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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Kingik v. State, Dept. of Administrative, Div. of Retirement & Benefits (10/1/2010) sp-6515

Kingik v. State, Dept. of Administrative, Div. of Retirement & Benefits (10/1/2010) sp-6515

        Notice:  This opinion is subject to correction before publication in the PACIFIC REPORTER. 
        Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 303 
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CAROLINE KINGIK,                                   ) 
                                                   )    Supreme Court No. S-13431 
                        Appellant,                 ) 
                                                   )    Superior Court No. 3AN-08-05774 CI 
        v.                                         ) 
                                                   )   O P I N I O N 
STATE OF ALASKA,   DEPARTMENT                      )
OF ADMINISTRATION, DIVISION                        )   No. 6515 - October 1, 2010
OF RETIREMENT AND BENEFITS                         )
                        Appellee.                  ) 

                Appeal from the Superior Court of the State of Alaska, Third 
                Judicial District, Anchorage, Jack Smith, Judge. 

                Appearances:       Sarah M. Curtis and Rebecca S. Copeland, 
                Patton   Boggs   LLP,   Anchorage,   for   Appellant.        Anne   L. 
                Johnson, Assistant Attorney General, and Daniel S. Sullivan, 
                Attorney General, Juneau, for Appellee. 

                Before:     Carpeneti,      Chief   Justice,   Fabe,   Christen,    and 
                Stowers, Justices.   [Winfree, Justice, not participating.] 

                CHRISTEN, Justice. 


                Caroline   Kingik's   husband,   Morris   Welch,   was   enrolled   in   the   Public 

Employees' Retirement System (PERS) from 1986 to 1999.                    Shortly before Welch's 

retirement, he selected a retirement option that did not include survivor benefits. Kingik 

consented to this election.        Welch died in 2005, and the Division of Retirement and 

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Benefits (the "Division") notified Kingik that she would no longer receive benefits from 

PERS. Kingik appealed to the superior court, arguing that the Division violated her due 

process rights and that her waiver of survivor benefits was void.              Because the waiver 

form was clear and because Kingik's waiver of benefits was effective, we affirm. 


                Morris Welch was employed by the North Slope Borough from 1986 until 

his retirement in 1999.  He married Caroline Kingik in 1989 and was married to her at 

his death in 2005.   By virtue of his employment with the Borough, Welch was eligible 

for medical and retirement benefits from the State of Alaska through PERS.                  Between 

his retirement and death, Welch received $139,992.97 from PERS, $46,041.90 more 

than his lifetime contributions to the program. 

                Welch began inquiring about early retirement in early 1998. The Division 

mailed him information providing estimates of the monthly income he could expect to 

receive depending on when he decided to retire and which retirement option he selected. 

The estimates were accompanied by a retirement application packet that included a 

newsletter entitled "Rights of Spouses and Dependents." The newsletter explained that 

if the member chose the "normal, early or level income" options and the member's 

spouse consented, PERS would "pay monthly benefits to the member during his or her 

lifetime, but [would] not pay monthly benefits to the spouse after the member's death." 

                Before   his   retirement,   Welch   submitted   several   forms   instructing   the 

Division   on   how   he   wanted   to   receive   his   PERS   benefits.    The   Application   for 

Retirement      Benefits   form   offered    Welch    five  different   options   for  receiving   his 
retirement benefits.      Three options included survivor benefits.1           The Level Income 

        1       The Division had no stake in which option Welch chose; each choice had 

the   same   actuarial   value   and   was   therefore   projected   to   cost   the   Division   the   same 

                                                  -2-                                            6515 

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Option did not include survivor benefits.        The Level Income Option pays members a 

higher monthly benefit until they reach age sixty-five (when many members begin 

receiving social security payments), a reduced monthly benefit after age sixty-five, and 

no survivor benefits.     Welch chose the Level Income Option on the Application for 

Retirement   Benefits   form,   affirmed   his   choice   by   signing   the   Retirement   Benefits 
Election   Level   Income   Option   form,2    and   expressly   declined   to   request   additional 

information concerning spousal benefits when given the opportunity to do so. 

               Alaska Statute 39.35.450 requires PERS members to provide their spouse's 

written consent when they select a retirement option that does not include survivor 

benefits.  The one-page Application for Retirement Benefits form Welch signed shows 

his selection of the Level Income Option and Kingik's notarized signature consenting 

to his selection. 

               Welch was later reminded that he did not select a survivor option. In 1998 

Welch sued the North Slope Borough over an ordinance that gave an employment 

preference   to   Native   Americans.     The   ordinance   was   later   declared   "invalid   and 

unenforceable."  As part of the 2005 settlement of the discrimination case, the Borough 

paid nearly four years of retirement benefits into PERS on Welch's behalf and credited 

him with four more years of service. During the negotiations to settle the discrimination 

claim, the Division sent Welch a revised projection of his PERS retirement benefits 

showing   the   money   the   Borough   anticipated   paying   into   his   PERS   account.    The 

Division's letter reminded Welch that he had selected the Level Income Option and that 


amount.  See AS 39.35.450(b); AS 39.35.460 (repealed by ch. 4, FSSLA 1996). 

        2       The Retirement Benefits Election Level Income Option form provides: "I 

request my retirement benefits in an increased amount prior to age 65 with a reduced 
amount after age 65, for the remainder of my life . . . .          I understand that the benefit 
selected is irrevocable." 

                                                 -3-                                           6515

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"[f]ailure to choose one of the three survivor options means ALL benefits, including 

health insurance, will stop when you die" and "Important notice: . . .  there are no 

survivor options with an LIO." (Emphasis in original.) 

              Neither Welch nor his attorney ever contacted the Division to object or 

protest his selection of the Level Income Option.    Had Welch chosen an option with 

survivor benefits, he would have received a significantly lower monthly benefit during 

his lifetime. Instead, Welch received enhanced monthly benefits for the remainder of 

his life, and never attempted to change his election. 

              Welch died on October 25, 2005.   Kingik contacted the Division to report 

Welch's death and to inquire about the status of his retirement and medical benefits.  On 

November 17, 2005, the Division notified Kingik that her medical coverage had been 

terminated and that the October retirement check was the final benefit payable under the 

PERS program. 

              Kingik wrote to the Administrator of the Division about her right to receive 

benefits, but the Administrator upheld the Division's initial denial of benefits.  Kingik 

then appealed to the Office of Administrative Hearings, where the parties filed cross- 

motions for summary adjudication.      The administrative law judge (ALJ) granted the 

Division's motion, in part. The ALJ ruled that Kingik's waiver of survivor benefits was 

valid and rejected her argument that the Division had a duty to notify Welch that he had 

an opportunity to re-designate his retirement benefit when he settled his discrimination 

claim in 2005 - the settlement provided no such opportunity.  But the ALJ ruled that 

issues of fact prevented him from deciding as a matter of law what Welch intended when 

he   completed   the  Application   for  Retirement  Benefits  form.   After   holding  an 

evidentiary hearing on the "single issue of the intent and significance of Mr. Welch's 

elections," the ALJ found  by a preponderance of the evidence that Welch had intended 

to select the Level Income Option. 

                                            -4-                                      6515

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                Kingik appealed the administrative decision to the superior court, arguing 

that her own due process rights had been violated, that Welch's due process rights had 

been violated, and that her waiver of survivor benefits was ineffective.                 The superior 

court affirmed the administrative decision, ruling that:            (1) Kingik did not have third- 

party    standing    to  litigate  a  violation   of   Welch's   rights;   (2)   substantial   evidence 

supported the administrative decision that the waiver form was objectively clear; (3) 

Kingik did not have a vested constitutional right to receive survivor benefits when she 

signed the waiver; and (4) the evidence did not support Kingik's argument that the 

waiver was invalid for lack of mutual consent or because of a unilateral mistake. 

                Kingik appeals. 


                This case requires us to review a superior court order affirming an agency 

decision.      "When   the   superior   court   acts  as   an   intermediate   court   of   appeal   in   an 

administrative matter, we independently review and directly scrutinize the merits of the 

[administrative] decision."         "No deference is given to the superior court's decision 
when that court acts as an intermediate court of appeal."4 

                Two   standards   of   review   are   relevant   in   this   case.  First,   we   review 
findings of fact under the substantial evidence test.5             Substantial evidence is "such 

relevant     evidence    as  a  reasonable     mind    might   accept    as  adequate    to  support    a 

        3       McMullen v. Bell, 128 P.3d 186, 189-90 (Alaska 2006) (quoting Alyeska 

Pipeline Serv. Co. v. DeShong, 77 P.3d 1227, 1231 (Alaska 2003)). 

        4       Handley v. State, Dep't of Revenue, 838 P.2d 1231, 1233 (Alaska 1992) 

(citing Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903 (Alaska 

        5       Id. 

                                                   -5-                                             6515

----------------------- Page 6-----------------------

conclusion."6    Second, we apply the substitution  of judgment test when reviewing 

constitutional questions7 and questions of law not involving agency expertise.8    When 

exercising our independent judgment, we "adopt the rule of law that is most persuasive 
in light of precedent, reason, and policy."9 


       A.	    Kingik Waived Her Argument That She Has Third-Party Standing To 
              Litigate A Violation Of Welch's Constitutional Rights. 

              In her appeal to our court, Kingik argues that she has third-party standing 

to litigate an alleged violation of Welch's constitutional rights. But she did not make 

this argument before the ALJ.    Instead, Kingik argued at the administrative level that 

"the operative question . . . [is] what, if anything, did the Department do to safeguard 

Ms. Kingik's constitutional rights[?]"   We have held that "[a] party may not raise an 
issue for the first time on appeal."10   Because Kingik did not make her third-party 

standing argument before the ALJ, it was not properly part of her appeal to the superior 

court.   It is not properly part of the present appeal for the same reason.  Kingik waived 

this argument. 

       B.	    Kingik's Due Process Rights Were Not Violated. 

       6	     Storrs v. State Med. Bd., 664 P.2d 547, 554 (Alaska 1983) (citing Keiner 

v. City of Anchorage, 378 P.2d 406, 411 (Alaska 1963)). 

       7      McMullen, 128 P.3d at 190 (citing Holding v. Municipality of Anchorage, 

63 P.3d 248, 250 (Alaska 2003)). 

       8      Handley, 838 P.2d at 1233. 

       9      Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979). 

       10     Mullins v. Oates, 179 P.3d 930, 941 n.31 (Alaska 2008) (quoting Brandon 

v. Corr. Corp. of Am., 28 P.3d 269, 280 (Alaska 2001)). 

                                            -6-	                                     6515

----------------------- Page 7-----------------------

               Kingik argued before the ALJ that the Division's failure to safeguard her 

constitutional right to survivor benefits violated due process.         She contends that the 

Division should have taken additional steps to "ensure that Ms. Kingik's purported 

waiver was valid and intentional."   The Division countered that Kingik's constitutional 

rights were not violated because "spouses of retirees do not hold a constitutional right 

to survivor benefits." 
               We adopted the Mathews v. Eldridge11 test for procedural due process 

claims in Hilbers v. Municipality of Anchorage.12        Under that test, courts identify the 

specific requirements of due process by considering: 

               [F]irst, the private interest thatwill be affected by the official 
               action; second, the risk of an erroneous deprivation of such 
               interest through the procedures used, and the probable value, 
               if any, of additional or substitute procedural safeguards; and, 
               finally, the Government's interest, including the fiscal and 
               administrative     burdens   that  the  additional   or  substitute 
               procedural requirements would entail.[13] 

               We need not decide whether Kingik had a protected property interest in 

Welch's   PERS   retirement   benefits   because   we   conclude   the   Division's   procedures 

satisfied due process.    Kingik claims an interest in the receipt of survivor benefits if 

Welch predeceased her.        The Division's interest is in the efficient administration of 

PERS.   Kingik's position is that the Division's procedures were inadequate because it 

could have modified its forms to "more clearly and concisely convey to its members 

(and their spouses) the effects and consequences of their selections." But our conclusion 

that the waiver form is reasonably clear disposes of Kingik's argument; the likelihood 

        11     424 U.S. 319 (1976). 

        12     611 P.2d 31, 36-37 (Alaska 1980). 

        13     Id. at 36 (quoting Mathews, 424 U.S. at 334-35). 

                                               -7-                                         6515 

----------------------- Page 8-----------------------

 of an erroneous deprivation of survivor benefits caused by the form is very low because 

 of the waiver form's plain language.  Applying the Mathews factors, we conclude that 

 Kingik was not denied due process. 

         C.      Kingik's Waiver Of Survivor Benefits Was Effective. 

                 1.      The waiver form was clear. 

                Kingik argues her waiver of survivor benefits is invalid because the waiver 

form she signed is confusing and misleading.               Kingik testified that she thought the 

Application for Retirement Benefits form's waiver only affected her right to receive 

dental and vision coverage through PERS.  She explained that her understanding of the 

waiver's effect was based on conversations  she had with Welch where, she alleges, 

Welch   assured   her   that   she   would   receive   surviving   spouse   benefits   and   medical 

coverage after he died.      Kingik admitted that she "[m]ost likely" did not read the form 

before     signing     it.   The     Division     argues     that,   despite    Kingik's     subjective 

misunderstanding, the waiver is objectively clear and effectively describes the rights 

spouses relinquish by signing it. 

                The clarity of the Division's waiver form is a legal question we review de 

novo.      Both parties cite to ERISA regulations governing waiver and agree that the 

waiver language on the form Kingik signed was required to describe or explain the right 

the spouse is giving up and affirmatively state that the spouse is giving up a right rather 
than contain generalized and indeterminate language.15 

         14      Rockstad v. Erikson, 113 P.3d 1215, 1219 (Alaska 2005). 

         15      ERISA   provides   that   a   participant   "may   elect   at   any   time   during   the 

 applicable election period to waive the qualified joint and survivor annuity form of 
 benefit." 29 U.S.C.A.  1055(c)(1)(A)(i) (West 2009).  But such election shall not take 
 effect unless "(i) the spouse of the participant consents in writing to such election, (ii) 
 such election designates a beneficiary . . . which may not be changed without spousal 

                                                   -8-                                             6515 

----------------------- Page 9-----------------------

               The ALJ concluded that the waiver form "reasonably describes or explains 

the right the spouse is giving up" and "is very clear in categorizing three options as 

'Survivor Options.' "       Directly under the section where the member selects his or her 

retirement benefit option, the form cautions: "IMPORTANT . . . ALL BENEFITS 


APPLICANT if a survivor option is not selected." (Emphasis in original.) Following this 

warning, the form contains a section entitled "SPOUSE'S WAIVER OF SURVIVOR 

OPTION" with a signature line for the spouse to "acknowledge and approve the benefit 

selected" and to "freely waive entitlement to continuing survivor benefits . . . upon the 

death of the named applicant." (Emphasis in original.)  Because the survivor options are 

clearly designated, because the form unambiguously warns that "all benefits including 

medical coverage" will cease on the applicant's death if a survivor option is not selected, 

and because the form contains a clearly-worded waiver clause, we agree with the ALJ 

that the waiver plainly and adequately describes both the rights and the effect of signing 

the form. 

               Although we do not believe the Application for Retirement Benefits form's 

layout or language obfuscates the meaning of the waiver Kingik signed or the validity 

of Welch's election, we agree with the ALJ that the Division's forms could be improved. 

For   example,   some   of   the   Application   for  Retirement   Benefits   form's   language   is 

arguably internally inconsistent.        The form's waiver section states that "[i]f you are 


 consent . . . and (iii) the spouse's consent acknowledges the effect of such election and 
 is witnessed by a plan representative or a notary public." 29 U.S.C.  1055(c)(2)(A) 
 (2006).    PERS is not governed by ERISA because PERS falls under the governmental 
 employee benefit plan exception. See 29 U.S.C.  1002(32) & 1003(b)(1) (2006).                  We 
 understand both parties cite to ERISA by analogy only, and accept as uncontested their 
 joint position that the waiver on the Application for Retirement Benefits form should be 
 measured by this standard. 

                                                 -9-                                           6515

----------------------- Page 10-----------------------

married, the waiver below must be completed to select a regular income benefit."                      But 

the term "regular income benefit" is not an option; this phrase appears nowhere else on 

the form. 

                 The Division's forms could be improved, but we agree with the ALJ's 

conclusion that the Application for Retirement Benefits form describes the rights Kingik 

relinquished by signing the waiver.   We are satisfied that the form adequately explained 

that Kingik's benefits would stop upon Welch's death if no survivor option was selected. 

                 2.      Kingik bore the risk of her unilateral mistake. 

                Kingik   argues   that   she   is   entitled   to   void   the   waiver   because   she   was 

mistaken as to its basic assumption - that signing it would affect her right to receive 

survivor benefits. 

                 The Restatement (Second) of Contracts  154 explains that a party bears the 

risk of the mistake when: "(a) the risk is allocated to him by agreement of the parties; or 

(b) he is aware, at the time the contract is made, that he has only limited knowledge with 

respect to the facts to which the mistake relates but treats his  limited knowledge as 

sufficient;   or   (c)   the   risk   is   allocated   to   him   by   the   court   on   the   ground   that   it   is 
reasonable under the circumstances to do so."16 

                Kingik   argues   that   she   does   not   bear   the   risk   of   her   mistake   under 

Restatement  154(b) and (c).  Regarding subsection (b), she argues she "was not aware 

that she had only limited knowledge with respect to the facts to which the mistake 

related" because she "believed she was waiving one thing when she purportedly waived 

another."     The Division counters that Kingik bore the risk of the mistake because she 

"acted   with   what   she   knew   was   limited  knowledge   but   treated   that   knowledge   as 

sufficient."  Kingik's admission that she "[m]ost likely" did not read the waiver form or 

         16       RESTATEMENT (SECOND) OF CONTRACTS  154(a), (b), and (c) (1981). 

                                                    -10-                                              6515 

----------------------- Page 11-----------------------

other parts of Welch's retirement application undermines her ability to claim mistake as 

a defense.    If she did not read the waiver, she must have known she was acting with 

limited   knowledge   of   the   contents   and   meaning   of   the   contract,   yet   her   signature 

indicates that she treated her knowledge of it as sufficient.  Under these circumstances, 

the law requires that Kingik bear the risk of her mistake. 

                Kingik also argues that the risk of error should be allocated to the Division 

under Restatement  154(c) because "it was the Division's duty to appropriately inform 

[Welch] of his rights, and because it is the Division's forms which caused the mistake in 

this case."   We have subscribed to the principle that the risk of mistake should be borne 
by the party who has the greater interest in the consequences of a contract term.17                The 

Division had no financial interest in Welch's election because its liability under each 

option was actuarially equal. The superior court observed that "[i]t seems fair to say that 

the information about what rights were being waived was of great importance to [Kingik] 

while of lesser importance to [the Division], so under the facts of this case, the risk of 

mistake should be assigned to [Kingik]."            Given the relative disparity in the parties' 

interests, we agree that Kingik properly bore the risk of her unilateral mistake. 

                3.      The contract does not fail for lack of mutual assent. 

                Kingik alleges that she did not subjectively intend to waive anything other 

than dental and vision coverage.          Therefore, she argues, there was no "meeting of the 

minds on the essential terms of the offer" and she did not form a valid contract with the 

Division.   Contract formation is a legal question not involving agency expertise, so we 
apply the substitution of judgment standard of review.18 

         17      See Wasser & Winters Co. v. Ritchie Bros. Auctioneers (Am.), Inc., 185 P.3d 

 73, 80 (Alaska 2008). 

         18      Handley v. State, Dep't of Revenue, 838 P.2d 1231, 1233 (Alaska 1992). 

                                                   -11-                                            6515 

----------------------- Page 12-----------------------

                Mutual assent is an elementary requirement of an enforceable contract.19 

An "agreement to a contract may be imputed based on the reasonable meaning of a 
party's words and acts."20  "Because a contract is assessed under an objective standard, 

if a party objectively manifested an intention to be bound by the terms of a contract, that 
assent cannot be defeated by evidence of the party's . . . subjective contrary intentions."21 

Kingik signed and notarized a waiver that contained a plainly worded clause stating that 

her benefits would cease unless a survivor option was selected.                Her signature was an 

objective manifestation of intent sufficient to create an enforceable contract with the 
Division.    Only Kingik's objective manifestations of intent may be considered.22                   Her 

unexpressed subjective intentions are irrelevant to the mutual assent analysis as a matter 
of law.23   Therefore, the contract does not fail for lack of mutual assent. 

                Finally,     Kingik    argues    that   she   and   the   Division    had    a  material 

misunderstanding and that this misunderstanding prevented contract formation.                        She 

points out that while the Division intended the waiver to be a waiver of survivor benefits, 

she only meant it to waive her vision and dental benefits.  The Restatement (Second) of 

Contracts  20 recognizes an exception to the normal mutual assent rules for certain 

misunderstandings. Under the Restatement, "[t]here is no manifestation of mutual assent 

to an exchange if the parties attach materially different meanings to their manifestations 

         19      Howarth v. First Nat'l Bank of Anchorage, 596 P.2d 1164, 1167 (Alaska 


         20      Id.

     Dutton v. State, 970 P.2d 925, 928 (Alaska App. 1999) (citingHowarth, 596 

 P.2d at 1167). 

         22      Id.

         23      Id.

                                                   -12-                                             6515

----------------------- Page 13-----------------------

and . . . neither party knows or has reason to know the meaning attached by the other."24 

This portion of Kingik's argument fails because, as the Division points out, it had no way 

of knowing that Kingik subjectively intended to waive only vision and dental coverage, 

but Kingik did have reason to know that the Division intended the waiver to affect her 

survivor benefits.  Indeed, the waiver Kingik signed contained no reference to dental or 

vision   coverage,   but   it   did   include   express  language   regarding   waiver   of   survivor 

benefits. The Restatement's exception for misunderstandings does not support Kingik's 


        D.	     Substantial   Evidence   Supports   The   ALJ's   Conclusion   That   Welch 
                Intended To Select The Level Income Option. 

                The ALJ held an evidentiary hearing to determine which option Welch 

intended to select when he completed the Application for Retirement Benefits form. 

Having reviewed the record, we conclude that substantial evidence supports the ALJ's 

finding that Welch intended to select the Level Income Option. 

                The ALJ found that Welch was a "fairly sophisticated man with excellent 

literacy" who was capable of reading and understanding the Division's forms. While not 

extensive, the record includes evidence adequate to support this finding:  Welch worked 

for the North Point School District as a supervising operator of a Point Hope utility, he 

started a home business selling Alaska Native art, and he authored an article that the ALJ 

read about the experience of building a website to sell art. 

                Other    documentary      evidence    supports   the   ALJ's   finding   that  Welch 

intended to select the Level Income Option.  Welch consistently chose the Level Income 

Option as his preferred choice for receiving his retirement benefits: he unequivocally 

marked the Level Income Option on the Application for Retirement Benefits form and 

included     Kingik's    waiver   as  required   by   the  form;   he  signed    and  submitted    the 

         24      RESTATEMENT (SECOND) OF CONTRACTS  20(1)(a) (1981). 

                                                  -13-                                           6515 

----------------------- Page 14-----------------------

Retirement   Benefits   Election   Level   Income   Option   form;   he   expressly   declined   the 

Division's offer to provide him information concerning spousal benefits when given the 

opportunity   to   request   it;   he   received   enhanced   monthly   benefits   for   several   years 

without   objection;   and   he   never   attempted   to   change   his   election   -   even   after   the 

settlement of his 2005 discrimination claim when he was reminded that the Level Income 

Option did not include survivor benefits. We conclude substantial evidence supports the 

ALJ's finding that Welch intended to select the Level Income Option. 


                For the reasons explained above, the decision of the ALJ is AFFIRMED. 

                                                  -14-                                            6515
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