SSR 72-35c: SECTIONS 218(s) (42 U.S.C. 418(s)). -- STATE AND LOCAL COVERAGE -- STATUS OF POLICEMEN OF CITY OF NEW MARTINSVILLE -- WEST VIRGINIA

20 CFR 404.1270-404.1274

SSR 72-35c

State of West Virginia v. Richardson , U.S.D.C., S.D. W. Va.,

Civ. No. 68-66 CH (10/18/71) (CCH U.I.R. Fed. Par. 16,455)

FIELD, JR., District Judge: Pursuant to Title 42, U.S.C. § 418(A)(1),

plaintiff here seeks a redetermination of the correctness of a decision

issued on May 9, 1968, by the Commissioner of Social Security acting on

behalf of the defendant Secretary. The Commissioner's decision affirmed a

ruling made by the Department of Health, Education and Welfare on April

25, 1967, excluding members of the police force of New Martinsville, West

Virginia, from Social Security.

In 1951, the State of West Virginia and the Federal Security

Administrator (predecessor to the Secretary of Health, Education and

Welfare) entered into an agreement pursuant to § 218 of the Social

Security Act, 42 U.S.C. 418, whereby the insurance system established by

Title II of the Social Security Act was extended to all services performed

by individuals in coverage groups specified therein, as employees of the

State and as employees of political subdivisions of the State, except

services expressly excluded from the agreement. This agreement extended

Social Security coverage, effective January 1, 1951 to services performed

by individuals as employees of the City of New Martinsville, West

Virginia. The agreement, however, expressly excluded from coverage "[a]ny

service performed by an employee in a position which, on the effective

date specified under Part (1) of this agreement, is covered by a

retirement system."

agreement extended

Social Security coverage, effective January 1, 1951 to services performed

by individuals as employees of the City of New Martinsville, West

Virginia. The agreement, however, expressly excluded from coverage "[a]ny

service performed by an employee in a position which, on the effective

date specified under Part (1) of this agreement, is covered by a

retirement system."

From the date of the agreement between the State and the Federal Security

Administrator until April 25, 1967, West Virginia made Social Security

payments based on services in positions of policemen employed by the City

of New Martinsville. As stated, on that date the Department of Health,

Education and Welfare determined that New Martinsville's policemen were

ineligible for Social Security coverage under the agreement concluded

between the State of West Virginia and the Federal Security Administrator,

because on January 1, 1951, the effective date of the agreement, the

policemen were "covered by a retirement system" within the meaning of

Section 218(d) of the Social Security Act, 42 U.S.C. 418(d).

Both parties have moved for summary judgment, it being agreed that there

are no issues other than the question of law: Were the policemen of New

Martinsville in "positions covered by a retirement system" on January 1,

1951? The parties have stipulated that (1) on January 1, 1951, and at all

times since that date the City of New Martinsville has had a police

department supported at public expense; (2) the provisions of West

Virginia Code, Chapter 8, Article 6, Section 10, were applicable to the

City of New Martinsville on January 1, 1951; and (3) the City of New

Martinsville has never enacted an ordinance providing for a policemen's

pension or relief fund as required by the aforementioned Chapter 8,

Article 6, Section 10 of the West Virginia Code.

At all times material to this dispute, West Virginia Code, Chapter 8,

Article 6, Section 10, has provided that:

e applicable to the

City of New Martinsville on January 1, 1951; and (3) the City of New

Martinsville has never enacted an ordinance providing for a policemen's

pension or relief fund as required by the aforementioned Chapter 8,

Article 6, Section 10 of the West Virginia Code.

At all times material to this dispute, West Virginia Code, Chapter 8,

Article 6, Section 10, has provided that:

Similar provisions were adopted in 1969 when the quoted statute was

repealed as part of the recodification of the entire basic municipal law

of West Virginia, and now appearing in Code Sections 8-22-16 through

8-22-28.

To avoid the constitutional difficulties inherent in levying taxes paid

by the employer directly upon the state, the Social Security Act as passed

in 1935 expressly excluded from coverage:

In 1950, the Act was amended to allow the Federal Security Administrator

to enter into voluntary agreements with the states to include state

employees in the Social Security system. The Act still excludes state

employees from coverage, but the 1950 amendment provides that this

exclusion does not apply to "service included under an agreement under

Section 418 of this title." Section 418 of Title 42 now provides in

part:

However, the coverage afforded state employees by such voluntary

agreements is limited by subsection 418(d)(1), which provides:

I am of the opinion that the policemen of New Martinsville were in

"positions covered by a retirement system" as contemplated by this statute

on the first day of January, 1951. As a general rule the Social Security

Act excludes from coverage the employees of a state and its political

subdivisions, and agreements concluded under Section 418 of Title 42

constitute exceptions to this general rule, and the Social Security Act

permits the states to exercise a high degree of control over Section 418

agreements

ated by this statute

on the first day of January, 1951. As a general rule the Social Security

Act excludes from coverage the employees of a state and its political

subdivisions, and agreements concluded under Section 418 of Title 42

constitute exceptions to this general rule, and the Social Security Act

permits the states to exercise a high degree of control over Section 418

agreements. Specifically, these arguments (sic) can be initiated only by

the states, and will contain "such provisions, not inconsistent with the

provisions of this section (Section 418), as the State may request."

West Virginia's agreement expressly excludes employees "in positions

covered by a retirement system." As defined by Section 218(d) of the

Social Security Act, 42 U.S.C. 418(b)(4), "[t]he term 'retirement system'

means a pension, annuity, retirement, or similar fund or system

established by a State or by a political subdivision thereof." At the time

West Virginia entered into its Section 418 agreement, Chapter 8, Article

6, Section 10 of the West Virginia Code required New Martinsville, a

political subdivision of the State, to, "by ordinance, provide for the

establishment and maintenance of a * * * policemen's pension or relief

fund." This placed a mandatory obligation upon the City of New

Martinsville, and in discussing the absolute obligation of a municipality

to obey legislative mandates, the West Virginia Supreme Court of Appeals

in another context stated:

sville, a

political subdivision of the State, to, "by ordinance, provide for the

establishment and maintenance of a * * * policemen's pension or relief

fund." This placed a mandatory obligation upon the City of New

Martinsville, and in discussing the absolute obligation of a municipality

to obey legislative mandates, the West Virginia Supreme Court of Appeals

in another context stated:

"A 'position covered by a state retirement system' cannot be transmitted

(sic) into a position not covered by failure of the state to collect

contributions from those holding the position." Secretary of Health,

Education and Welfare v. Snell , 416 F.2d 840 at p. 843 (5th Cir.

1969). Likewise, unless this Court should see fit to permit a municipality

to take advantage of its own inaction, a position for which a state by

legislation has provided a state retirement system cannot be transmuted

into a position not covered thereby merely by the failure of a political

subdivision of the State to comply with an express statutory mandate. To

rule otherwise would be tantamount to holding that a political subdivision

could determine the scope of the agreement between the State and the

Department of Health, Education and Welfare. The instances are few in

which one party can affect the scope of an agreement between two other

parties, and certainly a municipality possessing only such powers as it

has derived from the State does not have the authority to affect the scope

of the agreement involved in this dispute. See State v. Duffield ,

149 W. Va. 19, 138 S.E. 2d 351 (1964).

The inescapable conclusion in a case such as the one presented here was

succinctly stated in Secretary of Health, Education and Welfare v.

Snell , 416 F.2d 840 at p. 843 (5th Cir. 1969).

In the light of the foregoing observations, IT IS ORDERED that the motion

of the plaintiff for summary judgment be and the same is hereby denied,

and the motion of the defendant for summary judgment be and it is hereby

granted.