IN RE ADOPTION OF N.J.A.C. 17:1-6.4, 17:1-7.5 and 17:1-7.10.
April 23, 2018
appeal from the New Jersey Department of the Treasury,
Division of Pensions and Benefits.
Richard A. Friedman argued the cause for appellant New Jersey
Education Association (Zazzali, Fagella, Nowak, Kleinbaum
& Friedman, attorneys; Jason E. Sokolowski and Richard A.
Friedman, of counsel and on the brief; Kaitlyn E. Dunphy, on
Chung, Deputy Attorney General, argued the cause for
respondent New Jersey Department of the Treasury, Division of
Pensions and Benefits (Gurbir S. Grewal, Attorney General,
attorney; Melissa H. Raksa, Assistant Attorney General, of
counsel; Amy Chung, on the brief).
Judges Fasciale, Sumners and Moynihan.
appeal focuses on the 2016 re-adoption of N.J.A.C. 17:1, with
amendments (the Re-adoption), promulgated by the Department
of the Treasury, Division of Pension and Benefits (Division).
The Re-adoption governs the disability retirement application
process for various State public retirement systems. In
challenging amended N.J.A.C. 17:1-6.4, N.J.A.C. 17:1-7.5, and
N.J.A.C. 17:1-7.10, the New Jersey Education Association
(NJEA) argues the Division exceeded its statutory authority
and acted arbitrarily. The NJEA urges us to invalidate the
that administrative regulations are entitled to a presumption
of validity and reasonableness, and giving the Division wide
latitude to achieve its legislatively assigned tasks, we hold
that most of the challenged regulations comport with the
terms and objectives of the governing statutes. That is, the
Division mainly acted consistently with the enabling
statutes, which it reasonably interpreted. Yet, there are a
few instances where that is not the case.
uphold N.J.A.C. 17:1-6.4 (the separation from service
rule); N.J.A.C. 17:1-7.10(a)(1) (part of the
documentation amendment); N.J.A.C. 17:1-7.10(e) (the
certification amendment); N.J.A.C. 17:1-7.10(f) (the one
retirement application amendment); N.J.A.C. 17:1-7.10(j) (the
notification amendment); and N.J.A.C. 17:1-7.5(c) and (c)(1)
(part of the subsequent independent medical examination (IME)
amendment). But we invalidate N.J.A.C. 17:1-7.5(c)(2) through
(c)(4) - which require applicants to pay for subsequent IMEs
- and N.J.A.C. 17:1-7.10(a)(2) - which requires applicants to
pay for addenda to IMEs.
general, the primary practical effect of our holding - as to
the separation of service rule - maintains the longstanding
principle that eligibility for disability retirement benefits
requires members to make a prima facie showing that they
cannot work due to a disability. To that end, voluntary or
involuntary termination of employment, for non-disability
reasons, generally deems a member ineligible for disability
benefits. Such a holding comports with the existing overall
framework of the enabling, eligibility, and rehabilitation
statutes, and policies applicable to the various State public
retirement systems. To hold otherwise would require us to
re-write the text of multiple statutes, which has never been
the role of the judiciary.
familiar standard of review guides our holding and analysis.
"Administrative regulations are entitled to a
presumption of validity and reasonableness." In re
Adoption of N.J.A.C. 11:3-29, 410 N.J.Super. 6, 24 (App.
Div. 2009). "The party challenging the agency action
bears the burden of overcoming" this presumption.
Id. at 25.
will "overturn an administrative determination only if
it was arbitrary, capricious, unreasonable or violated
express or implied legislative policies." Id.
at 24-25. Administrative agencies have wide discretion to
decide "how best to approach legislatively assigned
administrative tasks." In re Failure by the
Dep't of Banking & Ins., 336 N.J.Super. 253, 262
(App. Div. 2001). It has been a longstanding principle that
"the grant of authority to an administrative agency is
to be liberally construed ... to enable the agency to
accomplish its statutory responsibilities." N.J.
Guild of Hearing Aid Dispensers v. Long, 75 N.J. 544,
562 (1978). As a result, "courts should readily imply
such incidental powers as are necessary to effectuate fully
the legislative intent." Ibid.
"[a]n administrative regulation 'must be within the
fair contemplation of the delegation of the enabling
statute.'" Id. at 561-62 (quoting S.
Jersey Airways, Inc. v. Nat'l Bank of Secaucus, 108
N.J.Super. 369, 383 (App. Div. 1970)). We usually apply
substantial deference to a regulation promulgated by an
agency. But the application of "substantial
deference" afforded to regulations is only available if
they are "consistent with the governing statutes'
terms and objectives." In re Adoption of Amendments
to N.J.A.C. 6:28-2.10, 3.6 & 4.3, 305 N.J.Super.
389, 401 (App. Div. 1997).
determine if an agency had the requisite authority to issue a
regulation, courts strive "to determine the intent of
the Legislature." Med. Soc'y of N.J. v. N.J.
Dep't of Law & Pub. Safety, 120 N.J. 18, 26
(1990). We begin with the statutory language, the best
indicator of legislative intent. DiProspero v. Penn,
183 N.J. 477, 492 (2005). Here, the text is not contained in
only one statute, but appears in multiple statutes related to
several State public retirement systems.
analysis, however, of whether the Legislature authorized the
challenged regulations is not limited to a plain reading of
one provision in a large statutory scheme. "[A]
reviewing court 'may consider the entire enabling
legislation .... to ascertain if there is in fact sufficient
underlying authority [for a regulation].'" In re
N.J.A.C. 7:1B-1.1, 431 N.J.Super. 100, 119 (App. Div.
2013) (quoting Long, 75 N.J. at 561). In a similar
vein - like we have done here - courts "may look beyond
the specific terms of the enabling act to the statutory
policy sought to be achieved by examining the entire statute
in light of its surroundings and objectives."
Long, 75 N.J. at 562; accord N.J. Ass'n of
Sch. Adm'rs v. Schundler, 211 N.J. 535, 549 (2012).
Courts defer to the interpretation of legislation by the
administrative agency to whom its enforcement is entrusted,
but only if that interpretation "is not plainly
unreasonable." Merin v. Maglaki, 126 N.J. 430,
436-37 (1992); accord Matturri v. Bd. of Trs. of the
Judicial Ret. Sys., 173 N.J. 368, 382 (2002).
Division administers the Police and Firemen's Retirement
System (PFRS); the Public Employees' Retirement System
(PERS); the Teachers' Pension and Annuity Fund (TPAF);
the State Police Retirement System (SPRS); the Consolidated
Police and Firemen's Pension Fund (CPFPF); the Judicial
Retirement System (JRS); and the Prison Officers' Pension
Fund (POPF). See Burgos v. State, 222 N.J. 175, 184
(2015). The Re-adoption deals with the Division's
administration of these State retirement systems, and the
challenged regulations generally address disability
retirement eligibility and related applications.
retirement applicants generally apply for ordinary or
accidental disability retirement benefits. There are multiple
statutes that permit these benefits. For example, N.J.S.A.
43:16A-6 to -7 (PFRS); N.J.S.A. 43:15A-42 to -46 (PERS);
N.J.S.A. 18A:66-39 to -42 (TPAF); N.J.S.A. 53:5A-9 to -10
(SPRS); N.J.S.A. 43:16-2 (CPFPF); N.J.S.A. 43:6A-12 (JRS);
and N.J.S.A. 43:7-12 (POPF). The question is whether the
challenged regulations - N.J.A.C. 17:1-6.4, N.J.A.C.
17:1-7.5, and N.J.A.C. 17:1-7.10 - are inconsistent with the
legislative intent expressed in the various enabling
enabling statutes, in their entirety, are N.J.S.A. 43:16A-1
to -68 (PFRS); N.J.S.A. 43:15A-1 to -161 (PERS); N.J.S.A.
18A:66-1 to -93 (TPAF); N.J.S.A. 53:5A-1 to -47 (SPRS);
N.J.S.A. 43:16-1 to -21 (CPFPF); N.J.S.A. 43:6A-1 to -47
(JRS); and N.J.S.A. 43:7-7 to -27 (POPF) - all of which we
have considered in great depth. For purposes of our plain
text analysis, the pertinent language of each statute is
nearly identical or substantially similar: "Upon
retirement for [ordinary, accidental, or special]
disability, a member shall receive" the
applicable retirement allowance. See, e.g., N.J.S.A.
43:16A-6(2), -6.1(2), -7(2) (PFRS) (emphasis added); N.J.S.A.
18A:66-41, -42 (TPAF) (emphasis added); N.J.S.A. 53:5A-9(b)
(SPRS) (emphasis added).
begin by addressing whether N.J.A.C. 17:1-6.4 - the
separation from service rule - is consistent with the
legislative intent expressed in the statutes governing the
State retirement systems. This new rule generally requires
disability retirement applicants to prove that their asserted
disability is "the reason the member left
employment." N.J.A.C. 17:1-6.4(a). The rule also bars
members from applying for a disability retirement if they
voluntarily or involuntarily terminate service for any of the
1. Removal for cause or total forfeiture of public service;
2. Settlement agreements reached due to pending
administrative or criminal charges, unless the underlying
charges relate to the disability;
3. Loss of licensure or certification required for the
performance of the member's specific job duties;
4. Voluntary separation from service for reasons other than a
5. Job abolishment or reduction in force.
its rulemaking, the Division stated that "[d]isability
retirement benefits are intended for members who become
disabled while in active service and can no longer work, not
for members who have voluntarily or involuntarily terminated
service for some other reason." 48 N.J.R. 1306(a) (June
20, 2016). It noted that, "[i]f their service ends on
the basis of other grounds, some members decide to apply for
a disability retirement, in order to try to receive the
highest retirement benefits available under their former
to the Division, the separation from service rule "is
intended to prevent members from applying for a disability
retirement benefit when their service has voluntarily or
involuntarily terminated for reasons unrelated to a
disability." Ibid. It explained that such
do not qualify for disability retirement benefits, as they
were not totally and permanently disabled from performing
their job duties when their service ended; their public
service ended for a reason completely unrelated to a physical
or mental disability ...