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New Jersey Education Assocation v. Board of Trustees

January 19, 2000

NEW JERSEY EDUCATION ASSOCIATION, PETITIONER/APPELLANT,
v.
BOARD OF TRUSTEES, PUBLIC EMPLOYEES' RETIREMENT SYSTEM, AND
BOARD OF TRUSTEES, TEACHERS' PENSION AND ANNUITY FUND,
RESPONDENTS/RESPONDENTS.



Before Judges Muir, Jr., Wallace, Jr. & Lesemann.

The opinion of the court was delivered by: Wallace, Jr., J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: November 3, 1999

On appeal from the Board of Trustees of the Public Employees' Retirement System and the Teachers' Pension and Annuity Fund.

The New Jersey Education Association (NJEA) challenges the validity of regulations adopted by the Board of Trustees of the Teachers' Pension and Annuity Fund (TPAF) and the Board of Trustees of the Public Employees' Retirement System (PERS). The regulations require all retired persons receiving a disability pension to undergo a medical examination if the Board has good cause to believe the retiree is no longer disabled. NJEA contends the regulations exceed the requirements of the underlying statutes and therefore are invalid. We agree and reverse.

I.

The two challenged regulations, although they have minor variations in language, are identical in purpose and are based on similarly worded statutory authority and principles. The parties in their respective brief focus on the regulation adopted by the TPAF Board. We do likewise.

The TPAF is governed by a Board of Trustees which establishes rules and regulations for the administration and transaction of its business and controls the pensions entrusted to it. N.J.S.A. 18A:66-56. The TPAF provides pension allowances to retirees from the system, including those who retire based on a disability pension. N.J.S.A. 18A:66-39(b). This section provides that a member under sixty years of age who has ten or more years credit for New Jersey service may apply and be approved for a disability pension if a physician designated by the board shall first certify "that the member is physically or mentally incapacitated for the performance of duty and should be retired." Ibid. Subsection (c) of N.J.S.A. 18A:66-39 also allows the retirement of a member for accidental disability. N.J.S.A. 18A:66-39(c). A person retired on ordinary disability receives an allowance of at least forty percent of his annual compensation, while a person retired on an accidental disability pension receives two-thirds of his or her highest annual compensation. N.J.S.A. 18A:66-41(b); N.J.S.A. 18A:66-42(b).

N.J.S.A. 18A:66-40 [hereinafter the Statute] determines certain rights and obligations of members who retire on ordinary and accidental disability pensions. The Statute authorizes limited re-examination of these members as follows:

[o]nce each year the retirement system may, and upon his application shall, require any disability beneficiary who is under the age of 60 years to undergo medical examination by a physician or physicians designated by the system for a period of 5 years following his retirement in order to determine whether or not the disability which existed at the time he was retired has vanished or has materially diminished. If the disability beneficiary is engaged in an occupation, then the amount of his pension shall be reduced to an amount which, when added to the amount then earned by him, shall not exceed the amount of the salary now attributable to his former pension.

If a disability beneficiary, while under the age of sixty years, refused to submit to at least one medical examination in any year by a physician or physicians designated by the system, his pension shall be discontinued until withdrawal of his refusal. If the report of the medical board shall show that such beneficiary is able to perform either his former duty or other comparable duty which his former employer is willing to assign to him, the beneficiary shall report for duty; such a beneficiary shall not suffer any loss of benefits while he awaits his restoration to active service. If the beneficiary fails to return to duty within 10 days after being ordered so to do, or within such further time as may be allowed by the board of trustees for valid reason, as the case may be, the pension shall be discontinued during such default. [Emphasis added] [N.J.S.A. 18A:66-40(a).]

This Statute remains intact and has not been amended since 1971. The original implementing regulation, N.J.A.C. 17:3-6.13, effective on March 5, 1980, provided as follows:

(a) All disability retirants, under the normal retirement age, may be required to undergo a medical examination each year for a maximum period of five years by a physician designated by the Fund as of the anniversary date of their retirement, unless such examination requirement has been waived by the Board.

(b) Failure on the part of a retirant to submit to the required medical examination shall result in the automatic suspension of his retirement allowance until he submits to a medical examination. ...


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