A retirement plan designed based on “pension status” rather than on unlawful age-based criteria is non-discriminatory.

On June 19, 2008, the Court handed down the long-awaited ruling. In a 5-4 decision, the Supreme Court held that the Kentucky Retirement Systems did not discriminate on the basis of age. The majority adopted the argument advanced by Kentucky that the plan was designed based on “pension status” rather than on unlawful age-based criteria.

The Court noted that the plan in place in Kentucky shared common features with Social Security, the Federal Employees Retirement Programs, and a substantial number of state and local retirement systems. It was recognized that Kentucky’s plan design was not structured around an aged-based rationale; that once eligible for normal retirement, disability was no longer available. The Court also noted that while some older workers may have been disadvantaged by Kentucky’s plan, it was equally likely that an older worker would receive more money. Lastly, the majority held that there was no evidence that Kentucky had any motivation involving anti-age bias.

The EEOC filed suit against KRS in 1998. Summary judgement was granted in favor of KRS on the basis that the statute did not intentionally discriminate against older workers. A three-judge panel of the U.S. 6th Circuit Court of Appeals affirmed the dismissal. The EEOC moved for rehearing by the entire fourteen-member court which determined in late 2006 that the statute did discriminate, by a vote of 10-4. KRS requested that the U.S. Supreme Court exercise its discretionary review authority. That request was granted in September, 2007. The question before the Supreme Court was whether any use of age in a governmental retirement plan violates the age discrimination laws.

On September 25, 2007, the United States Supreme Court granted a Petition for Certiorari filed by the Kentucky Retirement Systems to review an en banc decision of the United States Court of Appeals for the 6th Circuit holding the KRS statute discriminated on the basis of age. Under the KRS plan, once a member becomes eligible for an unreduced normal retirement based on years of service or a combination of years of service and age, disability benefits are no longer available. If a member is disabled prior to retirement, the plan imputes years of service needed to get a member to the earliest normal retirement date, but not more than double the years of actual service.

In the briefs, KRS pointed out that in Kentucky, retirement was based on either age or years of service and that age alone was not the determining factor. The EEOC argued that if all other factors except age were equal, a younger person always got either the same or better benefits than an older person. Kentucky countered that this was not correct as an older worker begins membership closer to retirement than a younger worker and therefore is more favorably situated.

The ruling in favor of Kentucky ends more than 10 years of litigation. One of the side effects of that litigation was a reduction in disability benefits for persons hired beginning in 2004. The decision also protects hundreds of other state and local systems which, like Kentucky, make benefit decisions based on pension status, whether or not linked to age. Kentucky was supported in the case by Attorney Generals from 13 states, and several important trade, labor and governmental associations.

Kentucky Retirement Systems v. E.E.O.C., 128 S.Ct. 2361 (2008)

Forfeiture of pension benefits is required based on a nexus between a crime and job duties if the service is a material element and a substantial factor in bringing about the conduct underlying a conviction.

In 2000, upon the request of the mayor’s office of intergovernmental affairs, the deputy commissioner for the department of streets and sanitation (the “deputy”) formed a political organization of employees to perform political tasks during various election periods. As the head of the organization, which grew to over 200 employees, the deputy obtained promotions for his members based on the amount of political work each performed. Once job openings with the City were posted, the deputy would submit prioritized lists of employees in the organization to the assistant director for these positions, while giving lower priority to those not in his organization. The deputy knew that the names he submitted were to be fraudulently rewarded for political work, and that the people he included on lists for promotions routinely received them. The deputy retired in June 2003. In early 2004, City officials announced new job openings for career service motor truck drivers. Again, the deputy prioritized and submitted a list of workers for these positions, giving top priority to those within his organization, and those prioritized workers received the positions. In 2005, following a federal investigation, the deputy was indicted by a federal grand jury for mail fraud. The deputy pleaded guilty and was sentenced to federal imprisonment. In 2006, the Board of Trustees of the Municipal Benefit Fund (“Fund”) moved to forfeit the deputy’s pension benefits. The Board asserted that the deputy’s guilty plea disqualified him from receiving benefits under the Illinois Pension Code (“Code”). The Code states that none of the benefits provided shall be paid to any person who is convicted of any felony relating to or arising out of or in connection with his service as a municipal employee. The Board found that the deputy’s felonious conduct started with his City employment and continued into retirement. The Board held that he was convicted of a felony relating to or arising out of or in connection with his service as a municipal employee. The Board ordered the forfeiture of his annuity and other benefits, and the deputy appealed. The deputy contended that, because his felony conviction was not connected to his City employment, the Board legally erred in ordering pension forfeiture. He asserted that the Code requires that there be a connection or nexus between his conviction and his job duties, but no such connection existed. He further argued that his political organization was independent of his public employment, he was not employed at the time of conviction, the conviction would have occurred regardless of his employment, and he insisted that the pension statute must be liberally construed in his favor. The court disagreed holding that a clear nexus between the deputy’s conviction and his employment existed. The court stated that but forthe fact that the deputy was a deputy commissioner of the department of streets and sanitation, he would not have been in a position to become involved in the hiring scheme, and he would not have been able to commit mail fraud. The deputy’s conviction was clearly a product of his status as deputy commissioner, and the court found that the deputy’s service was a material element and a substantial factor in bringing about the conduct underlying his conviction. The origins of the deputy’s conviction were connected to his employment establishing a causal connection between his employment and the felony. The conduct of making and prioritizing lists of employees and submitting them to the mayor’s office began while he was employed with the City and continued after he retired. Even though this extended beyond his period of employment, he was attempting to fraudulently secure promotions and jobs for his employees who were still working in his department.

Katalinic v. Board of Trustees of Mun. Employees’, Officers’, Officials’ Annuity and Benefit Fund, 898 N.E.2d 243 (Ill. App. 1 Dist. 2008)

Court grants disability benefits based on a police officer’s subjective belief as to the existence of an emergency during a false alarm.

A police officer was employed as a patrolman for eight years, and he was injured while investigating a possible burglary. The officer received a call that a residential burglary alarm was triggered, and he responded as quickly and safely as possible. On the way to the scene he did not activate his siren or the overhead lights on his police car because doing so might have alerted any intruders that he was approaching. When the officer parked his police car in the driveway in front of the residence it was rainy and there was very little lighting. He went around the side of the house to check for open doors or broken windows. He noticed a wood deck that had a couple steps going up that led to a sliding glass door. As he approached the sliding glass door, he slipped and sustained an injury to his shoulder. Ultimately the officer determined that it had been a false alarm. Cross-examination revealed that he did not even un-holster his sidearm during his investigation. Based on this injury, the officer was granted permanent and total disability benefits, and the city appealed. The city argued that the officer was not responding to an emergency as that term is used in the Employee Benefits Act (the “Act”) when he was injured and is therefore ineligible for benefits. The Act provided that an injury must have occurred as the result of the officer’s response to fresh pursuit, the officer’s response to what is reasonably believed to be an emergency, an unlawful act perpetrated by another, or during the investigation of a criminal act. The city argued that the officer’s subjective belief that he was responding to an emergency goes against the manifest weight of the evidence. The court defined an emergency as a situation that is urgent and calls for immediate action. The court applied the definition to determine whether the officer believed that he was facing an emergency and whether that belief was reasonable. The city argued that the officer did not face an urgent situation requiring immediate action as demonstrated by the fact that he did not use his overhead lights or siren to expedite his arrival on the scene, he did not draw his gun, and he did not call for backup assistance before beginning his investigation. The court concluded that the fact that the officer did not draw his gun or call for backup only relate to the officer’s belief that the situation was more dangerous, but those factors are not dispositive of his view of the exigency of the situation. The officer argued that his decision not to activate his lights or siren was because he feared alerting any intruders in the residence. The court held that the term emergency is broad enough to encompass not only a situation that necessitates the use of lights or sirens to expedite police response, but also a situation in which police must respond immediately but need not expedite their arrival by activating the sirens or drawing a gun. The court found that the officer acted in a manner consistent with a belief that the situation required his immediate response. The court upheld the view that the officer believed he was responding to an emergency, and granted the disability.

DeRose v. City of Highland Park, 898 N.E.2d 1115 (Ill. App. 2 Dist. 2008)

Use of knowledge of law enforcement techniques, police training, and knowledge to commit a crime constitutes a sufficient nexus to forfeit police officer’s pension despite DROP status.

Officer pleaded guilty to the crime of conspiracy to possess heroin with the intent to distribute. He admitted that he provided escort services for a truck driver who was carrying multiple kilograms of heroin. The officer’s role in the drug trafficking scheme was to make sure that the truck driver did not encounter problems with the delivery. The officer admitted that he, his co-conspirators, and the undercover officers discussed the operation in detail. These discussions included the counter-surveillance techniques they would employ, and the methods they would use to ensure that the heroine delivery was successful. After the scheme was successful, the officer was payed for his escorting services. The Board of Trustees of the Hollywood Retirement System determined that the officer committed a specified offense pursuant to 112.3173,Florida Statutes, and the officer appealed. In order for the Board to forfeit pension benefits under section 112.3173, the officer’s crime must have been committed prior to retirement and the crime must have been connected to his employment as a police officer. On appeal, the officer argued that his actions were not related to his position as a police officer, and that he was technically retired prior to his participation in the drug trafficking scheme because he was in the Deferred Retirement Option Plan (“DROP”). However, the court held that his crime was significantly connected to his position as a police officer because he was selected for the trafficking operation due to his heightened knowledge of law enforcement techniques, his police training, and because he knew the enemy. The court also held that retirement, for DROP purposes, is separate from the meaning of retirement in section 112.3173. Chapter 185 defines retirement solely for the purposes of the plan, while section 112.3173 uses the common meaning fo the word retirement, meaning an employee’s voluntary termination of employment. The court held that the Board properly forfeited pension benefits because the offense was committed prior to retirement.

Simcox v. City of Hollywood Police Officers’ Retirement System, 988 So.2d 731 (Fla. 4th DCA 2008)

An employee, who was never a member of the public safety department, was not entitled to an early retirement benefit even though he was attracted to the position based on the early retirement provision.

A former employee of the Georgia Peace Officer Standards and Training Council (“POST”), was reported to the Employee Retirement System (“ERS”) as being eligible for early retirement. After twenty-two and one-half years in law enforcement in DeKalb County, the employee was hired by POST. He claimed that he was attracted to the POST position based upon the sworn retirement plan that was offered to him, which was his primary motivation to become employed. His employment records and pay information indicated that he was enrolled in the “sworn retirement plan,” which he understood to mean that he could retire at age fifty-five with ten years of service. The employee never trained as a State Trooper, and never served in the Uniform Division of the Department of Public Safety (“DPS”). Although reported as eligible for early retirement, the employee made no greater contribution to the retirement system than employees who were not eligible. In October 2005, the Human Resources Division of the Georgia State Patrol sent the employee a memorandum advising him that he was erroneously enrolled in the sworn retirement plan that is specifically reserved for members of the Uniform Division of the Georgia State Patrol, and that he would be placed in the non-sworn retirement plan. After receiving this letter, the employee wrote the Executive Director objecting to the change, and he submitted a retirement application. His application for retirement was denied. The employee subsequently resigned from POST, and later filed a complaint. The complaint, although asserting claims of breach of contract, violation of equal protection, and equitable estoppel, essentially sought a determination that he was entitled to receive early retirement benefits. The court held that the relationship between POST and DPS and proper interpretation of the pension code shows that the employee was never in the service of the Uniform Division of DPS, and therefore an early retirement plan was never part of his contract of employment. There no vested right to benefits which one was never entitled to receive. The court stated that the employee, was never employed by DPS, and was never in service in the Uniform Division of the DPS as an officer.

Employees’ Retirement System of Georgia v. Melton, 669 S.E.2d 692 (Ga. App. 2008)

County employee was not entitled to pension until his normal retirement date, despite statements to the contrary.

A county employee worked for the county for almost 21 years and became vested in the county’s pension plan. Under the pension plan, a participant would become eligible to receive retirement benefits upon reaching his or her normal retirement date, which was defined based either on the participant reaching a certain age or completing a certain number of years of service. The county’s deputy human resources administrator testified that she interpreted this service requirement to count years after an employee had left employment with the county as part of the employee’s years of service. Thus, when the employee left the county’s employment in February 1995, the administrator determined that he was entitled to begin receiving retirement benefits in June 2004, at which time he would have had 30 years of service had he remained employed by the county. The administrator communicated this date to the employee in a letter. In May 2004, the employee contacted the county to make arrangements for his benefits. The county informed the employee by letter that his projected starting retirement date was calculated in error and that instead he would begin receiving benefits in 2013, when he reached the correct normal retirement date age. The trial court granted summary judgement to the county, and the employee appealed, arguing that the county breached a contractual obligation to begin distributing his retirement benefits in June 2004. The employee’s contract of employment with the county incorporated the terms of the county’s pension plan. He contended that the pension plan’s definition of “normal retirement date” is ambiguous and capable of supporting the interpretation given it by the county’s deputy human resources administrator. The court disagreed, stating that there was no such ambiguity. A “normal retirement date” is either the attainment of a certain age or the completion of 30 years of service. The plan defined service as the period of the participant’s employment by the county and while a participant in the plan. According to the court, this language is plain, unambiguous, and capable of only one reasonable interpretation, that to reach the “normal retirement date” a plan participant must either have attained a certain age or have been employed by the county and participated in the plan for 30 years. Because it is undisputed that the employee had neither met the age requirement nor been employed by the county for 30 years, he had not reached his “normal retirement date” under the plan and the county had no contractual obligation to begin paying him retirement benefits at that time.

Mullis v. Bibb County, 669 S.E.2d 716 (Ga. App. 2008)

In order to be considered a town employee entitled to all employee, a person must show that they are subject to the control of the town.

The owner of a corporate entity signed an agreement with a town, providing that the corporation would perform certain services at the town’s solid waste facility and other facilities. The owner commenced an action against the town for a judgement declaring that a town employee is entitled to all benefits enjoyed by such employees, including but not limited to, pension rights, health care, vacation time, sick leave, and personal time. The town moved for summary judgement declaring that the plaintiff was not a town employee at any time and that the owner had failed to provide any evidence to support his claim. The court stated that the determination of whether one is an employee or an independent contractor requires examination of all aspects of the arrangement between the parties. The critical inquiry pertains to the degree of control exercised by the purported employer over the results produced or the means used to achieve the results. Factors relevant to assessing control include whether the worker: (1) worked at his own convenience; (2) was free to engage in other employment; (3) received fringe benefits; (4) was on the employer’s payroll; and (5) was on a fixed schedule. The fact that a contract exists designating a person as an independent contractor is to be considered, but it is not dispositive. The court found that the contract expressly provided that the corporation and its employees would be acting as independent contractors and were not to be considered employees of the town. At all times, the owner was paid by submitting payment vouchers to the town’s comptroller, payment was generally made to the corporate entity, no funds were withheld by the town for purposes of taxes or insurance, and the corporation paid the requisite taxes and insurance on behalf of the owner of the corporation. It is also undisputed that the corporation carried liability insurance, that it maintained its own offices, that the town paid the corporation more than an individual employee would have been paid for the same work, and that, in performing the work, the plaintiff used many of his own tools. Moreover, the owner was not instructed on how to perform the work he did for the town. The court held that the record plainly establishes that, at all times at issue, the owner was an independent contractor and not an employee.

Araneo v. Town Bd. for Town of Clarkstown, 865 N.Y.S.2d 281 (N.Y.A.D. 2 Dept. 2008)

A former spouse was granted a community property interest in a pension benefit because the governing statute provides that a community property judgement prevails over survivor pension provisions.

Joel and Dianne were married in Louisiana, and when Joel began working as an engineer for the Department of Transportation, he enrolled in the Louisiana State Employees Retirement System (“LASERS”). Joel and Dianne had two children, Jodee, and Joelle. After 18 years of marriage, they were divorced and a judgement granted Dianne 50% of the pension benefits that accrued during the marriage, or 50% of the lump sum payment that accrued during their marriage. Joel later married Jane, and after about 10 years, Joel died while still employed by the State of Louisiana. After Joel’s death, three individuals filed applications for survivor benefits with LASERS: Jane (second wife); Joelle (the daughter); and Dianne (first wife). LASERS placed the disputed portion in the registry of the court in order to be relieved of liability, and then began distributing the remainder of the survivor benefits to the current wife and daughter. The first wife believed she was entitled to her share of the survivor benefits deposited with the court because of the community property judgements and the jurisprudence recognizing a former spouse’s rights to such assets. The lower court found that the funds deposited in the registry of the court are survivor benefits rather than retirement benefits, and under the pension code only the current wife and daughter were entitled to survivor benefits as the code only defines survivors as surviving children or a surviving spouse. The first wife appealed arguing that the court erred in refusing to award the full benefit agreed to in the community property judgement. The court of appeal found that LASERS did not list the former spouse among the categories of individuals entitled to receive survivor benefits, and the first wife was precluded from receiving her share of the survivor benefits. The court of appeals ordered LASERS to pay the lump-sum refund of 50% to the first wife, and she appealed. The court held that the pension code directs LASERS to pay a former spouse survivor benefits when ordered by a community property judgement which meets that statute’s requirements. The lower court’s judgement ordering that all of the survivor’s benefits be paid to the current wife and daughter was erroneous. The first wife was entitled to these benefits according to the community property judgements. The court held that the first wife was entitled to the portion of the survivor benefits according to the amount stipulated by the parties.

Louisiana State Employees’ Retirement System (Lasers) v. McWilliams, 996 So.2d 1036 (La. 2008)

Court may not reweigh evidence, since a board’s decision is conclusive as long as it is based upon substantial evidence.

An accounting assistant began to experience severe pain from writing all day long, and she was diagnosed with carpal tunnel syndrome. The assistant filed a disability claim with the Board of Trustees (“Board”) of the Public Employees’ Retirement System (“PERS”). The record shows that she experienced problems with both of her hands and received treatment for the pain. The assistant’s surgeon stated that she could return to light duty but that she could not return to her former job. The Board employed an independent medical examiner (“IME”) who reported that the assistant had full range of motion of her wrists, and no signs of bruising or warmth. The IME concluded that the assistant’s subjective complaints of pain and numbness were fairly impressive. However, it was his opinion that the assistant was capable of returning to her former job because there were no objective findings that prevented her from performing that type of work. Before a hearing was held, but after the assistant’s last day of work, she had heart bypass surgery that caused her vocal cords to become temporarily paralyzed. The assistant’s doctor recommended that she only use her voice for two hours per day for at least the next six months. This limitation prohibited her employer from transferring her to a receptionist job, which would have accommodated her problems associated with carpal tunnel syndrome. The Board denied the assistant’s claim for disability benefits because it found that the assistant’s complaints of pain alone were insufficient to substantiate a disability. There was no objective evidence of carpal tunnel sufficiently significant to warrant permanent disability. Furthermore, the Board did not take into consideration the injury to her vocal cords because it occurred after her last day of work, and denied her all disability benefits. The circuit court upheld the Board’s decision regarding the carpal tunnels syndrom, but the court overturned the denial of regular disability benefits, and the Board appealed.

The court stated that judicial review of an administrative agency’s decision is severely limited. As long as the reviewing court finds that the Board’s decision was supported by evidence, the Board’s decision conclusive. The court noted that the Board specifically regarded the IME findings as more persuasive than the treating physician because he could find nothing objective to support the assistant’s complaints of pain and numbness. The court held that the Board’s decision was supported by substantial evidence because the Board heard evidence from two opposing doctors, and found the IME’s findings to be more reliable. The court held that the Board was in a far better position to evaluate whether the assistant’s subjective complaints of pain amounted to a disability. The court stated that the lower court improperly reweighed evidence when it relied on other evidence that was not in the record. The court reversed the judgement of the circuit court circuit court and reinstated the Board’s denial of regular disability benefits. However, the court held that the Board erred when it excluded evidence of the assistant’s vocal cord impairment because it was the Board’s duty to determine whether the assistant was permanently and totally disabled from further performance of her job duties.

Public Employees’ Retirement System v. Card, 994 So.2d 239 (Miss. App. 2008)

Something more than being “on duty” is required to receive a line-of-duty pension since not all police functions involve “special risk.”

An officer was involved in a motor vehicle accident while on routine patrol. As the officer was moving to a destination in response to a report of speeding vehicles, a man shot out in a truck. The officer made an evasive maneuver. The officer had to pull back into the right-hand lane due to oncoming traffic, and the truck hit the side of the officer’s van. The officer suffered injuries to his shoulder, underwent back surgery, and he filed for disability benefits. The Board issued a written decision stating that it found the officer physically disabled for service in the police department so as to render necessary his retirement. The Board concluded, however, that the officer’s disability was a non-duty disability rather than a line-of-duty disability pension because driving a transport van did not involve a “special risk” as required by the definition of “act of duty” in the pension code. The officer appealed. The court stated that the issue is an examination of the legal effect of a given set of facts, which is a mixed question of law and fact requiring review under the clearly erroneous standard. Under the clearly erroneous standard, the reviewing court will reverse the administrative agency only where the court is left with the definite and firm conviction that a mistake has been committed. The court stated that something more than being “on duty” is required to receive a line-of-duty pension, and that not all police functions involve “special risk.” For a line-of-duty pension, the officer does not need to be injured by the act of duty but rather, the injury occur in the performance of an act of duty. Therefore, the court focused on the capacity in which the officer was acting at the time of the injury. Courts have found the police officer injured in the performance of an act of duty where the officer (1) fell through a porch while serving a notice to appear; (2) was riding a bicycle on patrol; (3) injured his shoulder while raising a railroad crossing gate; and (4) responded to a call reporting juveniles stacking concrete blocks in a parking lot and suffered an injury attempting to remove the hazard by unstacking the blocks. Other courts have found the officer was not injured in the performance of an act of duty where (1) the officer was injured when he attempted to sit down in a chair at his desk to fill out a police report and the chair rolled out from underneath him; (2) the officer was injured while exiting his police vehicle to place a parking citation on an illegally parked car; and (3) the evidence technician was injured when the unmarked police vehicle in which he was riding as a passenger was struck while stopped at a red light returning from an investigation. In this case, the court held that the officer was performing an act of police duty involving a special risk because he was driving a police transport van on patrol intending to investigate an area that had reports of speeders. The officer was conducting an investigation, and he faced special risks associated with being on patrol duty. The officer had to have his attention directed toward being prepared to deal with any eventuality. The court granted the officer a line-of-duty pension.

Jones v. Board of Trustees of Police Pension Fund of City of Bloomington, 894 N.E.2d 962 (Ill. App. 4 Dist. 2008)

The Comptroller is vested with the exclusive authority to weigh the testimony offered by medical experts and to credit the opinion of one expert over that of another.

A mental health therapy aide filed an application for disability retirement benefits contending that he was permanently disabled following an incident where a patient fell to the ground and pulled on his left arm. The aide applied for disability benefits and was denied. Following the denial, the aide requested a hearing and redetermination, and the hearing officer found that the aide failed to establish that he was permanently incapacitated from the performance of his duties. The Comptroller accepted those findings, and the aide appealed. The aide testified that he had limited range of motion in his neck and left shoulder which stopped him from adequately performing his job, which includes the restraint of, and responding to attacks by mentally unstable patients. The aide also offered the testimony of his treating physician, who diagnosed him with cervical spondylosis and cervical disc disease. The physician described the decreased range of motion in petitioner’s neck as moderate to severe and opined that this condition was permanently disabling and rendered petitioner unfit to perform his duties. An orthopedic surgeon evaluated the aide on behalf of the Commissioner, and he disagreed stating that the aide was not permanently disabled from performing his job duties. The court stated that the Comptroller is vested with the exclusive authority to weigh the testimony offered by medical experts and to credit the opinion of one expert over that of another, and upheld the Comptroller’s holding.

Johnson v. New York State and Local Retirement System, 863 N.Y.S.2d 529 (N.Y.A.D. 3 Dept. 2008)

The denial of an application for accidental disability retirement benefits is proper when the injury was not caused by an accident.

A police officer was injured after tripping over a snow bank while chasing two suspects. The officer climbed to the top of a fence, and as he tried to jump to the ground, his foot allegedly hit the top of an unseen second fence built adjacent to the fence he had climbed, causing him to fall onto a concrete patio. The officer sustained two broken elbows and injured his neck. His subsequent application for accidental disability retirement benefits was denied on the ground that the two incidents which caused his injuries were not accidents within the meaning of Retirement and Social Security Law. Following a hearing and redetermination which was denied, the officer appealed. The court held that the officer must prove that an injury was accidental to receive accidental disability retirement benefits. An injury that occurs without an unexpected event as the result of activity undertaken in the performance of ordinary employment duties is not an accidental injury. The pursuit of suspects is an ordinary employment duty of a police officer. The officer even testified that he often climbed fences when pursuing suspects. The court held that tripping over a snow bank and falling from a fence while chasing suspects are inherent risks of employment as a police officer and not the result of unexpected events, even without seeing the actual hazard that caused him to fall, and upheld the denial of benefits.

Melendez v. New York State Comptroller, 863 N.Y.S.2d 844 (N.Y.A.D. 3 Dept. 2008)

A reviewing agency does have the burden to present substantial evidence, it must only base its decision substantial evidence. Instead, the disability applicant bears the burden of proving that she is disabled.

A child support enforcement officer was diagnosed with fibromyalgia. Her primary physician stated that the employee also had secondary depression and recommended she see a psychiatrist. However, the doctor did not place her on any restrictions and made no long-term recommendations regarding disability or inactivity other than a three-month leave of absence. The employee saw a psychiatrist who found that she was suffering from major depression secondary to medical issues. The employee applied for a disability benefit to the Committee on Disability Appeals. The Appeals Committee found that there was no objective medical evidence to show the employee was permanently disabled, and therefore the it recommenced that her request for benefits be denied, which was followed by the board of trustees. The employee appealed, and the appellate court found that the board did not presented substantial evidence to support its decision. The appellate court reversed the board’s decision, and the board appealed. The court held that there is no evidence in the record that the Appeals Committee ignored or received and rejected evidence in its duties as fact finder, and there was substantial credible evidence which supports its findings. The court held that these findings, when supported by such substantial evidence, should be accepted. The court reversed the appellate court stating that it reweighed evidence and misapprehended the burden of proof for an agency decision.

Thomas v. Public Employees’ Retirement System of Mississippi, 995 So.2d 115 (Miss. 2008)

A board reviewing a disability application must state its reasons for disregarding facts that make up an applicant’s claim.

Following a difficult and stressful nine-month tenure as the department of public work’s superintendent, the superintendent attempted suicide, was diagnosed with a major depressive disorder, and was unable to return to work. The superintendent applied for accidental disability benefits, which was rejected, and this denial was subsequently upheld by both the Contributory Retirement Appeal Board (“CRAB”) and the superior court. The superintendent appealed arguing that his permanent disability was caused both by an identifiable, uncommon workplace condition and by a series of work-related events, and that he is entitled to accidental retirement disability benefits. In order to establish entitlement to accidental disability retirement benefits as a result of his emotional disability, an employee must prove either that his disability resulted from a single work-related event or series of events, or, if the disability was the product of gradual deterioration, that the employment exposed the employee to an identifiable condition that is not common and necessary to all or a great many occupations. CRAB concluded that stress caused by job pressures including increasing demands by superiors and unfilled departmental vacancies is common to management positions across a broad spectrum of employment and that the superintendent did not satisfy his burden because he did not prove that his condition is not common and necessary to other occupations. The court stated that there is no error in CRAB’s conclusion that the work stressors were common across the board. However, the court held that CRAB committed an error when it concluded, without explanation, that the death of a co-worker, a suicide attempt by a co-worker, and another employee’s death from a disease could not form the basis of the superintendent’s claim because the individual events themselves were not personal injuries. The court stated that this view departs from the statutory definition of the term personal injury stating that a series of events need not be unusually stressful or traumatic to support a recovery as long as the event or events cause the disability. The court stated that CRAB failed to explain the basis of its exclusion regarding several of the events proffered by the superintendent to satisfy his evidentiary burden. The court remanded the matter for further consideration of the issues and a fuller explanation of CRAB’s reasoning.

Fender v. Contributory Retirement Appeal Bd., 894 N.E.2d 295 (Mass. App. Ct. 2008)

To get an in-line-of-duty disability benefit for a condition caused by stress, an officer is not required to show that the job stress was unusual, he only needs to prove that it was an aggravating cause of a total and permanent disability.

A state law enforcement officer spent most of his 25 years working without incident, first as a corrections officer and then as a deputy sheriff in investigations. Two years prior to his retirement, the officer was accused by the media of colluding with a police informant who was a prime suspect in a murder case. Due to this publicity, his employment was terminated. No charges were ever filed, and the officer was rehired. However, the officer was not returned to his previous position. Instead, he was assigned to court security and the evidence warehouse, where he was not allowed the use of his badge or uniform. The officer retired due to a debilitating psychological condition, which he claimed was work-related. The officer applied for in-line-of-duty disability retirement benefits. He testified that this treatment was humiliating and that after his termination and subsequent loss of duties, his mental condition deteriorated to the point that it forced him to leave his employment. The Division of Retirement denied his application for line-of-duty benefits, and the officer appealed. The only issues for the court to resolve were whether his injury was work related, and whether his injury was a substantial cause or an aggravating cause of his permanent total disability. The court held that there was no question that the officer had major stressors outside of his job, but there was no evidence indicating that these outside stressors rendered him unable to work. The court held that the Division of Retirement did not properly consider that debilitating anxiety or stress over loss of duties can be considered a work-related injury even if there are significant outside stressors. The Division of Retirement found that there was no showing of a substantial relationship between the job environment and the disabling illness and that job conditions did not rise to the level of unusual stress triggering the disability. However, the court held that the officer is not required to show that the job stress was unusual; he only needed to prove that it was a substantial or aggravating cause of a total and permanent disability. Nothing in the record suggested that his illness was not aggravated by the work-related incident. The court found that the medical evidence supports the conclusion that his loss of duties after termination aggravated his mental condition and led to his inability to work.

Jernigan v. State, Dept. of Management Services, Div. of Retirement, 995 So.2d 996 (Fla. 1st DCA 2008)

The proper exercise of discretionary authority presupposes the existence of legally sufficient conflicting evidence. Absent conflicting evidence, a reviewing authority must accept the evidence presented.

A Port Authority police officer filed applications for accidental and performance of duty disability retirement benefits following an on-the-job accident where the officer was struck on the head by a metal beam that fell from a collapsed scaffold. Following denial of his applications, the officer sought a hearing and redetermination, at the conclusion of which it was determined that the officer failed to establish that he was permanently incapacitated from the performance of his duties. The Comptroller accepted those findings, and the officer challenged that determination. The officer testified regarding his current symptoms and his job duties. He also offered the testimony of an orthopedic surgeon who diagnosed the officer with cervical disk herniation and cervical radiculopathy, together with nerve root impingement. The surgeon opined that the officer was permanently incapacitated from the performance of his duties and that the injuries were causally related to the accident at work. The retirement system offered the testimony of a board-certified neurologist who evaluated the officer. The neurologist opined that the officer was neurologically intact and was not permanently incapacitated from the performance

of his duties from a neurological perspective. He conceded that he did not conduct an orthopedic assessment of the officer, and he stated that one could be orthopedically disabled but neurologically intact. The neurologist did not dispute the diagnosis made by the orthopedist. The court noted that the Comptroller is vested with the exclusive authority to weigh and evaluate conflicting medical testimony and to credit the opinion of one expert over that of another. However, the proper exercise of that discretionary authority presupposes the existence of legally sufficient conflicting evidence. The court held that there was no actual conflict in the evidence presented in this case because the neurologist he did not dispute the orthopedist’s testimony that the officer had an orthopedic disability even though the he opined that there was no neurological disability. The court concluded that the Comptroller’s determination denying the officer’s application for an accidental disability retirement benefits was not supported by substantial evidence in the record as a whole.

Rossi v. New York State Comptroller, 866 N.Y.S.2d 399 (N.Y.A.D. 3 Dept. 2008)

Reviewing court will not disturb lower tribunal’s decision if it is based on articulated, rational and fact-based opinion, founded upon a physical examination and review of relevant medical reports and records.

A state trooper was injured when his police vehicle was struck from behind while parked. Based upon injuries to his neck, back and right knee, the trooper applied for ordinary and accidental disability retirement benefits. Following initial disapproval of his applications, and a request by the trooper for a hearing and redetermination, a hearing officer found that petitioner failed to establish that he was permanently incapacitated from performing his job duties and denied the applications. The Comptroller accepted the hearing officer’s recommendations, and the trooper appealed. To be eligible for disability retirement benefits, a petitioner must establish that he is permanently disabled from his regular job duties. The trooper presented medical records from his treating physicians, who concluded that he was unable to perform all the duties of a state trooper due to disc herniation in his back and neck. In contrast, the retirement system presented the testimony of an independent medical examiner, who concluded that the trooper was not permanently disabled and many of his symptoms were fictitious rather than anatomical. The Comptroller is accorded the exclusive authority to weigh conflicting medical evidence and credit one medical expert’s opinion over another. The independent medical examiner provided an articulated, rational and fact-based opinion, founded upon a physical examination and review of the relevant medical records. The Comptroller’s determination was supported by substantial evidence. The court did not disturb the Comptroller’s holding, despite evidence in the record which might support a contrary conclusion.

Doran v. New York State and Local Police and Fire Retirement System, 867 N.Y.S. 2d 254 (N.Y.A.D. 3 Dept. 2008)

A police officer’s application for continuing health benefits should be decided based on the injury that caused the officer to become permanently and totally disabled.

A former peace officer for the St. Paul Police Department sustained a back injury in 2003 while lifting weights in the police gym during work hours. The officer again injured his back when he slipped at work walking up stairs to reach the elevated front desk of the police headquarters, rendering him unable to return to work. The Public Employee Retirement Association (“PERA”) awarded the officer duty-related disability pension. The officer then applied for continuing health benefits, which the panel denied, finding that the officer’s occupational duties and professional responsibilities did not put him at risk for the injuries he sustained. The officer claimed that both the weightlifting and the activity of slipping on the stairs are compensable events that occurred in the course and scope of his professional duties as a peace officer. By statute, a peace officer’s employer is required to provide continued health insurance coverage to the officer and his or her dependents until the officer reaches the age of 65 if the officer suffers a disabling injury that: (1) results in the officer’s retirement or separation from service; (2) occurs while the officer is acting in the course and scope of duties as a peace officer; and (3) the officer has been approved to receive duty-related disability pension. After a peace officer is granted a duty-related disability pension, the officer may apply for a determination of whether the officer meets the requirements for a continuing health benefit. A two-part test is used to determine entitlement to employer-provided health insurance benefits. First, the officer must be approved to receive a duty-related disability pension. Second, the disabling injury must have occurred while the officer was acting within the course and scope of his or her duties. In making this determination, the panel must decide whether the officer’s occupational duties put the officer at risk for the type of injury sustained. In this case, the officer was granted a duty-related disability pension. At the hearing, the officer presented information regarding both of his back injuries, including undisputed evidence that the weightlifting injury did not render him unable to return to work. The panel made no inquiry regarding any facts about the stairs that caused his injury in 2004. Instead, the panel focused solely on the facts surrounding the officer’s weightlifting injury in 2003. The court held that the panel failed to articulate its rationale as to why the officer’s duties did not put him at risk for sustaining a debilitating injury on the stairs at his workplace. The court concluded that the panel’s sole focus on the preexisting weightlifting injury was an error as the statute does not exclude the aggravation of pre-existing conditions or prior injuries. Instead of focusing exclusively on the prior weightlifting injury, the panel should have examined the facts and made its decision based on the subsequent injury that caused officer’s permanent separation from employment. The court held that by only addressing officer’s previous injury, the panel’s decision to deny benefits was unsupported by substantial evidence. The court stated that the panel acted arbitrarily in failing to find any facts with respect to officer’s injury on the stairs and in failing to articulate a rational connection between any facts found and the decision made.

In re Minnie, Not Reported in N.W.2d, 2008 WL 5396826 (Minn. App. 2008)

A police officer was denied accidental disability benefits when injured while unclogging a toilet with a plumber’s tool because this activity was not within his job description.

A police officer sustained a fracture of the middle phalanx of the fourth digit of his left hand when he attempted to unclog an overflowing toilet using a plumber’s snake. The officer applied for disability benefits, but the board denied benefits on the ground that use of the tool was not among his ordinary job duties. The board found that the officer knew the proper procedure was to call maintenance for a professional to handle the job, and concluded that the incident does not fit the criteria for accidental disability. The court stated that there was substantial evidence in the record to support the board’s conclusion that the activity in which petitioner was engaged at the time of injury was not undertaken in the performance of ordinary employment duties. The court held that the determination of which activities constitute the regular duties of a police officer is a matter within the particular expertise of the board, and its findings are entitled to deference. Since the record contains substantial evidence supporting the board’s findings, its decision must be upheld.

Marchisotto v. Kelly, 872 N.Y.S.2d 51 (N.Y.A.D. 1 Dept. 2009)

Trooper was denied special disability benefit where the officer’s disability arose out of a disciplinary action commenced against as the result of his own negligent behavior in failing to comply with a special order.

A state trooper for the Maryland State Police (“MSP”) began employment in 1971. After he suffered a series of panic attacks while on the road he was transferred to the MSP’s Automotive Safety Enforcement Division (“ASED”), after which the panic attacks ceased. The trooper’s job was to audit Maryland’s authorized vehicle inspection stations. In 2000, the MSP established new uniform procedures for auditing vehicle inspection stations. It is undisputed that the trooper was aware of the new procedures and failed to comply with them. After his superiors discovered that the trooper was not conducting thorough audits and that he was submitting false reports, the MSP initiated disciplinary proceedings. The disciplinary proceedings caused the trooper to experience feelings of depression, anxiety, anger, and agitation, interfering with his job performance. Accordingly, the MSP referred the trooper to a licensed psychologist for treatment who testified that he was productive and working well up until the time he went for treatment. The MSP and the trooper came to a settlement agreement but the MSP allegedly backed out of the agreement. The trooper argued that the MSP’s backing out of the settlement agreement was a traumatic incident that exacerbated his pre-existing depression, insomnia, anger, and obsession over the disciplinary proceedings against him. The trooper applied for special disability retirement benefits, as opposed to the less generous ordinary disability retirement benefits. In order to be eligible for ordinary disability benefits, the Medical Board must certify that he is mentally or physically incapacitated from performing the normal duties of the member’s position. To qualify for special disability benefits, an MSP retiree must be totally and permanently incapacitated for duty arising out of or in the course of the actual performance of duty without willful negligence by the member. The Administrative Law Judge (“ALJ”) concluded that it is reasonable and permissible to infer that the trooper intentionally disregarded his job requirements and was disciplined for his noncompliance. The ALJ concluded that the trooper’s incapacity for duty arose from his intentional disregard of the requirements of his duties. The trooper appealed, and the circuit court affirmed the agency’s decision explaining that there was substantial evidence in the record to support the ALJ’s findings that the trooper’s mental illness arose from the adverse disciplinary actions pending against him, which were instituted because of his willful negligence. The court held that there was substantial evidence to support the conclusion of the ALJ that the trooper’s depression arose out of both the disciplinary proceedings against him, and the trooper’s willful negligent auditing of the inspection stations he was assigned to review.

Thomas v. State Retirement and Pension System of Maryland, ___ A.2d ___, 2009 WL 262433 (Md. App. 2009)

Police detective’s disability due to psychological problems irritable bowel syndrome was denied as the fact finder is entitled to discern between conflicting evidence.

A police detective suffered from various heart, gastrointestinal and psychological problems that caused him to stop working after 12 years. The officer filed applications for ordinary disability retirement benefits and performance of duty disability retirement benefits. After his applications were disapproved, the officer requested a hearing. The hearing officer concluded that the police officer was not entitled to either type of benefits because he was not permanently incapacitated from the performance of his duties. This determination was adopted by the Comptroller, and the officer appealed. The court noted that the officer had the burden to show that he was permanently incapacitated from performing his duties as a police officer in order to qualify for the requested disability benefits. In this case, there was conflicting medical evidence concerning whether the officer’s psychological problems and irritable bowel syndrome permanently incapacitated him from performing his duties as a police detective. The Comptroller is vested with the exclusive authority to credit the opinion of one medical expert over another. Given the evidence establishing that petitioner did not suffer from permanent incapacitation due to his afflictions, the court held that substantial evidence supported the Comptroller’s decision, and denied the officer’s appeal.

Kennedy v. New York State and Local Police and Fire Retirement System, 868 N.Y.S.2d 382 N.Y.A.D. (3 Dept. 2008)

A withdrawal is from a pension plan is complete when the employer no longer has any obligations to contribute under the plan or it has ceased all covered operations under the plan.

In 1976, the City entered a collective bargaining agreement (“CBA”) in connection with the City’s employment of crossing guards. The CBA provided that the City would make contributions to the Fund for the purpose of providing retirement benefits for the crossing guards. For the next few decades, the City entered into a series of CBAs for the crossing guards’ employment and continued to make contributions to the Fund. In November 2007, the City terminated employment of its crossing guards and contracted for crossing guard services on a daily basis. The City discontinued making pension payments after February 15, 2008, as there was no longer a CBA in place. The crossing guards filed charges with the Labor Relations Board and sought to be reinstated to their prior positions. The Fund informed the City that the Fund was required by federal law to assess and collect a withdrawal liability from the City. The Fund notified the City that it was in default for non-payment; that the time period to request a review was about to expire; and that the Fund would initiate collection proceedings if the default were to continue. In response, the City made a formal demand for review and requested additional information to help it identify possible inaccuracies in the Fund’s assessment. The City also suggested that its “defined contribution plan” was exempted from federal withdrawal liability provisions and it asked the Fund to consider whether a withdrawal had actually occurred while the labor dispute over termination of the crossing guards was still pending. In 1980, Congress amended ERISA and enacted the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), which imposes a withdrawal liability on employers leaving a multiemployer pension plan. An employer is deemed to have withdrawn from a pension plan when the employer permanently ceases to have an obligation to contribute under the plan, or ceases all covered operations under the plan. In that event, the employer is required to continue funding a proportionate share of the pension plan’s unfunded vested benefits. The plan sponsor is required to notify the employer of the amount of the liability, and the schedule for liability payments, and demand payment in accordance with the schedule. The withdrawal liability must be paid by the employer notwithstanding any request for review or appeal of determinations of the amount of such liability or of the schedule. The City tried to avoid the Fund’s demand for withdrawal liability primarily by asserting that it established a governmental pension plan exempted from MPPAA regulations or, in the alternative, that it had not completely withdrawn from the Fund as the crossing guards’ claim with the Labor Relations Board had not yet been decided. The court stated that neither of those arguments are persuasive. Under the MPPAA, a withdrawal is complete when the employer no longer has any obligations to contribute under the plan or it has ceased all covered operations under the plan. According to the complaint, and the successor CBA was not ratified by City Council. Thereafter, all crossing guards covered by the plan were replaced by per diem workers and, as the City conceded, no further pension plan payments were made after February 15, 2008 because there was no longer a collective bargaining agreement in place. Consequently, the City’s suggestion now that it has not withdrawn from the Fund because it has merely suspended contributions during a labor dispute involving its employees. The court held that a withdrawal is complete when the employer no longer has any obligations to contribute under the plan or it has ceased all covered operations under the plan. The last CBA expired and the successor CBA was not ratified by City Council. All crossing guards covered by the plan were replaced by per diem workers and no further pension plan payments were made because there was no longer a collective bargaining agreement in place. Consequently, the City’s cannot claim that it did not withdraw from the Fund.

City of Warwick v. Laborers’ Intern. Union of North America, 2009 WL 462690 (D.R.I. 2009)

There is no Applicable Statute of Limitations to a Disciplinary Administrative Forfeiture Proceeding.

After witnessing a robbery, an officer and his team chased four fleeing suspects. The officer shot and killed one of the suspects, another suspect was shot and killed, a third was apprehended, and the fourth managed to escape. Other officers planted weapons on the suspects’ bodies to explain their actions and validate the shootings. After the incident, the officer gave a sworn statement to homicide investigators wherein he covered up the actions of the other officers by falsely stating that the fleeing suspects were carrying weapons before they were shot. The officer subsequently retired from the police force and received full pension benefits. The officer was later charged by information with conspiracy to obstruct justice and deprive Miami’s citizens of rights, privileges, and immunities, in violation of federal law. The officer entered a plea of guilty, admitting that he gave a false and misleading sworn statement, and he was adjudicated guilty. The pension board held a hearing and determined that the officer forfeited his pension benefits because he committed a specified offense under Florida law. The officer appealed claiming that the statute requires notice to the Commission on Ethics, that a forfeiture action was commenced after the applicable statute of limitations, and the crime for which he was convicted was not a specified offence. The court held that the board was authorized to commence the administrative forfeiture determination against the officer without involving the Commission on Ethics, there is no statute of limitations period applicable a disciplinary administrative action, and the acts were punishable in Florida as a felony involving a breach of the public trust, which amounted to a specified offense for the purposes of the forfeiture statute.

Hames v. Firefighters’ and Police Officers’ Trust, 980 So.2d 1112 (Fla. 3rd DCA 2008)

Court held constitutional a classification excluding employees who were not subject to county supervision was rationally related to legitimate state interests.

The state and county employees’ retirement fund (“CERF”) was formed in 1994 to provide retirement benefits for employees of Missouri counties. At that time, more than 50 Missouri counties did not offer retirement benefits for their public employees. CERF provides that eligible employees shall receive monthly benefits after retirement based on years of service and salary. It is funded by a number of sources, mainly by penalties related to property tax collected by counties. Only a small portion of the funding is tied to the number of members in the program. An “employee” for CERF purposes was defined as any county elective or appointive officer or employee whose position requires the actual performance of duties during not less than one thousand hours per year. In 1998, the definition was amended to limit an “employee” to any county elective or appointive officer or employee who is hired and fired by the county and whose work and responsibilities are directed and controlled by the county. A 2001 amendment added eligibility for individuals hired by the circuit court located in a county of the first classification without a charter form of government which is not participating in the Missouri Local Government Employees Retirement System (“LAGERS”). After the employees in the juvenile office of attempted to enroll in CERF, they were informed that they were not eligible for the program because they were not “county employees” for purposes of CERF.

The reason given was that juvenile office personnel were subject to hiring, supervision, and termination by either the circuit court or chief juvenile officer, not the county. The employees argued that the statutes and rule excluding the employees from CERF membership violated the equal protection provisions of the United States and Missouri constitutions because the laws’ current exclusions do not reasonably relate to the original purpose of CERF. However, the court held that the classification is constitutional under an equal protection analysis.

Alderson v. State, 273 S.W.3d 533 (Mo. 2009)

Forfeiture of pension benefits does not violate the protection against excessive fines, the double jeopardy clause, or the constitutional proscription of ex post facto laws.

W.D. Childers was employed as a teacher in the Florida Retirement System (“FRS”). After two years, Childers became a member of the Florida Legislature where he served for 30 years. In 2000, Childers became a member of the Escambia Board of County Commissioners, and he continued to accrue years of credited service. During his term as a County Commissioner, Childers was convicted of bribery and unlawful compensation, and the parties stipulated that the crimes were not related to the employee’s service as a teacher or a member of the legislature. The Division of Retirement instituted formal of agency action to forfeit his rights pursuant to section 112.3173, Florida Statutes. On appeal, Childers argued that section 112.3173 is unconstitutional because it violates his constitutional protections against excessive fines, double jeopardy, and ex-post facto laws. The court disagreed stating that forfeiture of an employee’s retirement does not violate the protection against excessive fines because the constitutional protection against excessive fines applies only to fines directly imposed by, and payable to the government. Forfeiture of pension benefits is not a fine because the employee has not been ordered to pay anything to the government. The court next held that the right to a pension benefit is contractual in nature and the forfeiture of benefits are merely the enforcement of a contract, not the imposition of a punishment, which would trigger protections against double jeopardy. Finally, the court held that the forfeiture of pension benefits did not violate the constitutional proscription against ex post facto laws. Ex post facto laws reach back in time to punish acts which occurred before the enactment of a law. Since section 112.3173 was enacted before Childers was convicted of a crime, it does not reach back in time to punish Childers for a crime committed prior to the enactment of the law.

Childers v. State, Dept. of Management Services, Div. of Retirement, 989 So.2d 716 (Fla. 4th DCA 2008)

The Alaska Constitution does not give employees the right to mix and match a statutory provision from one era with that of another to maximize their pension benefits.

A group of early retirees of the Public Employees’ Retirement System (“PERS”), who took early retirement before 1977, returned to work in public service, and later retired again. Calculation of PERS benefits when a public employee retires, returns to work, and then retires again is governed by the pension code. Since July 1, 1977, the code has provided that upon subsequent retirement, an employee is entitled to receive an additional pension based on the credited service and average monthly compensation earned during the period of re-employment. The second pension is added to the reinstated pension for the previous employment period. Prior to its amendment, the pension code provided that the pension payable upon a re-employed employee’s subsequent retirement shall be reduced by the actuarial equivalent of early retirement benefits previously received by the employee. The Attorney General’s office issued an opinion to apply the pension code as if it had not been amended when calculating the second retirement benefit for any member who had been in the PERS system before July 1, 1977, if doing so would result in a more favorable benefit for the retiree. To determine which version of the code would result in a more favorable benefit to the retirees, the Division calculated benefits under both the pre-and post-amendment statutes. The Division found that few early retirees would receive increased benefits because they had been retired with an early benefit for so long that the actuarial reduction wiped out any increase they would have received. The Division awarded each eligible second retiree a lump sum payment or an actuarially increased benefit as compensation for past underpayments, interest, and increased benefits. But, as required by the code, the Division began recapturing retirement benefits disbursed to those who originally had taken early retirement. As a result, while the early retirees received an increased benefit from the recalculation of the retirement benefit for their second round of employment, their original monthly benefits were decreased to some extent to account for the “actuarial equivalent” recapture requirement. The early retirees presented several arguments to the Board in support of their contention that they should not be subject to the recapture requirement. They argued that the recapture: (1) violated the anti-diminution provision of Article XII, section 7 of the Alaska Constitution; (2) violated AS 35.39.520(b), which prohibits the Division from making certain “adjustments” to a retiree’s pension; and (3) impinged on their vested right to elect early retirement under article XII, section 7 of the Alaska Constitution. They also made other arguments in favor of waiving the recapture requirement, including an allegation that the Division breached its fiduciary duty by initially miscalculating their pensions and failing to advise them of the effects of early retirement on their pensions. Finally, they maintained that they were entitled to hardship waivers of the recapture. The court found that application of the recapture requirement does not result in an unconstitutional diminution of benefits. The court held that PERS members are entitled to the best benefits available, and that they are entitled to choose those benefits for themselves, but the provisions are not so broad as to allow members to sever statutory provisions from one another and mix and match some or all of a statutory provision from one era with that of another. The early retirees’ additional retirement benefits under the former code were diminished only to the extent that the Division accounted for repayment of early retirement benefits. They still enjoy a net increase over what they would receive under the new version of the pension code. The court held that the Board properly declined to sever and disregard the recapture provision when calculating retirement benefits under former pension code. The court concluded that the Division’s methodology (1) did not violate the anti-diminution provision of the state Constitution, (2) did not violate the code’s prohibition against adjustments, and (3) was reasonable.

Alford v. State, Dept. of Admin., Div. of Retirement and Benefits, 195 P.3d 118 (Alaska 2008)

In order to receive a vested right to free health insurance benefits offered by a retirement system, an employee must meet all of the conditions set forth by the system.

A former city employee argued that he is entitled to free health insurance upon retirement because a no-premium-cost provision was in effect when he completed 15 years of service with the City in 1999. The employee argued that when a management employee completes 15 years of service, the employee is entitled to the no-premium-cost provision under the health insurance benefit in effect at that time, even if the management employee has not attained the specified retirement age and has not retired. In sum, the employee argued that although he could not receive a retiree’s health insurance benefit until he retired at age 60, he earned the retiree benefit upon his completion of 15 years of service. According to the employee, attaining the retirement age of 60 and retiring are conditions precedent to receipt of the free health insurance benefit. In contrast, the City argued that the employee was entitled only to the shared-premium-cost health insurance because he did not attain the age of 60 and did not retire until 2005. The court agreed with the City stating that the free health insurance plan does not govern the employee’s health insurance on his retirement in 2005. The free health insurance plan clearly provided health insurance to management employees who met three conditions: the management employee had to retire; had to be between the ages of 60 and 65; and had to have 15 or more years of city service. Before 2004, the employee only met one of the qualifications for no-premium-cost health insurance, 15 years of employment with the City. The employee had not attained the age of 60 and he did not retire while the free health insurance plan was in effect. The court held that the employee did not satisfy all three requirements before the health insurance plan was amended to take effect in 2004.

Loth v. City of Milwaukee, 758 N.W.2d 766 (Wis. 2008).

DROP election form providing that participation is subject to future Collective Bargaining Agreements was binding upon the DROP participants.

The Police Association and Millcreek Township entered into a series of collective bargaining agreements governing the terms and conditions of employment of the Township’s police officers. The first CBA was effective from January 1, 2000, through December 31, 2002 (“2000 CBA”). At the end of 2002, the Association and the Township agreed to extend the terms of the 2000 CBA. The contract extension also created a Deferred Retirement Option Program (“DROP”) for officers. In 2004, the Association and the Township negotiated a new CBA (“2005 CBA”). The provisions regarding health coverage of the 2000 CBA were retained in the 2005 CBA. The Township was still required to pay the premium cost for health care with the same or comparable benefits as before retirement, and retired officers were still required to certify annually that they were not eligible for hospitalization coverage without cost to them by virtue of other employment, or spousal coverage. DROP participants signed a DROP election form which stated that their participation in the DROP was governed by the prevailing collective bargaining agreement. When the Township implemented the new health plan in the 2005 CBA, it continued to provide the former officers with indemnity plan coverage during 2005. As their separation dates approached, however, the Township advised the officers that they would have to take health insurance coverage available to them through their spouses. The officers filed grievances asserting that the coverage available through their spouses was not comparable to the Township’s indemnity type coverage and was not available without cost. The officer requested to remain on the Township’s indemnity plan and sought reimbursement for out-of-pocket expenses they had incurred while on their spouses’ plans. In its response to the grievances, the Township argued that the officers did in fact have available insurance coverage through their spouse without cost to them as that term is used in the contract, and in the alterative, the terms of the contract apply and limit the Township’s obligations to providing secondary coverage. The court held that the prevailing agreement was the 2005 CBA. If the officers did not want to accept the possibility that subsequent agreements might alter their benefits, they were free not to elect to participate in the DROP. There was nothing unilateral about the change in health insurance benefits, or unconstitutional in holding that the officers’ insurance benefits were governed by the 2005 CBA.

Millcreek Tp. Police Ass’n v. Millcreek Tp., 960 A.2d 904 (Pa. Cmwlth. 2008)

Evidence that is accepted as credible by the trier of fact could be sufficient competent and substantial evidence to rebut the firefighter’s presumption and establish non-work related causation.

A former deputy sheriff suffered a heart attack while he was sleeping. He sought workers’ compensation benefits, alleging that stress from his job as a police officer had caused the heart attack and that he was entitled to invoke section 112.18(1), Florida Statutes, often referred to as the “firefighter’s presumption.” At the hearing, the medical evidence presented unanimously supported a conclusion that claimant’s heart attack was facilitated and, more likely than not, caused by a genetic condition known as combined familial hyperlipidemia (“CFL”). Both the officer’s treating physician, and the independent medical examiner (“IME”) agreed that CFL results from a genetic pre-disposition that affects the body’s ability to handle cholesterol. Both doctors stated that this genetic factor, was the primary cause of the heart attack because studies of CFL revealed that an individual with CFL has over three times the risk of developing a heart attack versus someone without this condition. The officer’s treating physician indicated that work related exposures could not have caused the heart attack, and he confirmed that the officer suffers from CFL. Section 112.18(1) establishes a presumption that certain health conditions incurred by any designated firefighter or law enforcement officer are accidental and have been suffered in the line of duty. The presumption can be rebutted by competent evidence. Nothing in this statute indicates that the legislature required an elevated burden of proof to rebut the presumption. The presumption does not vanish upon presentation of contrary evidence. Instead, it remains with the claimant and is itself sufficient to support an ultimate finding of causation unless overcome by evidence of sufficient weight to satisfy the trier of fact that the tuberculosis, heart disease or hypertension had a non-work related cause. It is the evidence of non-work related causation that may be found to rebut the presumption, not the mere existence of risk factors or conditions. The employer’s ability to rebut the presumption is not limited by an obligation to demonstrate a single non-work related cause, in that non-work related causation may be demonstrated by a combination of wholly non-work related causes. For example, if the employer’s medical testimony shows that several non-work related factors are the cause of a heart attack, and such evidence is accepted as credible by the trier of fact, such testimony could be found sufficient as competent evidence to rebut the statutory presumption and establish non-work related causation. If a trier of fact finds that a claimant is entitled to the presumption even in the face of contrary evidence, the presumption itself can provide the competent evidence to uphold the trier’s ruling for the claimant. Likewise, if the record contains competent substantial evidence of causation upon which the trier of fact relies in finding the presumption to have been rebutted, its ruling for the employer should be upheld. The court stated that in the present case, the IME provided competent substantial evidence of causation that CFL was the major contributing cause of the heart attack.

Punsky v. Clay County Sheriff’s Office, ___ So.2d ___, 2009 WL 564953 (Fla. 1st DCA 2009)

Possibility that the IRS would not recognize a tax shelter plan is a foreseeable event.

The Austin Firefighters Relief and Retirement Fund (“AFF”) was contacted by KPMG to promote its SC2 tax shelter scheme and eventually recruited AFF to participate in five separate SC2 transactions arranged by KPMG. KPMG explained the nature of the proposed transactions, as follows:

“Under a little known IRS ruling (Revenue Ruling 58-154), individuals are permitted to donate cash and other property to municipal pension plans and obtain a tax deduction. Our client is looking to donate certain financial interests in his closely held business and thereby obtain a deduction under the above Revenue Ruling. The financial interests will be equity interests which will not subject the holder to any potential liabilities of the business. We anticipate the fair market value of these financial interests will be at least $500,000. Under Federal and State tax law most holders of these financial interests would be taxed on the income from the underlying business (including most tax-exempt entities because the income will constitute “unrelated taxable business taxable income” or “UBTI”), even though the income will not actually be distributed to the holder. Therefore, it does not make economic sense for most entities to accept these financial interests because the tax burden associated with ownership would exceed the value of the financial interest. Your organization would be required to hold the financial interest for a minimum specified period of time, and at the end of that time period your organization will have the right to present financial interests for redemption.”

For the tax years 2001, 2002, 2003 and 2004, the parties acted in conformance with the SC2 transaction. KPMG’s client’s, income was allocated ninety percent to AFF and ten percent to BBG/Brown. As a tax-exempt entity, AFF did not have to pay taxes on its ninety-percent allocation, and BBG/Brown paid taxes on his ten-percent allocation. No dividends were declared and distributed during 2001, 2002 or 2003. In January 2004, BBG/Brown declared and distributed a dividend of $200,000 to AFF. Later, the IRS issued a notice declaring the SC2 shelter at issue to be an abusive tax avoidance transaction and deemed such arrangements “listed transactions,” and also declared that tax-exempt parties in the transactions including AFF would be treated as participants in the transactions. Subsequently, the AAF provided formal notice of its intent to redeem the client’s stock, as provided by the SC2 agreement. However, the other participating parities took the position that the SC2 was void and unenforceable due to the IRS’s disallowance of the tax benefits which were the foundation of the transaction. The court held that the SC2 agreement was a completed gift to the AAF. The court found that AFF’s was not unjustly enriched. The court found that BBG/Brown failed to show that estoppel could apply in this case. The court held that even assuming for the sake of argument that the Mississippi courts would recognize the frustration of purpose defense, the doctrine cannot apply because the risk that Brown/BBG would not receive the favorable tax treatment desired was disclosed by KPMP and hence was a foreseeable event. The court held that there was adequate consideration in light of the parties’ mutual promises respecting redemption of the shares; and that there was no failure of consideration. However, the court deny the parties’ motions for summary judgement on issue illegality/public policy because it could not, at the time conclude as a matter of law that the transaction should be undone on this basis.

Austin Firefighters Relief and Retirement Fund v. Brown, 2008 WL 4450253 (S.D. Miss. 2008)

Pension benefits untainted by a felony conviction may not be forfeited.

Illinois Governor, George H. Ryan, (“Ryan”), brought an action challenging the termination of his pension benefits. The Board held that Ryan forfeited his pension earned through his service as a member of the General Assembly, Lieutenant Governor, Secretary of State and Governor, following felony convictions. Ryan appealed, arguing that section the Pension Code limits forfeiture to the period of service in such office as is connected to a felony conviction. Ryan also argued that partial forfeiture satisfies the rationale underlying the statute. In 1966, Ryan was appointed to the Kankakee County Board of Supervisors. Ryan. While serving on the Kankakee County Board of Supervisors, Ryan contributed to the Illinois Municipal Retirement Fund (“IMRF”). Ryan was later elected to the General Assembly, and he became a member of the General Assembly Retirement System (the “System”). Ryan requested to transfer his credits earned in the IMRF into the System. Ryan continued to participate in the System while serving as Lieutenant Governor, Secretary of State and Governor. In December 2003, a federal grand jury indicted Ryan on felony charges for racketeering, conspiracy, mail fraud, making false statements to the Federal Bureau of Investigation, and income tax violations. These charges were premised on conduct that arose out of and in connection with Ryan’s service as Secretary of State and Governor, and a jury found Ryan guilty on all counts. The Board initiated forfeiture preceding as required by the Pension Code which provides that benefits shall not be paid to any person convicted of any felony relating to or arising out of or in connection with his or her service as a member. On appeal, Ryan argued that the plain language of the Pension Code limits forfeiture to those benefits earned through service in the specific office connected to the felony convictions. Ryan did not dispute the termination of his benefits earned while serving as Secretary of State and Governor, but contended that there is no nexus between his service as a member of the General Assembly and Lieutenant Governor and his felony convictions. The Board maintained that all of Ryan’s benefits were subject to forfeiture because his felony convictions arose out of his service to the State of Illinois as a member of the System. Therefore, the question on appeal was whether the forfeiture provision a member of the General Assembly Retirement System from receiving all of his or her pension if convicted of a felony “relating to or arising out of or in connection with his or her service as a member.” Ultimately the court concluded that the public policy behind the felony forfeiture provisions is to discourage malfeasance. This purpose is not negated by allowing the participant to keep that part of his pension untainted by his felony conviction. Ryan will still suffer a financial loss in the termination of the pension benefits he earned while serving as the Secretary of State and Governor. Ryan served the State of Illinois for 30 years and will be losing his pension for 12 of those years, presumably the years he received the highest salary.

Ryan v. Board of Trustees of General Assembly Retirement System, ___ N.E.2d ___, 2009 WL 323205 (Ill. 1st DCA 2009)

Putative class representative must file a notice of claim with the specific amount for which would settle his own claim.

In a class action lawsuit, Arizona law requires the putative class representative to include in his notice of claim a specific amount for which his individual claim can be settled. The notice should also include a statement that, if litigation ensues, the representative intends to seek certification of a class. If a class is later certified, the notice of claim will serve as a representative notice for other class members. A class claim meets the settlement demand requirement if it identifies the amount for which an individual putative class representative would settle his own claim and puts the governmental entity on notice of the claimant’s intention to pursue a class action if his claim does not settle. In this case, the notices filed by the class representatives did not include amounts for which their individual claims could be settled and therefore failed to satisfy the demand requirement. However, the Class argued that even if these notices were deficient, the City and the Board waived this affirmative defense. The City and Board responded that the court should not consider this argument because it was not raised in the court of appeals. Generally, the court does not address arguments raised in the trial court but not in the court of appeals. The court stated that this rule is procedural, not substantive, and may be suspended in its discretion. The court stated that if the City and Board had promptly sought judicial resolution of their notice of claims defense, the other members of the class would have been spared considerable expense and the judicial system a significant expenditure of its resources. Most importantly, the non-representative members of the class would have been alerted before class certification to the need to file their own separate notices of claim. The court held that, even assuming that the City and Board preserved the notice of claims defense in their original joint answer, they waived this defense against the claims in the original complaint by their subsequent participation in the litigation before raising this defense.

City Of Phoenix v. Fields, ___ P.3d ___, 2009 WL 395395 (Ariz. 2009).


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