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

On January 27, 2010, the Appellate Division decided Gregory Russo v. Board of Trustees, Police and Firemen’s Retirement System, Docket No.: A-3706-08T2. In the case, Gregory Russo appealed from the March 10, 2009 final determination of the Board of Trustees of the Police and Firemen’s Retirement System (“Board”) denying his application for accidental disability benefits.

On November 29, 2001, during his first year as an officer for the Montclair Police Department, Russo was dispatched to the scene of a residential fire with three other officers. They entered the burning building, determined that there were four residents inside and escorted two children and an adult to safety from the first floor. They could hear a fourth person calling for help from the second floor and tried to reach him, but could not safely proceed upstairs because of the fire’s rapid advance. As they were attempting to rescue the fourth occupant, local fire department personnel entered the building and ordered the police officers to leave. The man on the second floor died as a result of the fire.

After being evacuated from the residence, Russo witnessed the fire department removing the fourth occupant’s body through a window and was verbally berated by the man’s family for not doing enough to rescue him. The officers were taken to the local emergency room to be treated for smoke inhalation and were released the following morning. As a result of this traumatic event, Russo was diagnosed with post-traumatic stress disorder.

The initial decision of an Administrative Law Judge (“ALJ”) who considered the matter, issued on November 6, 2008, found that Russo met the standard for receipt of accidental disability benefits. The ALJ found that Russo was eligible because he considered the reasonable person test to be “fully satisfied under the known facts of this case.” In contrast, the Board, although it adopted the ALJ’s factual findings, rejected the ALJ’s legal conclusions and denied Russo’s application. This appeal ensued.

The Appellate Division determined that it was constrained to agree with the Board in light of the substantial deference afforded to an administrative decision. According to the Court, none of the four officers who responded to the fire suffered any injuries beyond the smoke inhalation for which Russo was treated. Moreover, the Court noted that although the sight of the lifeless body of the fourth occupant of the burning building being removed was no doubt traumatic, police officers are trained to deal with injured and dead citizens under a multitude of horrific circumstances, including homicides, automobile accidents and natural disasters. Russo’s trauma was further compounded by being verbally berated by the surviving family members. However, the Court found that circumstance, in and of itself, does not constitute a traumatic event. Therefore, the Court agreed with the Board’s conclusion to deny Russo’s application for accidental disability retirement.

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On October 13, 2009, the Appellate Division decided Raymond Joseph Foster, III v. Board of Trustees, Police and Firemen’s Retirement System, Docket No.: A-5666-07T2. In the case, Raymond Joseph Foster, III, a member of the Police and Firemen’s Retirement System (“PFRS”), appealed from the final decision of the Board of Trustees (“Board”), upholding the May 5, 2008 initial decision of Administrative Law Judge (“ALJ”) Jeff Masin, finding that Foster “has failed to meet his burden to prove that the total and permanent disability from which he suffers is the direct result of the injuries received in the traumatic event [Foster suffered on March 5, 2002].”

Foster started working as a Bordentown Township police officer in February 1998. On March 5, 2002 at 9:51 p.m., Foster was injured in a motor vehicle accident, while working as a police officer. The police report indicated that it was a one-vehicle accident. Foster was responding to the ACME supermarket. As he entered the parking lot, he turned right, but missed the entrance and struck a light pole to the left of the entrance. At the time, Foster was thirty-seven years old.

More than four years later, in September 2006, Foster stopped working. According to Foster, he could no longer tolerate the pain, which had become more constant and excruciating. It was undisputed that Foster was totally and permanently disabled and unable to perform his work duties. Thereafter, Foster applied to the Board for accidental disability retirement benefits. The Board denied the application on the grounds that Foster’s disability was not a direct result of the automobile accident, thus he did not qualify for accidental disability benefits.

Foster challenged that decision. The matter was transferred to the Office of Administrative Law as a contested case. After hearings were conducted, ALJ Masin found that Foster’s application should be denied, concluding that Foster’s present disability was not the direct result of the accident. This appeal ensued.

On appeal, Foster contended that the decision of ALJ Masin and the Board was not supported by the evidence. The Appellate Division disagreed. Based on its review of the record, the Court found that the Board’s findings were supported by the appropriate proofs and, therefore, its decision was supported by sufficient credible evidence on the record as a whole. As such, the Board’s decision was affirmed.

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On May 12, 2009, Kate Benner published an article entitled “The Public Pension Bomb” in Fortune Magazine. The article addresses how states all across the country, for many years, have been starving their retirement plans. More importantly, however, the article focuses upon how the crisis is playing out in New Jersey, where the bill is coming due and the State does not have the money to pay it.

According to Benner, the New Jersey public pension situation is dire. In June 2008, the State estimated that the plan, one of the nation’s largest covering teachers, state employees, firefighters, and police officers, had $34 billion less than it needed to meet its obligations. Since then the market value of the plan has dropped from $82 billion to $56 billion. A new estimate of underfunding is due in July.

Benner also indicated that, overall, states nationwide have shortchanged the retirement programs that cover teachers, police, and other public employees. Now, the stock market plunge has wiped out billions of dollars from already underfunded plans. California, New York, and Illinois are among the states scrambling to plug multibillion dollar holes in their pension systems. As a result, these growing obligations raise the specter of higher taxes, diminished services, or even another round of costly federal bailouts.

Lastly, the article traces a 20 year time line to figure out how New Jersey dug itself into this hole. It also delineates the steps that have been and currently are being taken to address the problem. As such, any current or retired New Jersey public safety officer should read this article in order to fully understand the problems with the New Jersey public pension system. The status of the New Jersey public pension system is vital to every resident of this state and especially crucial to public safety employees. Consequently, one must be conscious of this in order to adequately prepare for its financial impact. To read the full article, click on the following link.

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Most recently, the New Jersey Supreme Court heard argument and deceided the case of Hemsey v. Police and Firemen's Retirement System, A-15 September 2008 Term, on Certification from the Appellate Division, 393 NJ Super 254 (App. Div. 2007).

Hemsey was hired as a police officer by the City of Trenton in 1973.  In 1998, he retired and began receiving retirement benefits from PFRS.  Most of his employment with the city was spent as a police dispatcher.  In the same year that he retired, Hemsey entered into a consulting contract with the City of Trenton in which he worked directly under the Department's commanding officer and evaluated and worked with police and fire communication center personnel.  In 1999, Hemsey was appointed to the position of Director of Communications.  This was a newly created civilian position of employment.

Thereafter, PFRS requested information from the City regarding Hemsey'e employment and called Hemsey before the board to answer questions regarding the same.  In October 2002, PFRS informed Hemsey that he was required to re-enroll in the reitement system due to the fact that the functions he was performing as a retiree were essentially the same duties that he was performing prior to retirement.  As a result of the ruling, Hemsey's retirement benefits were cancelled  retroactively to January 1, 1999.  Hemsey appealed and the case was sent to the Office of Administrative Law as a contested case. 

The OAL concluded that the retirement benefits were properly cancelled, with  the Appellate Division affirming the decision.  However, the Supreme Court for the State of New Jersey reversed the Appellate Division and held that the retirement benefits were improperly cancelled because there was insufficient evidence to conclude that the duties of the two positions were the same and the position of civilian director of communications started six (6) months after Hemsey retired from employment with the police department. 

New Jersey law dictates that an individual who retires and then accepts employment in a PFRS covered position will lose retirement benefits and be required to re-enroll in PFRS, N.J.S.A. 43:16A-3.1.  Hemsey successfully argued that his new position of employment did not meet the statutory requirements that mandated re-enrollment in PFRS.  After a review of all of the credible evidence including testimony and the consulting contract itself, the Supreme Court agreed with Hemsey.

To simplify this case for retirees collecting a PFRS pension and still performing duties in a law enforcement capacity, you must be very careful that your new duties are not substantially the same or similar to the duties for which you are collecting the pension.  Furthermore, the duties associated with the new position of employment must not meet the statutory definition of a PFRS covered position.  Each case is different and will be evaluated on a case by case basis with a thorough evaluation of the facts.  Its always advisable to research and evaluate the facts before you accept re-employment.  It is much easier to draft an employment agreement that falls outside the statutory requirements of PFRS than to have your pension benefits cancelled, whereby you are left with no choice but to appeal the issue before the Office of Administrative Law. 

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In a letter dated December 15, 2008, Wendy Jamison, Secretary for the Police and Firemen's  Retirement System (PFRS),  explained that PFRS has recently adopted amendments to the New Jersey Administrative Code that addresses training requirements for Police Officers and Firefighters and the potential affect of the same to pension eligibility for some members of PFRS.

In her letter, Ms. Jamison explained that in order for a member of PFRS to meet the eligibility criteria for the pension system, he or she must work in a title that meets the definition of "police officer" or "firefighter" and meet specific minimal training requirements.  The training requirements for eligibility in PFRS is that each member of the retirement system must complete the basic training course for Police Officers as prescribed by the New Jersey Police Training Commission, and Firefighters must receive Firefighter 1 certification through the New Jersey Department of Community Affairs, Division of Fire Safety.  What is important to note is that N.J.A.C. 17:4-2.4 mandates that should pension members not pass and/or receive said certification within eighteen (18) months after the final adoption of the new regulation, they will be dis-enrolled and removed as an active member of PFRS.

In essence, PFRS members that do not have the required training as specified under N.J.A.C. 17:4-2.4, have until June 30, 2010, to complete the required training.  If any active member of the retirement system not be fully trained by July 1, 2010, they will be removed as an active member of PFRS. 

in closing, Ms. Jamison notes that certain federal, state, or county training may be substituted for the training required under N.J.A.C. 17:4-2.4, so long as the same is approved by the New Jersey Police Training Commission and the PFRS Board of Trustees.  However for Firefighters, no other training other than Firefighter 1 certification through the New Jersey Department of Community Affairs, Division of Fire Safety, will be accepted.  It should also be noted that while the letter is silent regarding Corrections Officers; common sense dictates that completion of the Corrections Officers Training Academy (COTA) will satisfy the requirements of N.J.A.C. 17:4-2.4.  However at this time we are contacting the Board of trustees to obtain clarification to ensure Corrections personnel are protected and covered.

The reason that we are bringing this to the attention of our readers is to ensure that all Public Safety Officers are made aware of the new regulation and that their training certification is up to date for purposes of qualifying as a member of the Police and Firemen's Retirement System.  PFRS is regarded as the "gem" of the public employment retirement systems in the State of New Jersey.  For obvious reasons, the retirement system garners great benefits for its membership in comparison to the other large public employment retirement systems provided by the state of New Jersey.  over the years, PFRS and the New Jersey State Legislature has been lobbied by administrators and non public safety officer groups to obtain membership in the retirement system.  With the passage of the new regulation, there should no longer be a question as to which employees have the right and ability to claim membership in PFRS.

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Following up on our previous entry, this article will help our readers understand the criteria that must be met in order for a public employee to qualify for an ordinary or accidental disability pension within one of the following State pension systems, the Public Employees Retirement System, the Teachers Pension and Annuity Fund, the State Police Retirement System, and the Judicial Retirement System. While these pension plans are similar in defined benefits and criteria for eligibility, each has their own specific nuances that are particular to the membership they serve. 

Accidental v. Ordinary Disability Benefits

Public Employees Retirement System and Teachers Pension and Annuity Fund

In accordance with the Public Employees Retirement System (“PERS”) and Teachers Pension and Annuity Fund (“TPAF”) handbooks, in order to qualify for an ordinary disability retirement, an employee must:

·         Have an active pension account;

·         Have 10 or more years of New Jersey service credit;

·         Be considered totally and permanently disabled; and

·         Submit medical reports certifying the disability.

In order to qualify for an accidental disability retirement, a member must:

·         Be an active member of PERS or TPAF on the date of the “traumatic event”;

·         Be considered totally and permanently disabled as a result of a “traumatic event” that happened during and as a direct result of carrying out the member’s regular or assigned job duties;

·         File an application for disability retirement within five (5) years of the date of the “traumatic event”; and

·         Be examined by physicians selected by the retirement system.

If an employee claiming membership to either one of these retirement funds qualified for accidental disability, his/her annual retirement allowance will be 72.7% of their salary at the time of the “traumatic event.”

Should the public employee be receiving periodic workers’ compensation benefits, the accidental disability retirement benefits will be reduced dollar for dollar by the periodic benefits paid after the retirement date. However, the retirement benefit is not reduced by any Social Security or private insurance benefits that may be payable.

The New Jersey Division of Pensions and Benefits reports accidental disability retirement benefits as exempt from federal income tax. The benefits are also

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 After much concern regarding the new Treasury Regulations promulgated by the Internal Revenue Service (“IRS”) and their potential impact on members of government pension plans, the IRS and the Treasury intend to extend the date by which a governmental plan must comply with final regulations on distributions from a pension plan upon attainment of normal retirement age. Under the extension, the new Treasury Regulations will be effective for a governmental plan for plan years beginning on or after January 1, 2011.     

As described in two previous blog entries, the IRS modified Treasury Regulation §1.401(a)-1 to provide an exception to the rule that pension benefits be paid only after retirement by permitting a pension plan to commence payment of retirement benefits to a participant after the participant has attained normal retirement age even if the participant has not yet had a severance from employment with the employer maintaining the plan. 

The new regulations also require a pension plan’s normal retirement age to be 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 the case of a retirement plan where substantially all of the participants are qualified public safety officers, a normal retirement age of age 50 or later is deemed not be earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed. 

Notice 2007-69, which provided temporary relief for certain plans that may have to change their definitions of normal retirement age to satisfy the new regulations, indicated that the new regulations do not contain a safe harbor or other guidance with respect to a normal retirement age conditioned on the completion of a stated number of years of service.  The notice requested comments on whether and how a pension plan with a normal retirement age conditioned on the completion of a stated number of years of service satisfies the requirement in §1.401(a)-1 that a pension plan be maintained primarily to provide for the payment of definitely determinable benefits after retirement or attainment of normal retirement age and how such a plan satisfies the pre-ERISA vesting rules. 

Based upon this, in Notice 2008-98, the IRS indicated its intention to amend the new regulations to change the effective date for governmental plan to plan years beginning on or after January 1, 2011.  Moreover, the notice provided that government plan sponsors may rely on this notice with respect to extension until such time as the new regulations are so amended. 

Although the implementation of the new regulations has been delayed, it is critical to keep apprised of the comments regarding whether a pension plan with a normal retirement age conditioned on the completion of a stated number of years of service satisfies the new regulations. Clearly, the resolution of this issue could drastically impact many public safety officers not only in New Jersey, but across the country. Periodic updates to this website regarding these regulations will be posted as more information becomes available.    

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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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Most recently New Jersey GovernorJon S. Corzine signed the Public Employee Pension and Benefits Reform Act of 2008. While this bill does not affect the members of the Police and Firemen’s retirement System (PFRS), it does affect members of the Public Employees Retirement System (PERS) and the Teachers Pension and Annuity Fund (TPAF). Certain Public Safety Officers in the State of New Jersey hold membership in PERS. The legislation, S-1962/A-2818, is touted to save New Jersey tax payers $150 million dollars by 2022 through new changes to the pension systems to include instituting a higher retirement age and new income eligibility requirements for enrollment in the major pension systems.

The significant changes signed into law today include:

•  Increasing the annual salary required for new workers to qualify for the state pension system to $7,500. Previously, workers required an annual compensation of only $500 to qualify for the Teachers Pension and Annuity Fund, and a minimum salary of $1,500 a year for the Public Employees Retirement System.

• Raising the retirement age from 60 to 62 for new employees to qualify for a pension without a reduction.

• The number of paid holidays for state employees is reduced to 12. It eliminates the Lincoln's Birthday holiday and combines it with Washington's Birthday, to be observed as President's Day.

The new law also makes reforms to the State Health Benefits Program (SHBP), allowing the state to offer an incentive to employees to opt out of the program and accept health coverage from other sources such as a spouse's plan. The state has the power and authority to determine whether to offer the incentive and the amount, which could not exceed half of the amount saved because of the employee's waiver of coverage.

The bill was sponsored in the Senate by Senators Barbara Buono (D-Middlesex), Stephen Sweeney (D-Salem, Cumberland, Gloucester), Nicholas Scutari (D-Middlesex, Cumberland, Union), and Tom Kean (R-Essex, Morris, Somerset, Union), and in the Assembly by Speaker Joseph Roberts (D-Camden).

While the members of PFRS have been spared by this legislation, close watch must be kept on our elected officials as it appears they are prepared to enact any cost savings measures available due to the poor financial position of the state.

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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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