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James v. Board of Trustees of the Public Employees' Retirement System

June 20, 2000

ANNIE JAMES,
PETITIONER-APPELLANT,
V.
BOARD OF TRUSTEES OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM,
RESPONDENT-RESPONDENT.



The opinion of the court was delivered by: LaVECCHIA, J.

Argued February 15, 2000

On certification to the Superior Court, Appellate Division, whose opinion is reported at 323 N.J. Super. 100 (1999).

On February 21, 1997, petitioner, Annie James, filed for accidental disability retirement under the Public Employees' Retirement System (PERS). The Board of Trustees of the Public Employees Retirement System (PERS Board) rejected her application, finding it to be untimely. In so concluding, the PERS Board rejected petitioner's contention that her employer had a statutory obligation to make pension payments on her behalf during that period of time when she was entitled to receive permanent partial disability benefits under the New Jersey Workers' Compensation Act for a work related injury. The PERS Board conceded that N.J.S.A. 43:15A-25.1 requires an employer to make contributions on behalf of an employee who is awarded temporary disability benefits, but found no equivalent employer obligation in the case of permanent partial disability benefits, because it did not view those payments as payments made "in lieu of [her] normal compensation."

The Appellate Division affirmed the PERS Board. James v. Board of Trustees, PERS, 323 N.J. Super. 100 (App. Div. 1999). We granted certification, 162 N.J. 133 (1999), and now reverse.

We hold that N.J.S.A. 43:15A-25.1 obligates an employer to make pension contributions on behalf of an employee who is awarded either temporary or permanent disability benefits. We also accept the principle that an employer's obligation to make contributions pursuant to N.J.S.A. 43:15A- 25.1 ordinarily will terminate when an employee is validly terminated or if the employee is physically or mentally incapacitated for the performance of duty, meets the requirements for ordinary disability or accidental disability retirement, and is involuntarily retired by his or her employer pursuant to N.J.S.A. 43:15A-42 or -43.

We decline, however, to apply that principle in the unique circumstances of this case. The fact that petitioner was discharged for unauthorized absence from work shall not operate to excuse continuation of employer pension contributions on her behalf for the duration of her permanent partial disability award. Respondent should therefore direct petitioner's employer to make pension contributions for that period and petitioner's application for accidental disability retirement benefits should be accepted as timely filed.

I.

The facts are not in dispute. Petitioner was injured on May 4, 1994 in the course of performing her job at the Woodbridge Developmental Center. She was paid sick leave injury (SLI) benefits through June 30, 1994, when she was cleared by her physicians to return to work. *fn1 From June 30 through July 13, 1994, she took unauthorized sick leave.

After reporting for work on July 14, 1994, she was granted an unpaid leave of absence. On August 24, 1994, while on unpaid leave, petitioner filed a workers' compensation claim. Following successive renewals by her employer, petitioner's unpaid leave of absence expired on November 30, 1994. When she did not return to work for five days after November 30, provide justification for her absence, or respond to a letter informing her of proposed disciplinary proceedings, her employer brought a disciplinary action to remove her from her position. Her employment was terminated on December 8, 1994.

The termination was affirmed by the Merit System Board on August 6, 1996 and no further appeal was taken. No employer contributions to the Public Employee Retirement System were made on her behalf after December 31, 1994, the last month during which she was in active service.

Petitioner's workers' compensation claim was not resolved until May 20, 1997, when a settlement was reached. The terms of the settlement awarded petitioner temporary disability benefits based on full salary for the period May 4, 1994, through June 30, 1994. Those benefits were offset against her sick leave benefits. Petitioner also was awarded permanent partial disability benefits pursuant to N.J.S.A. 34:15-12(c) based on a 10 percent disability for residuals of lumbosacral spine trauma with suggestions of radiculopathy. The permanent partial disability award of $7,380 was calculated on the basis of 60 weeks at $123 per week, representing the weeks between June 30, 1994 and August 23, 1995.

On February 21, 1997, shortly before her workers' compensation claim was resolved, petitioner filed an application for an accidental disability retirement pension. Pursuant to N.J.S.A. 43:15A-43, only members of PERS are permitted to file such applications. Because employer contributions to PERS on petitioner's behalf ceased in December 1994, following her termination from service, *fn2 petitioner's membership in PERS terminated two years later on December 31, 1996. See N.J.S.A. 43:15A-7(e). Accordingly, unless the provisions of N.J.S.A. 43:15A-25.1 are invoked to require employer pension contributions on her behalf for the period of her later determined workers' compensation award, petitioner's application would clearly be untimely. Petitioner, however, would be eligible to apply for accidental disability retirement were the employer obligated to make pension contributions on her behalf for the duration of her workers' compensation award, i.e., through August 23, 1995.

When petitioner filed her application for accidental disability retirement and her case reached the PERS Board, the Board directed an examination into whether petitioner was entitled to receive any additional pension contributions on her behalf from her employer. That review resulted in the PERS Board affirming the position originally taken by the Division of Pensions on petitioner's retirement application, namely that the application was untimely pursuant to N.J.S.A. 43:15A-7(e).

The Board held that N.J.S.A. 43:15A-25.1, which requires an employer to make pension contributions while an employee receives periodic benefits "in lieu of his normal compensation," does not require an employer to make pension contributions for any weeks factored into the calculation of a permanent partial disability benefits award. The Board held that it would credit the employee only with weeks for which temporary disability benefits were paid because it views such benefits as payments in lieu of normal compensation, but it does not consider payments for permanent partial disability as payments "in lieu of compensation." Rather, such payments are perceived by the Board to be compensation to the worker for the injury sustained.

As noted, the Appellate Division affirmed.

II.

We start our analysis by focusing on the text of N.J.S.A. 43:15A- 25.1. The statute provides as follows:

43:15A-25.1 Effect of receiving periodic workmen's compensation benefits

a. If any member of the retirement system receives periodic benefits payable under the Workers' Compensation Law during the course of his active service, in lieu of his normal compensation, his regular salary deductions shall be paid to the retirement system by his employer. Such payments shall be computed, in accordance with section 25 of P.L. 1954, c. 84 (C. 43:15A-25), at the rate of contribution on the base salary subject to the retirement system, just prior to the receipt of the workers' compensation benefits. The moneys paid by the employer shall be credited to the member's account in the annuity savings fund and shall be treated as employee contributions for all purposes. The employer will terminate the payment of these moneys when the periodic benefits payable under the Workers' Compensation Law are terminated or when the member retires.

The member for whom the employer is making such payments, will be considered as if he were in the active service and shall be permitted to continue to make contributions to purchase the additional death benefit coverage provided by section 57 of P.L. 1954, c. 84 (C. 43:15A-57).

b. An application for retirement benefits may be approved by the board of trustees while the member, applying for such benefits, is in receipt of periodic benefits under the Workers' Compensation Law. If a retirant receiving an accidental disability retirement allowance becomes a recipient of periodic benefits under the workers' compensation law after the date of retirement, the pension portion of the retirement allowance payable to the retirant shall be reduced, during the period of the payment of the periodic benefits, dollar-for-dollar in the amount of the periodic benefits received after the date of retirement, subject to the provisions of section 64 of P.L. 1954, c. 84 (C. ...


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