IN RE ADOPTION OF N.J.A.C. 17:1-6.4, 17:1-7.5 and 17:1-7.10.

Annotate this Case

(NOTE: The status of this decision is Published.)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2171-16T3

APPROVED FOR PUBLICATION

May 7, 2018
IN RE ADOPTION OF N.J.A.C.
APPELLATE DIVISION
17:1-6.4, 17:1-7.5 and
17:1-7.10.

Argued April 23, 2018 – Decided May 7, 2018

Before Judges Fasciale, Sumners and
Moynihan.

On appeal from the New Jersey Department of
the Treasury, Division of Pensions and
Benefits.

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

Amy Chung, Deputy Attorney General, argued
the cause for respondent New Jersey
Department of the Treasury, Division of
Pensions and Benefits (Gurbir S. Grewal,
Attorney General, attorney; Melissa H.
Raksa, Assistant Attorney General, of
counsel; Amy Chung, on the brief).

The opinion of the court was delivered by

FASCIALE, J.A.D.

This appeal focuses on the 2016 re-adoption of N.J.A.C.

17:1, with amendments (the Re-adoption), promulgated by the
Department of the Treasury, Division of Pension and Benefits

(Division). The Re-adoption governs the disability retirement

application process for various State public retirement systems.

In challenging amended N.J.A.C. 17:1-6.4, N.J.A.C. 17:1-7.5, and

N.J.A.C. 17:1-7.10, the New Jersey Education Association (NJEA)

argues the Division exceeded its statutory authority and acted

arbitrarily. The NJEA urges us to invalidate the challenged

regulations.

Understanding that administrative regulations are entitled

to a presumption of validity and reasonableness, and giving the

Division wide latitude to achieve its legislatively assigned

tasks, we hold that most of the challenged regulations comport

with the terms and objectives of the governing statutes. That

is, the Division mainly acted consistently with the enabling

statutes, which it reasonably interpreted. Yet, there are a few

instances where that is not the case.

So we uphold N.J.A.C. 17:1-6.4 (the separation from service

rule);
1 N.J.A.C. 17:1-7.10(a)(1) (part of the documentation

amendment); N.J.A.C. 17:1-7.10(e) (the certification amendment);

1
We uphold this rule but slightly modify N.J.A.C. 17:1-
6.4(b)(5) (pertaining to "[j]ob abolishment or reduction in
force [(RIF)]"). We do so because in this limited instance, the
NJEA has demonstrated that a teacher whose position has been
abolished due to a RIF may be eligible for disability retirement
benefits if that teacher is unable to return to a recalled
position due to the purported disability. See infra Part III.B.

2 A-2171-16T
3 N.J.A.C. 17:1-7.10(f) (the one retirement application

amendment); N.J.A.C. 17:1-7.10(j) (the notification amendment);

and N.J.A.C. 17:1-7.5(c) and (c)(1) (part of the subsequent

independent medical examination (IME) amendment). But we

invalidate N.J.A.C. 17:1-7.5(c)(2) through (c)(4) – which

require applicants to pay for subsequent IMEs – and N.J.A.C.

17:1-7.10(a)(2) – which requires applicants to pay for addenda

to IMEs.

In general, the primary practical effect of our holding –

as to the separation of service rule – maintains the

longstanding principle that eligibility for disability

retirement benefits requires members to make a prima facie

showing that they cannot work due to a disability. To that end,

voluntary or involuntary termination of employment, for non-

disability reasons, generally deems a member ineligible for

disability benefits. Such a holding comports with the existing

overall framework of the enabling, eligibility, and

rehabilitation statutes, and policies applicable to the various

State public retirement systems. To hold otherwise would

require us to re-write the text of multiple statutes, which has

never been the role of the judiciary.

3 A-2171-16T3
A familiar standard of review guides our holding and

analysis. "Administrative regulations are entitled to a

presumption of validity and reasonableness." In re Adoption of

N.J.A.C. 11:3-29,
410 N.J. Super. 6, 24 (App. Div. 2009). "The

party challenging the agency action bears the burden of

overcoming" this presumption. Id. at 25.

Courts will "overturn an administrative determination only

if it was arbitrary, capricious, unreasonable or violated

express or implied legislative policies." Id. at 24-25.

Administrative agencies have wide discretion to decide "how best

to approach legislatively assigned administrative tasks." In re

Failure by the Dep't of Banking & Ins.,
336 N.J. Super. 253, 262

(App. Div. 2001). It has been a longstanding principle that

"the grant of authority to an administrative agency is to be

liberally construed . . . to enable the agency to accomplish its

statutory responsibilities." N.J. Guild of Hearing Aid

Dispensers v. Long,
75 N.J. 544, 562 (1978). As a result,

"courts should readily imply such incidental powers as are

necessary to effectuate fully the legislative intent." Ibid.

Nonetheless, "[a]n administrative regulation 'must be

within the fair contemplation of the delegation of the enabling

statute.'" Id. at 561-62 (quoting S. Jersey Airways, Inc. v.

Nat'l Bank of Secaucus,
108 N.J. Super. 369, 383 (App. Div.

4 A-2171-16T3
1970)). We usually apply substantial deference to a regulation

promulgated by an agency. But the application of "substantial

deference" afforded to regulations is only available if they are

"consistent with the governing statutes' terms and objectives."

In re Adoption of Amendments to N.J.A.C. 6:28-2.10, 3.6 & 4.3,

305 N.J. Super. 389, 401 (App. Div. 1997).

To determine if an agency had the requisite authority to

issue a regulation, courts strive "to determine the intent of

the Legislature." Med. Soc'y of N.J. v. N.J. Dep't of Law &

Pub. Safety,
120 N.J. 18, 26 (1990). We begin with the

statutory language, the best indicator of legislative intent.

DiProspero v. Penn,
183 N.J. 477, 492 (2005). Here, the text is

not contained in only one statute, but appears in multiple

statutes related to several State public retirement systems.

Our analysis, however, of whether the Legislature

authorized the challenged regulations is not limited to a plain

reading of one provision in a large statutory scheme. "[A]

reviewing court 'may consider the entire enabling legislation

. . . to ascertain if there is in fact sufficient underlying

authority [for a regulation].'" In re N.J.A.C. 7:1B-1.1,
431 N.J. Super. 100, 119 (App. Div. 2013) (quoting Long,
75 N.J. at
561). In a similar vein – like we have done here – courts "may

look beyond the specific terms of the enabling act to the

5 A-2171-16T3
statutory policy sought to be achieved by examining the entire

statute in light of its surroundings and objectives." Long,
75 N.J. at 562; accord N.J. Ass'n of Sch. Adm'rs v. Schundler,
211 N.J. 535, 549 (2012). Courts defer to the interpretation of

legislation by the administrative agency to whom its enforcement

is entrusted, but only if that interpretation "is not plainly

unreasonable." Merin v. Maglaki,
126 N.J. 430, 436-37 (1992);

accord Matturri v. Bd. of Trs. of the Judicial Ret. Sys.,
173 N.J. 368, 382 (2002).

II.

The Division administers the Police and Firemen's

Retirement System (PFRS); the Public Employees' Retirement

System (PERS); the Teachers' Pension and Annuity Fund (TPAF);

the State Police Retirement System (SPRS); the Consolidated

Police and Firemen's Pension Fund (CPFPF); the Judicial

Retirement System (JRS); and the Prison Officers' Pension Fund

(POPF). See Burgos v. State,
222 N.J. 175, 184 (2015). The Re-

adoption deals with the Division's administration of these State

retirement systems, and the challenged regulations generally

address disability retirement eligibility and related

applications.

Disability retirement applicants generally apply for

ordinary or accidental disability retirement benefits. There

6 A-2171-16T3
are multiple statutes that permit these benefits. For example,

N.J.S.A. 43:16A-6 to -7 (PFRS); N.J.S.A. 43:15A-42 to -46

(PERS);
N.J.S.A. 18A:66-39 to -42 (TPAF);
N.J.S.A. 53:5A-9 to -

10 (SPRS);
N.J.S.A. 43:16-2 (CPFPF);
N.J.S.A. 43:6A-12 (JRS);

and
N.J.S.A. 43:7-12 (POPF). The question is whether the

challenged regulations – N.J.A.C. 17:1-6.4, N.J.A.C. 17:1-7.5,

and N.J.A.C. 17:1-7.10 – are inconsistent with the legislative

intent expressed in the various enabling statutes.

The enabling statutes, in their entirety, are
N.J.S.A.

43:16A-1 to -68 (PFRS); N.J.S.A. 43:15A-1 to -161 (PERS);

N.J.S.A. 18A:66-1 to -93 (TPAF);
N.J.S.A. 53:5A-1 to -47 (SPRS);

N.J.S.A. 43:16-1 to -21 (CPFPF);
N.J.S.A. 43:6A-1 to -47 (JRS);

and
N.J.S.A. 43:7-7 to -27 (POPF) – all of which we have

considered in great depth. For purposes of our plain text

analysis, the pertinent language of each statute is nearly

identical or substantially similar: "Upon retirement for

[ordinary, accidental, or special] disability, a member shall

receive" the applicable retirement allowance. See, e.g.,

N.J.S.A. 43:16A-6(2), -6.1(2), -7(2) (PFRS) (emphasis added);

N.J.S.A. 18A:66-41, -42 (TPAF) (emphasis added);
N.J.S.A. 53:5A-

9(b) (SPRS) (emphasis added).

III.

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We begin by addressing whether N.J.A.C. 17:1-6.4 – the

separation from service rule – is consistent with the

legislative intent expressed in the statutes governing the State

retirement systems. This new rule generally requires disability

retirement applicants to prove that their asserted disability is

"the reason the member left employment." N.J.A.C. 17:1-6.4(a).

The rule also bars members from applying for a disability

retirement if they voluntarily or involuntarily terminate

service for any of the following reasons:

1. Removal for cause or total forfeiture of
public service;

2. Settlement agreements reached due to
pending administrative or criminal charges,
unless the underlying charges relate to the
disability;

3. Loss of licensure or certification
required for the performance of the member's
specific job duties;

4. Voluntary separation from service for
reasons other than a disability; and

5. Job abolishment or reduction in force.

[N.J.A.C. 17:1-6.4(b).]

During its rulemaking, the Division stated that "[d]isability

retirement benefits are intended for members who become disabled

while in active service and can no longer work, not for members

who have voluntarily or involuntarily terminated service for

some other reason."
48 N.J.R. 1306(a) (June 20, 2016). It

8 A-2171-16T3
noted that, "[i]f their service ends on the basis of other

grounds, some members decide to apply for a disability

retirement, in order to try to receive the highest retirement

benefits available under their former membership." Ibid.

According to the Division, the separation from service rule

"is intended to prevent members from applying for a disability

retirement benefit when their service has voluntarily or

involuntarily terminated for reasons unrelated to a disability."

Ibid. It explained that such former members

do not qualify for disability retirement
benefits, as they were not totally and
permanently disabled from performing their
job duties when their service ended; their
public service ended for a reason completely
unrelated to a physical or mental disability
that keeps them from continuing to perform
their job duties.

[Ibid.]

The purpose of the separation from service rule, according to

the Division, "is to prevent individuals from applying for

disability retirement benefits who are ineligible and do not

qualify." Ibid.

The NJEA argues that under the statutory framework

governing the State-administered retirement systems, "members

9 A-2171-16T3
are not disqualified from disability retirement if they are

separated from service for reasons other than their disability."

According to the NJEA, members who suffer a qualifying

disability must receive disability retirement benefits, even if

their separation from public service is for a reason unrelated

to the disability, such as termination for cause. It contends

that the separation from service rule adds a requirement for

receiving disability retirement benefits that is not present in

the enabling statutes. In essence, it argues that the inquiry

should end with the recognition that the statutes' eligibility

provisions do not expressly require that retirement disability

applicants leave service because of the disability.

It is true that the plain text of the enabling statutes

does not explicitly say that a disability retirement applicant

must have left public service due to a disability. But still,

the statutes governing the retirement systems make clear that,

although a person eligible for benefits is entitled to a liberal

interpretation of a pension statute, "eligibility [itself] is

not to be liberally permitted." Smith v. Dep't of Treasury,

Div. of Pensions & Benefits,
390 N.J. Super. 209, 213 (App. Div.

2007). It is obvious to us that there is no such explicit text

in the enabling statutes because it is common sense that

disability retirees leave their jobs due to a purported

10 A-2171-16T3
disability. After all, the employee seeks disability retirement

benefits.

Applying our standard of review – by considering the entire

enabling legislation and statutory policies – we conclude that

the premise of NJEA's contention (that membership is the sole

qualification for receiving disability retirement benefits) is

incorrect for several reasons.

First, various eligibility statutes presume that an

applicant is employed when filing a disability retirement

application. In general, an eligibility statute provides

applicable guidelines for determining whether an applicant

qualifies for benefits. To that end, there are numerous

references to a disability applicant's current employer or

employment duty. See, e.g.,
N.J.S.A. 18A:66-39(b) (TPAF statute

allowing the employer to apply for disability retirement on

behalf of the employee); N.J.S.A. 18A:66-39(c) (TPAF statute

requiring employer certification as part of application);

N.J.S.A. 18A:66-2(e) (TPAF statute defining "[e]mployer" in the

present tense as "the State, the board of education or any

educational institution or agency of or within the State by

which a teacher is paid" (emphasis added)); see also
N.J.S.A.

43:16A-7(1) (providing that, for a PFRS member to receive

accidental disability retirement benefits, the member must prove

11 A-2171-16T3
incapacity for "the performance of his [or her] usual duty and

of any other available duty in the department which his [or her]

employer is willing to assign to him [or her]" (emphasis

added)); N.J.S.A. 43:16A-1(6) (PFRS statute defining

"[e]mployer" in the present tense as "the State of New Jersey,

the county, municipality or political subdivision thereof which

pays the particular policeman or fireman" (emphasis added)).

The eligibility statutes also require a finding that the

applicant is "incapacitated for the performance of duty." E.g.,

N.J.S.A. 18A:66-39(b).

True, the TPAF and PERS statutes allow membership to

continue for two years following the final pension contribution.

N.J.S.A. 18A:66-7(a) (TPAF) (stating generally that membership

shall cease if the member "discontinue[s] his [or her] service

for more than two consecutive years"); N.J.S.A. 43:15A-7(e)

(PERS) (indicating that "[m]embership of any person in the

retirement system shall cease if he [or she] shall discontinue

his [or her] service for more than two consecutive years"). But

even if one is technically a member, a terminated former

employee removed for cause has no employer from which to receive

assignments, or duty to perform during that two-year period.

Thus, the references in the eligibility statutes – to a current

employer and a current duty – render it unlikely that the

12 A-2171-16T3
Legislature intended membership to be the sole qualification for

disability retirement benefits.

Second, rehabilitation statutes entitle a disability

retiree whose disability has abated to return to active service.

Klumb v. Bd. of Educ. of Manalapan-Englishtown Reg'l High Sch.

Dist.,
199 N.J. 14, 33-35 (2009);
N.J.S.A. 18A:66-40(a) (TPAF);

N.J.S.A. 43:16A-8(2) (PFRS);
N.J.S.A. 43:15A-44(a) (PERS);

N.J.S.A. 43:16-2 (CPFPF);
N.J.S.A. 43:7-12 (POPF). For example,

if a medical report shows that a TPAF disability retirement

beneficiary "is able to perform either his [or her] former duty

or other comparable duty which his [or her] former employer is

willing to assign," he or she must "report for duty."
N.J.S.A.

18A:66-40(a). Rehabilitation provisions have been present in

the TPAF, PERS, PFRS, CPFPF, and POPF statutory schemes for

decades.2 Pursuant to Klumb,
199 N.J. at 32, and In re Allen,

2 See L. 1967, c. 271 (TPAF); L. 1966, c. 67, § 5 (PERS); L.
1944, c. 255, § 8 (PFRS); L. 1944, c. 253, § 2 (CPFPF); L. 1969,
c. 56, § 4 (POPF).

We were unable to locate rehabilitation statutes in the SPRS
or JRS statutory schemes. However, the use of rehabilitation
statutes in PERS, TPAF, POPF, PFRS, and CPFPF are generally
applicable to the Division's authorization to administer all of
the State pension systems. Nw. Bergen Cty. Utils. Auth. v.
Donovan,
226 N.J. 432, 444 (2016) (holding that, "[s]tatutes
that deal with the same matter or subject should be read in pari
materia and construed together as a unitary and harmonious
whole" (alteration in original) (quoting St. Peter's Univ. Hosp.
(continued)

13 A-2171-16T3

262 N.J. Super. 438, 444 (App. Div. 1993), disability retirees

must be returned to the same status and position held at the

time of retirement, if available, after proving rehabilitation.

Returning to active service presumes that, at the time the

beneficiary left public service, he or she actually had a duty.

E.g.,
N.J.S.A. 18A:66-40 (TPAF). And so, a beneficiary who

previously left public service for some reason other than a

disability – like termination for cause – would have no

employment or work duty from which to return.

The rehabilitation statutes presume that, unlike other

retirees attempting to return to state service, the only

obstacle to a disability retiree's reemployment is the

disability itself. Once the disability abates, the disability

retirement beneficiary may be entitled to reinstatement. See

Allen,
262 N.J. Super. at 444 (interpreting the rehabilitation

statutes, and observing that, "[t]he Legislature clearly

recognized that individuals returning from a disability

retirement are in a unique situation, plainly different from all

other employees returning to active service . . . [and t]heir

separation from employment is unlike the voluntary separation of

other civil servants" (emphasis added)). The statutory language

(continued)
v. Lacy,
185 N.J. 1, 14-15 (2005))); see also Klumb,
199 N.J. at 32 (applying the same principle in the public pension context).

14 A-2171-16T3
expressly conditions reinstatement for disability retirees upon

disability rehabilitation. It logically follows then that

disability retirees must have left public service because of the

disability in the first instance; unlike someone who has been

terminated for cause.

If the NJEA were correct that any member could receive

disability retirement benefits even after leaving public

employment for an independent reason, a member removed for cause

could arguably receive disability retirement benefits, and then

argue for reinstatement by operation of Klumb, Allen, and the

rehabilitation statutes, following rehabilitation from the

purported disability. There is no evidence that the Legislature

intended, and nothing in the text of the applicable statutes

supports, such an absurd result. See Gallagher v. Irvington,

190 N.J. Super. 394, 397 (App. Div. 1983) (indicating that "[a]n

absurd result must be avoided in interpreting a statute").

Third, the NJEA's interpretation of the enabling

legislation conflicts with public policy declared in other

statutes. For example, the civil service statutes declare that,

"[i]t is the public policy of this State to provide public

officials with appropriate appointment, supervisory and other

personnel authority to execute properly their constitutional and

statutory responsibilities."
N.J.S.A. 11A:1-2(b). And "[i]t is

15 A-2171-16T3
the public policy of this State to encourage and reward

meritorious performance by employees in the public service and

to retain and separate employees on the basis of the adequacy of

their performance."
N.J.S.A. 11A:1-2(c). Public bodies

obviously have the power to remove employees for cause. E.g.,

N.J.S.A. 11A:2-6(a)(1) (indicating that the Civil Service

Commission has power to remove covered career service employees

following a hearing);
N.J.S.A. 40:69A-37(b) (stating that local

councils have authority to remove any municipal officer for

cause);
N.J.S.A. 26:3-19 (providing that appointees of local

health boards may not be removed except for cause following a

hearing). If the NJEA's interpretation were correct, then

employees removed for cause could potentially override the

personnel decision-making abilities of public agencies.3

3
Another panel recently rejected in an unpublished opinion an
almost identical challenge from the NJEA in the context of a
TPAF-specific regulation. Of course, we are aware that an
unpublished opinion has no precedential value. R. 1:36-3.
Nevertheless, a court may "acknowledg[e] the persuasiveness of a
reasoned decision on analogous facts." Sauter v. Colts Neck
Volunteer Fire Co. No. 2,
451 N.J. Super. 581, 600 (App. Div.
2017).

In New Jersey Education Ass'n v. Board of Trustees of
T.P.A.F., No. A-3158-15 (App. Div. July 13, 2017), the NJEA
challenged the 2015 promulgation of amended N.J.A.C. 17:3-
6.1(f)(3), a TPAF regulation, which sets forth that,
"[t]ermination of employment, voluntary or involuntary, that was
caused by any reason other than the claimed disability
disqualifies a member from disability retirement." The court
(continued)

16 A-2171-16T3
Fourth, the NJEA misplaced reliance on several unpublished

opinions, which we rendered before the promulgation of the

separation from service rule. See Bogart v. Bd. of Trs. of

P.F.R.S., No. A-2167-14 (App. Div. July 1, 2016) (determining

that although the applicant pled guilty to disorderly conduct,

the board failed to account for the applicant's PTSD diagnosis

in instituting a total forfeiture of his pension); Bergen Cty.

v. Bd. of Trs. of P.F.R.S., No. A-5756-11 (App. Div. Oct. 11,

2013) (determining that although the applicant left employment

as part of a settlement agreement with the county regarding his

disciplinary action, the board properly granted him disability

benefits due to his psychiatric symptoms and substance abuse

that left him permanently and totally disabled); K.K.N. v. Bd.

of Trs. of P.F.R.S., No. A-4651-13 (App. Div. May 13, 2016)

(determining that although the applicant was terminated, she

settled a lawsuit alleging wrongful termination, she suffered

from PTSD following incidents of abuse and harassment in her

employment, and thus was entitled to ordinary disability); Coyle

v. Bd. of Trs. of T.P.A.F., No. A-6101-12 (App. Div. Mar. 20,

2015) (applicant left employment due to mental ailments

(continued)
found that the statutes governing TPAF, "[w]hen harmonized,
. . . render a TPAF member ineligible for a disability
retirement when that member's employment has been terminated for
a non-disability reason." N.J. Educ. Ass'n, slip op. at 8.

17 A-2171-16T3
resulting from his employment and received disability

retirement). None of these cases addressed whether disability

retirement applicants are eligible for benefits unrelated to the

disability.

Fifth, the NJEA's reliance on Frigiola v. State Board of

Education,
25 N.J. Super. 75 (App. Div. 1953), and Gladden v.

Board of Trustees of P.E.R.S.,
171 N.J. Super. 363 (App. Div.

1979), is equally unpersuasive. In Frigiola,
25 N.J. Super. at
81, the court found the board's thirty-day delay was not

authorized by the governing statute, which expressed a "manifest

declaration of the legislative intent" that teachers "shall be

retired for disability" upon a finding of disability. In

Gladden, the Board of Trustees of PERS implemented a rule that

any employee "not paid in each of the four calendar quarters"

would be ineligible for PERS membership. Gladden,
171 N.J.

Super. at 373 (quoting N.J.A.C. 17:2-2.3(a)(4) (1979) (amended

1983)). The court found that although in "most cases" the rule

may be "necessary," its application to bar the employee, who

received a semi-annual salary payment pursuant to statute,

violated statutory policy. Id. at 374. Neither Frigiola nor

Gladden supports the NJEA's proffered interpretation in this

case.

18 A-2171-16T3
Sixth, contrary to the NJEA's contention that the

separation from service rule "improperly provides for the

forfeiture of the right to disability retirement benefits" and

"seeks to take away" those benefits from members who leave

public service for reasons other than disability retirement, the

separation from service rule takes nothing away from members.

Members who leave public service for reasons unrelated to a

disability are not entitled to disability retirement benefits in

the first instance. Nothing is being taken away, and the

automatic forfeiture statutes do not and cannot override the

rehabilitation statutes.

As to the validity of N.J.A.C. 17:1-6.4(b)(5) (dealing with

a "[j]ob abolishment or [RIF]"), we make the following

observations and modification. A member whose position may be

the subject of a RIF is eligible for retirement disability

benefits before the effective date of the abolishment of that

position, so long as the member is unable to work due to the

purported disability. If the member suffers from, or discovers,

a disabling injury while looking for new work – in anticipation

of the abolishment – then the member would likewise be entitled

to apply for such benefits. But unlike in New Jersey Education

Ass'n v. Board of Trustees of T.P.A.F., No. A-3158-15 (App. Div.

19 A-2171-16T
3 July 13, 2017) (slip op. at 8) – where we remarked that the NJEA

had not demonstrated how the existing legislation could render a

TPAF member (who was terminated for a non-disability reason)

otherwise eligible for a disability retirement – the NJEA has

partially made such a showing as it relates to the abolishment

of a tenured teaching position due to a RIF.

For example, a teacher who loses a job due to a RIF remains

on a reemployment list and, based on seniority, is entitled to

reemployment when a vacancy occurs, if still qualified for the

position.
N.J.S.A. 18A:28-12. A similar provision exists for

PFRS.
N.J.S.A. 43:16A-3(5); Cologna v. Bd. of Trs. of P.F.R.S.,

430 N.J. Super. 362, 365 (App. Div. 2013). Such a teacher,

however, may suffer or discover a disability after the

abolishment of the position pending employment reinstatement.

Although the abolishment of the position temporarily alters the

employer-employee relationship, the teacher would arguably have

an "employment duty" – based on seniority pending recall – from

which to return. Consequently, pursuant to N.J.A.C. 17:1-

6.4(b)(5), that teacher, who suffers from a disability pending

recall, might be unable to return to the recalled work duty due

to the disability.

A plain reading of N.J.A.C. 17:1-6.4(b)(5) – under this

rare fact pattern – would be inconsistent with the purpose of

20 A-2171-16T3
the separation of service rule and the overall framework of the

enabling, eligibility, and rehabilitation statutes, and policies

applicable to the State public retirement systems.

Nevertheless, we choose to modify Section (b)(5) rather than

completely invalidate it.

Applying Section (b)(5) to teachers whose jobs have been

abolished due to a RIF and who have not suffered a disability

pending reinstatement is consistent with the enabling statutes

and related legislative directives. Such an application of

Section (b)(5) also accords with our conclusion in New Jersey

Education Ass'n, slip op. at 8, that a TPAF member is ineligible

for disability retirement when that member's employment has been

terminated for a non-disability reason. Therefore, invalidation

of Section (b)(5) is unwarranted.

But modification of Section (b)(5) is appropriate for those

public employees whose positions have been abolished due to a

RIF, and who have suffered a disability pending reinstatement to

a recalled job. Teachers, and other public retirement system

members in this unique position, should be allowed to apply for

and, if otherwise eligible, receive disability retirement

benefits. That is so because such members would have an

"employment duty" from which to return (even though the

employer-employee relationship has been temporarily altered

21 A-2171-16T3
pending reinstatement), and the purported disability would

arguably prevent the member from resuming the job duties in the

recalled position. Consequently, Section (b)(5) is modified

accordingly.

IV.

We now turn to N.J.A.C. 17:1-7.5 – the so-called subsequent

IME amendment – which governs the Division's treatment of

disability retirement applications after filing. The Re-

adoption added subsections (c)(1) through (c)(4). On this

point, we partially agree with the NJEA that the Division's

action was unreasonable.

In general, if the Medical Review Board (MRB) decides that

it requires additional information regarding a disability

retirement application, the Disability Review Section (DRS) will

schedule an initial IME, provided at no cost to the applicant.

N.J.A.C. 17:1-7.5(c)(1). If the applicant "fails to attend and

fails to cancel the initial IME scheduled by the [DRS], the

applicant will be required to pay for any subsequent medical

examinations arranged by the [DRS]." N.J.A.C. 17:1-7.5(c)(2).

"Failure to provide payment for the rescheduled IME within

[ninety] days of the missed appointment date will result in the

dismissal of the disability retirement case." N.J.A.C. 17:1-

7.5(c)(3). The applicant "will be responsible to pay the IME's

22 A-2171-16T3
contractual rate for any subsequent IME required when additional

medical documentation is submitted after the initial medical

examination." N.J.A.C. 17:1-7.5(c)(4).

The NJEA argues that the governing statutes do not

authorize the Division to require applicants to pay for IMEs or

to cancel applications for failure to pay for an IME. The NJEA

also argues that the subsequent IME amendment's lack of a good

cause exception and failure to specify the method for

calculating IME contractual rates render the regulation

capricious.

Although the governing statutes generally allow the MRB to

order IMEs to supplement information provided by an applicant in

certain circumstances, they are silent regarding which party

must pay for the IMEs. E.g.,
N.J.S.A. 43:16A-8 (PFRS);
N.J.S.A.

43:15A-42, -43 (PERS);
N.J.S.A. 18A:66-39 (TPAF); see also

N.J.A.C. 17:2-6.26 (PERS regulation explaining that an IME will

be required only when medical documentation accompanying the

application is insufficient). The Division argues that this

silence authorizes the subsequent IME amendment because, unlike

in other contexts – see Unemployment Compensation Law,
N.J.S.A.

43:21-15(b) – the Legislature did not specifically prohibit

charging applicants.

23 A-2171-16T3
To be sure, the Unemployment Compensation Law, prevents the

Department of Labor and Workforce Development from imposing any

fees upon unemployment compensation applicants. According to

the Division, because the Legislature could have specified that

disability retirement applicants shall not be charged any fees,

as it did in the unemployment compensation context, its failure

to do so within the pension statutes authorizes the Division to

shift IME costs onto applicants.

But, the Unemployment Compensation Law, unlike the pension

statutes, does not contemplate an implementing agency ordering

an applicant to attend a costly IME as a condition to an

application. N.J.S.A. 43:21-1 to -24.30. Indeed, an

applicant's medical condition is irrelevant to unemployment

compensation benefits. The pension statutes' silence, standing

alone, is therefore not evidence that the Legislature authorized

the Division to shift IME costs onto applicants.

Any interpretation of the legislative silence regarding the

cost of IMEs (purportedly $900 for physical IME and $1025 for a

psychiatric IME) that places potentially prohibitive financial

burdens upon applicants is unreasonable, and is certainly not a

liberal construction in favor of the beneficiaries, as precedent

requires. Harris v. Bd. of Trs. of P.E.R.S.,
378 N.J. Super.
459, 465 (App. Div. 2005) (citing Steinmann v. Dep't of

24 A-2171-16T3
Treasury,
116 N.J. 564, 572 (1989)). Even if the Division

promulgated the subsequent IME amendment with a legitimate

purpose – to deter applicants from missing scheduled IME

appointments – there is no evidence that the Legislature ever

intended for applicants to bear the entire cost of an IME upon

the Division's unilateral determination that the applicant acted

negligently. Although we invalidate N.J.A.C. 17:1-7.5(c)(2),

(c)(3), and (c)(4), we uphold N.J.A.C. 17:1-7.5(c)(1) because

that provision merely establishes that the initial IME will be

provided at no cost to the applicant.

The NJEA argues that the Division was without authority to

promulgate N.J.A.C. 17:1-7.10(a)(1) and (a)(2) – the

documentation amendments – and that they are arbitrary because

they fail to include a good cause exception.

Documentation amendment (a)(1) requires applicants to

"submit all required documentation within six months of

submitting the disability retirement application, or the

disability retirement application will be cancelled." N.J.A.C.

17:1-7.10(a)(1). The NJEA argues that the Division has no

authority to place time limitations on the submission of medical

information, and cannot dismiss an application for failure to

satisfy a time limitation.

25 A-2171-16T3
The NJEA's reliance on Frigiola for this proposition is

misplaced. The applicable statute in Frigiola declared that the

pension board "shall" retire an applicant upon approving the

application, but the board delayed the effective date of the

employee's retirement by thirty days following its approval.

Frigiola,
25 N.J. Super. at 78-81. Frigiola involved a board

rule that violated a "manifest declaration of . . . legislative

intent." Id. at 81. Here, there is no violation of legislative

intent, express or otherwise.

The NJEA contention that documentation amendment (a)(1)

"limits pension rights, which are to be liberally administered

in favor of the members they are intended to benefit," misses

the mark. The documentation amendment does not limit pension

rights. It requires cancellation and resubmission of the

application if the applicant fails to produce "all required

documentation" within a six-month grace period. N.J.A.C. 17:1-

7.10(a)(1).

N.J.A.C. 17:1-7.10(a), which predated the Re-adoption and

established the documentation requirement, merely called for

applicants to submit with their applications "all the medical

information they can supply relative to their disability" that

would "assist" the retirement system "in determining eligibility

of the applicants for disability retirement." The pre-existing

26 A-2171-16T3
rule therefore had required applications to be complete at the

time of filing. Documentation amendment (a)(1) merely added a

grace period of six months in which applicants may submit

additional documentation. Rather than dismiss unsupported

applications outright, the Division must wait six months.

Agencies, like the Division, "may exercise powers that are

expressly granted by statute and those fairly implied as

necessary to carry out their assigned function." Circus

Liquors, Inc. v. Governing Body of Middletown Twp.,
199 N.J. 1,

12 (2009). As we have previously stated, the Division has "wide

discretion in the exercise of [its] responsibility,"

particularly in light of its expertise and experience in the

area of disability retirement applications. N.J. State League

of Municipalities v. Dep't of Cmty. Affairs,
310 N.J. Super.
224, 239-40 (App. Div. 1998), aff'd,
158 N.J. 211 (1999).

Additionally, the failure to include an express "good cause"

exception within the text of the regulation does not render it

arbitrary and capricious. See In re Regulation of Operator

Serv. Providers, 343 N.J. Super. 282, 327 (App. Div. 2001)

(holding that a regulation is presumed valid against a challenge

that it is arbitrary, capricious, or unreasonable).

27 A-2171-16T3
The Legislature entrusted the Division with the authority

to promulgate regulations to administer retirement systems.4 The

pension statutes expressly reference disability retirement

applications, but do not contain any detail whatsoever regarding

the procedural aspects of the application process itself. The

Legislature therefore delegated that authority to the Division.

Documentation amendment (a)(1) falls within that statutory grant

of authority. Cf. In re Middlesex Reg'l Educ. Servs. Comm'n

Name Change Request, ___ N.J. Super. ___, ___ (App. Div. 2018)

(slip op. at 12-13) (holding that an agency has the power to

amend a commission's name because such power was utilized for a

"minor" change and "so obviously within the purview of the State

Board's authority, that the Legislature chose not to detail that

authority in the statutes").

Next, documentation amendment (a)(2) permits the Division

to charge applicants for the cost of any addenda, if "additional

documentation that existed at the time of the [IME] is submitted

after the IME." N.J.A.C. 17:1-7.10(a)(2). This provision

charges applicants for supplemental reports prepared by a Board-

designated independent medical examiner. We invalidate

documentation amendment (a)(2) for the same reasons that we

4
E.g.,
N.J.S.A. 18A:66-56 (TPAF);
N.J.S.A. 43:15A-17 (PERS);

N.J.S.A. 52:18A-96.

28 A-2171-16T3
invalidate N.J.A.C. 17:1-7.5(c)(2) through (c)(4); and need not

reach the NJEA's good cause contention.

VI.

The NJEA challenges N.J.A.C. 17:1-7.10(e) – the

certification amendment – which states that the Division

"reserves the right to require [an applicant] to sign a sworn

certification that no underlying condition existed related to

the disability for which the [applicant] is seeking a benefit."

The NJEA argues that the court should invalidate the

certification amendment because it conflicts with the accidental

disability retirement statutes. According to the NJEA, the

certification amendment constitutes "an attempt to foreclose

consideration of disabilities not associated with the traumatic

event." It contends that even if "a pre[-]existing condition

contributes to the member's disability," it "does not bar the

member from receiving accidental disability benefits." Thus, it

claims that the certification amendment "conflicts with the

applicable law."

The accidental disability statutes require the asserted

disability to be the "direct result of a traumatic event."

N.J.S.A. 18A:66-39(c) (TPAF); N.J.S.A. 43:15A-43 (PERS);

N.J.S.A. 43:16A-7(1) (PFRS). The Supreme Court clarified this

standard in Richardson v. Board of Trustees of P.F.R.S., 192

29 A-2171-16T
3 N.J. 189 (2007). There, the Court held that to constitute a

traumatic event, the injury must be "caused by a circumstance

external to the member (not the result of pre-existing disease

that is aggravated or accelerated by the work)." Id. at 212-13.

"[W]here the disability arises out of a combination of pre-

existing disease and work effort, a traumatic event has not

occurred . . . ." Id. at 211.

"[T]he Legislature sought to prohibit the grant of

accidental disability benefits to a member disabled by a pre-

existing condition, alone or in combination with work effort

. . . ." Id. at 210. The certification amendment reasonably

allows the Division to ask applicants to confirm the existence

of any related pre-existing conditions.

Nonetheless, the NJEA argues that, "contrary to" the

certification amendment, "the presence of a pre[-]existing

condition can be considered in an accidental disability

application." In other words, the NJEA suggests that the

certification amendment forecloses the consideration of a pre-

existing condition when deciding an application. In support of

its argument that the presence of a pre-existing condition can

be considered as part of the accidental disability application,

the NJEA cites several cases decided before the Richardson Court

clarified the meaning of "traumatic event" in 2007. See Cattani

30 A-2171-16T3
v. Bd. of Trs. of P.F.R.S.,
69 N.J. 578 (1976); Gerba v. Bd. of

Trs. of P.E.R.S.,
83 N.J. 174 (1980); Korelnia v. Bd. of Trs. of

P.E.R.S.,
83 N.J. 163 (1980); Hillman v. Bd. of Trs. of

P.E.R.S.,
109 N.J. Super. 449 (App. Div. 1970).

We need not decide whether the Richardson standard

forecloses the consideration of pre-existing conditions, because

the NJEA misreads the certification amendment. The amendment

does not forbid the consideration of a pre-existing condition as

part of the ultimate determination whether to approve or deny

the application. Nor does it condition the grant of an

accidental disability benefit upon the information contained in

the applicant's certification. The certification amendment is

merely informational. It provides a mechanism by which the

retirement system may determine if a pre-existing disability is

involved in the case. At the very least, that information is

relevant to the resolution of a disability retirement

application pursuant to the Richardson standard.

Critically, the certification amendment does not preclude

the grant of a benefit to an applicant who certifies the

existence of a pre-existing condition. It merely allows the

agency to confirm if a pre-existing condition is present, but it

does not predetermine any result. Certainly, if a retirement

system denies an individual application in the future by

31 A-2171-16T3
breaching the Richardson standard, applicants may appeal that

denial in the normal course.5

VII.

The NJEA also challenges N.J.A.C. 17:1-7.10(f) – the one

retirement application amendment – which sets forth that an

applicant who has filed any type of disability retirement

application cannot file a separate application for any other

type of retirement while the prior application is pending.

The NJEA argues that the one retirement application

amendment frustrates the purpose and intent of the pension

system. According to the NJEA, applicants suffer a hardship

because they are "forced to discontinue service" when applying

for a disability retirement benefit. An applicant thus earns no

income while awaiting the resolution of the application. The

NJEA argues that an applicant "clearly entitled to a service

5
We decided a similar issue in New Jersey Education Ass'n,
slip op. at 7. There, the NJEA challenged a TPAF regulation
requiring that for accidental disability applications, "only
those disabilities associated with the purportedly-disabling
event shall be considered." N.J.A.C. 17:3-6.1(f)(1). We
concluded the regulation reasonable and held that it conforms to
the Richardson standard by ensuring that applicants do not
receive benefits based on pre-existing conditions. N.J. Educ.
Ass'n, slip op. at 7. The certification amendment's requirement
is even less unreasonable, because it says nothing whatsoever
regarding what the agency may or may not consider when
processing applications. Rather, as discussed above, it is
merely part of the deciding agency's information-gathering
process.

32 A-2171-16T3
retirement" should collect the service retirement allowance

while the disability retirement application is pending, with

retroactive "adjustments made after the disability application

is determined."

The one retirement application amendment is consistent with

legislative intent. Membership in several of the retirement

systems automatically ceases "upon retirement,"
N.J.S.A. 18A:66-

7(d) (TPAF),
N.J.S.A. 53:5A-7 (SPRS),
N.J.S.A. 43:6A-5 (JRS), or

when the member becomes a "beneficiary,"
N.J.S.A. 43:16A-3(3)

(PFRS). If an applicant receives a service retirement allowance

while the disability retirement application is pending, the

applicant may no longer be a "member" of the retirement system

because he or she has "retired" and is now a "beneficiary." If

no longer a member, an applicant is not encompassed by the

disability retirement statutes. See, e.g.,
N.J.S.A. 18A:66-

39(b) (TPAF statute providing that "a member" shall be retired

for ordinary disability if otherwise eligible).

As noted by the Division, the disability retirement

statutes refer to "the application" or "the written application"

in the singular. E.g.,
N.J.S.A. 18A:66-39 (TPAF);
N.J.S.A.

43:16A-6(1) (PFRS);
N.J.S.A. 43:15A-43 (PERS). And the NJEA

concedes that under the statutes, members can only receive one

retirement benefit at a time. The NJEA does not cite any

33 A-2171-16T3
statutory provision that conflicts with the one application

rule. Although the pension statutes are to be liberally

construed, Uricoli v. Bd. of Trs. of P.F.R.S.,
91 N.J. 62, 76-77

(1982), that principle does not prevent the Division's

regulations from effecting legislative intent.

VIII.

Finally, the NJEA initially challenged N.J.A.C. 17:1-

7.10(j) – the notification amendment – which states that members

who are granted accidental disability benefits "will be advised

that they are responsible for notifying the Division if the

disabling condition improves enough to allow the member to

return to gainful employment, or if the member becomes employed

again." The notification amendment contains two separate

notification requirements: (1) upon a retiree's reemployment;

and (2) upon rehabilitation of the disability. At oral

argument, the NJEA withdrew its appeal of the notification

amendment; however, for completion's sake, we briefly address

the NJEA's arguments contained in its merits brief, and the

validity of N.J.A.C. 17:1-7.10(j).

Generally, the NJEA argued that the notification amendment

conflicts with law because the disability retirement statutes

only require proof of incapacity in the general area of ordinary

employment. See Skulski v. Nolan,
68 N.J. 179, 205-06 (1975)

34 A-2171-16T3
(holding that the appropriate standard for permanent disability

under PFRS is whether the applicant is "employable in the

general area of his [or her] ordinary employment" (quoting Getty

v. P.O.P.F.,
85 N.J. Super. 383, 390 (App. Div. 1964))). The

NJEA contended "[a]pplicants are not required to show that they

are completely unemployable." According to the NJEA, the

notification amendment arbitrarily fails to account for pension

statutes that do not require proof that an applicant is

generally unemployable.

The notification-of-reemployment provision of the

notification amendment advances the legislative directives

contained in statutes that govern the treatment of beneficiaries

post-retirement. The TPAF and PERS statutes require the

Division to reduce pension awards if the beneficiary is "engaged

in an occupation." See
N.J.S.A. 18A:66-40(a) (TPAF);
N.J.S.A.

43:15A-44(a) (PERS). And the statutes contemplate a member's

possible reemployment in a position that is eligible for

participation within the same retirement system. See
N.J.S.A.

18A:66-40(b) (TPAF);
N.J.S.A. 43:15A-44(b) (PERS).

It is reasonable to infer from these statutes that the

Legislature intended for the Division to be aware when

disability retirement beneficiaries return to work. Therefore,

it is reasonable for the Division to require notification upon

35 A-2171-16T3
reemployment, and such notification does not conflict with law.

The NJEA's reliance upon Skulski,
68 N.J. at 201-08, was

misplaced because that case involved the standard for qualifying

for disability benefits in the PFRS system, and did not involve

the statutory treatment of beneficiaries post-retirement.

The notification amendment's requirement that beneficiaries

notify the Division "if the disabling condition improves enough

to allow the member to return to gainful employment" is also

reasonable and consistent with the governing statutes. N.J.A.C.

17:1-7.10(j). The NJEA claimed that this provision conflicts

with law because beneficiaries need not be generally

unemployable to receive disability benefits.

But the Division's awareness when a disability retirement

beneficiary is able to return to employment may further its

enforcement of the rehabilitation statutes. For example, the

TPAF statute provides that the retirement system may designate a

physician to perform a medical examination for beneficiaries

under the age of sixty, for a period of five years following

retirement.
N.J.S.A. 18A:66-40(a). If the report reveals that

the beneficiary "is able to perform either his [or her] former

duty or other comparable duty which his [or her] former employer

is willing to assign to him [or her]," the beneficiary must

report for duty. Ibid. (emphasis added).

36 A-2171-16T3
The PERS statute contains identical language.
N.J.S.A.

43:15A-44(a). Similarly, the PFRS statute allows the system to

order medical examinations of disability retirees under the age

of fifty-five within five years following retirement to

determine if the disability retirement beneficiary "is able to

perform either his [or her] former duty or any other available

duty in the department."
N.J.S.A. 43:16A-8(2) (emphasis added).

Beyond specifying age limits (under sixty for TPAF and PERS;

under fifty-five for PFRS) and time frames (within five years of

retirement), the Legislature granted the Division discretion to

decide the circumstances in which it will order a medical

examination of a disability retiree to determine if he or she is

fit for employment in any capacity with the former employer.

The Division may use the information provided by disability

retirees to aid its decision whether to order a post-retirement

medical examination, if the other statutory conditions (the age

and time frame limitations) are satisfied. Therefore, the

requirement for disability retirees to provide the information

in the notification amendment is not arbitrary and is consistent

with the law.

The NJEA also argued that this aspect of the amendment

improperly asks beneficiaries to render a medical opinion. Yet

the notification amendment does not ask the beneficiary to

37 A-2171-16T3
render a medical opinion, but rather asks the beneficiary to

update the Division if he or she believes that he or she is able

to work due to the condition's improvement. The notification

does not permit the Division to rely upon the beneficiary's

notification as medical evidence, or to deny or adjust

allowances based upon the beneficiary's notification. Rather,

as discussed previously, the Division may merely wish to use

that information to order a subsequent medical examination in

accordance with the rehabilitation statutes.

The NJEA claimed the Division may rely upon the

notifications to reopen and reconsider prior awards, which it

suggests would be improper. The NJEA expressed concern that the

Division may rely on the information provided by a retiree to

determine that the retiree is rehabilitated, or to order medical

examinations not in accordance with the statutory limitations.

As we have previously indicated, the pension statutes

specifically permit the Division to adjust disability retirement

benefits if a beneficiary obtains post-retirement employment.

N.J.S.A. 43:15A-44(b) (PERS);
N.J.S.A. 18A:66-40(b) (TPAF). And

the NJEA's initial concerns about what the Division may or may

not do in the future are not relevant to the final agency action

challenged here: the Division's promulgation of the notification

amendment. Raising concerns about a rule's possible application

38 A-2171-16T3
in future cases is not the same as challenging the rule's

validity. Therefore, the NJEA did not satisfy its burden of

demonstrating that the notification amendment is arbitrary and

capricious. In re Adoption of N.J.A.C. 11:3-29,
410 N.J. Super.

at 24-25.

The NJEA argued that, when retirees return to gainful

employment, "the onus should be on the Division to send out

regular notices to retirees reminding them of their obligation

to update the Division, not on the retirees who have no

expertise in pension matters." However, when authorized to do

so, the Division has the discretion to choose how to effectuate

legislative intent. In re Failure by the Dep't of Banking &

Ins.,
336 N.J. Super. at 262. That the Division could have

chosen other means, more in accord with the NJEA's preferences,

does not invalidate the amended rule. Additionally, the

observation that retirees "have no expertise in pension matters"

is misguided. No such expertise is required to know if one is

working or not, or to have a belief regarding whether one is

able to work.

Affirmed in part; reversed in part; and modified in part.

39 A-2171-16T3

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