Deprivation of Deferred Retirement Benefits Due to Conviction of Crime May Occur Only When Offense Relates to Official Duties

In re Hess, 422 N.J. Super. 27 (App. Div. 2011).  Suzanne Hess was employed as a Geographic Information Specialist by the New Jersey Office of Information Technology.  She filed an application for a deferred retirement allowance, to be effective in 2019, after her 60th birthday.  Thereafter, Hess pleaded guilty to two counts of third-degree assault by auto.  Those charges, and others that were dismissed as part of the guilty plea, resulted from a 2005 auto accident that occurred at a time that Hess was driving her personal vehicle while seriously intoxicated.

Later, the Board of Trustees of the Public Employees’ Retirement System (“the Board”) began proceedings that resulted in a court order forfeiting her employment as a result of the guilty plea.  Hess did not appeal that order.  The Board then denied her application for deferred retirement benefits pursuant to N.J.S.A. 43:15A-38.  That statute permits a member of the Public Employees’ Retirement System to receive deferred retirement benefits “after completing 10 years of service, before reaching retirement age, and not by removal for cause on charges of misconduct or delinquency.” 

Hess appealed the denial of deferred retirement benefits to the Appellate Division.  Writing for the panel, Judge Coleman reversed the Board and remanded the case for further review.  

“Pension statutes should be liberally construed and administered in favor of public employees because they represent deferred compensation for a government employee’s service.”  The Board had relied on an earlier case, Borrello v. Public Employees’ Retirement System, 313 N.J. Super. 75 (App. Div. 1998), which had denied deferred retirement benefits under N.J.S.A. 43:15A-38.  But that case involved an employee who had accepted bribes, a violation of his employment duties. 

Judge Coleman noted that, on the purely legal issue presented, the Appellate Division owed no deference to the Board’s interpretation of the statute.  The statutory language, despite the Board’s view that it was “clear and unambiguous” in compelling denial of deferred retirement benefits, had to be construed strictly in favor of Hess.  Citing the rationale of two decisions of the Supreme Court of New Jersey in comparable cases, the panel concluded that “forfeiture of deferred retirement benefits pursuant to N.J.S.A. 43:15A-38 is conditioned on an involuntary removal due to misconduct related to employment.”  Accordingly, the Board had erred by relying on Borrello.  The Appellate Division remanded the matter to the Board for further consideration of whether Hess was eligible for deferred retirement benefits.