IN RE N.J.A.C. 17:2-6.5 (PUBLIC EMPLOYEES' RETIREMENT SYSTEM)

CourtNew Jersey Superior Court Appellate Division
DecidedJune 21, 2021
DocketA-2059-18
StatusPublished

This text of IN RE N.J.A.C. 17:2-6.5 (PUBLIC EMPLOYEES' RETIREMENT SYSTEM) (IN RE N.J.A.C. 17:2-6.5 (PUBLIC EMPLOYEES' RETIREMENT SYSTEM)) is published on Counsel Stack Legal Research, covering New Jersey Superior Court Appellate Division primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
IN RE N.J.A.C. 17:2-6.5 (PUBLIC EMPLOYEES' RETIREMENT SYSTEM), (N.J. Ct. App. 2021).

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2059-18 APPROVED FOR PUBLICATION IN RE N.J.A.C. 17:2-6.5. June 21, 2021 _____________________ APPELLATE DIVISION

Argued April 21, 2021 – Decided June 21, 2021

Before Judges Ostrer, Accurso and Vernoia.

On appeal from the adoption of amendments to N.J.A.C. 17:2-6.5 by the Board of Trustees, Public Employees' Retirement System.

Jason E. Sokolowski argued the cause for appellant New Jersey Education Association (Zazzali, Fagella, Nowak, Kleinbaum & Friedman, attorneys; Richard A. Friedman, of counsel and on the briefs).

Robert E. Kelly, Deputy Attorney General, argued the cause for respondent Board of Trustees, Public Employees' Retirement System (Gurbir S. Grewal, Attorney General, attorney; Sookie Bae, Assistant Attorney General, of counsel; Robert E. Kelly, on the brief).

The opinion of the court was delivered by

OSTRER, P.J.A.D.

To receive an accidental disability pension, a public employee must

prove that his or her "disability was not the result of his [or her]

willful negligence." N.J.S.A. 43:15A-43(a). For over fifty years, the Public Employees' Retirement System (PERS) Board defined "[w]illful negligence"

as "1. [a] [d]eliberate act or deliberate failure to act; or 2. [s]uch conduct as

evidences reckless indifference to safety; or 3. [i]ntoxication, operating as the

proximate cause of injury." N.J.A.C. 17:2-6.5(a) (2017); see N.J.A.C. 17:2

hist. n. (stating that these rules were adopted before September 1, 1969). In

2017, the Board amended the first alternative to read: "Deliberate act or

deliberate failure to act that reflects an intentional or purposeful . . . deviation

from the standard of care exercised by a reasonable person in similar

circumstances." 50 N.J.R. 646(a) (Dec. 13, 2017) (adoption); see also 49

N.J.R. 2189(a) (July 17, 2017) (proposal). 1 On appeal, the New Jersey

Education Association asks us to invalidate the amendment, arguing that the

change extends the statute beyond its intended meaning, and thereby

1 The adopted rule mistakenly includes an extra "or" — that is, it defines "[w]illful negligence" as a "[d]eliberate act or deliberate failure to act that reflects an intentional or purposeful or deviation from the standard of care exercised by a reasonable person in similar circumstances." N.J.A.C. 17:2- 6.5(a)(1) (emphasis added). The words "intentional or purposeful" make sense only when they directly modify "deviation." Although the Board agreed on appeal that it inserted the second "or" by mistake, it has decided to await resolution of this case to correct the error (which it could do by formal amendment or by seeking technical correction through the Office of Administrative Law. See N.J.A.C. 1:30-2.7 (stating procedure for administrative correction of "obvious, easily recognizable, or apparent" error)). We interpret the regulation without reference to the extra "or."

A-2059-18 2 disqualifies public employees from receiving accidental disability benefits who

are properly qualified for such benefits under the statute.

We agree and invalidate the Board's 2018 amended "willful negligence"

definition because it strays from the Legislature's intent, and because the

Board's own reasoning supporting its rule is arbitrary and self-contradictory.

I.

We presume a regulation is valid, N.J. State League of Muns v. Dep't of

Cmty. Affs, 158 N.J. 211, 222 (1999), and review it narrowly and deferenti-

ally, In re N.J.A.C. 12:17-2.1, 450 N.J. Super. 152, 166 (App. Div. 2017). We

defer to an agency's rule-making because we recognize that "certain subjects

are within the [agency's] peculiar competence." In re Amend. of N.J.A.C.

8:31B-3.31 & N.J.A.C. 8:31B-3.51, 119 N.J. 531, 543 (1990). When a statute

is "silent or ambiguous" about an issue, we may not replace an agency's

"permissible" interpretation of that statute with our own view. Kasper v. Bd.

of Trs. of the Tchrs.' Pension & Annuity Fund, 164 N.J. 564, 581 (2000)

(quoting 2 Am. Jur. 2d Administrative Law § 525 (1994)).

But our deference has limits. We accord "less deference" to a newly

minted agency interpretation, "which has not previously been subjected to

judicial scrutiny or time-tested agency interpretation." See id. at 580 (quoting

2 Am. Jur. 2d Administrative Law § 524 (1994)). That is especially so when

A-2059-18 3 the new interpretation departs from a prior, long-standing interpretation. See

Safeway Trails, Inc. v. Furman, 41 N.J. 467, 484 (1964). In Safeway Trails,

the Court reviewed an Attorney General's opinion that reversed a prior

opinion. The Court stated that if an agency's statutory "construction is not

uniform and consistent, it will be taken into account only to the extent that it is

supported by valid reasons." Ibid. (quoting Burnet v. Chi. Portrait Co., 285

U.S. 1, 16 (1932)). Furthermore, we owe no deference at all to an agency's

interpretation of judicial precedent. Bowser v. Bd. of Trs., Police & Firemen's

Ret. Sys., 455 N.J. Super. 165, 171 (App. Div. 2018).

At bottom, an agency's rulemaking "must be reasonable and not

arbitrary" and must further the Legislature's goals. Pascucci v. Vagott, 71 N.J.

40, 50 (1976). We shall set aside a regulation that is "unreasonable or

irrational," Bergen Pines Cnty. Hosp. v. N.J. Dep't of Hum. Servs., 96 N.J.

456, 477 (1984), or that "violate[s] the enabling act's express or implied

legislative policies," Williams v. N.J Dep't of Hum. Servs., 116 N.J. 102, 108

(1989); see also In re N.J. Individual Health Coverage Program's Readoption

of N.J.A.C. 11:20-1, 179 N.J. 570, 579 (2004) (stating that "[a]dministrative

regulations 'cannot alter the terms of a statute or frustrate the legislative

policy'" (quoting Med. Soc'y of N.J. v. N.J. Dep't of L. & Pub. Safety, 120 N.J.

18, 25 (1990))); In re Amend. of N.J.A.C. 8:31B-3.31, 119 N.J. at 543-44

A-2059-18 4 (stating that appellate courts determine whether a rule "is arbitrary, capricious,

unreasonable, or beyond the agency's delegated power"). Ultimately, "we are

'in no way bound by an agency's interpretation of a statute or its determination

of a strictly legal issue.'" Russo v. Bd. of Trs., Police & Firemen's Ret. Sys.,

206 N.J. 14, 27 (2011) (quoting Mayflower Sec. Co. v. Bureau of Sec., 65 N.J.

85, 93 (1973)).

II.

To determine if the Board's amendment conforms to the Legislature's

express or implied policy, we turn first to the statute. The PERS statute

withholds accidental-disability pensions from employees whose disability

results from their "willful negligence," N.J.S.A. 43:15A–43(a) — but the

statute does not define "willful negligence," let alone a "deliberate act or

deliberate failure to act." Neither do the statutes for the Police and Firemen's

Retirement System (PFRS), the Teachers' Pension & Annuity Fund (TPAF),

and the State Police Retirement System (SPRS), which likewise deny

accidental-disability pensions because of willful negligence. See N.J.S.A.

18A:66-39(c) (TPAF); N.J.S.A. 43:16A-7(a)(1) (PFRS); N.J.S.A. 53:5A-10(a)

(SPRS).2 Because the PERS statute's plain meaning is unclear, we turn to

2 The "willful negligence" disqualifier has a long history.

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IN RE N.J.A.C. 17:2-6.5 (PUBLIC EMPLOYEES' RETIREMENT SYSTEM), Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-njac-172-65-public-employees-retirement-system-njsuperctappdiv-2021.