Jay A Kravitz, a licensed physician, provided part-time professional services to four public school districts since the mid-1980s. In the course of his providing such services, Kravitz was reported as a school employee to the New York State and Local Employees' Retirement System [ERS] and made annual employer contributions toward his public pension.
In a September 2011 letter from ERS notified Kravitz that ERS had been determined that he was an independent contractor rather than an employee of the school districts that he served and thus would lose approximately 20 years of member service credits in the Retirement System. Kravitz was also advised that  he had the right to a hearing to challenge the determination;  if no hearing was requested within four months, the service credits would be removed and  any contributions he made would be refunded.
Kravitz timely requested a hearing, but such a hearing had not been held as of the date of this decision by the Appellate Division. The court noted that the record includes a November 2012 letter from Kravitz's attorney requesting that the hearing be deferred until the following August due to Kravitz's absence from the country.
In October 2012, Kravitz filed an application with the Retirement System but ERS advised Kravitz that as a result of “the loss of approximately 20 years of service credits,” his remaining 1.55 years of service credits “rendered him ineligible to receive a pension benefit at that time.” Kravitz's attorney objected to ERS “removal of Kravitz's service credits” and requested that ERS process Kravitz's retirement application pending the hearing. ERS, however, advised Kravitz that he was not eligible for retirement benefits because he had insufficient years of service credits and canceled his retirement application.
Kravitz then commenced a CPLR Article 78 action seeking a judgment declaring that ERS' removal of his service credits and refusal to accept and process his retirement application was, among other things, arbitrary and capricious and a violation of due process. ERS asked Supreme Court to dismiss Kravitz's petition “for failure to state a cause of action” and for his failure to exhaust administrative remedies. Finding that Kravitz failed to exhaust his administrative remedies, Supreme Court granted ERS' motion.
ERS contended that inasmuch as it has not made a final determination with regard to Kravitz's service credits and retirement application, the matter is not ripe for judicial consideration, citing Swergold V Cuomo, 70 AD3d 1290. Kravitz argued that even though no hearing has occurred, the matter is ripe for judicial review because ERS had already removed his service credits and canceled his retirement application, resulting in a violation of his constitutional due process rights to such a predeprivation hearing.
The Appellate Division said that it agreed with Kravitz and vacated the Supreme Court's ruling.In Swergold the Appellate Division found that the member's due process claims “were rendered moot and/or were premature after the Retirement System restored their service credits pending administrative hearings and averred that it would not revoke those credits until the completion of such hearings.”
In contrast to Swergold, in Kravitz, said the court, ”not only has the Retirement System removed Kravitz's service credits, it has also canceled Kravitz's retirement application and has not represented that it would restore his service credits until his hearing is completed and a final determination is rendered.”
Accordingly, requiring Kravitz to exhaust his administrative remedies arguably could cause irreparable injury, for example, in the event of his death pending an administrative hearing.
Under these circumstances, said the Appellate Division, it concluded that Kravitz “has a cognizable constitutional claim regarding the prehearing removal of his service credits and cancellation of his retirement application that is ripe for our review and survives [ERS'] motion to dismiss.
As Kravitz's appeal was before the Appellate Division on ERS' pre-answer motion to dismiss, the court ruled that the matter must be remitted to Supreme Court to permit ERS to serve an answer to Kravitz's petition.
However, in a footnote to its ruling, Appellate Division said that “Considering the viability of the petition, we are of the view that [ERS] should be precluded from removing Kravitz's service credits and refusing to accept his retirement application until a final determination is made by Supreme Court with respect to the petition and by the Comptroller as to his employment status after an administrative hearing.”
The decision is posted on the Internet as:http://www.nycourts.gov/reporter/3dseries/2014/2014_08284.htm