Opinion
DOCKET NO. A-5519-13T1
04-14-2016
JANE FEIGENBAUM, Petitioner-Appellant, v. BOARD OF TRUSTEES OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM, Respondent-Respondent.
Stephen E. Trimboli argued the cause for appellant (Trimboli & Prusinowski, LLC, attorneys; Mr. Trimboli, of counsel and on the brief; Michael R. McAndrew, on the brief). Robert E. Kelly, Deputy Attorney General, argued the cause for respondent (John J. Hoffman, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Kelly and Christin E. Deacon, Deputy Attorney General, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Alvarez, Ostrer and Manahan. On appeal from the Board of Trustees of the Public Employees' Retirement System, Docket No. 2-10-234787. Stephen E. Trimboli argued the cause for appellant (Trimboli & Prusinowski, LLC, attorneys; Mr. Trimboli, of counsel and on the brief; Michael R. McAndrew, on the brief). Robert E. Kelly, Deputy Attorney General, argued the cause for respondent (John J. Hoffman, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Kelly and Christin E. Deacon, Deputy Attorney General, on the brief). PER CURIAM
Petitioner Jane Feigenbaum appeals the final administrative action of respondent, the Board of Trustees (the Board) of the Public Employees Retirement System (PERS), which adopted the Administrative Law Judge's (ALJ) order requiring petitioner to pay back pension benefits totaling $113,328.60, as well as unpaid pension contributions totaling $12,475.27. We affirm.
Petitioner was enrolled in PERS as a public employee since August 1, 1989, first as a municipal department head in Jersey City, then as Assistant Business Administrator before she ultimately became Business Administrator (BA) for the City of Trenton. She held the BA position for Trenton from 2002 until she retired on November 30, 2008.
Prior to retiring from her position in Trenton, petitioner applied for and negotiated the terms of employment for the BA position in Perth Amboy, primarily with Gregory Fehrenbach in his capacity as City Administrator. On September 10, 2008, Perth Amboy declared in an ordinance that if its BA was an "active participant in [PERS] on July 1, 2007 and continuously since that time[,]" the BA was not obligated to join the Defined Contribution Retirement Program (DCRP), a pension system different from PERS. City of Perth Amboy, N.J., Defined Contribution Ret. Program Ordinance § 1437-2008 (2008).
In September 2008, petitioner attended a seminar held by the Division of Pensions and Benefits (the Division) for public employees considering retirement. She was presented with a handbook at the seminar containing Fact Sheets designed to provide general information and guide members through their retirement.
Two Fact Sheets provided advice regarding retirees' return to public employment in a position covered by PERS. Fact Sheet #21 advised that retirees must cancel their retirement and reenroll in PERS if they return to employment covered by PERS (subject to certain exceptions not relevant here). Fact Sheet #21 also stated that employees may return to employment in a position covered by a different state-administered retirement system, but would be precluded from enrollment in that retirement system. Additionally, Fact Sheet #21 informed PERS retirees that for their benefits to become due and payable, they are required to be retired for at least thirty days before returning to a PERS-covered position. Fact Sheet #4 stated "[i]f you return to [public] employment in a position covered by the same retirement system from which you retired[,] . . . you should expect to cancel your retirement and reenroll in the retirement system." Fact Sheet #4 also advised retirees to contact the Division prior to returning to public employment.
The Fact Sheets were amended several times over the years following petitioner's retirement. In July 2010, Fact Sheet #21 was amended to characterize a retirement as "bona fide" once retirement becomes due and payable following a thirty-day break in employment without pay or a thirty-day delay in retirement approval, whichever is later. It was also amended in March 2011 to preclude pre-arranged public employment following retirement. No information was provided in the Fact Sheets received and reviewed by petitioner in 2008 regarding what constituted a "bona fide" retirement.
Petitioner met with a PERS counselor on October 20, 2008, regarding her planned retirement. At the meeting she disclosed that she was negotiating employment with Perth Amboy, and inquired whether that employment would compromise her PERS pension. Despite a review of the Fact Sheets provided at the seminar, the counselor was unable to answer petitioner's inquiry. In lieu of an answer, the counselor provided petitioner with a contact phone number for a DCRP counselor and instructed her to consult with the DCRP.
Petitioner did not follow up with a DCRP counselor since she believed it was unnecessary as her retirement was from a PERS position and therefore DCRP, a "new entity[,]" had no authority to make a decision on a PERS issue. As for the Division, although it required counselors who encounter potential pension irregularities to notify the External Audit Unit, no notification was made by the counselor. Therefore, the Division did not conduct an investigation or take any action after petitioner "self-identif[ied]" a pension issue.
During the administrative hearing, Hank Schwedes, the Board Secretary previously employed as a pension and benefits specialist in the External Audit Unit for the Division, stated that it is not possible to investigate all pensioners who ask questions about pension issues.
On March 20, 2008, the Division generated a memorandum directed to certifying officers of the DCRP (Memorandum), stating that appointed public officials who were PERS members "enrolled in the PERS prior to July 1, 2007" and accepted a position covered by DCRP — "without a break in membership" — "will remain a PERS member while in the appointed position."
On October 22, 2008, Perth Amboy offered petitioner the BA position. The following day petitioner submitted her PERS retirement application. On October 27, 2008, petitioner was appointed BA for Perth Amboy effective January 5, 2009. Perth Amboy anticipated saving approximately $5000 to $10,000 by not providing health benefits or pension contributions for petitioner. Petitioner's last day of employment as BA for Trenton was November 30, 2008, and her retirement became effective December 1, 2008. She earned $132,828 in her final year of employment with Trenton. The Division notice advising petitioner of her retirement approval, dated December 10, 2008, notified her that she would be expected to reenroll in PERS if she accepted a PERS-covered position, and gave her thirty days to "make any changes to [her] retirement." She was also required to notify the Division if she returned to public employment following her retirement. Petitioner received further confirmation of her retirement approval and her first pension check in the beginning of January 2009.
Petitioner's employment with Perth Amboy commenced on January 5, 2009, and she resigned from the position on September 16, 2010. She made no pension contributions to either PERS or DCRP during her employment with Perth Amboy, as she was not enrolled in any retirement pension fund. Nor did she receive health benefits from Perth Amboy. While employed as BA for Perth Amboy, petitioner earned an annual salary of $129,500, as well as her PERS pension benefits.
Sometime in 2011, the Division received a telephone call from the Governor's office advising receipt of a complaint regarding alleged irregularities in petitioner's retirement pension. The Division conducted an investigation in response to the allegations. On August 31, 2011, petitioner received a notice from the Division advising that it had reviewed petitioner's "post-retirement employment activities" and concluded that her retirement was not "bona fide." The Division advised petitioner that she was therefore obligated to repay pension benefits totaling $178,319.64, as well as back pension contributions totaling $12,475.27. The Division also found that, despite Perth Amboy's ordinance making the position eligible for DCRP benefits, petitioner was "grandfathered" into the PERS system. The Division took the position that Perth Amboy should have notified the Division and requested an intrafund transfer pursuant to N.J.A.C. 17:1-3.5, which states that PERS members "who terminate[] employment with one participating employer but transfer[] to another covered position within the same retirement system with a different employer may continue such membership."
The Division would, by practice, review yearly reports generated by the Department of Labor and Workforce Development to locate and investigate potential violations of pension statutes. However, without having conducted a review of the reports for 2008 and 2009, apparently due to a backlog in the review process, the Division resumed reviews starting in 2010.
Petitioner appealed the decision to the Board, and on December 9, 2011, the Board upheld the Division's determination that petitioner's retirement was not bona fide because she did not have a thirty-day break in service, and because she should have reenrolled in the PERS system when she began her employment with Perth Amboy. The Board also took exception to petitioner's application and negotiation for the Perth Amboy position even though she was not yet retired from the Trenton position, apparently contrary to the Division policy articulated in the March 2011 version of Fact Sheet #21. Petitioner appealed the decision.
The Board's decision is unclear on this point. The Board ostensibly calculated the amount of time between the date of the Board's approval of her retirement (December 10, 2008, rather than the date of her retirement, December 1, 2008) and the start date of her employment with Perth Amboy (January 5, 2009), which is less than thirty days. See N.J.A.C. 17:2-6.2.
On January 19, 2012, the Division issued a notice to petitioner that her monthly pension and retiree health insurance coverage was "suspended" because she returned to employment. Petitioner requested a stay of the Board's decision, which was denied on February 15, 2012. On April 2, 2012, we denied an emergent application for leave to appeal. The matter was subsequently transferred to the Office of Administrative Law (OAL) for a hearing as a contested matter. On May 4, 2012, petitioner submitted an application for PERS retirement benefits retroactive to October 1, 2010. The Board denied retroactive retirement on July 18, 2012, but permitted retirement effective June 1, 2012. The decision was consolidated with the pending appeal in the OAL. On March 8, 2013, the Division sent correspondence to the petitioner requiring her to pay an additional $21,586.40, constituting pension benefits received from September 2011 through December 2011. The issue was consolidated with the pending appeal in the OAL.
Petitioner was then required to pay her own health insurance and prescription drug costs, as Perth Amboy did not provide benefits for employees such as petitioner.
The hearing on petitioner's appeal took place on January 30 and February 6, 2013. The ALJ heard testimony from petitioner, Fehrenbach, and Schwedes, as well as Michael Czyzyk, a supervisor from the External Audit Unit for the Division. On May 2, 2014, the ALJ issued a written initial decision finding that the Division acted with reasonable diligence in reopening petitioner's pension grant, and that reconsideration of the pension grant was appropriate under the circumstances. The ALJ concluded that petitioner's retirement never became due and payable because there was no thirty-day break in service. She continued by ruling that equitable estoppel should not be applied because petitioner failed to provide notice regarding her post-retirement public employment, and equitable considerations did not foreclose petitioner from being required to return the pension benefits she received.
As a result, the ALJ ordered petitioner to pay back $113,328.60 in pension benefits received prior to the end of her employment with Perth Amboy, as well as $12,475.27 in unpaid pension contributions for the time she was employed by Perth Amboy. The ALJ disagreed that petitioner should be required to pay back benefits received after ending her Perth Amboy employment in September 2010, reasoning that she would have been entitled to those benefits if she had filed a PERS retirement application at that time. On June 18, 2014, the Board affirmed the ALJ's decision without modification. This appeal followed.
Petitioner raises the following points on appeal:
POINT I
THE PERS BOARD'S DECISION BELOW WAS ARBITRARY, CAPRICIOUS, UNREASONABLE, UNSUPPORTED BY THE RECORD EVIDENCE, AND CONTRARY TO LAW.
POINT II
RESPONDENT FAILED TO MAKE THE MANDATORY SHOWING UNDER SKULSKI V. NOLAN THAT IT WAS PROPER TO REOPEN THE PENSION GRANTED TO [PETITIONER] ON DECEMBER 1, 2008.
A. [PETITIONER] [MET] HER BURDEN OF PRODUCTION UNDER SKULSKI.
B. THE BOARD OF TRUSTEES DID NOT ACT WITH REASONABLE DILIGENCE IN RECONSIDERING [PETITIONER'S] PENSION.
POINT III
ASSUMING ARGUENDO THAT RESPONDENT CAN OVERCOME THE FIRST PHASE OF THE SKULSKI INQUIRY, RESPONDENT IS UNABLE TO SHOW THAT [PETITIONER] WAS NOT ENTITLED TO A PERS PENSION AT THE TIME IT WAS ORIGINALLY GRANTED.
POINT IV
[PETITIONER] WAS NOT REQUIRED BY ANY LEGAL AUTHORITY IN EXISTENCE AT THE TIME TO MAINTAIN A THIRTY[-]DAY "BREAK IN SERVICE" BETWEEN THE APPROVAL OF HER PERS PENSION AND BEGINNING HER DCRP EMPLOYMENT IN PERTH AMBOY.
Our scope of review in an appeal from the final decision of an administrative agency is limited. In re N.J. Dep't of Envtl. Prot. Conditional Highlands Applicability Determination, 4 33 N.J. Super. 223, 235 (App. Div. 2013) (citing Circus Liquors, Inc. v. Governing Body of Middletown Twp., 199 N.J. 1, 9 (2009)). The court "must sustain the agency's action in the absence of a 'clear showing that it is arbitrary, capricious, or unreasonable, or that it lacks fair support in the record[.]'" Ibid. (quoting Circus Liquors, supra, 199 N.J. at 9). On questions of law, review is de novo. Ibid. (citing Russo v. Bd. of Trs., Police & Firemen's Ret. Sys., 206 N.J. 14, 27 (2011)). We are "in no way bound by the agency's interpretation of a statute or its determination of a strictly legal issue." Mayflower Sec. Co., Inc. v. Bureau of Sec, 64 N.J. 85, 93 (1973). We accept the factual findings of an agency as long as they are supported by sufficient credible evidence, and we may not substitute our judgment for that of the agency. Greenwood v. State Police Training Ctr., 127 N.J. 500, 513 (1992).
Given our standard of review, and consistent with the factual record and applicable law, we affirm substantially for the reasons set forth in the ALJ's comprehensive written opinion. We add the following.
Administrative agencies have the authority to reopen and modify previous orders as long as it is done within a reasonable time or with reasonable diligence. Ruvoldt v. Nolan, 6 3 N.J. 171, 183 (1973). Reasonable diligence depends on the interplay of time with other factors, including the reason for reconsideration, fraud or illegality, and the extent of any reliance or justified change of position by the pensioner. Id. at 183-84. In Skulski v. Nolan, 68 N.J. 179, 199-201 (1975), our Supreme Court set forth a two-step test for applying these equitable considerations when reexamining a pension grant.
In the first phase of the Skulski inquiry, the agency must address a "threshold question of the propriety of reexamining the merits of a prior pension grant." Id. at 199. During this phase, the merits as to whether a pension is proper are immaterial; rather, the pensioner has the burden of providing evidence demonstrating that reexamination was improper. Id. at 199-200. This determination may be based on proofs including: "(1) the [pensioner's] subjective good faith belief that he was entitled to benefits; (2) the extent of the [pensioner's] change of position in reliance on the initial pension grant; and (3) the extent to which the [pensioner's] reliance has foreclosed alternate opportunities for pension benefits." Id. at 200. While the pensioner has the burden of coming forward with evidence that the initial grant should not be reexamined, the agency has the "burden of both coming forward and burden of proof (persuasion) that action was taken within a reasonable period and with reasonable diligence." Ibid. In the second phase of the inquiry, the original decision awarding pension is entitled to a presumption of validity, and the agency has the "onus of proving[,]" by a preponderance of the evidence, "that the applicant was not entitled to the pension at the time of the original grant." Id. at 201.
Here, in addressing the first phase of the Skulski test, the ALJ noted that petitioner "credibly testified that she would not have retired from Trenton if she knew her pension would be jeopardized[,]" and that "[p]etitioner's reliance on the December 2008 pension award foreclosed her opportunity to remain at Trenton . . . ." Additionally, the ALJ noted there was no suggestion of bad faith by petitioner, as her employment was announced in the newspaper. The ALJ also noted petitioner's attendance of the Division seminar, review of the Fact Sheets, and meeting with a Division counselor.
Notwithstanding the above, the ALJ found that all three factors for consideration when addressing the propriety of reexamination were not satisfied by petitioner. In particular, the ALJ found that petitioner's subjective good faith belief that there would be no impact upon her entitlement to pension benefits based upon the Perth Amboy employment was "strained[.]" The ALJ found that the Division counselor was unable to provide an answer to petitioner's inquiry. Yet when she was directed to contact a DCRP representative in furtherance of the inquiry, she chose not to do so. The ALJ also found that petitioner did not contact the Division regarding her employment with Perth Amboy despite being advised of this requirement in the Division's notice confirming her retirement.
We conclude the ALJ's "subjective good faith" finding was grounded in the undisputed facts. Petitioner astutely made inquiry whether her proposed employment would affect her pension eligibility, then inexplicably proceeded with her employment in Perth Amboy without obtaining an answer. We note as well that petitioner's employment experience as a BA and her familiarity with administrative and financial issues relating to public employment further militate against a finding that her decision to proceed was premised upon a subjective good faith belief that her employment would pose no detriment to her pension eligibility.
The determination that petitioner did not act in bad faith related to her conduct when she advised the counselor of her potential employment with Perth Amboy and the publication of that employment after she accepted the position. On the other hand, the subjective good faith belief related to her acceptance of the Perth Amboy position without reasonable due diligence.
Nor has petitioner satisfied the second and third factors of the first phase of the Skulski test — "the extent of [petitioner's] change of position in reliance on the initial pension grant[,]" and "the extent to which [petitioner's] reliance has foreclosed alternate opportunities for pension benefits." Skulski, supra, 68 N.J. at 200. Succinctly, had petitioner notified the Division of her return to employment, she would have been permitted to reenroll in PERS or otherwise effect an intrafund transfer pursuant to N.J.A.C. 17:1-3.5 and 17:2-7.2.
As noted, within the first phase of the Skulski test, the Division has the "burden of both coming forward and burden of proof (persuasion) that action was taken within a reasonable period and with reasonable diligence." Skulski, supra, 68 N.J. at 200. What constitutes "reasonable diligence" depends on the interplay of the time element with a number of other factors, including: the reason for the administrative reexamination; the fraud or illegality that led to the original administrative action and any contribution by the pensioner to that fraud or illegality; and the extent of any reliance or justified change of position by the pensioner. Skulski, supra, 68 N.J. at 196 (quoting Ruvoldt, supra, 63 N.J. at 183-84). "[E]ven with respect to public entities, equitable considerations are relevant in evaluating the propriety of conduct taken after substantial reliance by those whose interests are affected by subsequent actions." Id. at 198.
In weighing the conflicting considerations of the general policy against dissipation of public funds through unauthorized pension grants, the reliance of the pensioner on the pension grant, and the issues of time and reasonable diligence, "[t]here is no easy formula to resolve issues of this kind. The ultimate objective is fairness to both the public and the individual [pensioner]." Id. at 197 (quoting Tremarco Corp. v. Garzio, 32 N.J. 448, 457 (1960)).
Here, the ALJ reasoned that the Division acted with reasonable diligence and the nearly three-year delay in reexamination was attributable to petitioner's failure to inform the Division of her post-retirement public employment. We agree that had petitioner disclosed her post-retirement public employment to PERS — as directed in her retirement approval notice and Fact Sheet #4 — the Division would have been aware of the issue at the outset. However, the burden is upon the Division to demonstrate diligence and timely action.
In this vein, it cannot be overlooked that the Division was made aware of the potential for future public employment by petitioner but did not follow its own policy of referring the matter to the External Audit Unit. The nearly three-year hiatus in employing the Division policy of reviewing Department of Labor records — which may have disclosed the pension issue earlier — was attributed by the Division to a "backlog[.]" Finally, the investigation was not the result of its own review process but was instituted by a complaint. Nonetheless, when balancing the equitable considerations, petitioner's reliance upon her pension eligibility could not have been "substantial" for the reasons we noted above. Petitioner waded into the waters of uncertainty regarding her pension eligibility of her own volition and not premised on any action or inaction of the Division. We conclude her choice of conduct when weighed against the Division's arguably dilatory investigation did not produce an unfair result.
We next turn to the second phase of the Skulski test, wherein the agency must prove by a preponderance of the evidence "that the applicant was not entitled to the pension at the time of the original grant." Id. at 201.
The purpose of the pension laws and the Board's role in enforcing them is also important to an assessment of the legal significance of the facts of this case. Pensions for public employees are "'compensation for services previously rendered' and 'an inducement to continued and faithful service.'" Francois v. Bd. of Trs., 415 N.J. Super. 335, 349 (App. Div. 2010) (quoting Geller v. N.J. Dep't of Treasury, Div. of Pensions & Annuity Fund, 53 N.J. 591, 597 (1969)). Given those remedial purposes, the laws "should be liberally construed and administered in favor of the persons intended to be benefited thereby." Klumb v. Bd. of Educ. of Manalapan-Englishtown Reg'l High Sch. Dist., 199 N.J. 14, 34 (2009) (quoting Geller, supra, 53 N.J. at 597-98).
A retirement application should be "governed by the law existing at the time of its submission." Chiarello v. Bd. of Trs., Pub. Emps. Ret. Sys., 429 N.J. Super. 194, 197-98 (App. Div. 2012). Accordingly, an analysis of the second phase of the Skulski test requires application of the statutes, codes, and regulations in effect at the time petitioner's retirement application was granted.
N.J.S.A. 43:15A-57.2(a) states:
if a former member of the State Employees' Retirement System or [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 [PERS], his retirement allowance and the right to any death benefit as a result of his former membership, shall be canceled until he again retires.The statute also requires the pensioner to reenroll in PERS and make contributions. Ibid.
[(emphasis added).]
N.J.S.A. 43:15A-57.2 was amended by L. 2011, c. 78, § 34, effective June 28, 2011. The amendments are not relevant to our analysis.
Additionally, N.J.A.C. 17:2-6.2 states that "[a] [PERS] member's retirement allowance shall not become due and payable until [thirty] days after the date the Board approved the application for retirement or [thirty] days after the date of the retirement, whichever is later." N.J.A.C. 17:2-7.2(a) allows a public employee to take a position with a different public employer covered by the same pension system, and transfer membership to their new employer subject to certain conditions. See also N.J.A.C. 17:1-3.5.
N.J.A.C. 17:2-7.2 was amended by R. 2010 d. 149, effective July 19, 2010. The amendments are not relevant to our analysis.
The ALJ found that N.J.S.A. 43:15A-57.2(a), as well as N.J.A.C. 17:2-6.2 and -7.2, were consistent with Fact Sheet #21, which notified retirees that they should expect to continue enrollment in PERS if they are employed in a PERS position before their pension has become "due and payable[.]"
N.J.S.A. 43:15C-2(b)(2) and (3) states:
N.J.S.A. 43:15C-2 was amended by L. 2008, c. 89, § 11, effective November 1, 2008, and again by L. 2010, c. 1 § 7, effective May 21, 2010. The amendments are not relevant to our analysis.
b. No person shall be eligible to participate in the [DCRP] with respect to any public employment, office, or position if:
. . . .
(2) the person is, . . . eligible for membership or enrolled as a member of another State or locally-administered pension fund or retirement system established under the laws of this State . . . ;
(3) the person is receiving a benefit as a retiree from any other State or locally-administered pension fund or retirement system established under the laws of this State[.]
The ALJ considered "N.J.S.A. 43:15C-2(b)(2) and the statutes and rules governing PERS" to be consistent with the Memorandum declaring that if "a regular employee enrolled in the PERS prior to July 1, 2007, . . . is appointed — without a break in membership — to a DCRP eligible position on or after July 1, 2007, the newly appointed official will remain a PERS member while in the appointed position." (emphasis added).
As a result, the ALJ held that petitioner's retirement had not become due and payable pursuant to N.J.A.C. 17:2-6.2 because she began her employment with Perth Amboy, a PERS-eligible position, less than thirty days after her retirement was approved. The ALJ also relied on Perth Amboy's ordinance exception to DCRP enrollment, which permitted those who were previously enrolled in PERS on July 1, 2007, and continuously since that time, to continue enrollment in PERS. City of Perth Amboy, N.J., Defined Contribution Ret. Program Ordinance § 1437-2008 (2008); see also N.J.S.A. 43:15A-7(b). Stated otherwise, the ALJ concluded that petitioner remained eligible for PERS and ineligible for DCRP, and her retirement benefit should have been cancelled, with petitioner reenrolled in PERS pursuant to N.J.S.A. 43:15A-57.2, until her retirement from Perth Amboy. We agree.
Petitioner correctly asserts that N.J.S.A. 43:15A-57.2 applies to those employees returning to a PERS-eligible position. However, she incorrectly asserts that the Perth Amboy position was not PERS-eligible. Perth Amboy's ordinance required the BA position to be DCRP-covered, but carved out the exception stating that previously-enrolled PERS employees could maintain PERS enrollment. City of Perth Amboy, N.J., Defined Contribution Ret. Program Ordinance § 1437-2008 (2008). Moreover, N.J.S.A. 43:15C-2(b)(2) precluded eligibility for participation in the DCRP if previously enrolled in PERS.
The advice offered in Fact Sheet #21 was consistent with the statutory and regulatory provisions in effect at the time. Although Fact Sheet #21 permitted employment in a DCRP-eligible position without enrolling in DCRP, it stated that PERS members are required to reenroll in PERS if employed in PERS-eligible positions. Similarly, the Memorandum, as well as N.J.S.A. 43:15C-2(b)(2) and N.J.S.A. 43:15A-57.2, required petitioner to reenroll in PERS.
N.J.S.A. 43:15C-2(b) precluded petitioner's eligibility for enrollment in the DCRP, and the Memorandum required PERS members who accept a position covered by DCRP "without a break in membership" to remain a PERS member while in the appointed position (emphasis added). Moreover, the exception in the Perth Amboy ordinance permitted employees to remain in PERS if they were covered by PERS continuously since July 2007. City of Perth Amboy, N.J., Defined Contribution Ret. Program Ordinance § 1437-2008 (2008).
While there was no specific definition for "continuous" employment, "break in membership," or "bona fide" retirement, there is ample support for the conclusion that petitioner's failure to remain retired for thirty days required her reenrollment in PERS. Specifically, N.J.A.C. 17:2-2.3(a)(7) considered PERS members to be "retired member[s]" if they had not received compensation for at least thirty consecutive calendar days.
In addition, the Division notice approving petitioner's retirement gave her thirty days to make any changes to her retirement and required her to reenroll in PERS if the position was PERS-eligible. This is consistent with both the Memorandum, which requires reenrollment if a PERS employee is appointed to a DCRP position "without a break in membership[,]" as well as Fact Sheet #21, which stated:
You should expect to continue enrollment in PERS if you start working in a PERS[-] covered position before your pension has become due and payable. . . . You must have at least a [thirty]-day break in service after your retirement date to be considered retired from the PERS. If you return to PERS[-]covered employment within [thirty] days of your retirement date, your retirement is not valid, and you are considered an active employee.
Saliently, N.J.A.C. 17:2-6.2 states that retirement allowance is not "due and payable" until thirty days after approval for retirement, or thirty days after the date of the retirement, whichever is later. Petitioner's retirement became effective December 1, 2008, and her approval was dated December 10, 2008. Therefore, her retirement was not "due and payable" until January 10, 2009. However, she commenced employment with Perth Amboy on January 5, 2009, five days before her retirement became "due and payable."
Petitioner also accurately asserts that there was no law or regulation in effect in 2008 defining a "bona fide" retirement or prohibiting pre-retirement negotiations for post-retirement employment. There was no applicable statute or regulation in effect in 2008 which addressed that issue, and the relevant Fact Sheets were not amended to define a "bona fide" retirements until July 2010. However, the ALJ's decision was not based on a finding that petitioner's retirement was not bona fide. The ALJ's decision was premised on a finding that — given the statutes and regulations in effect at the time — petitioner was not DCRP-eligible, that she reengaged in PERS-eligible public employment less than thirty days after her retirement from Trenton, and that she was therefore not entitled to her pension and was required to reenroll in PERS. Moreover, the final determination by the Board adopting the ALJ's decision made no reference to a "bone fide" retirement or lack thereof.
Having affirmed the Board's decision pursuant to controlling law and our standard of review, we are nonetheless mindful of the deleterious impact the Board's decision requiring repayment will have upon the petitioner. We are also mindful that petitioner did not engage in bad faith conduct and that she served the public since 1989 in "continued and faithful" service. Petitioner's conduct, when considered with her public service, should not produce a result here that effectively eviscerates her pension benefit by an onerous repayment that serves neither the public nor the petitioner.
We note that due to petitioner's reinstatement in PERS, the petitioner receives compensation in the amount of approximately $6000 per month as opposed to the $5396.60 per month she received from her 2008 "retirement." In the exercise of original jurisdiction, R. 2:10-5, we order that repayment shall be made at the rate of $700 per month by reducing her gross pension payment by that amount.
Schwedes testified that petitioner now receives "a little over [$6000 per] month."
Counsel for the Division advised at oral argument that the Division has permitted payments over time when dealing with refunds. In addition, we note the Board's August 31, 2011 notice to petitioner, advising "that in accordance with N.J.A.C. 17:1-5.5(b), any outstanding balance due . . . at the time of death will be deducted first from [petitioner's] group life insurance proceeds and then from the proceeds of any pension benefit, such as a monthly allowance or last check benefit." --------
Finally, as to the termination of petitioner's health benefits, her health insurance and prescription drug coverage under the State Health Benefits Program is governed by the State Health Benefits Commission (SHBC) rather than PERS. Thus, any issue regarding post-retirement coverage and relief from the termination is within the SHBC's jurisdiction. See N.J.A.C. 17:9-1.3.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION