Jim Dey: Retired physician pays price for SURS mistake
"You (screwed) up. You trusted us."
That's a classic line from "Animal House," the 1978 comedy about the men from Delta House. But it also sums up the situation facing a doctor from the University of Illinois at Chicago who, contemplating retirement, inquired of the State Universities Retirement System about what his pension would be and, relying on what he was told, quit working.
He, too, screwed up — he trusted SURS.
The sad tale of Dr. Prakash Desai is told in an appellate court decision issued Thursday that outlines what can happen when an individual follows the traditional rules of planning for retirement and gets bad information.
"So he was misled?" asked appellate Judge Robert Steigmann during April 24 oral arguments held in Springfield.
"He was misled," replied John Ellis, Desai's lawyer.
Here, in a nutshell, is what happened.
When Desai inquired about what his benefit would be if he retired, SURS officials estimated it would be over $10,000 a month.
After Desai retired in 2009, he started receiving checks of $5,700 a month.
What happened? SURS gave Desai incorrect estimates of his pension benefits.
What can Desai do about it? Nothing.
"This case is definitely not my favorite case. The facts are bad," SURS lawyer Albert Lee told the appellate court.
That's no exaggeration. But just as the facts are indisputably bad, state law is equally clear, according to judges who have ruled in the case. Desai has no legal claim against SURS to make up the difference between what he was promised and what he received.
"Our conclusion that SURS could not provide equitable relief in a case of this nature should in no way be interpreted as diminishing the gravity of the error that occurred here. Participants of SURS rely on the information they receive from SURS to make major life decisions; accordingly, SURS must make a good-faith effort to provide accurate annuity information to each and every one of its participants. Nonetheless, it is not our place to apply the doctrine of equitable estoppel where the legislature has not provided such a remedy. ... Until the legislature does so, however, we must adhere to the law," Judge Lisa Holder White wrote for a unanimous appellate court. Judges Steigmann and Carol Pope concurred in the decision.
Desai worked at the UIC Medical Center from 1976 to 2009, initially part time (as low as 10 percent) and eventually moving to full-time status. In 2003, when he was considering going full time, he asked SURS to compute what his monthly pension benefit would be if he added six years to his full-time employment record.
SURS replied that he would receive a monthly benefit of approximately $11,000 a month.
"These estimates were premised on (Desai) having received a credit of 26.5 years, adjusted down from 33.5 years based on (Desai's) part-time service," the appellate court stated.
In Febuary 2008, Desai sought another pension estimate from SURS, this time being told his monthly benefit would be $10,710 a month based on 33-plus years of credit.
"The figures contained in this letter are only estimates," SURS' disclaimer stated.
In June 2008, Desai received a revised estimate, this one $10,710 a month based on 25.8 years of credit.
After Desai's August 2009 retirement, SURS recalculated his monthly benefit, this time concluding that he was to receive $5,700 a month based on only 12.7 years of credit.
In the end, SURS' lawyer contends, Desai received the correct monthly check.
"All I can say is that mistakes were made, and we just have to accept that fact," said SURS lawyer Lee.
Desai would have had more luck if he was dealing with a private entity, like an insurance company. In that case, the company might have felt compelled — either for legal or public relations reasons — to live by its initial estimates.
Because SURS is a public entity bound by state law, it has no legal authority to pay more than what Desai earned even though Desai relied on SURS representations, first in moving to full-time status and then in retiring.
Ellis, Desai's lawyer, said his client "would have continued to work" if he had received accurate information.
"The only person who has paid for this mistake is Dr. Desai," Ellis told the appellate court.
How could such a thing happen, appellate judges wondered.
Lee said that a "mix of things" came into play, that state pension rules are "very, very complex," that it "takes years" to train the retirement counselors who dispense advice and that they make mistakes.
"I know you have that kind of mentality of, 'Oh, my God, SURS, do they even know how to add and subtract?'" Lee told appellate court.
He assured the judges that SURS employees do know how to add and subtract but admonished SURS members that "when you're getting (retirement) estimates, get as many as you can."
"You can't expect the SURS retirement system" to be perfect, Lee told the court.
Jim Dey, a member of The News-Gazette staff, can be reached by email at firstname.lastname@example.org or at 217-351-5369.