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Friday, April 29, 2011

Court finds Pension Board's failure discontinue the payment of disability retirement benefits obviates the “suspension” of the retiree’s benefits

Court finds Pension Board's failure discontinue the payment of disability retirement benefits obviates the “suspension” of the retiree’s benefits
Matter of Seiferheld v Kelly, 2011 NY Slip Op 03309, Court of Appeals

New York City police officer James J. Seiferheld retired for alleged disability in 2004 and was awarded accident disability benefits. Seiferheld had applied for disability retirement benefits claiming that he suffered from constant pain in his right shoulder and neck, loss of range of motion in his neck and shoulder, and pain radiating into his arm as the result of a line-of-duty accident. This injury, he contended, prevented him from performing police duty. His application was granted, and he was awarded accident disability retirement on May 12, 2004.

Subsequently the police department received information that Seiferheld was working. It instituted an investigation that ultimately reported that Seiferheld was "performing construction work on a daily basis," which work included “picking up siding, passing it to others, lifting it over his head and nailing materials above his head with both arms extended for some time — all tasks performed without apparent difficulty.” A number of these activities were recorded on videotape.

The police department notified the Police Pension Fund that Seiferheld "may no longer be disabled" and the Pension Fund subsequently reexamined him. During his interview with the Pension Fund’s Medical Board Seiferheld said that he "cannot lift any heavy objects . . . cannot work overhead . . . has no outside work and his major occupation is babysitting his two children."

The Pension Fund's Medical Board concluded that Seiferheld’s condition "has improved dramatically," and recommended disapproval of his retirement application. Ultimately the Pension Fund board of trustees voted, over the dissent of several trustees, to invoke New York City Administrative Code §13-254** entitled "Safeguards on disability retirement," under which a disability pensioner found to be able to work may be returned to city service. Seiferheld was placed on a list of candidates eligible to become police officers, but subsequently he was informed that he was "medically disqualified" for that position "due to the presence of an unauthorized substance, cocaine, in your hair sample."* 

When the Pension Fund's Director of Pension Payroll advised Seiferheld "that your pension benefit will be suspended beginning with the July 2007 payroll," Seiferheld filed an Article 78 petition seeking to annul the determination to suspend his pension benefits.

Supreme Court denied the application; the Appellate Division reversed, annulling the suspension of benefits; the Court of Appeals “reluctantly” affirmed the Appellate Division’s ruling.

Characterizing New York City Administrative Code §13-254 as “complicated,” the Court of Appeals explained, in a “simplified summary,” that a “disability pensioner found to be able to work is put on a civil service list, and his or her pension is reduced based on outside earnings and the amount ‘earned . . . or earnable’ in any City job that is offered.”

Noting that the application of the statute to this case presents something of a puzzle, because although Seiferheld was put on a civil service list, he was not, and evidently could not be, offered a job because of his cocaine us, the court commented that “if the statute is mechanically applied, [Seiferheld] might actually benefit from using cocaine, because he presumably does not want to be offered a City job; he wants to remain retired and receive his pension.

Supreme Court, in a thoughtful opinion, correctly concluded that this anomaly could not have been intended by the statute's authors.

The Appellate Division, however, reversed Supreme Court's order, without discussing Supreme Court's analysis of the statute, because the suspension of Seiferheld's benefits "was not directed by the Board of Trustees" of the Pension Fund.

The Court of Appeals concluded that the Appellate Division was correct as it is “clear from a reading of the safeguards statute that action under that statute must be taken by the board.” The court explained that  “However well justified a reduction or termination of benefits may be … the board of trustees has to do it.”

The majority*** of the Court of Appeals, at the conclusion of its opinion, wrote:

“Though [Seiferheld] is entitled to prevail here, the case as a whole is very troubling. It seems from the record that [Seiferheld] either has received or is in a position to claim accident disability benefits for the last seven years, and counting. Yet any reader of this record must have serious doubt that he was ever really disabled. Whether any of the benefits paid to him may be recouped is a subject on which we express no opinion. But we do express the hope that the Pension Fund's board of trustees will generally act to protect the Fund and the public with more efficiency than it has displayed in this case.”

The decision is posted on the Internet at: 
http://www.courts.state.ny.us/reporter/3dseries/2011/2011_03309.htm 

* General Municipal Law §207-a5 provides “The appropriate municipal or fire district officials may transfer such a fireman to a position in the same or another agency or department where they are able to do so pursuant to applicable civil service requirements and provided the fireman shall consent thereto.” while General Municipal Law §207-c4 provides “The appropriate municipal officials may transfer such a policeman to a position in another agency or department where they are able to do so pursuant to applicable civil service requirements and provided the policeman shall consent thereto.” 

** The "safeguards" statute, New York City Administrative Code § 13-254, under which the Pension Fund tried to bring Seiferheld back to work, provides, in relevant part: "Once each year the board [of trustees of the Police Pension Fund] may . . . require any disability pensioner, under the minimum age or period for service retirement elected by him or her, to undergo medical examination. . . . Upon the completion of such examination the medical board shall report and certify to the board whether such beneficiary is or is not totally or partially incapacitated physically or mentally and whether he or she is or is not engaged in or able to engage in a gainful occupation. If the board concurs in a report by the medical board that such beneficiary is able to engage in a gainful occupation, he or she [sic] shall certify the name of such beneficiary to the appropriate civil service commission . . . and such commission shall place his or her name as a preferred eligible on such appropriate lists of candidates as are prepared for appointment to positions for which he or she is stated to be qualified. Should such beneficiary be engaged in a gainful occupation, or should he or she be offered city-service as a result of the placing of his or her name on a civil service list, such board shall reduce the amount of his or her disability pension . . . if any, to an amount which, when added to that then earned by him or her, or earnable by him or her in city-service so offered him or her, shall not exceed the current maximum salary for the title next higher than that held by him or her when he or she was retired." 

*** Justice Pigott, in his dissent, said: “In my view, the Appellate Division erred in finding that the Board of Trustees had not considered what action should be taken with respect to revocation of the Accident Disability Retirement benefits. This error, which the majority of this Court repeats, rests on an assumption that the Board's final determination had merely been that Seiferheld should be returned to work as a police officer. This leaves out a crucial part of the Board's ruling. The Board's final determination was that Seiferheld was not disabled, should not receive disability benefits, and should be returned to work” and would “reverse, deny the petition and dismiss the article 78 proceeding.” 
  

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