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Wednesday, January 02, 2013

Retiree’s application to change the retirement option selected filed more than thirty days after her effective date of retirement rejected as untimely


Retiree’s application to change the retirement option selected filed more than thirty days after her effective date of retirement rejected as untimely
Feuer v State of New York, 2012 NY Slip Op 09129, Appellate Division, Third Department

Prior to retiring in June 2009, a teacher, a Tier 4 member of the New York State Teachers' Retirement System [TRS], met her financial advisor and a TRS representative for a preretirement consultation. The teacher then submitted her application for retirement, selecting the option entitled "Largest Lump Sum," which provided the "largest possible lump sum payment to a beneficiary" following the member's death (emphasis in the decision), and designated her niece and nephew as her beneficiaries.

The retirement application the teacher completed also detailed another option available to a retiree entitled the "Maximum" option. It described this option as follows: "MAXIMUM — Do not designate a beneficiary if you select this option. This election will provide you with the largest possible annual benefit. All payments will cease at your death."

In addition, the application stated that, in the event an applicant wished to change options, notice of such a change had to be received by the Retirement System "within 30 days after [the] effective date of retirement" —  in this retiree's case, no later than July 30, 2009.

After submitting her application, the retiree received a letter from the Retirement System dated March 23, 2010, summarizing her retirement benefits and established her monthly pension payment. More then 30 days after the effective date of her retirement, however, the now retired teacher notified the Retirement System that she wanted to change her retirement option selection from "the Largest Lump Sum" option to the "Maximum" option.

The Retirement System denied her request and the retiree filed a petition with the Court of Claims seeking permission to file a late notice of claim.*

The Court of Claims denied her request because the retiree, by her own admission, did not notify the Retirement System that she wanted to change her retirement option within 30 days of the effective date of her retirement. The Appellate Division affirmed the Court of Claims’ ruling, explaining that the Court of Claims is a court of limited jurisdiction that has no capacity "to grant strictly equitable relief, [although it] may grant incidental equitable relief so long as the primary claim seeks to recover money damages in appropriation, contract or tort cases."

Although the relief that the retiree seeks is couched in money damages,** the Appellate Division characterized her application as requiring  the review of an administrative agency's determination. In that regard, the Appellate Division noted that the money damages that the retiree sought were calculated by using as a base figure what she would have received as her pension benefit had she initially selected the "Maximum" option.

The bottom line: The Appellate Division ruled that as the retiree, in essence sought judicial review and reversal of an administrative determination made by the Retirement System, the Court of Claims lacked subject matter jurisdiction and it properly denied the retiree's motion for leave to file a late notice of claim.

* The retiree also sued TRS’ representative in Supreme Court, contending that the representative was negligent regarding the her retirement options. Supreme Court dismissed this action as it sought money damages from a state employee in connection with the performance of her duties and, as such, could only be commenced in the Court of Claims.

** The Appellate Division said that the relief that the retiree sought would result in her receiving “windfall, because not only would she receive the monthly pension benefit under the Maximum option, but she still would have a lump sum available to her beneficiaries upon her demise.”

The decision is posted on the Internet at: http://www.courts.state.ny.us/reporter/3dseries/2012/2012_09129.htm

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