Luis Fermin v. Board of Trustees, Etc. ( 2024 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1270-22
LUIS FERMIN,
Petitioner-Appellant,
v.
BOARD OF TRUSTEES,
POLICE AND FIREMEN'S
RETIREMENT SYSTEM,
Respondent-Respondent.
_________________________
Argued October 9, 2024 – Decided November 19, 2024
Before Judges Mayer and Rose.
On appeal from the Board of Trustees of the Police
and Firemen's Retirement System, Department of the
Treasury, PFRS No. xx2576.
Eric V. Kleiner argued the cause for appellant.
Robert J. Papazian argued the cause for respondent
(Gebhardt & Kiefer, PC, attorneys; Leslie A. Parikh
and Linda M. Brown, on the brief).
PER CURIAM
Petitioner Luis Fermin, a former police officer with the City of Paterson
(City) Police Department, appeals from a November 16, 2022 final decision
of the Board of Trustees (Board) of the Police and Firemen's Retirement
System (PFRS), rejecting the administrative law judge's (ALJ) initial
decision, which reversed the Board's denial of Fermin's request to apply for
accidental disability retirement benefits (ADRB). Because we conclude the
record supports the Board's decision that Fermin irrevocably resigned from
his employment with the City pursuant to the terms of their settlement
agreement, we affirm.
I.
The facts are straightforward and, for purposes of this appeal, largely
undisputed. Fermin commenced his employment with the City as a Paterson
Police Officer in January 2005. During the early morning hours of January
1, 2018, Fermin was seated in the passenger side of a car driven by a "female
civilian companion" when an unidentified man approached the vehicle at a
traffic light. Believing the man reached for a gun, Fermin fired three rounds
from his service weapon and the man fled. Fermin was off-duty at the time
of the incident.
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Following an internal affairs investigation, Fermin was issued a
preliminary notice of disciplinary action (PNDA) on January 2, 2019,
recommending his termination. According to the PNDA, "Fermin left the
scene without": "reporting the incident to police headquarters"; "attempting
to identify or contain the identified male"; and "without reporting he fired the
shots from his service weapon to police headquarters." Further, "Fermin
returned to the scene in a different vehicle [from] the one involved in the
incident, thereby contaminating the scene."
The PNDA charged Fermin with the following acts of misconduct under
N.J.A.C. 4A:2-2.3(a)(1), (3), (6), (7), and (12): "[i]ncompetency, inefficiency
or failure to perform duties"; "[i]nability to perform duties"; "[c]onduct
unbecoming a public employee"; "[n]eglect of duty"; and "[o]ther sufficient
cause." The PNDA also charged Fermin with misconduct and suspended him
without pay under N.J.A.C. 4A:2-2.5(a)(1) based on the City's determination
that he was "unfit for duty and an immediate suspension [wa]s necessary to
maintain safety, health order and/or effective direction of public service."
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On November 26, 2019, Fermin and the City signed a Memorandum of
Agreement (MOA).1 Pertinent to this appeal, the City agreed to withdraw all
pending disciplinary charges without prejudice. Fermin agreed to
"immediately meet with the City's Personnel Office to begin the process for
filing for a disability retirement pension with the PFRS." The MOA further
provided:
5. If Fermin withdraws his pension application
or fails to comply with all State of New Jersey and
City requirements for processing his disability
retirement in an expeditious manner, Fermin's current
disciplinary charges shall be reinstated, and Fermin
will be terminated.
6. The City does not object to and/or takes no
position as to Fermin's accidental disability claim and
shall cooperate with any requests for information or
documentation from the New Jersey Division of
Pensions. The City shall provide the parties to the
disability application with standard police reports and
incident reports related to the incident . . . wherein
Fermin claims he discharged his weapon in self-
defense.
7. Fermin hereby understands and agrees that
from February 1, 2020 forward[,] he is forever barred
from taking any actions as a law enforcement officer
for the Paterson Police Department.
1
The MOA was re-executed on March 12, 2020, with certain revisions that did
not substantively alter the relevant terms. We set forth the terms of the March
12, 2020 MOA.
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Fermin applied for ADRB on November 26, 2019, the same day he signed the
initial MOA.
On October 21, 2020, the Division's Disability Review Section
determined Fermin was ineligible to apply for disability benefits under
N.J.A.C. 17:1-6.4(b), which "requires that disability applicants must prove
that the retirement is due to a total and permanent disability and that the
disability is the reason the member left employment." After reviewing
Fermin's application and the MOA, the Division reasoned Fermin could not
comply with N.J.S.A. 43:16A-8(2) because "there would be no position for
[him] should [his] alleged disability diminish at some point in the future to
the point that [he] could return to employment."
On January 13, 2021, the Board denied Fermin's ensuing request to
apply for ADRB for the same reasons stated by the Division. Fermin appealed
the Board's decision and the matter was transmitted to the Office of
Administrative Law as a contested case. Fermin and the City filed cross-
motions for summary decision. See N.J.A.C. 1:1-12.5(a) ("A party may move
for summary decision upon all or any of the substantive issues in a contested
case."). The sole issue presented on the undisputed facts was whether the
MOA "preclude[d] Fermin from applying for [ADRB]."
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On August 2, 2022, the ALJ issued an initial decision reversing the
Board's legal determination. The ALJ concluded "the plain language of
N.J.S.A. 43:16A-8(2) does not contemplate barring a member from applying
for benefits" and any interpretation otherwise "conflict[s] with the plain
language of N.J.S.A. 43:16A-7(a)(1)" (permitting a PFRS member to apply
for ADRB). Citing the terms of the MOA, the ALJ noted: "It seems somewhat
contradictory to reference a document that specifically states Fermin is to
apply for [ADRB] as a reason to bar Fermin from applying for said benefits."
Further, "in the less-than-likely hypothetical situation relied on by the Board,
wherein Fermin receives benefits, recovers, and is then denied reemployment,
the Board, upon determining that Fermin is fully recovered from his
disability, could simply discontinue benefits and Fermin could seek
employment elsewhere."
The Board rejected the ALJ's initial decision, maintaining its
determination that, pursuant to the terms of the MOA and the governing law,
Fermin is not eligible to apply for ADRB. This appeal followed.
II.
Well-settled principles guide our review. "Judicial review of agency
determinations is limited." Allstars Auto Grp., Inc. v. N.J. Motor Vehicle
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Comm'n, 234 N.J. 150, 157 (2018). An agency decision will be upheld
"unless there is a clear showing that (1) the agency did not follow the law; (2)
the decision was arbitrary, capricious, or unreasonable; or (3) the decision
was not supported by substantial evidence." In re Virtua-West Jersey Hosp.
Voorhees for a Certificate of Need, 194 N.J. 413, 422 (2008). "When an
agency's decision meets those criteria, then a court owes substantial deference
to the agency's expertise and superior knowledge of a particula r field." In re
Herrmann, 192 N.J. 19, 28 (2007). "The burden of demonstrating that the
agency's action was arbitrary, capricious or unreasonable rests upon the
person challenging the administrative action." In re Arenas, 385 N.J. Super.
440, 443-44 (App. Div. 2006); see also Lavezzi v. State, 219 N.J. 163, 171
(2014).
"Because an agency's determination on summary decision is a legal
determination, our review is de novo." L.A. v. Bd. of Educ. of Trenton, 221
N.J. 192, 204 (2015). We also exercise de novo review of the interpretation
of a settlement agreement as it is subject to ordinary principles of contract
law. See Thompson v. City of Atlantic City, 190 N.J. 359, 374 (2007);
Polarome Int'l, Inc. v. Greenwich Ins. Co., 404 N.J. Super. 241, 260 (App.
Div. 2008).
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A reviewing court is "not bound by the agency's interpretation of a
statute or resolution of a question of law." In re Carroll, 339 N.J. Super. 429,
437 (App. Div. 2001); see also Allstars, 234 N.J. at 158. However, "[w]e will
overturn an agency's interpretation of a statute it implements only when it is
'plainly unreasonable.'" In re Comm'r's Failure to Adopt 861 CPT Codes, 358
N.J. Super. 135, 149 (App. Div. 2003) (quoting Merin v. Maglaki, 126 N.J.
430, 437 (1992)). A reviewing court therefore "affords a 'strong presumption
of reasonableness' to an administrative agency's exercise of its statutorily
delegated responsibilities." Lavezzi, 219 N.J. at 171 (quoting City of Newark
v. Nat. Res. Council, Dep't of Env't Prot., 82 N.J. 530, 539 (1980)). That
presumption is particularly strong when an agency is dealing with specialized
matters within its area of expertise. See Newark, 82 N.J. at 540.
An agency is empowered to reject and modify an ALJ's initial decision,
but its authority to do so is not boundless. When an agency rejects an ALJ's
decision, regulations require the agency to clearly state the basis for its
rejection and cite specific evidence supporting its final decision and
interpretation of the law. N.J.A.C. 1:1-18.6(b). The Board's discretion
includes the authority to adopt, reject, or modify the ALJ's findings of
credibility of expert witnesses. In re Adoption of Amends. to Ne., Upper
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Raritan, Sussex Cnty., 435 N.J. Super. 571, 584 (App. Div. 2014). However,
"[t]he agency head may not reject or modify any findings of fact as to issues
of credibility of lay witness testimony unless it is first determined from a
review of the record that the findings are arbitrary, capricious [,] or
unreasonable or are not supported by sufficient, competent, and credible
evidence in the record." N.J.S.A. 52:14B-10(c).
The "separation for service rule . . . generally requires disability
retirement applicants to prove that their asserted disability is 'the reason the
member left employment.'" In re Adoption of N.J.A.C. 17:1-6.4, 454 N.J.
Super. 386, 397 (App. Div. 2018) (quoting N.J.A.C. 17:1-6.4(a)). Relevant
here, "[t]he rule also bars members from applying for a disability retirement
if they voluntarily or involuntarily terminate service" by "[r]emoval for cause
or total forfeiture of public service" and "[s]ettlement agreements reached due
to pending administrative or criminal charges, unless the underlying charges
relate to the disability." Id. at 397-98 (quoting N.J.A.C. 17:1-6.4(b)(1) and
(2)). "[A]lthough a person eligible for benefits is entitled to a liberal
interpretation of a pension statute, 'eligibility [itself] is not to be liberally
permitted.'" Id. at 399 (quoting Smith v. Dep't of Treasury, Div. of Pensions
& Benefits, 390 N.J. Super. 209, 213 (App. Div. 2007)). "Members who leave
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public service for reasons unrelated to a disability are not entitled to disability
retirement benefits in the first instance." Id. at 404.
The "restoration to active service" statute provides, in pertinent part:
Any beneficiary under the age of 55 years who
has been retired on a disability retirement allowance
under this act, on his [or her] request shall, or upon
the request of the retirement system may, be given a
medical examination and he [or she] shall submit to
any examination by a physician or physicians
designated by the medical board once a year for at
least a period of five years following his retirement in
order to determine whether or not the disability which
existed at the time he was retired has vanished or has
materially diminished. If the report of the medical
board shall show that such beneficiary is able to
perform either his former duty or any other available
duty in the department which his employer is willing
to assign to him, the beneficiary shall report for duty;
such a beneficiary shall not suffer any loss of benefits
while he awaits his restoration to active service. If
the beneficiary fails to submit to any such medical
examination or fails to return to duty within 10 days
after being ordered so to do, or within such further
time as may be allowed by the board of trustees for
valid reason, as the case may be, the pension shall be
discontinued during such default.
[N.J.S.A. 43:16A-8(2) (emphasis added).]
Against these guiding legal principles, we reject Fermin's argument that
the Board misapplied the law, including his contention agencies typically
"follow the ALJ's recommendations." As this matter was resolved on
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summary decision, the issue presented turned on the legal interpretation of
the MOA and the governing rule and statute. The Board clearly stated its
reasons for rejecting the ALJ's initial decision. See N.J.A.C. 1:1-18.6(b).
We are likewise unpersuaded by Fermin's overlapping arguments that
the Board's decision "was arbitrary and capricious and was not supported by
the factual record." More particularly, Fermin argues the Board mistakenly
interpreted the MOA. He maintains the MOA was not a quid pro quo
agreement because its purposes primarily were limited to the City's obligation
to: resolve the outstanding money owed him under his contract in view of his
total disability; "fully cooperate and support" his disability application; and
dismiss the disciplinary charges "solely" based on his permanent disability.
Thus, Fermin claims the Board erroneously relied on our decision in
Cardinale v. Board of Trustees, Police and Firemen's Retirement System, 458
N.J. Super. 260 (App. Div. 2019), which was not cited by the ALJ, to resolve
his eligibility issue.
Contrary to Fermin's contentions, our decision in Cardinale – issued
eight months before Fermin signed the initial MOA – supports the Board's
decision in the present matter even though the facts are not on all fours. In
Cardinale, a former police officer voluntarily and irrevocably retired from his
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position pursuant to a settlement agreement following his suspension for a
positive random drug test. Id. at 264-65. Unlike the MOA in the present
matter, the settlement agreement in Cardinale "acknowledged [the petitioner]
would proceed with his application for ordinary disability benefits at his 'sole
risk.'" Id. at 265. Also, unlike Fermin, Cardinale testified at the hearing
before the ALJ and "conceded that he was recovering and no longer disabled."
Ibid.The ALJ in Cardinale determined "the settlement agreement did not
bind the Board," a non-party to the contract. Id. at 266. The Board adopted
the initial decision, reasoning "the only obstacle to [the petitioner's]
reemployment was not the purported disability, but rather, his irrevocable
resignation." Thus, "assuming Cardinale was disabled but later became
rehabilitated," the Board concluded "it would have no statutory authority to
stop paying benefits." Id. at 265.
We affirmed the Board's decision, holding "when a PFRS member . . .
voluntarily irrevocably resigns from active service, such a separation from
employment automatically renders the individual ineligible for ordinary
disability benefits." Id. at 263 (emphasis added). Of particular relevance to
this appeal, we concluded the petitioner's claimed disability was "irrelevant
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to our holding that his irrevocable resignation made him ineligible for benefits
in the first place." Id. at 268.
Citing the "unambiguous[]" terms of the restoration to active duty
service, we noted a PFRS member who retired due to disability, but then
recovered sufficiently to "perform either his former duty or any other
available duty in the department which his employer is willing to assign to
him . . . shall report for duty." Id. at 269 (quoting N.J.S.A. 43:16A-8(a)).
The statute's purpose "is to return the previously disabled retiree to work as
if that individual had never suffered a disability or interruption of service."
Id. at 270. The statute "balances a worker's interest with those of an employer
and the public by requiring PFRS workers – upon rehabilitation – to forgo the
benefits and return to work." Ibid. We concluded "Cardinale's permanent
inability to return to duty [wa]s fatal." Ibid. We therefore recognized:
Importantly, a member's irrevocable
resignation presents a practical problem that strains
the workability of the system. N.J.S.A. 43:16A-8(2)
envisions only one circumstance when disability
benefits may cease. That situation, which does not
apply to members who irrevocably resign from work,
arises when the Board grants retirement benefits to a
PFRS retiree, that retiree's disability vanishes or
materially diminishes, and then that retiree fails to
return to duty after the Board orders the retiree to do
so.
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[Id. at 270-71.]
Thus, the process set forth in the statute, when a recipient recovers from his
or her disability and returns to work, provides the sole means for the Board
to terminate disability benefits. Id. at 271.
We therefore concluded permitting public employees to seek disability
benefits when they have irrevocably retired would prevent the State from ever
terminating disability benefits, even upon the member's recovery, because the
member could never "return" to his or her former employment. Such an
outcome "would violate public policy, contravene the rehabilitation statute,
and encourage abuse of the disability retirement system." Id. at 273.
Accordingly, Cardinale's irrevocable resignation rendered him ineligible for
participation in the disability pension scheme. Ibid.Here, as the Board correctly concluded, similar to the settlement
agreement in Cardinale, the terms of the MOA prevent Fermin from
complying with N.J.S.A. 43:16A-8(2). Specifically, should the medical board
determine Fermin "is able to perform either his former duty or any other
available duty in the department" he must "report for duty" but he cannot do
so because, pursuant to the terms of the MOA he is "forever barred from
future employment with [the City]." Thus, assuming Fermin were entitled to
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ADRB, should he fully recover, he could not "simply discontinue benefits and
. . . seek employment elsewhere," as the ALJ suggested. See Cardinale, 458
N.J. Super. at 269. Rather, Fermin's "permanent inability to return to duty is
fatal." Id. at 270.
Having conducted a de novo review of the record and governing legal
principles, L.A., 221 N.J. at 204, we are satisfied the Board properly rejected
the ALJ's initial decision. We conclude the Board's decision "is supported by
sufficient credible evidence on the record as a whole." R. 2:11-3(e)(1)(D).
To the extent we have not addressed a particular argument, it is because either
our disposition makes it unnecessary, or the argument was without sufficient
merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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