September 20, 2010

New York State Comptroller alleges retired police officer involved in a "pension padding scheme"

New York State Comptroller alleges retired police officer involved in a "pension padding scheme"
Source: Office of the State Comptroller

State Comptroller Thomas P. DiNapoli announced in a press release issued on September 17, 2010 that his Department's investigators found that a retired City of Rome Police Officer, Thomas C. Hubal, was involved in a “pension padding scheme."

The Comptroller said that Hubal was indicted “for illegally collecting more than $88,000 from the New York State and Local Retirement System over a nine-year period.” According to a report* published in September 2010 by the Comptroller's Investigations Unit, investigators from the Investigations Unit and Oneida County District Attorney Scott McNamara’s office found that Hubal was working for the Rome City School District without having obtained a waiver from the State Civil Service Commission, as required by State Law,** and without notifying the Comptroller’s Office that he would be returning to public employment.

In general, §150 of the New York State Civil Service Law prohibits a retired member of a public retirement system of this state*** collecting a retirement allowance from a New York public pension system from being employed by New York State or a political subdivision of New York State and simultaneously collecting a salary in excess of statutory salary limits imposed for such retirees returning to public service by law.

There are, however, certain exceptions to this general prohibition whereby:

1. A retiree who is age 65 or more may return to public sector employment without a reduction or suspension of his or her pension regardless of the amount of his or her public sector compensation;

2. The retiree may suspend his or her retirement allowance and rejoin the Retirement System;

3. The retiree, regardless of age, may be reemployed by the State or a political subdivision of the State without any reduction or suspension of his or her pension if he or she does not earn a salary in excess of the earnings limits set out in the RSSL.

4. A retiree "may be able to temporarily (and for a finite period of time)" earn a public sector salary in excess of the limits imposed by the RSSL if the retiree and the retiree’s prosective appointing appointing authority (on his or her behalf) apply for and are granted a waiver under very specific circumstances" prescribed in §211.

Although the New York State Retirement and Social Security Law permits a retiree receiving a retirement allowance from a public retirement system of New York State to temporarily return to work for a public entity without a reduction in his or her existing retirement benefits, provided the retiree satisfies specific legal requirements to do so, Hubal, said the Commissioner, "circumvented those legal requirements."

The Comptroller said that Hubal was arraigned in Oneida County Court on Friday, September 17, 2010 and charged with second-degree grand larceny and defrauding the government, both felonies.

The Comptroller also said Department investigators found evidence suggesting that others in the school district attempted to help Hubal illegally “double-dip,” commencing with Hubal’s hiring by school district officials in 1995 and their disregarding the requirements set out in New York State's laws concerning the reemployment of individuals receiving a retirement allowance from a public retirement system of this State.

In addition, DiNapoli said that the investigators found evidence suggesting that school district officials allowed Hubal to collect funds for travel and other expenses without the required documentation to support such expenses in excess of $20,000.

A retiree's failure to obtain the required §211 waiver in a timely fashion could result in civil financial liability as well. For example, in Freda v Board of Educ. of City of New York, 224 A.D.2d 360, the court ruled that the NYC Police Retirement System could “recoup” over $100,000 of the retirement allowance that had be paid to Freda because the required §211 approval had not been obtained prior to his being reemployed by the New York City Board of Education following his retirement from the New York City Police Department.

However, there are no limitiations with respect to the reemployment of a retiree of a New York public retirement system by an employer in the private section, by the federal government or by another state or a political subdivision of another state.

* The full text of the Comptroller’s report is posted on the Internet at http://www.osc.state.ny.us/reports/investigations/Rome_Report.pdf

** See §150 of the Civil Service Law and §211 of the Retirement and Social Security Law.

*** The Optional Retirement Plans, available to certain employees of SUNY, CUNY, the statutory colleges at Cornell and Alfred Universities, the community colleges and the New York State Department of Education, are not public retirement systems of this State within the meaning of Article V, §7 of the State Constitution.
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