NOEMIO OLIVEIRA v. BOARD OF TRUSTEES POLICE AND FIREMEN'S RETIREMENT SYSTEM

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

NOEMIO OLIVEIRA,

Appellant,

v.

BOARD OF TRUSTEES, POLICE AND

FIREMEN'S RETIREMENT SYSTEM,

Respondent.

_______________________________

August 17, 2016

Argued August 2, 2016 Decided

Before Judges Sabatino and Gilson.

On appeal from the Board of Trustees of the Police and Firemen's Retirement System, Department of Treasury, #54547.

Steven J. Kossup argued the cause for appellant.

Danielle P. Schimmel, Deputy Attorney General, argued the cause for respondent (Christopher S. Porrino, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Christin E. Deacon, Deputy Attorney General, on the brief).

PER CURIAM

Noemio Oliveira appeals from a January 13, 2015 final agency decision by the Board of Trustees of the Police and Firemen's Retirement System ("PFRS") denying him deferred retirement benefits under N.J.S.A. 43:16A-11.2 based upon a finding that he had previously been removed from his public employment for misconduct and delinquency. We affirm.

Oliveira was employed as a police officer by the City of Newark from April 1986 until March 2002. In 2001, the Police Department issued six disciplinary charges against Oliveira for chronic inefficiency; misconduct (including alleged interference with a police investigation of his cousin's bar); false pre-employment statements; false statements; failure to report a change of residency; and failure to maintain residency in the State, which was required for his employment as a City police officer.

Following a departmental hearing, Oliveira entered into a negotiated "plea agreement"1 under which he acknowledged making false statements concerning his residency in the state and violating the residency policy. The other charges were "merged" into the admitted false statement charge.

The agreement provided that Oliveira was required to establish permanent residency in the State within six months. He also agreed to be subjected to an annual residency audit for five years. Oliveira further agreed to be demoted in rank for six months. In addition, the agreement specified that if at any time during the five-year audit period he were found to be in violation of the residency policy, he agreed to be "terminated without a hearing." The agreement also imposed a six-month suspension, which was agreed to be held in abeyance unless Oliveira committed an infraction during that period that resulted in "major discipline."

After a follow-up investigation, it was determined that Oliveira had failed to comply with the terms of the agreement by, in particular, failing to move his residence to this State. The City consequently terminated Oliveira from his position.

Oliveira appealed his removal and the matter was transferred to the Office of Administrative Law as a contested case. An Administrative Law Judge ("ALJ") conducted a hearing and issued a decision upholding the disposition in the City's final notice. On July 14, 2004, the Merit System Board in the Department of Personnel adopted the findings of fact and conclusions of law set forth in the ALJ's initial decision. We affirmed the Merit System Board's ruling "substantially for the reasons set forth in [the ALJ's] well-reasoned, written decision[.]" In the Matter of Noemio Oliveira, No. A-6719-03 (App. Div. Sept. 19, 2005) (slip op. at 3).

In April 2014, Oliveira applied for deferred retirement benefits. The PFRS Board rejected his application, concluding that he had been removed "for cause on charges of misconduct or delinquency" and was thus prohibited from receiving retirement benefits under N.J.S.A. 43:16A-11.2. Oliveira sought reconsideration, which the PFRS Board denied. On January 13, 2015, the PFRS Board issued its final administrative determination, finding that the statutes and regulations prohibited Oliveira from receiving deferred retirement benefits.

Oliveira now appeals. He essentially makes four arguments: (1) the PFRS Board incorrectly determined that N.J.S.A. 43:16A-11.2 mandates automatic forfeiture of his pension benefits; (2) his termination was based solely on his lack of residency and did not "touch and concern" his actual duties as a police officer; (3) the term "misconduct" as used in N.J.S.A. 43:16A-11.2 needs to be construed with the entire statutory scheme to signify more egregious conduct than was committed here; and (4) forfeiture of Oliveira's pension would violate the Internal Revenue Code as it applies to public pensions.

In considering these arguments, we apply well-settled principles of appellate review. "The interpretation of a statute by the administrative agency charged with its enforcement is entitled to great weight." Nelson v. Bd. of Educ., 148 N.J. 358, 364 (1997); see also In re Virtua-W. Jersey Hosp. Voorhees for a Certificate of Need, 194 N.J. 413, 422 (2008) ("[T]he overarching informative principle guiding appellate review requires that courts defer to the specialized or technical expertise of the agency charged with administration of a regulatory scheme.").

This deference we accord to administrative agencies such as the PFRS "comes from the understanding that a state agency brings experience and specialized knowledge to its task of administrating and regulating a legislative enactment within its field of expertise." In re Election Law Enf't Comm'n Advisory Op. No. 01-2008, 201 N.J. 254, 262 (2010). Hence, "[a]bsent arbitrary, unreasonable or capricious action, the agency's determination must be affirmed." Wnuck v. N.J. Div. of Motor Vehicles, 337 N.J. Super. 52, 56 (App. Div. 2001) (citing R&R Mktg., L.L.C. v. Brown-Forman Corp., 158 N.J. 170, 175 (1999)). We are not bound, however, by the agency's interpretation of pure questions of law. Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973).

These well-settled principles of deference have been recognized and applied with respect to the various pension boards' administration of the pension statutes. See, e.g., Hemsey v. Bd. of Trs., Police & Firemen's Ret. Sys., 198 N.J. 215, 224 (2009). Our courts have long been cognizant that the pension boards "are fiduciaries and therefore have a duty to protect the [pension] fund[s] and the interests of all beneficiaries thereof[,]" and not just the individual member seeking a retirement allowance. Mount v. Bd. of Trs., Pub. Emps.' Ret. Sys., 133 N.J. Super. 72, 86 (App. Div. 1975).

Applying these principles here, we reject Oliveira's arguments seeking to set aside the PFRS Board's final agency decision. The correctness of that decision is manifest, when this record is examined in light of the applicable law.

First, we agree with the PFRS Board that N.J.S.A. 43:16A-11.2 is the controlling statute here, and that it compels the forfeiture of Oliveira's pension benefits in light of the terms of his plea agreement, his failure to adhere to the terms of that agreement, and the Merit System Board's affirmed determination that upheld his removal from office based on his non-compliance. The statute unambiguously prescribes that a member of the PFRS who has worked ten or more years who is separated before the age of fifty-five may elect to receive a retirement allowance, but only if that separation is "not by removal for cause on charges of misconduct or delinquency." N.J.S.A. 43:16A-11.2. We agree with the PFRS that the City removed Oliveira "for cause" and on "charges of misconduct or delinquency." By its very clear terms, the plea agreement includes Oliveira's acknowledgement of guilt of, among other things, the charge of making a "false statement," which comprises an act of misconduct.

Except for the six-month demotion, the plea agreement held in abeyance other sanctions while Oliveira was afforded the opportunity to comply with the City's residency requirement. Instead of complying, Oliveira continued to violate the residency policy, which triggered the sanction of termination to which he had already agreed. That termination was upheld by the Merit System Board and this court over a decade ago.

We need not reach in this appeal the question of whether the mere violation of a public employer's residency policy may constitute "misconduct or delinquency" that can support the forfeiture of a pension under N.J.S.A. 43:16A-11.2. The present case does not arise in such an setting. Instead, it arises in a context where the public worker has already admitted that he committed misconduct through making false statements, was spared more severe sanctions while he was afforded a chance to comply with the terms of his plea, and then failed to achieve such compliance. As the prior Merit System Board litigation makes clear, Oliveira was justifiably terminated, which amounts to a "removal for cause" within the meaning of N.J.S.A. 43:16A-11.2.

We reject Oliveira's claim that the PFRS Board has misapplied the statutory scheme. His admitted false statement and his subsequent failure to perform his obligations under the plea agreement to establish residency "touch and concern" his employment with the City. Where, as here, a police officer's misconduct is "directly related to his employment" the sanction of pension forfeiture is authorized by the statute. Corvelli v. Bd. of Trs., Police & Firemen's Ret. Sys., 130 N.J. 539, 548 (1992).

Oliveira further contends that the forfeiture of his pension benefits is contrary to the principles articulated by the Supreme Court in Uricoli v. Bd. of Trs., Police & Firemen's Ret. Sys., 91 N.J. 62 (1982) and its progeny, which he argues set forth a multi-factor test that require "a more flexible approach in determining whether the character of misconduct of public employees will justify the deprivation of pension benefits." He stresses in this regard that he has not been found guilty of any criminal offense. These arguments, however, fail for two reasons. First, the Court in Uricoli, a case involving accidental disability benefits under N.J.S.A. 43:16A-7, explicitly noted that N.J.S.A. 43:16A-11.2, which governs early retirement benefits, applies a different test of removal "for cause or charges of misconduct or delinquency," and therefore Uricoli would be ineligible for receiving pension benefits under N.J.S.A. 43:16A-11.2 even if he were eligible for disability benefits under the Court's multi-factor standard. Id. at 74 n.4. Moreover, even if the Uricoli factors governed here, they do not compel reversal of the final agency decision. In particular, factor seven examines "the nature of the [employee's] misconduct or crime," clearly indicating that wrongful conduct need not rise to a level of a criminal offense in order to justify forfeiture. Id. at 78 (emphasis added).

Lastly, we reject as without merit Oliveira's final argument that forfeiture of his pension is contrary to various sections of the Internal Revenue Code, including 26 U.S.C.A. 401 and 414, which he maintains preempt the State's ability to deny him deferred retirement benefits. Although we raised, and reserved for future consideration, such preemption concerns initially in the 1990 opinion now being cited by Oliveira, Widdis v. Pub. Emps.' Ret. Sys., 238 N.J. Super. 70, 77 n.4 (App. Div. 1990), we subsequently held in Debell v. Bd. of Trs., Pub. Emps.' Ret. Sys., 357 N.J. Super. 461 (App. Div. 2003), that federal law does not preempt the State's right to require forfeiture of a public employee's individual pension when he has been terminated for misconduct rendering the member's service dishonorable. We explained in Debell that the pre-empting features of federal law apply to a state's termination of its pension plan, not the termination of an individual worker's employment. Id. at 467-68. Although the situation in Debell involved an employee who engaged in criminal wrongdoing, we find that precedential opinion's rejection of the preemption argument equally applicable to the present context of termination for non-criminal forms of misconduct.

To the extent we have not commented upon them, all other points raised by appellant lack sufficient merit to warrant comment in this opinion. R. 2:11-3(e)(1)(D) and (E).

Affirmed.

1 Although the arrangement is described by the parties as a plea agreement, respondent's counsel agrees that it is civil in nature and not does not involve any criminal disposition.