Court holds CalPERS to the 100 day rule of Government Code section 11517

On September 8, 2009, the Court of Appeal issued a decision in Matus v. Board of Administration of California Public Employees' Retirement System, Case No. C056576. The Court held that an Agency cannot wait more than 100 days to order the transcript after rejecting an Administrative Law Judge’s Decision. The case arises from an appeal after an administrative hearing. An administrative law judge ruled that defendant California Public Employees Retirement System (CalPERS) had underpaid retirement benefits to Clarence Alexander and his widow by more than $3 million (plus interest). CalPERS rejected this proposed decision and opted to decide the case itself upon the record, including the transcript. Government Code section 11517 allows an agency the choice of holding administrative hearings itself or outsourcing that role to an administrative law judge (ALJ) through the California Office of Administrative Hearings (OAH). If the agency elects to use an ALJ, then Section 11517 requires the ALJ to issue a proposed decision within 30 days. Within 100 days of receiving the proposed decision, the agency may act in five ways:

1. Adopt the proposed decision in its entirety
2. Adopt the proposed decision, but reduce or mitigate the penalty
3. Make technical corrections
4. Reject the proposed decision and refer the case back to the ALJ
5. Reject the proposed decision and decide the case itself based on the record, including the transcript.

CalPERS waited more than 100 days before ordering the transcript of the administrative hearing. The Court of Appeal decided that 100 days means 100 days; and, that the ALJ’s proposed decision was automatically adopted as the final decision under Section 11517 after 100 days passed.