M.R. VS. BOARD OF TRUSTEES (PUBLIC EMPLOYEES' RETIREMENT SYSTEM) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE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-6015-17T4
M.R.,
Petitioner-Appellant,
v.
BOARD OF TRUSTEES,
PUBLIC EMPLOYEES'
RETIREMENT SYSTEM,
Respondent-Respondent.
_____________________________
Argued March 16, 2020 – Decided April 6, 2020
Before Judges Sabatino and Sumners.
On appeal from the Board of Trustees of the Public
Employees' Retirement System, Department of the
Treasury, PERS No. 2-1063717
Samuel Michael Gaylord argued the cause for appellant
(Gaylord Popp, LLC, attorneys; Samuel Michael
Gaylord, on the brief).
Amy Chung, Deputy Attorney General, argued the
cause for respondent (Gurbir S. Grewal, Attorney
General, attorney; Melissa H. Raksa, Assistant
Attorney General, of counsel; Robert S. Garrison,
Deputy Attorney General, on the brief).
PER CURIAM
Appellant M.R. 1 was employed by the Judiciary in the Union County
vicinage. He was found to have posted on the Internet numerous disparaging
comments about his employer, in violation of Judiciary policy.
Because of his inappropriate conduct, appellant was charged in September
2015 with disciplinary violations. Appellant contends he was suffering from a
disability before he received the September 2015 disciplinary action letter. While
the disciplinary charges were still pending, appellant filed a disability retirement
benefits application in January 2016 with the Public Employment Retirement
System ("PERS"), pursuant to N.J.S.A. 43:15A-44. He claimed a psychiatric
disability that impaired his ability to perform his job functions.
Thereafter, in July 2016, appellant entered into a settlement with his
employer of the disciplinary matter. As part of the settlement, appellant
agreed to resign from his position and to not seek reemployment with the
Judiciary in the future. The agreement recites that the parties take no position
on the impact of the settlement upon appellant’s pending disability retirement
matter.
1
Although no motion to impound the record was filed, we have chosen to refer
to appellant by his initials because of his mental health information in the record.
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Appellant’s disability claim was referred to the Office of Administrative
Law as a contested case. A critical threshold issue was whether the appellant's
settlement and resignation disallowed the processing of his disability claim.
An Administrative Law Judge ("ALJ") found that the settlement and
resignation did not bar appellant’s receipt of disability benefits. The PERS
Board of Trustees reversed that decision, finding that the applicable statutes do
not allow a disability retirement benefit in instances where the employee resigns
for reasons other than a disability.
Appellant contends the Board’s final agency decision should be
overturned because it is inconsistent with the law and arbitrary and capricious.
He maintains he is entitled to benefits because his disabled condition arose
before the disciplinary charges were filed against him.
The eligibility issues before us are squarely controlled by this court’s
March 1, 2019 published opinion in Cardinale v. Bd. of Trustees, 458 N.J.
Super. 260 (App. Div. 2019). The Cardinale opinion coincidentally was issued
after the PERS Board’s final agency decision in the present case, but its
reasoning validates the Board’s determination here.
In Cardinale, this court considered an application for disability benefits
under the Police & Firemen's Retirement System ("PFRS"). 458 N.J. Super. at
262. The plaintiff, a former police officer, had voluntarily and irrevocably
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retired from his position under a settlement agreement after he was suspended
for a positive drug test. Id. at 264-65. We held "that when a PFRS member—
here a police officer—voluntarily irrevocably resigns from active service, such
a separation from employment automatically renders the individual ineligible
for ordinary disability benefits." Id. at 263 (emphasis added). We found the
plaintiff's claimed disability “irrelevant to our holding that his irrevocable
resignation made him ineligible for benefits in the first place." Id. at 268.
In Cardinale, we noted that the applicable PFRS statute, N.J.S.A. 43:16A-
8(2), directs that a public employee who retired due to disability, but then
recovered sufficiently to "perform either his former duty or any other available
duty in the department which his employer is willing to assign to him . . . shall
report for duty." (Emphasis added). This statutory requirement provides a way
"to return the previously disabled retiree to work as if that individual had never
suffered a disability or interruption of service." Cardinale, 458 N.J. at 270; See
also In re Terebetski, 338 N.J. Super. 564, 570 (App. Div. 2001) (same). The
statutory scheme accordingly strikes a balance between "a worker's interest with
those of an employer and the public by requiring PFRS workers—upon
rehabilitation—to forgo the benefits and return to work." Cardinale, 458 N.J.
Super. at 270.
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Crucially, we found in Cardinale that N.J.S.A. 43:16A-8(2) dictates that
this process—whereby a recipient recovers from his or her disability and returns
to work—is the only way the Board can cut off disability benefits. Id. at
271. If, on the other hand, a worker "irrevocably resigned" from his or her
former position, that creates:
a practical problem that strains the workability of the
system . . . . the Board cannot statutorily cease paying
any approved disability benefits, once they have begun,
for an individual who voluntarily resigns from duty to
settle disciplinary charges and agrees never to return.
[Id. at 270–73.]
Consequently, we ruled in Cardinale that allowing an employee to seek
disability benefits in a situation where he or she had irrevocably retired would
prevent the State from ever cutting off disability benefits, even upon recovery,
because the employee could never "return" to his or her former
employment. Such an outcome "would violate public policy, contravene the
rehabilitation statute, and encourage abuse of the disability retirement
system." Id. at 273. 2 Accordingly, the plaintiff's irrevocable resignation
rendered him ineligible for participation in the disability pension scheme. Ibid.
2
Disability retirement benefits are generally more generous than other
retirement benefits. See 50 N.J.R. 646(a) (January 16, 2018) (discussing the
necessity of limiting disability pensions only to employees who actually retire
due to disability and not some other reason).
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The pension scheme discussed in Cardinale, covering police and
firefighters, is different than the PERS pension scheme at issue in this case, and
governed by different statutes. However, a comparison of the statutes
demonstrates that Cardinale's logic applies with equal force to the PERS pension
scheme. Such comparisons are particularly appropriate because the various
pension schemes were designed to be "part of a harmonious whole." In fact, the
Supreme Court has analyzed one pension scheme using other pension statutes
as reference. See, e.g., Klumb v. Bd. of Educ. of Manalapan-Englishtown Reg'l
High Sch. Dist., Monmouth Cty., 199 N.J. 14, 30-33 (2009).
N.J.S.A. 43:16A-8(2), the PFRS statute at issue in Cardinale, requires a
recipient of disability benefits to, "upon the request of the retirement system"
undergo a medical examination and "[i]f the report of the medical board shall
show that such beneficiary is able to perform either his former duty or any other
available duty in the department which his employer is willing to assign to him,
the beneficiary shall report for duty."
By comparison, N.J.S.A. 43:15A-44, the PERS statute at issue in this
appeal, likewise requires an employee receiving disability pension benefits to
undergo a medical examination, in this case on an annual basis. It uses identical
language to N.J.S.A. 43:16A-8(2), stating "[i]f the report of the medical board
shall show that such beneficiary is able to perform either his former duty or other
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comparable duty which his former employer is willing to assign to him, t he
beneficiary shall report for duty."
Like the statute in Cardinale, N.J.S.A. 43:15A-44 does not provide an
alternative means for the PERS Board to cut off disability pension benefits even
where a former employee's disability has ended. The two schemes use identical
language regarding a pensioner's return to active service. Both statutes envision
a return to work as the sole means available to a Pension Board to cut off
disability benefits.
Other state pension schemes and the PERS regulations likewise support
this conclusion. For example, in another recent decision concerning the
constitutionality of certain regulations for other state pension schemes, we
reaffirmed the "longstanding principle that eligibility for disability retirement
benefits requires members to make a prima facie showing that they cannot work
due to a disability." In re Adoption of N.J.A.C. 17:1-6.4, 454 N.J. Super. 386,
394 (App. Div. 2018). Accordingly, "voluntary or involuntary termination of
employment, for non-disability reasons, generally deems a member ineligible
for disability benefits." Ibid.
The regulatory scheme for the PERS pension fund also supports the
Board's decision here. The pertinent PERS regulations instruct that an employee
who resigns for any other reason than inability to work due to a disability,
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including resignation under a settlement agreement, is disqualified from seeking
disability retirement:
Termination of employment, voluntary or involuntary,
that was caused by any reason other than the claimed
disability disqualifies a member from filing for a
disability retirement. A member whose employment
ended after his or her employer initiated disciplinary
action, or who was the subject of criminal or
administrative charges or party to a settlement resulting
in resignation or termination, is considered to have
separated from service as a result of the employer
action, charges, or settlement, and not due to a
disability, unless the action, charges, or settlement is
shown to be a result of the disability.
[N.J.A.C. 17:2-6.1.]
Although this regulation was introduced and adopted after appellant
initially filed his disability pension application, see 49 N.J.R. 2189(a) (July 17,
2017) (proposing this amendment to the PERS regulations), it supports a reading
of N.J.S.A. 43:15A-44 consistent with Cardinale. As part of the rulemaking
process for the regulation, the PERS Board also noted the regulation reflected
the preexisting law:
Under current law, disability retirement benefits are
provided to members who have become "physically or
mentally incapacitated for the performance of duty."
They are not intended to provide higher retirement
benefits to members whose service has been terminated
for any other reason. The fact patterns for the member's
case, including the reason for the member's voluntary
or involuntary separation from service, must
demonstrate that the member is totally and permanently
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disabled from performing his or her regular or assigned
job duties.
[50 N.J.R. 646(a) (January 16, 2018) (emphasis
added).]
The denial of appellant’s disability application is therefore consistent with the
underlying statutes and the public policy on terminating pension benefits.
Appellant argues he is eligible for disability pension benefits because he is
only barred by the settlement from reemployment with the Judiciary. He argues
he can return to employment in a different (non-judicial) branch of State
government, and that there is nothing in the settlement agreement "to say that
he couldn't return to his former duties with a different employer." He argues
this possible return to service as a PERS member is consistent with N.J.S.A.
43:15A-44.
This argument is contrary to the plain language of the statute, which
requires a recovered disability pension recipient to "report to duty." N.J.S.A.
43:15A-44. Our courts have consistently ruled that an employee who has been
terminated from his position can no longer "report for duty" to the same or
similar position with his or her employer. See Terebetski, 338 N.J. Super. at
568 (emphasis added) ("Plainly, the Legislature intended that persons on
disability retirement who are no longer disabled, i.e., no longer entitled to
disability retirement . . . be returned to either their prior positions or any
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available duty that their employers are willing to assign to them.") (emphasis
added).3
We made this point clear in In re Adoption of N.J.A.C. 17:1-6.4:
Returning to active service presumes that, at the time
the beneficiary left public service, he or she actually
had a duty. . . . And so, a beneficiary who previously
left public service for some reason other than a
disability—like termination for cause—would have no
employment or work duty from which to return.
[454 N.J. Super. at 401.]
Appellant’s disciplinary settlement bars him from returning to his former
position or any other position in the Judiciary. [Pa7-8]. He does not suggest
what jobs, if any, outside the Judiciary would be akin to his former "duty" or
would require similar responsibilities to his position as a Court Services
Supervisor 2. None of the cases cited in his brief support his argument that
N.J.S.A. 43:15A-44 envisions allowing an employee to return to a "his former
duty[,] just not his former employer." Rather, they support the contrary
proposition that an employee who retires due to disability and subsequently
3
See also Cardinale, 458 N.J. Super. at 270 ("The purpose of N.J.S.A. 43:16A-
8(2) is to return the previously disabled retiree to work as if that individual had
never suffered a disability or interruption of service.") (emphasis added); In re
Adoption of N.J.A.C. 17:1-6.4, 454 N.J. Super. at 401 ("[D]isability retirees
must be returned to the same status and position held at the time of retirement,
if available, after proving rehabilitation.") (emphasis added); Matter of Allen,
262 N.J. Super. 438, 444 (App. Div. 1993) ("N.J.S.A. 43:16A–8(2) [the PFRS
statute] contemplates that a restoration to employment return the formerly
disabled individual as nearly as possible to the status held at the time he or she
was pensioned.").
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recovers must be rehired by his former employer in the same or similar
position. That cannot occur here because of the clear prohibition in the
settlement agreement.
The theoretical possibility that appellant might someday recover from his
disability and be hired in a non-Judiciary position within the vast spectrum of
State government does not amount to a "return to duty" with his former Judiciary
employer. If we were to adopt that principle, then many meritorious claims for
disability retirement could be rejected on a theory that the disabled employee
possibly could work in the future for an entirely different public employer within
the pension system. In other words, the interpretation appellant advances here
could readily cause more harm to the public workforce than good.
All other arguments presented by appellant, to the extent we have not
already discussed them, lack sufficient merit to warrant discussion. R. 2:11-
3(e)(1)(D) and (E).
Affirmed.
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