Fake lawsuit: Attorney General says delayed PFD was already in process

MILITARY SPOUSE KNEW HER CHECK WAS SCHEDULED, BUT SUED ANYWAY

Denali Nicole Smith and her attorneys had already been informed that Smith’s Permanent Fund dividend was scheduled to be paid — and they knew it before they filed a lawsuit that has made national news.

The lawsuit by Smith claims was denied a dividend because she is married to an Alaska woman military member who is stationed in Florida, and thus the couple is living out of Alaska. The lawsuit claims discrimination against same-sex couples.

Gov. Mike Dunleavy, Attorney General Kevin Clarkson and others named in the lawsuit were unaware that any permanent fund dividend had been denied based on the same-sex marital status of an applicant, until they read stories in the media on Thursday, according to a press release from the Attorney General’s Office.

Dunleavy immediately asked his staff, in consultation with the Department of Law and the Department of Revenue, to look into the incident to determine what occurred and how to fix it.

But Dunleavy’s staff discovered the issue had already been remedied and the plaintiff’s attorney had been notified of the remedy long before the lawsuit was filed.

The PFD Division is in the process of updating its manual to ensure this inadvertent mistake does not happen again, the statement said.

“I was only made aware of this yesterday,” said Gov. Dunleavy. “I immediately wanted to get to the bottom of it. The PFD should go to all eligible Alaskans regardless of their marital status. We are examining our regulations and processes to ensure those who are qualified get their PFD.”

According to the Department of Revenue, the PFD division recognizes same-sex spouses. 

Individual’s spouses who are living out of the state for allowable reasons will be paid under AS 43.23.008(13): “accompanying another eligible resident who is absent for a reason permitted…as the spouse, minor dependent, or disabled dependent of the eligible resident.”

A question had been raised this summer based on the Division’s Statutes and Regulations Booklet that still included the requirement from statute that same-sex marriages are not recognized—mirroring the Alaska Constitution’s definition of marriage that was struck down by the court as unconstitutional in 2015.

The applications that could have been denied based on this statute were supposed to be put on hold, while the PFD Division sought advice from the Department of Law to ensure it was properly complying with the law.

Smith’s application inadvertently was denied instead of being placed on hold. The Division remedied this denial in October, following legal advice that the statute was unconstitutional and should not be enforced.

Early in November, the Division communicated to the applicant and her attorney that she was eligible to be paid a PFD.

“No one disagrees that the denial letter never should have been sent,” said Attorney General Kevin G. Clarkson. “But the Division promptly remedied the action once it figured out its mistake. As an attorney, I am appalled that Ms. Shortell would file a false lawsuit knowing full well that the Division had already changed course and had in fact informed her that her client’s dividend was scheduled for payment before the lawsuit was filed. Attorneys have an ethical duty to not file false factual statements with a court.”

The PFD Division said it will work with the applicant to ensure her PFD gets paid. To the Division’s knowledge, there is no one who is similarly situated to Smith. The Division will continue to investigate to verify that this is indeed the case and take corrective action if necessary.

As for the lawsuit, the Department of Law will be filing a motion to dismiss, since the remedy requested—a 2019 PFD—was fulfilled before the lawsuit was even filed.

“Aside from the facts provided in this press release to clarify what occurred, there is no further information that will be provided prior to the motion to dismiss,” the Attorney General’s press release stated.

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