Justices side with 'little guy' over ERS

By Ken Kobayashi
Advertiser Courts Writer

One woman's quest to get survivor benefits that her husband thought he had left her has resulted in a major Hawai'i Supreme Court decision that mandates that the state Employees' Retirement System must clearly explain to government workers their retirement options and benefits.

Arlene Kamakana, with a photo of her parents, Katsumi and Helen Honda, says her mother would be relieved by Friday's decision. Eugene Tanner • The Honolulu Advertiser

But Katsumi Honda had actually chosen a plan that did not give beneficiaries any money after his death.

After he died at age 65, only five days after he retired, his widow, Helen Honda, asked the ERS board of trustees to allow her to collect benefits, saying her late husband submitted his retirement application by mail and did not receive any advice from the ERS.

The board denied her request.

By denying Helen Honda survivor benefits, the ERS had to pay the 23-year public-school custodian only five days of retirement benefits, a fraction of the $239 estimated monthly retirement pension.

In its decision Friday, the high court, in a 3-2 vote, ordered the ERS board to essentially overturn its denial, invoking a doctrine that allows the court to correct an error. The majority said the ERS failed to clearly explain to Katsumi Honda his options and the failure may have resulted in his mistake in choosing the wrong retirement option.

The minority said the high court shouldn't step in unless the matter involves "great public import," which doesn't apply because Honda's situation is "unique and unlikely to recur" because of changes in state retirement law.

Reid Nakamura, who represented Helen Honda, said the Legislature apparently passed laws to clarify the options for employees, but he said the court's message is still valid. "They need to change the manner in which they are doing business and look after the interests of retirees," he said.

Helen Honda, who had heart problems, died in 2003 at age 72. The retirement benefits — roughly $23,000 from the time Katsumi Honda died until Helen Honda died — would go to her estate.

"I think she would be relieved, and I think she probably would be happy," said the Hondas' daughter, Arlene Kamakana, one of four children raised by the Hondas. "At this point, it's not really the money. It's the principle of the whole thing."

The state attorney general's office and ERS officials were still reviewing and analyzing the decision yesterday and said they could not comment at this time.

The ERS, which was established to provide retirement benefits to state, city and county employees, has about $9 billion and more than 99,000 members, including retirees, beneficiaries and about 62,500 government employees.

The majority's 24-page decision was based on the plight of the Hondas, who lived in Mililani.

Katsumi Honda, who had served in the military, applied for the retirement plan in early 1994 that would give him about $239 a month. He checked off the "normal" plan and also listed his wife as the beneficiary. But he was diagnosed with cancer, moved up his retirement date to April 1 that year and died five days later.

Nakamura said if Katsumi Honda had chosen a plan giving the wife benefits after his death, he would have received roughly about $30 less a month.

But ERS only paid for the five days of Katsumi Honda's retirement. Nakamura said the ERS sent Helen Honda a check for $6.63, but she felt so insulted she never cashed it.

The majority decision said that "substantial evidence" supports a finding that Katsumi Honda, who had an eighth-grade education, did not understand that his wife would not get survivor benefits. The majority held that the application and pamphlet had "insufficient and seemingly inconsistent information."

The justices also pointed out Katsumi Honda listed his wife as a beneficiary. In addition, he told her "not to worry" because she would get his pension, the majority said.

He still could have switched plans before his retirement April 1, and if he knew his wife would not get the benefits, the majority said, it's reasonable that he would have changed his selection.

"The choice of retirement options is a pivotal decision that may substantially affect the retiree's quality of living for the reminder of his or her life and the provision for loved ones upon the retiree's death," the majority said.

"Such decisions should be informed ones, which are possible only if the choices are readily understandable."

The majority held that the ERS board of trustees owes a fiduciary duty to ERS members to prevent what happened to the Hondas from happening again.

Associate Justice Simeon Acoba wrote the majority decision. He was joined by Associate Justice Paula Nakayama and a substitute justice, Circuit Judge Dexter Del Rosario.

Associate Justice Steven Levinson wrote the dissent, which at 47 pages, is nearly twice as long as the majority's decision. He was joined by Chief Justice Ronald Moon. The minority held it would uphold the ERS board's denial of granting Helen Honda survivor benefits.

The minority said the majority essentially went out of its way to become an advocate for the Hondas. They said by the majority's reasoning, whenever the court wants to go beyond limits on its discretion imposed by previous high court rulings, the court can simply proceed "on the amorphous pretense" of saying it is seeking "whatever 'justice' it perceives at the moment."

But Kamakana, 46, an operations manager at a technical processing company, said the board's denial of her mother's request wasn't fair.

Kamakana said the paperwork was misleading and one could easily make the wrong choice. She said her father thought he was going to leave his wife with benefits.

"My dad always told her, 'Don't worry, you're going to be taken care of,' '' she said.

Kamakana said when her mother and brother went to the ERS to find out about her benefits, which the ERS had earlier indicated she would get, they were made to wait and then an ERS supervisor told them in the hallway that she wouldn't be getting any money.

Kamakana said she's not sure her mother would have sought legal help if she had been treated better. "It did make it worse the way she got treated," she said.

She said her mother was "clearly hurt" by the ERS denial and it kept bothering her until she found Nakamura to take the case.

"My dad worked so hard at Kipapa Elementary," Kamakana said. "He was there for many, many years. Look at what he got in the end from them, you know?"

The Hondas' lawyer said the majority rendered a just decision.

"The Supreme Court has given the little guy justice," Nakamura said. "If one little guy cannot get his justice, then what is justice?

"Everybody deserves to be treated fairly and justly."

Reach Ken Kobayashi at kkobayashi@honoluluadvertiser.com or 525-8030.