New Jersey Public Safety Officers Law Blog : New Jersey Public Safety Employee Lawyer & Attorney : Pellettieri, Rabstein & Altman Law Firm : Workers Compensation, Discipline Representation for Police & Firefighters : New Jersey

The Asbury Park Press published an article in today's Sunday edition addressing the ability of The State of New Jersey to honor its pension obligations to those public employees that have been paying into the retirement system since the start of their public employment .  The article, entitled "Can New Jersey Keep its Pension Promises?" unfortunately reiterated the same information that we have been hearing for the last several years.......The Pension System is Broke.

The article stated that as of June, 2009, the state's pension system faced unpaid liabilities in the amount of $45.8 billion dollars.  However, this is assuming that the state receives an annual 8.25% return on its pension investments.  At this point in time, everyone is aware that the State hasn't seen 8.25% for several years now.  Furthermore, many studies have demonstrated that the unfunded liability of $45.8 billion is a conservative estimate and the true unfunded liability is more along the lines of $173.9 billion, with unfunded health care costs reaching $55 billion dollars.  Eileen Norcross, a George Mason University researcher has been quoted as stating, "It's mathematically impossible to pay this out.  It's too large."

However, despite the fact that the public employment pension system is in dire straits, Governor Christie, has made the decision to "skip" the state's 2010 $3billion dollar pension payment. In reviewing the administration's decision to forgo the payment, one has to question if the Christie administration has already given up on attempting to save the state pension system and the countless amount of money that has been withheld from public employee's paychecks on a weekly basis since the inception of the system.  I bet many of you who are reading this article would like to skip a few pension payments or take a "pension holiday" the way that the state, county and local governments have over the last sever years. 

A year or two ago, myself and other attorneys representing public employee labor unions filed suit against the State of New Jersey for failing to fund the State Employee Pension Systems.  An argument was made that the state had a constitution mandate or obligation to fund the pension system.  Unfortunately all of the suits were dismissed under the notion that the state had very broad discretion in making decisions on how to appropriate funds concerning fiscal obligations.  However, the court did leave the door open and stated that a suit would be entertained if pension recipients did not receive payment due to the state's inability to pay.  With that being said, one has to ask the question:  "Wont it be to late at that point in time?"

We will continue to follow this issue on this blog.  You, the public employees of the State of New Jersey, and retired public employees of the  state of New Jersey need to take affirmative steps to attempt to revive your retirement system.  If you do not take immediate affirmative steps to protect your retirement income, unfortunately, it appears as if it will be lost due to government irresponsibility and mismanagement. 

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 Since the New Jersey Supreme Court’s decision in Richardson v. Board of Trustees, Police and Firemen’s Retirement System, 192 N.J. 189 (2007), we have witnessed more denials of accidental disability applications based on the premise that the member suffered from a pre-existing illness or injury which contributed to the overall disability that prevented the member from returning to employment. However, where the scenario gets particularly interesting is when the pre-existing injury or illness was the result of a work related traumatic event. One would think that such a denial does not make sense under the Richardson decision as a “traumatic event,” as redefined by the Supreme Court,  and the resulting injuries sustained therefrom should not qualify or be viewed as a pre-existing illness or injury. Such a scenario and situation has not been addressed by New Jersey courts and is ripe for review to further flush out this new and evolving area of the law. 

 While the last paragraph may sound like a tongue twister, we will try to explain it in plain english. New Jersey courts are currently grappling with scenarios revolving around multiple injuries caused by separate traumatic events which together cause a member to be permanently disabled from performing his or her job. However, the Police and Firemen’s Retirement System, Public Employees' Retirement System and Teachers' Pension and Annuity Fund do not believe that a person with multiple injuries that occurred as the result of multiple traumatic events should be entitled to receive accidental disability benefits. As a result, the various pension funds have been disqualifying applicants with multiple injuries caused by multiple traumatic events. 

          In Richardson, the New Jersey Supreme Court revisited the “traumatic event” standard under the accidental disability retirement provision of the Police and Firemen’s Retirement System, N.J.S.A. 43:16A-1. After conducting an exhausting analysis of conflicting court decisions which interpreted the traumatic event standard differently and the legislative history of the amendments to the accidental disability statutes, the Court opined that a “traumatic event” is essentially the same as what has been historically understood as an “accident” to be. An “accident” as defined under Richardson, is an unexpected, external happening that directly causes injury and is not the result of pre-existing disease alone or in combination with work. Based on establishing this baseline definition of “accident,” the Court held that in order to obtain accidental disability benefits, a member must prove amongst other things that he or she is totally and permanently disabled as a direct result of a traumatic event that is:

1.   Identifiable as to time and place;

2.   Undesigned and unexpected; and

3.   Caused by a circumstance external to the member (not the result of pre-existing disease that is aggravated or accelerated by the work).

          The Richardson Court also provided examples of situations that satisfy the newly enunciated traumatic event standard. The first example depicted a police officer who suffers a heart attack while chasing a suspect. The Court instructed that the police officer in such a situation has not experienced a traumatic event. In that case, the work effort, alone or in combination with a pre-existing disease, was the cause of the disabling injury. However, the Court stated if that the same police officer became permanently and totally disabled during the chase solely because of a fall, the officer has suffered a traumatic event that would give rise to an award of accidental disability benefits. Thereafter, the court provided another example. A gym teacher who develops arthritis from the repetitive effects of his work over the years has not suffered a traumatic event as defined and articulated under Richardson. Such a disability is the result of degenerative disease and is not related to an event that is identifiable as to time and place. On the contrary, the same gym teacher who trips over a riser, is injured and becomes permanently and totally disabled as a result of the fall, has satisfied the accidental disability standard. 

          In sum, the Court held that a member who is injured while performing his or her ordinary duties does not disqualify him or her from receiving accidental disability benefits; some injuries sustained during the ordinary work effort will pass muster and others will not. However, the polestar of the inquiry is whether, during the regular performance of his or her job, an unexpected happening, not the result of pre-existing disease alone or in combination with the work, has occurred and directly resulted in the permanent and total disability of the member. 

In our next post, we will look further into Richardson and whether members with multiple injuries resulting from multiple traumatic events should qualify for accidental disability benefits.

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Recently, it has come to our attention that many individuals aside from Public Safety Officers utilize this website as a reference guide for the various pension systems available to individuals employed by municipalities, counties, and the New Jersey state government. As such, this entry will focus upon a few of these pension systems and help our readers understand their background, membrship, and administration.

Overview of the Various Pension Systems

Public Employees Retirement System

The State of New Jersey established the Public Employees Retirement System (“PERS”) in 1955 after repeal of the laws that created the former State Employees Retirement System. Like the Police and Firemen’s Retirement System (“PFRS”), the New Jersey Division of Pensions and Benefits is assigned all administrative functions of the retirement system except for investment of the assets.

The PERS Board of Trustees has the responsibility for the proper operation of the retirement system. The Board consists of six (6) employee representatives, the State Treasurer, and two (2) individuals appointed by the Governor with advice and consent of the Senate. The Board meets monthly to conduct its business. 

Membership in the retirement system is generally required as a condition of employment for most employees of the State or any county, municipality, school district, or public agency. Generally, an employee is required to enroll in PERS if:

·         They are employed on a regular basis in a position covered by Social Security;

·         Their annual salary is $1,500.00 or more; and

·         They are not required to be a member of any other State or local government retirement system on the basis of the same position which gives them membership in PERS.

Teachers Pension and Annuity Fund

The Teachers Pension and Annuity Fund (“TPAF”) was established in 1919 and completely reorganized in 1955. The New Jersey Division of Pensions and Benefits is assigned all administrative function of the retirement system except for investment of the assets.

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In the case of In re Carry Permit of Andros, A-4077-06T4, the Appellate Division held that the State of New Jersey’s authority to revoke a retired police officer’s permit to carry a handgun is not preempted by federal law.

James Andros was an Atlantic City police officer from 1968 to 2003. Prior to his retirement in good standing, Andros applied for and obtained a permit to carry a handgun. This action concerns Andros’ appeal from a judgment granting the State’s application, under N.J.S.A. 2C:39-6L(6), to revoke his permit to carry a firearm.

Andros challenged denial of his motion to dismiss the State’s application because of federal preemption under 18 U.S.C.A. § 926C, enacted as part of the Law Enforcement Officers’ Safety Act of 2004, which amended 18 U.S.C.A. § 921, et. seq., relating to firearms. Andros contended: (1) that the revocation was preempted; and (2) the Law Division erred in finding that the State had presented “good cause” for the revocation.

The Law Division Judge denied Andros’ motion to dismiss on the grounds that the State was not preempted from revoking the license under N.J.S.A. 2C:39-6L(6). The Judge found that N.J.S.A. 2C:39-6L(6) did not bar a retired New Jersey law enforcement officer, or officers from other states who are qualified in those states, from carrying a concealed weapon as long as he meets New Jersey’s qualification standards. Consequently, the Judge concluded that N.J.S.A. 2C:39-6L remained valid.

On appeal, the Appellate Division, in affirming the revocation, held that the federal Law Enforcement Officers’ Safety Act of 2004, 18 U.S.C.A. §926C, does not pre-empt a state from revoking a retired police officer’s permit to carry a handgun under N.J.S.A. 2C:39-6L. In conceding Andros satisfied the requirements of federal act, the Court indicated a retired officer’s conduct permits the licensing state to revoke the permit, as evidenced by the requirements for qualification and testing every year in U.S.C.A. § 926C(c)(5). In other words, the federal act expressly permits states to set standards for training and qualification consistent with those of “active law enforcement officers.”  

The Court agreed with the Law Division Judge that the federal act merely preempts a state’s ability to preclude, or change the requirements for, carrying the firearm interstate, if the state permits licensing of the retired officer. As a result, New Jersey retains jurisdiction to hear the state’s contention that it can establish good cause justifying the revocation. With these principles in mind, the Court found no congressional intent to preclude the action taken by the State here and no basis for concluding that a state cannot revoke a handgun permit because Congress authorizes a carrier when licensed in one state to possess it in another. 

This case illustrates the State’s ability to limit a retired public safety officer’s ability to carry a firearm. Recently, this topic has become an important issue for retired officers throughout the State of New Jersey. This case is significant in that shows the State of New Jersey is not precluded under federal law from seeking and ultimately obtaining revocation of an officer’s permit to carry a firearm. The evolving case law regarding retired officers and their ability to carry a firearm should be followed closely so as to ensure the officers’ rights are protected.   

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In Communication Workers of America v. State of New Jersey, the appellants challenged an amendment made by the State Health Benefits Commission to the retiree prescription drug card pilot plan. In support, appellants argued that the rule is invalid and unenforceable because it reduces post-retirement health care benefits. 

The Appellate Division affirmed the amendment to N.J.A.C. 17:9-6.10(h) as well as a concurrent resolution. The Court held that the rule allowing adjustment of the cap on out-of-pocket expenditures is consistent with statutory authority governing the prescription drug benefit plan. The Court also noted that the pilot plan, as adopted, is reasonable and necessary to preserve the financial integrity of the plan.

This entry serves as follow up to the one regarding the State Health Benefits Program. As you can see, proposed changes or changes actually made to the State Health Benefits Program have become an increasingly important topic for all public employees. Recently, the State of New Jersey has become especially active in seeking to amend or alter the benefits packages offered to its employees through contract negotiations. Undoubtedly, as more collective bargaining units negotiate their contracts, this topic, which involves the potential for premium sharing by the employees, will come to the forefront.

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              Recently, there has been much concern over new Department of Treasury regulations promulgated by the Internal Revenue Service (“IRS”) and their effect upon State legislated pension systems for public employees. This entry summarizes the new regulations and their potential impact on the members of the Police and Firemen’s Retirement System (“PFRS”). After conducting research and for the reasons set forth in detail below, it our belief the new Treasury Regulations will not alter the ability of a PFRS member to retire under any existing PFRS law, including the special retirement provision allowing retirement prior to attaining the age of 50. 

By way of background, the New Jersey State PBA reported that the IRS adopted regulations that would prohibit any public safety officer in a state legislated pension system from retiring before the age of 50. As most public safety officers are aware, there is currently no minimum retirement age for a member of PFRS to qualify for a pension. In fact, all that is needed to qualify for a PFRS pension is twenty-five (25) years of service and retirement credits paid into the system. Specifically, N.J.S.A. 43:16A-11.1, entitled “Special Retirement; resignation with 25 years of creditable service; allowance; death benefit”, provides in pertinent part:

Should a member resign after having established 25 years of creditable service, he may elect “special retirement,” provided, that such election is communicated by such member to the retirement system by filing a written application, duly attested, stating at what time subsequent

to the execution and filing thereof he desires to be retired…

[N.J.S.A. 43:16A-11.1(a).]   

Treasury Regulation §1.401(a)-1 was recently modified. The modifications require qualified pension plans to revise the definition of normal retirement age to an age that is not earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed. In addition, the regulations provide that a normal retirement age of at least 62 is deemed to be not earlier than the typical retirement age for the industry in which the covered workforce is employed. Thus, a plan satisfies this provision if its normal retirement age is age 62, or if its normal retirement age is the later than age 62 or another specified date, such as the later of age 62 or the fifth anniversary of plan participation. This is known as the “safe harbor” provision. 

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 On its website, www.njspba.com, The New Jersey State PBA has reported that the Internal Revenue Service (IRS) has adopted regulations that would prohibit any public safety officer in a state legislated pension system from retiring before the age of 50. The regulation in its current form is slated to go into effect on January 1, 2009.

As all public safety officers throughout the State of New Jersey are aware, there is currently no minimum retirement age for a member of the Police and Firemen’s Retirement System to qualify for a pension. All that is needed to qualify for a PFRS pension is twenty five (25) years of service and retirement credits paid into the system. Based on the new regulations the State of New Jersey would be required to amend its pension laws or face the potential of being non compliant with the Federal tax code and regulations. The State PBA reports that this particular regulation has caught New Jersey politicians and the New Jersey Division of Pensions off guard and the State is not prepared to address the IRS regulations should they be enacted in 2009.

The New Jersey State PBA appears to have engaged in an extensive lobbying effort and has requested that the regulation be delayed indefinitely in order to seek a change in language impacting public safety employees. A formal request to delay the rule has already been made but the IRS has not yet acted upon it. 

The PBA goes on to further state that if the IRS rejects its request to delay the enactment of the regulation they will be seeking either federal legislation to overrule the IRS Regulation or a legal remedy challenging the regulations as a violation of PFRS member’s constitutional rights.

The Publishers of the New Jersey Public Safety Officers Law Blog are currently looking into this regulation and the legalities of the same. We will report more on this topic in the immediate future.

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