S.L.W. VS. NEW JERSEY DIVISION OF PENSIONS AND BENEFITS (BOARD OF TRUSTEES, POLICE AND FIREMEN'S RETIREMENT SYSTEM)

NOT FOR PUBLICATION WITHOUT THE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-1673-16T4
S.L.W.,
Petitioner-Appellant,
v.
NEW JERSEY DIVISION
OF PENSIONS AND BENEFITS,
Respondent-Respondent.
Argued May 14, 2018 – Decided July 17, 2018
Before Judges Sabatino, Rose and Firko.
On appeal from the Board of Trustees, Police
and Firemen's Retirement System, Department of
the Treasury, Docket No. 3-10-031416.
John F. Pilles, Jr., argued the cause for
appellant.
Jeff S. Ignatowitz, Deputy Attorney General,
argued the cause for respondent (Gurbir S.
Grewal, Attorney General, attorney; Melissa H.
Raksa, Assistant Attorney General, of counsel;
Jeff S. Ignatowitz, on the brief).
PER CURIAM
Claimant S.L.W.1 appeals from a November 15, 2016 final
decision of the Board of Trustees ("Board") of the Police and
Firemen's Retirement System ("PFRS"), denying her application for
survivor benefits from her deceased father's pension. The Board
adopted the recommendations of the Administrative Law Judge
("ALJ"), who determined S.L.W. failed to satisfy the definition
of a "child" pursuant to N.J.S.A. 43:16A-1(21), and that she failed
to provide sufficient documentation supporting her claim.
Although we disagree with the Board's initial basis for denying
S.L.W.'s claim, we are satisfied, nonetheless, she failed to
support her claim for dependency. Accordingly, we affirm.
I.
We glean the pertinent facts, which are largely undisputed,
from the record before the ALJ. S.L.W. is the daughter of the
late J.R.W., who retired from public service in 2005, and received
pension retirement benefits under the PFRS. At the time of her
father's retirement, S.L.W. was twenty-five years old and
gainfully employed as a police officer with the Delaware River
Port Authority ("DRPA"). She resided in her own home in
Sicklerville.
1
We use initials to protect the confidentiality of the records
submitted by S.L.W.
2 A-1673-16T4
When he retired, J.R.W. continued to reside with his second
wife in Mount Ephraim, having divorced S.L.W.'s mother, C.L.M.,
in 1995. Pursuant to the judgment of divorce, C.L.M. claimed
S.L.W. and her brother as dependents for income tax purposes.
In October 2008, S.L.W. was involved in a work-related motor
vehicle accident, rendering her unable to maintain employment.
S.L.W. received interim worker's compensation benefits until her
settlement with the DRPA was finalized. Although she continued
to live separately from her father in her own home, S.L.W. contends
she "substantially depended" financially on J.R.W. after her
accident.
At the time of his death in 2012, J.R.W. was a widower.
Approximately eighteen months later, S.L.W. applied for PFRS
survivor benefits, claiming she met the definition of "child" set
forth in a PFRS handbook, and Fact Sheet #19 of a Division of
Pensions and Benefits ("Division") publication. The Division
denied her application, "interpret[ing] the definition of
'[c]hild' as someone who at the time of emancipation could not be
gainfully employed as a result of a physical or mental disability
[she] incurred prior to [her] emancipation." (Emphasis added).
In denying S.L.W.'s claim, the Division noted that if its
"interpretation of the definition of '[c]hild' proves to be
incorrect, then [she] would still need to prove dependency under
3 A-1673-16T4
[N.J.A.C. 17:4-3.7]." In particular, the Division advised that
the regulation requires "the filing of an affidavit of dependency,
supported by the deceased and the claimant's income tax returns,
for the period immediately preceding the death [of J.R.W.]"
In an August 7, 2014 letter to S.L.W., the Board agreed with
the Division.2 Despite its denial, the Board transferred the case
to the Office of Administrative Law for fact-finding "[d]ue to
numerous factual questions that remained unanswered." (Alteration
in original). Among other things, the Board cited S.L.W.'s failure
to submit "[m]edical proof that she is disabled and no longer
capable of any type of gainful employment," documentary proof of
"[h]er education, employment and marital status[,]" whether she
is "currently collecting [w]orker's compensation, [s]ocial
[s]ecurity or other [d]isabilty benefits or eligible to collect
these benefits in the future," and "[p]roof of dependency with the
submission [her father's] of Federal and State income tax returns
for the years 2004-2012." (First, second, eighth, and ninth
alterations in original).
S.L.W. and the Board filed cross-motions for a summary
decision, pertaining to two substantive issues framed by the ALJ
2
Although the letter was provided to the ALJ, who referenced it
in his decision, it was not provided to us by the parties to this
appeal.
4 A-1673-16T4
as: "whether [S.L.W.] is statutorily entitled to survivor benefits
as a surviving 'child' and whether the Board may require a
('child') claimant to establish financial dependence, upon the
retired parent, with income tax returns through N.J.A.C. 17:4-
3.7." The ALJ considered the parties' submissions, including
documentary evidence, and oral argument.
While the matter was pending before the ALJ, S.L.W.
supplemented her submission with her tax returns for 2009 and 2012
through 2014. S.L.W. claimed she was not required to file tax
returns in 2010 or 2011 because she earned de minimis income. On
her tax returns for 2009 (the year following her accident) and
2012 (the year J.R.W. died), the box "Yourself" under "Exemptions"
is checked, indicating S.L.W. claimed herself as an exemption.
Next to the term, "Yourself" is the statement, "If someone can
claim you as a dependent, do not check [the] box."
Although S.L.W. did not produce her father's tax returns,3
she submitted correspondence from L.A.G., a tax professional, and
D.L.P., an accountant, opining that J.R.W. had provided
"significant financial support" for S.L.W.
3
According to S.L.W.'s affidavit in support of summary judgment,
a Division representative indicated J.R.W. did not claim her as a
dependent on his Federal or State income tax returns.
5 A-1673-16T4
According to L.A.G., J.R.W. could have claimed S.L.W. as a
dependent on his Federal income tax returns for 20104 and 2011.
L.A.G. opined J.R.W. did not claim S.L.W. on his self-prepared
returns because he "was simply complying with the divorce decree"
and "would not have possessed the detailed knowledge necessary to
determine whether he was entitled to the exemption for his daughter
in her adult years."
D.L.P. reviewed J.R.W.'s bank statements and S.L.W.'s
finances from September 2009 through January 2011. D.L.P. could
not "find a direct correlation between checks written directly to
[S.L.W.] from [her] father and deposits [made] into [her] bank
account." However, D.L.P. identified "substantial checks" from
J.R.W.'s account to S.L.W.'s account, and "substantial ATM
withdrawals[,]" which S.L.W. indicated were for her benefit. Based
on her analysis, D.L.P. concluded "financial support from an
outside source was clearly evident."
In his October 7, 2016 written initial decision, the ALJ
determined S.L.W. failed to meet the definition of a "child"
pursuant to N.J.S.A. 43:16A-1(21)(d), which provides in pertinent
part:
"Child” shall mean a deceased member’s . . .
unmarried child . . . (d) of any age who, at
4
The ALJ's decision states "2009" instead of "2010," as set forth
in L.A.G.'s letter.
6 A-1673-16T4
the time of the member’s . . . death, is
disabled because of an intellectual disability
or physical incapacity, is unable to do any
substantial, gainful work because of the
impairment and his impairment has lasted or
can be expected to last for a continuous
period of not less than [twelve] months, as
affirmed by the medical board.
Although the ALJ found "a literal reading of the definition
of 'child' under N.J.S.A. 43:16A-1(21)(d) seemingly supports
S.L.W.'s argument that she is eligible for survivor benefits, such
an interpretation appears to run afoul of legislative objectives
and public policy." The ALJ cited two Supreme Court decisions
referencing those objectives and policy. Initially, he quoted
Saccone v. Board of Trustees, Police and Firemen's Retirement
System, 219 N.J. 369, 381 (2014), where the Court determined "the
motivating force behind the Legislature's enactment of [the PFRS
survivors' benefits statute]5 appears to have been the financial
well-being of a member's surviving spouse and children." Further,
5
N.J.S.A. 43:16A-12.1(a). Pertinent to this appeal, where J.R.W.
was not survived by a wife, that statute provides:
Upon the death after retirement of any member
of the retirement system . . . [twenty
percent] of final compensation will be payable
to one surviving child, [thirty-five percent]
of such compensation to two surviving children
in equal shares and if there be three or more
children, [fifty percent] of such compensation
would be payable to such children in equal
shares.
7 A-1673-16T4
the ALJ cited Eyers v. State of New Jersey, Board of Trustees
Public Employees' Retirement System, 91 N.J. 51, 57 (1982), where
the Court pronounced that the PFRS survivors' benefits statute
"evinces a strong legislative policy in favor of those most likely
to be dependent upon a public employee." Relying on those
decisions, the ALJ determined "a disabled adult child, in order
to satisfy N.J.S.A. 43:16A-1(21)(d), must have been dependent upon
the deceased member."
Further, the ALJ found persuasive that a related section of
the Social Security Act, 42 U.S.C.A. § 402(d), and our State's
child support case law interpreting child-support orders, N.J.S.A.
2A:34-23, both require the disability arise before emancipation.
To support his conclusion, the ALJ quoted our decision in Kruvant
v. Kruvant, 100 N.J. Super. 107, 120 (App. Div. 1968), where we
observed "[W]e d[id] not believe that the Legislature in enacting
N.J.S.[A.] 2A:34-23 intended to confer jurisdiction upon the court
to compel a husband or wife to support a child suffering from a
disability which did not exist at the time of his attaining his
majority but came about some time later."
Secondly, the ALJ determined S.L.W. failed to produce the
requisite tax returns pursuant to N.J.A.C. 17:4-3.7(a). Under
that regulation, "Proof of dependency shall be established by the
filing of an affidavit of dependency, supported by the deceased
8 A-1673-16T4
and the claimant's income tax returns, for the period immediately
preceding the death or accident." In particular, S.L.W. failed
to provide her father's tax returns from 2004 through 2012.
Further, S.L.W.'s tax returns for 2009 and 2012 did not support
dependency because those returns indicated no one could claim her
as a dependent.
In disqualifying S.L.W. for failing to provide supporting
documentation, the ALJ rejected her contentions that the Board
should be estopped from requiring tax returns pursuant to N.J.A.C.
17:4-3.7, and should address the underlying issue that precluded
her father from claiming her as a dependent, i.e., that her
parents' divorce decree prevented J.R.W. from doing so. Instead,
the ALJ determined S.L.W. failed to demonstrate that N.J.A.C.
17:4-3.7 is arbitrary, capricious or unreasonable, where, as here,
the regulation "has a presumption of reasonableness." The ALJ
further found S.L.W. did not demonstrate she "detrimentally relied
upon the Board's rules and regulations so as to justify equitable
estoppel of the application of N.J.A.C. 17:4-3.7 and its
requirement of tax returns to support a claim of dependency."
Thereafter, the Board adopted the ALJ's recommendations.
This appeal followed.
On appeal, S.L.W. raises the following arguments for our
consideration: she meets the statutory requirements for survivor
9 A-1673-16T4
benefits, including the definition of a "child"; the Division is
equitably estopped from denying benefits to an emancipated
applicant because the condition is not explicitly required by
statute; the Division is equitably estopped from requiring that
she establish her father claimed her as a dependent on his tax
returns; N.J.A.C. 17:4-3.7 is unenforceable because it is not
authorized by the enabling statute; and the requirement that she
submit tax returns as proof of dependency is unconstitutional as
a violation of the due process clause of the Fourteenth Amendment.
II.
A.
Our scope of review of an agency decision is limited. In re
Stallworth, 208 N.J. 182, 194 (2011) (citing Henry v. Rahway State
Prison, 81 N.J. 571, 579 (1980)). In challenging an agency
conclusion, the claimant carries a substantial burden of
persuasion, and the determination of the administrative agency
carries a presumption of correctness. Gloucester Cty. Welfare Bd.
v. N.J. Civil Serv. Comm'n, 93 N.J. 384, 390-91 (1983); McGowan
v. N.J. State Parole Bd., 347 N.J. Super. 544, 563 (App. Div.
2002).
"Judicial review of agency regulations begins with a
presumption that the regulations are both 'valid and reasonable.'"
N.J. Ass'n of Sch. Adm'rs v. Schundler, 211 N.J. 535, 548 (2012)
10 A-1673-16T4
(citation omitted). We overturn an agency determination only if
it is arbitrary, capricious, unreasonable, unsupported by
substantial credible evidence as a whole, or inconsistent with the
enabling statute or legislative policy. Brady v. Bd. of Review,
152 N.J. 197, 210-11 (1997); see also Caminiti v. Bd. of Trs.,
Police & Firemen's Ret. Sys., 431 N.J. Super. 1, 14 (App. Div.
2013) (citing Hemsey v. Bd. of Trs., Police & Firemen's Ret. Sys.,
198 N.J. 215, 223-24 (2009)). "As a result, the party challenging
a regulation has the burden of proving that the agency's action
was 'arbitrary, capricious or unreasonable.'" Schundler, 211 N.J.
at 548 (citation omitted).
However, "we are not bound by an agency's statutory
interpretation or other legal determinations." Mattia v. Bd. of
Trs., Police & Firemen's Ret. Sys., ___ N.J. Super. ___, ___ (App.
Div. 2018) (slip op. at 6) (citing Russo v. Bd. of Trs., Police &
Firemen's Ret. Sys., 206 N.J. 14, 27 (2011)). Further, "we owe
no deference to an administrative agency's interpretation of
judicial precedent." Bowser v. Bd. of Trs., Police & Firemen's
Ret. Sys., ___ N.J. Super. ___, ___ (App. Div. 2018) (slip op. at
7).
We have carefully considered S.L.W.'s arguments in light of
the applicable law, and initially conclude she failed to establish
11 A-1673-16T4
dependency. We affirm the ALJ's decision, in that specific regard,
substantially for the sound reasons stated in his written opinion
of October 7, 2016. We add only the following comments.
S.L.W.'s assertion that her parents' divorce decree prevented
J.R.W. from including her as a dependent on his tax returns is
speculative and lacks corroboration, notwithstanding L.A.G.'s
opinion to the contrary. We agree with the Board that the record
is devoid of any evidence "indicat[ing] why either [J.R.W.] or
[C.L.M.] would have claimed [S.L.W.] as a dependent in 2012 (when
she was [thirty-three] years old) as a result of the 1995 divorce
decree."
Nor are we persuaded by S.L.W.'s argument that N.J.A.C. 17:4-
3.7(a) is unenforceable because it is not valid under the enabling
statute. Pursuant to that statute, "The State Treasurer shall,
with the advice of the State Investment Council, the Director of
the Division of Pensions . . . and in accordance with the
'Administrative Procedure Act' [("APA")], . . . promulgate any
rules and regulations necessary to accomplish the purposes of this
act." N.J.S.A. 43:16A-16.16. Again, "The motivating force behind
the Legislature's enactment of [the survivors' benefits section]
appears to have been the financial well-being of a member's
surviving spouse and children." Saccone, 219 N.J. at 381.
Generally, the Board owes a fiduciary duty to its members, and
12 A-1673-16T4
that duty would be thwarted if it provided benefits to someone who
is not eligible. See Mount v. Trs. of Pub. Emps' Ret. Sys., 133
N.J. Super. 72, 86 (App. Div. 1975).
Accordingly, the enabling statute clearly permits the
Division to promulgate regulations necessary to accomplish the
purpose of the PFRS statute, including the survivor benefits
subsection. The Division's decision to promulgate N.J.A.C. 17:4-
3.7(a) was a reasonable and prudent act in its role as fiduciary
of the pension plan, addressing the statute's objective of
providing for those "most likely to be dependent upon a public
employee." Eyers, 91 N.J. at 57.
We agree with the ALJ that S.L.W. has not demonstrated that
the statutory requirement of submitting income tax returns was
arbitrary, capricious or unreasonable. In particular, her
contention that J.R.W. did not claim her as a dependent on his tax
returns after her car accident, when she was in her late-twenties,
because of his divorce decree entered in 1995, when she was in her
teens, is uncorroborated and specious. Therefore, based on the
enabling act, and the legislative policy underscoring the survivor
benefits statute, S.L.W.'s claim for survivor benefits fails
because she did not comply with the mandates of N.J.A.C. 17:4-
3.7(a).
13 A-1673-16T4
B.
Because we find S.L.W. failed to provide the requisite income
tax returns supporting her claim of dependency, we need not address
her argument that the agency erred in finding she did not meet the
definition of a "child" under N.J.S.A. 43:16A-1(21)(d). We do so
for the sake of completeness.
It is well-settled that "The Legislature's intent is the
paramount goal when interpreting a statute and, generally, the
best indicator of that intent is the statutory language."
DiProspero v. Penn, 183 N.J. 477, 492 (2005) (citation omitted).
Thus, when interpreting a statute, the first step is to look to
the plain meaning of the language. Bergen Commercial Bank v.
Sisler, 157 N.J. 188, 202 (1999). In doing so, a court should
"ascribe to the statutory words their ordinary meaning and
significance, and read them in context with related provisions so
as to give sense to the legislation as a whole." DiProspero, 183
N.J. at 492 (internal citations omitted).
Further, a court should take care not to "disregard plain
statutory language to replace it with an unenacted legislative
intent." Bd. of Chosen Freeholders of Cty. of Hudson v. Cty.
Exec. of Cty. of Hudson, 357 N.J. Super. 242, 249 (App. Div. 2003)
(citation omitted). In other words, a court should not "'write
in an additional qualification which the Legislature pointedly
14 A-1673-16T4
omitted in drafting its own enactment,' Craster v. Board of
Commissioners of Newark, 9 N.J. 225, 230 (1952), or 'engage in
conjecture or surmise which will circumvent the plain meaning of
the act,' In re Closing of Jamesburg High School, 83 N.J. 540, 548
(1980)." DiProspero, 183 N.J. at 492. Therefore, "a statute that
is clear and unambiguous on its face, . . . is not open to
construction or interpretation." Bd. of Chosen Freeholders, 357
N.J. Super. at 249 (citation omitted).
Here, S.L.W. claims that the emancipation requirement is not
explicitly stated in the statute, regulation or educational
publications issued by the Division and, as such, N.J.S.A. 43:16A-
1(21)(d) cannot be interpreted to limit survivor benefits to
unemancipated children. In doing so, she contends the Division
engaged in improper rulemaking, and essentially adopted an invalid
policy ultra vires.
We have recognized that "The inquiry whether an agency's
actions constitute improper rulemaking is informed by well-settled
principles." In re N.J.A.C. 7:1B-1.1, 431 N.J. Super. 100, 133
(App. Div. 2013). The APA defines an administrative rule as "each
agency statement of general applicability and continuing effect
that implements or interprets law or policy, or describes the
organization, procedure or practice requirements of any agency."
N.J.S.A. 52:14B-2. "If an agency determination or action
15 A-1673-16T4
constitutes an 'administrative rule,' then its validity requires
compliance with the specific procedures of the APA that control
the promulgation of rules." Airwork Serv. Div. v. Dir., Div. of
Taxation, 97 N.J. 290, 300 (App. Div. 1984) (citation omitted).
"The purpose of the APA rulemaking procedures is 'to give those
affected by the proposed rule an opportunity to participate in the
process, both to ensure fairness and also to inform regulators of
consequences which they may not have anticipated.'" In re
Provision of Basic Generation Serv. for Period Beginning June 1[,]
2008, 205 N.J. 339, 349 (2011) (citation omitted).
In the seminal case, Metromedia, Inc. v. Director, Division
of Taxation, 97 N.J. 313 (1984), our Supreme Court outlined six
factors to consider when evaluating whether an agency
determination, "to be valid, had to comply with the requirements
governing the promulgation of administrative rules as provided by
the APA." Id. at 328. In doing so, the Court highlighted the
policy reasons behind formal rulemaking requirements, including
public notice, public comment, fairness, and predictability. Id.
at 331. According to the Court:
[A]n agency determination must be considered
an administrative rule when all or most of the
relevant features of administrative rules are
present and preponderate in favor of the rule-
making process. Such a conclusion would be
warranted if it appears that the agency
determination, in many or most of the
16 A-1673-16T4
following circumstances, (1) is intended to
have wide coverage encompassing a large
segment of the regulated or general public,
rather than an individual or a narrow select
group; (2) is intended to be applied generally
and uniformly to all similarly situated
persons; (3) is designed to operate only in
future cases, that is, prospectively; (4)
prescribes a legal standard or directive that
is not otherwise expressly provided by or
clearly and obviously inferable from the
enabling statutory authorization; (5)
reflects an administrative policy that (i) was
not previously expressed in any official and
explicit agency determination, adjudication
or rule, or (ii) constitutes a material and
significant change from a clear, past agency
position on the identical subject matter; and
(6) reflects a decision on administrative
regulatory policy in the nature of the
interpretation of law or general policy.
These relevant factors can, either singly or
in combination, determine in a given case
whether the essential agency action must be
rendered through rule-making or adjudication.
[Id. at 331-32.]
Those criteria "need not be given the same weight, and some factors
will clearly be more relevant in a given situation than others."
Doe v. Poritz, 142 N.J. 1, 97 (1995).
Here, factors (2), (4), (5)(i) and (6) compel our
determination that the Division's attempts to augment the plain
language of N.J.S.A. 43:16A-1(21)(d) with an emancipation
requirement "constituted a rule, and that its adoption required
rule-making procedures." Metromedia, 97 N.J. at 334. Pursuant
to those factors, the emancipation requirement is generally and
17 A-1673-16T4
uniformly applied to all child claimants (factor 2); the
requirement was "not otherwise expressly provided by or clearly
and obviously inferable from the enabling statutory authorization"
(factor 4); it "was not previously expressed in any official and
explicit agency determination, adjudication or rule" (factor
5(i)); and the emancipation requirement reflects the Division's
policy in its interpretation of PFRS law (factor 6). Indeed, the
Division's publications that assist retirees in understanding
their benefits are silent as to emancipation in the definition of
a "child." Thus, the requirement was not predictable or fair,
thereby requiring formal rulemaking procedures and public notice.
Metromedia, 97 N.J. at 331.
In sum, because the rulemaking procedures did not occur here,
the Board incorrectly upheld the ALJ's determination that S.L.W.'s
emancipation excluded her from the definition of a child pursuant
to N.J.S.A. 43:16A-1(21)(d). Nevertheless, as we explained in
Part II, supra, S.L.W. failed to submit the requisite income tax
returns to support her claim of dependency. Her remaining
arguments, to the extent we have not addressed them, are without
sufficient merit to warrant further discussion. R. 2:11-
3(e)(1)(D) & (E).
Affirmed.
18 A-1673-16T4