RORY MARADONNA VS. BOARD OF TRUSTEES, ETC. (PUBLIC EMPLOYEES' RETIREMENT SYSTEM) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2450-19
RORY MARADONNA,
Petitioner-Appellant,
v.
BOARD OF TRUSTEES,
PUBLIC EMPLOYEES'
RETIREMENT SYSTEM,
Respondent-Respondent.
__________________________
Argued October 14, 2021 — Decided October 27, 2021
Before Judges Haas and Mawla.
On appeal from the Board of Trustees of the Public
Employees' Retirement System, Department of the
Treasury, PERS No. x-xx-xxx493.
Richard A. Friedman argued the cause for appellant
(Zazzali, Fagella, Nowak, Kleinbaum & Friedman, PC,
attorneys; Richard A. Friedman, of counsel and on the
briefs; Kathleen Naprstek Cerisano, on the briefs).
Alison Keating, Deputy Attorney General, argued the
cause for respondent (Andrew J. Bruck, Acting
Attorney General, attorney; Melissa H. Raksa,
Assistant Attorney General, of counsel; Alison
Keating, on the brief).
PER CURIAM
Appellant Rory Maradonna appeals from a January 16, 2020, final agency
decision by respondent Board of Trustees (Board) of the Public Employees'
Retirement System (PERS), finding his retirement was not bona fide and
requiring him to reimburse PERS for the retirement benefits he received. We
affirm.
Maradonna began working at Rutgers University in 1974. In 1986, he
signed an Election of Retirement Coverage form waiving participation in the
Alternate Benefit Program (ABP) and remaining in the PERS. In 2007,
Maradonna's position was eliminated, and he applied for retirement benefits
effective March 1, 2008.
On March 7, 2008, Maradonna's wife was laid off. Maradonna
communicated with Rutgers officials about taking another position at the
university. Prior to accepting the new position, he spoke to Rutgers human
resources employees and consulted the Division of Pension and Benefits
(Division) website to ensure his reemployment would not affect his retirement
benefits. According to Maradonna, the human resources employees assured him
he could accept the new position and receive PERS benefits so long as he did
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not enroll in the ABP and waited thirty days after his date of retirement. Based
on those conversations, and because the new position was listed as an ABP
covered position, Maradonna concluded he could accept the job. He was
unaware the waiver he signed would convert a post-retirement ABP-covered
position into a PERS position. Maradonna began his new job on April 2, 2008.
Unaware of Maradonna's new employment, the Board approved his
retirement application on May 21, 2008. His first PERS pension check was
issued in April for the month of March. The Division sent him a letter stating:
In accordance with law, you have until thirty days
after (A) the effective date of your retirement, or (B)
the date your retirement was approved by the Board of
Trustees, whichever is the later date, to make any
changes to your retirement. Also, your first check
cannot be mailed until after this thirty[-]day period. . . .
You should expect to be reenrolled in the PERS
if you accept employment after retirement with the
State or any of the local participating public employers
in a PERS covered position and your total salary from
all public employment exceeds $15,000 in a calendar
year.
If you return to public employment following
your retirement, you must notify our Office of Client
Services immediately . . . .
In November 2011, the Division began investigating after Maradonna's
name appeared on an exception list from the Department of Labor and
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Workforce Development, indicating his earnings exceeded the statutory
minimum annual salary of $15,000. Based on its investigation, the Division
concluded Maradonna's retirement was not bona fide and notified him
accordingly in September 2013. The Division noted Maradonna did not wait
thirty days after the Board approved of his retirement before returning to work.
Therefore, Maradonna was never effectively retired.
The Division determined it was entitled to contributions and
reimbursement of all retirement benefits Maradonna received from March 1,
2008, through a projected date of October 1, 2013, totaling $510,780.10.
Maradonna appealed the Division's findings to the Board. He remained
employed in his new position.
The Board affirmed. Maradonna appealed and the matter was referred to
the Office of Administrative Law for a hearing before an Administrative Law
Judge (ALJ). The ALJ considered testimony from Maradonna and a Division
auditor and found Maradonna "liable for repayment of the retirement benefits
he has received and for pension contributions on the salary he has earned during
his improper post-retirement employment." The ALJ found Maradonna was not
"effectively retired" as of March 1, 2008, but instead "continued an active PERS
membership, as provided by the waiver he signed in 1986." Accordingly, the
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ALJ determined Maradonna's retirement should be cancelled, and he should be
reenrolled in PERS.
However, the ALJ determined Maradonna was entitled to an equitable
remedy to reduce the amount he was required to reimburse PERS. The ALJ
reasoned although
Maradonna should have spoken with state pension
authorities before accepting post-retirement
employment[. . . and] knew he should have spoken with
the Division, and not merely rel[ied] on the advice of
Rutgers, [. . . there were] other equitable factors
weighing in favor of Maradonna includ[ing] the
considerable length of time the Division took to inform
Maradonna of his ineffective retirement.
The ALJ found the Division's five-and-one-half-year delay in contacting
Maradonna "support[ed] a finding that the Division did not act diligently in
uncovering the impropriety of Maradonna's reemployment." The ALJ also
reasoned "the financial impact repayment would have on [Maradonna] and the
length of his honorable public service" favored an equitable remedy.
Therefore, the ALJ limited Maradonna's reimbursement liability to "the
salary he earned from April 1, 2008, to November 22, 2011, the date on which
the Division notified Rutgers of the Division's audit of Maradonna's
reemployment." The ALJ also determined Maradonna should have five years to
repay PERS given the considerable sum owed.
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Both parties filed exceptions to the ALJ's decision. The Board issued a
final determination adopting the ALJ's factual findings and legal conclusions
that: Maradonna's retirement should be cancelled; he should be reenrolled in
PERS; and he is liable for reimbursing PERS for the benefits and pension
contributions he received during his post-retirement employment. However, the
Board rejected the ALJ's application of an equitable remedy.
The Board found as follows:
While Maradonna never severed service with
Rutgers to become eligible for a retirement benefit,
even if he had, his return to employment would have
required his re-enrollment in PERS pursuant to
N.J.S.A. 43:15A-57.2, which states, in pertinent part:
a. Except as provided in subsections b.
and c. of this section, if a former member
of the [PERS], who has been granted a
retirement allowance for any cause other
than disability, becomes employed again in
a position which makes him eligible to be
a member of the [PERS], his retirement
allowance . . . shall be canceled until he
again retires.
Such person shall be re-enrolled in the
[PERS] and shall contribute thereto at a
rate based on his age at the time of re-
enrollment. . . .
....
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b. The cancellation, re-enrollment, and
additional retirement allowance provisions
of subsection a. of this section shall not
apply to a former member of the [PERS]
who, after having been granted a retirement
allowance, becomes employed again by:
(1) an employer or employers in a position
or positions for which the aggregate
compensation does not exceed $10,000 per
year . . . .
[Ibid.]
Our courts have long noted that "[T]he effect of
the statute is that one who has begun receiving pension
benefits . . . may not continue receiving those benefits
'while continuing in employment' in the same position
or in any other position requiring PERS membership."
Stevens v. Bd. of Trs., Pub. [Emps.] Ret. Sys., 309 N.J.
Super. 300, 303 (App. Div. 1998) (quoting [Vliet v. Bd.
of Trs., Pub. Emps. Ret. Sys., 156 N.J. Super. 83, 89
(App. Div. 1978))]. "The purpose is to prevent
professionals from manipulating the pension system by
working part-time for governmental agencies while
receiving a public pension." Ibid. Certainly, the same
principles would apply with respect to full-time
employment which exceeds the member's pension
benefit.
Maradonna's earnings greatly exceeded the salary
exemption provided for in N.J.S.A. 43:15A-57.2(b).
Thus, this was not the case of a member who missed
compliance with the return to employment rules by a
few days, and even if Maradonna waited until thirty
days after his retirement was approved on May 21,
2008, the statute requires that his retirement would be
cancelled and he would be reenrolled in the PERS as he
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accepted employment in a position governed by the
PERS.
[(first six alterations in original).]
The Board denied Maradonna equitable relief because he "continued to be
in violation of PERS rules for years, even after being informed of the Division's
investigation and its finding that he was not in compliance with the PERS return
to work rules" and such violations are "exactly what the return to employment
statutes and regulations are designed to prevent." The Board added that
equitable remedies were only afforded in other cases where "there was no
rationale as to why each of the members would have placed their pension at risk
in order to return to employment and earn a salary much lower than their pension
benefit." The Board concluded "Maradonna's annual salary exceeded his annual
pension benefit and there is no basis upon which to conclude that he would have
declined the more lucrative employment with Rutgers in favor of receiving his
PERS retirement benefits, especially in light of his wife's loss of employment."
The Board concluded an equitable remedy cannot apply "where the
member expects to 'benefit from retirement and public employment
simultaneously' . . ." It noted an equitable remedy would "provide[] Maradonna
with a windfall" at the expense of PERS. The Board ordered Maradonna to
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reimburse the entire sum of pension benefits he received during his post-
retirement employment.
Maradonna raises the following points on appeal:
[I.] THE PERS BOARD'S DETERMINATION THAT
[MARADONNA] CONTINUED AS AN ACTIVE
PERS MEMBER FOLLOWING HIS RETIREMENT
AND THAT HE MUST RETURN ALL OF THE
RETIREMENT BENEFITS HE RECEIVED IS NOT
SUPPORTED BY THE FACTS AND APPLICABLE
LAW AND MUST BE REVERSED.
....
[A]. THE RE-ENROLLMENT PROVISIONS
OF N.J.S.A. 43:15A-57.2 DO NOT APPLY TO
[MARADONNA'S] POST-RETIREMENT
EMPLOYMENT, AS THAT EMPLOYMENT IS
IN A POSITION COVERED BY THE [ABP].
[B]. THE ELECTION OF RETIREMENT
COVERAGE FORM EXECUTED BY
[MARADONNA] DECADES AGO DOES NOT
MEET THE LEGAL REQUIREMENTS OF A
WAIVER AND DOES NOT CONVERT HIS
POST-RETIREMENT POSITION FROM AN
ABP POSITION TO A PERS POSITION.
[C]. THE PERS BOARD'S REFUSAL TO
CONSIDER AND APPLY THE ALJ'S
FACTUAL FINDINGS AND CREDIBILITY
DETERMINATIONS AND ORDER AN
EQUITABLE REMEDY IS ARBITRARY,
CAPRICIOUS, AND UNREASONABLE.
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[D]. THE ALJ AND PERS BOARD MADE
FACTUAL ERRORS WITH REGARD TO THE
CALCULATION OF PENSION PAYMENTS
RECEIVED BY [MARADONNA] THAT
NEGATIVELY IMPACT A REMEDY IN THIS
MATTER.
"[We] have 'a limited role' in the review of [agency] decisions." In re
Stallworth, 208 N.J. 182, 194 (2011) (quoting Henry v. Rahway State Prison, 81
N.J. 571, 579 (1980)). "[A] 'strong presumption of reasonableness attaches to
[an agency decision].'" In re Carroll, 339 N.J. Super. 429, 437 (App. Div. 2001)
(quoting In re Vey, 272 N.J. Super. 199, 205 (App. Div. 1993)). "In order to
reverse an agency's judgment, [we] must find the agency's decision to be
'arbitrary, capricious, or unreasonable, or . . . not supported by substantial
credible evidence in the record as a whole.'" Stallworth, 208 N.J. at 194 (quoting
Henry, 81 N.J. at 579-80). The challenging party has the burden of proving an
agency action is arbitrary, capricious, or unreasonable. Bueno v. Bd. of Trs. of
the Tchrs. Pension & Annuity Fund, 422 N.J. Super. 227, 234 (App. Div. 2011)
(citing McGowan v. N.J. State Parole Bd., 347 N.J. Super. 544, 563 (App. Div.
2002)).
We "may not substitute [our] own judgment for the agency's, even though
[we] might have reached a different result." Stallworth, 208 N.J. at 194 (quoting
In re Carter, 191 N.J. 474, 483 (2007)). "It is settled that '[a]n administrative
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agency's interpretation of statutes and regulations within its implementing and
enforcing responsibility is ordinarily entitled to our deference.'" E.S v. Div. of
Med. Assistance & Health Servs., 412 N.J. Super. 340, 355 (App. Div. 2010)
(quoting Wnuck v. N.J. Div. of Motor Vehicles, 337 N.J. Super. 52, 56 (App.
Div. 2001)).
We affirm the Board's decision because it is supported by the substantial
credible evidence in the record. R. 2:11-3(e)(1)(D). We add the following
comments.
The Board has "authority to apply equitable principles to provide a remedy
when justice so demands, provided the power is used rarely and sparingly, and
does no harm to the overall pension scheme." Sellers v. Bd. of Trs. of the Police
& Firemen's Ret. Sys., 399 N.J. Super. 51, 62 (App. Div. 2008). This is because
the Board "owes a fiduciary duty to its members to protect the financial integrity
of the fund." Francois v. Bd. of Trs., Pub. Emps. Ret. Sys., 415 N.J. Super. 335,
357 (App. Div. 2010) (citing Mount v. Trs. of Pub. Emps. Ret. Sys., 133 N.J.
Super. 72, 86 (App. Div. 1975)). The Board's duty includes safeguarding against
"the dangers of manipulation of the pension system . . . and . . . preserv[ing] the
fiscal integrity of the PERS by vigilantly guarding against abuses." Mastro v.
Bd. of Trs., Pub. Emps. Ret. Sys., 266 N.J. Super. 445, 456 (App. Div. 1993).
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For these reasons, the Board's denial of an equitable remedy was not arbitrary,
capricious, or unreasonable.
Affirmed.
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