SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3151-18T3

ELLEN SCHWARTZ,

Plaintiff-Appellant,

v.

DEPARTMENT OF TREASURY,

DIVISION OF PENSIONS AND

BENEFITS,

Defendant-Respondent.

________________________________

Submitted April 20, 2020 – Decided July 16, 2020

Before Judges Rothstadt and Moynihan.

On appeal from the Board of Trustees, Teachers' 

Pension and Annuity Fund, Department of the 

Treasury, TPAF No. 1-10-158521.

Caruso Smith Picini PC, attorneys for appellant 

(Timothy Richard. Smith, of counsel; Sara B. Liebman, 

on the briefs).

Gurbir S. Grewal, Attorney General, attorney for 

respondent (Melissa H. Raksa, Assistant Attorney 

NOT FOR PUBLICATION WITHOUT THE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.
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General, of counsel; Austin J. Edwards, Deputy 

Attorney General, on the brief).

PER CURIAM

Plaintiff Ellen Schwartz appeals from the Board of Trustees, (Board) 

Teachers' Pension and Annuity Fund's (TPAF) February 11, 2019 final 

administrative determination requiring plaintiff to repay $32,431.56 in pension 

benefits. The Board required the repayment after it determined her retirement 

from the Elizabeth Board of Education (EBOE) did not qualify as a "bona fide 

severance from employment" since she returned to work for the EBOE within 

180 days of her retirement, in contravention of N.J.A.C. 17:1-17.14(a)(2)(iv).

On appeal, plaintiff argues that the matter should have been transferred to 

the Office of Administrative Law (OAL) for a hearing because there were factual 

disputes that needed to be resolved. She also contends that she should not be 

forced to repay the benefits because she returned to work as a substitute teacher 

through a placement by a third-party employer, Source4Teachers (S4T). 

Moreover, even if she did violate the regulation prohibiting returning to work, 

it was unintentional. We affirm because plaintiff failed to establish that a factual 

dispute existed or that the Board's decision was arbitrary, capricious, or 

unreasonable. 
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The material facts are undisputed. The EBOE employed plaintiff as a 

teacher until May 9, 2014, when it informed plaintiff that her employment would 

be terminated, effective June 30, 2014, due to a reduction in force. On May 31, 

2015, plaintiff filed for retirement and at its regular July 2, 2015 meeting, the 

Board approved plaintiff's retirement, effective June 1, 2015. In its letter 

notifying plaintiff that her retirement was approved, the Board cautioned 

plaintiff that if she was to return to public employment following her retirement, 

she needed to notify the Board's Office of Client Services "immediately." 

On April 2, 2015, plaintiff began working as a substitute teacher for S4T,

which assigned her to work for the EBOE starting on October 6, 2015 through 

June 21, 2016. Thereafter, the EBOE directly reemployed plaintiff as a fulltime teacher for the term beginning in September 2016. Plaintiff notified the 

Division of Pensions and Benefits (Division) about her reemployment in a 

October 1, 2016 letter that also requested that her retirement be stopped, and 

advised that she understood she was required to repay the distributed retirement 

benefits she received for September and October 2016. 

Upon receipt of plaintiff's letter, the Division's external auditor unit 

(EAU) began a review to determine whether plaintiff's post-retirement 

employment complied with "all applicable pension laws." On October 6, 2016, 
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a member of the EAU contacted plaintiff by telephone to investigate plaintiff's 

claims and verify her post-retirement employment status. During a phone call 

with the EAU, plaintiff confirmed that she worked for EBOE through S4T after 

her retirement. According to plaintiff, S4T told her that employment with S4T 

would not adversely affect any pre-existing relationships. 

The Division had no records indicating plaintiff ever contacted it to 

ascertain whether employment with the EBOE, through S4T, would compromise 

plaintiff's retirement benefits. 

Following a verification from the EBOE of her employment status, 

plaintiff was advised that she would be re-enrolled in the TPAF, her retirement 

benefits would be suspended, and defendant would initiate a recovery of all 

overpaid retirement benefits. Following a further review of the documents 

submitted by the EBOE, the EAU wrote to plaintiff on May 14, 2018 to advise 

her in detail of the Division's determination that her June 1, 2015 retirement did 

not constitute a bona fide severance from employment, given that she returned 

to work for the EBOE within 180 days of retirement. 

The letter recounted: when plaintiff retired, when her employment was set 

to be terminated by the EBOE, her earned wage totals from S4T, and various 

regulations that she was required to meet upon retiring before stating:
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Based on information provided by your employer, 

EBOE, the Division has determined that your TPAF 

retirement effective June 1, 2015 was not bona fide and 

that you remained an active member of TPAF since you 

did not separate from employment with the [EBOE] as 

required by the provisions of N.J.A.C. 17:1-17.14. The 

Division found that you did not have a bona fide 

severance from employment because you returned to 

the same employer (EBOE) that you retired from 

through a third[-]party employer (S4T) within 180 days 

of your retirement date of June 1, 2015. As a non[-

]bona fide retiree, you were not entitled to the 

retirement benefits you have received since your 

retirement of June 1, 2015.

Plaintiff appealed the Division's determination to the Board. On August 

15, 2018, the Board sent plaintiff another detailed letter explaining that it found 

plaintiff violated N.J.A.C. 17:1-17.14 by returning to work for the EBOE within 

180 days of her June 1, 2015 retirement. The Board found that plaintiff's 

retirement was not bona fide, "essentially for the reasons outlined by the 

Division's May 14, 2018, letter." As a non-bona fide retiree, the Board 

determined plaintiff "was not entitled to the retirement benefits she received 

since her retirement of June 1, 2015." 

The Board concluded that plaintiff was required to repay "all retirement 

benefits received" from the TPAF from July 1, 2015 to March 1, 2017, totaling 
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$32,431.56.1 Of that total amount, the Board found that plaintiff was not 

contesting the repayment of pension checks she received from October 1, 2016 

to March 1, 2017, totaling $9266.16, which she received after she returned to 

full-time employment with the EBOE as a teacher beginning September 1, 2016. 

Thereafter, plaintiff requested a hearing as to the Board's determination. 

The Board denied the request on January 17, 2019, "essentially for the reasons 

set forth in the Board's denial letter dated August 15, 2018." On February 11, 

2019, the Board issued its "Final Administrative Determination," setting forth 

its findings of fact that essentially described the noted history of plaintiff's 

employment, retirement, and re-employment by the EBOE, indirectly through 

S4T and then directly in September 2016. The Board described the issue as 

"whether [plaintiff] observed a 'bona fide severance from employment' because

she returned to the EBOE within 180 days of her retirement in violation of 

N.J.A.C. 17:1-17.14(a)(2)(iv)." In concluding that plaintiff violated N.J.A.C. 

17:1-17.14, the Board stated that "[i]n order for [plaintiff's] retirement to be 

bona fide, it would require that her employment be severed for a minimum 

 

1 Defendant did not suspend plaintiff's retirement benefits until after March 1, 

2017. 
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period of 180 days subsequent to her June 1, 2015 retirement, not the June 30, 

2014 date." This appeal followed. 

"Our review of administrative agency action is limited." Russo v. Bd. of 

Trs., Police & Firemen's Ret. Sys., 206 N.J. 14, 27 (2011). In our review, we 

presume the validity of the "administrative agency's exercise of its statutorily 

delegated responsibilities." Lavezzi v. State, 219 N.J. 163, 171 (2014). For 

those reasons, we will "not disturb an administrative agency's determinations or 

findings 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 Application of 

Virtua-West Jersey Hosp. Voorhees for a Certificate of Need, 194 N.J. 413, 422 

(2008). "The burden of demonstrating that the agency's action was arbitrary, 

capricious or unreasonable rests upon the [party] challenging the administrative 

action." In re Arenas, 385 N.J. Super. 440, 443-44 (App. Div. 2006).

"[T]he test is not whether [we] would come to the same conclusion if the 

original determination was [ours] to make, but rather whether the factfinder 

could reasonably so conclude upon the proofs." Brady v. Bd. of Review, 152 

N.J. 197, 210 (1997) (quoting Charatan v. Bd. of Review, 200 N.J. Super. 74, 

79 (App. Div. 1985)). "Where . . . the determination is founded upon sufficient 
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credible evidence seen from the totality of the record and on that record findings 

have been made and conclusions reached involving agency expertise, the agency 

decision should be sustained." Gerba v. Bd. of Trs., Pub. Emps.' Ret. Sys., 83 

N.J. 174, 189 (1980), overruled on other grounds by Maynard v. Bd. of Trs.,

Teachers' Pension & Annuity Fund, 113 N.J. 169 (1988). However, we review 

de novo an agency's interpretation of a statute or case law. Russo, 206 N.J. at 

27.

We turn first to plaintiff's contention that a factual dispute required the 

referral of the matter to the OAL. Specifically, plaintiff argues that in following 

the Division's "unsupported determination that [plaintiff's] employment with 

[S4T] constituted employment with the EBOE," the Board "erroneously ignored 

the clear factual dispute; that is [plaintiff] maintains that she was employed by 

a private employer and not by the EBOE." According to plaintiff, since "the 

Board failed to engage in any factual analysis, there [was] no basis for its finding 

that [plaintiff's] retirement was not bona fide." We disagree as we conclude the 

matter presented only a legal issue under what were undisputed facts.

Turning to plaintiff's contention that the Board's legal conclusion was 

incorrect because she was an employee of S4T rather than the EBOE when she 

returned to work, we disagree and find from our de novo review that the Board's 
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legal determination was correct. In reaching that conclusion, we are mindful of 

the public policies that must guide our review. First, "[a]s a form of legislation 

aimed at remedying a social problem, pension statutes 'should be liberally 

construed and administered in favor of the persons intended to be benefited.'"

Francois v. Bd. of Trs., Pub. Emps.' Ret. Sys., 415 N.J. Super. 335, 351 (App. 

Div. 2010) (quoting Klumb v. Bd. of Educ. of Manalapan–Englishtown Reg'l 

High Sch. Dist., 199 N.J. 14, 34 (2009)). However, second, "pension[] statutes 

are to be construed so as to preserve the fiscal integrity of the pension funds." 

DiMaria v. Bd. of Trs., Pub. Emps.' Ret. Sys., 225 N.J. Super. 341, 354 (App. 

Div. 1988). 

With those guiding principles in mind we turn to the Board's legal 

conclusion. The Board, relying exclusively on N.J.A.C. 17:1-17.14(a)(2)(iv), 

found that plaintiff did not have a bona fide severance from employment after 

she returned to employment with the EBOE within 180 days of her retirement, 

and was therefore required to repay the retirement benefits that the TPAF paid 

to her from July 1, 2015 to March 1, 2017. We agree.

Under the Teachers' Pension and Annuity Fund Law, N.J.S.A. 18A:66-1 to 

-93, when a former member of the TPAF, who has received a retirement 

allowance "for any cause other than disability, becomes employed again in a 
10 A-3151-18T3

position which makes him eligible to be a member of the retirement system, his 

retirement allowance . . . shall be canceled until he again retires." N.J.S.A. 

18A:66-53.2(a). Under N.J.A.C. 17:1-17.14(c), defined benefit plans2are 

required to pay retirement benefits to a member "only when there is a bona fide 

severance from employment" unless the member is of normal retirement age

under the plan and the plan provides for distribution of benefits without a bona 

fide severance from employment. 

"Bona fide severance from employment" means a 

complete termination of the employee's employment 

relationship with the employer for a period of at least 

180 days. The following does not constitute a complete 

termination of the employee's relationship with the 

employer:

i. Employment or reemployment in a part-time 

position;

ii. Employment or reemployment in a position that is 

not covered by the Defined Benefit Plan;

iii. A change in title;

iv. Employment or reemployment as a contract 

employee, a leased employee, or an independent 

contractor; or

v. Termination of employment with a pre-arranged 

agreement for reemployment.

 

2 The TPAF is one of seven defined benefit plans. N.J.A.C. 17:1-17.14(a)(1).
11 A-3151-18T3

Federal Internal Revenue Service factors3shall be used 

as guidance in determining whether an employment 

relationship exists. A mandatory retirement shall be 

treated as a bona fide severance from employment.

[N.J.A.C. 17:1-17.14(a)(2) (emphasis added).]

According to N.J.A.C. 17:1-17.14(e), 

if an employee who has applied and commenced a 

retirement benefit is reemployed by the same 

employer . . . within fewer than 180 days after the 

specified date of termination, the Division may, but is 

not required to, do the following:

1. Require the employee and employer to again certify 

that there was no prearranged agreement for the 

reemployment; and

2. Investigate the circumstances of the reemployment 

to determine if there was, in fact a bona fide severance 

from employment.

If, after investigation, the Division finds there was no bona fide severance from 

employment, the Division "may revoke the retirement of the member and require 

 

3 Those factors are used as guidance in determining whether "an employment 

relationship exists," N.J.A.C. 17:1-17.14(a)(2), and were "designed to determine 

whether a person was an independent contractor or an employee." Francois, 415 

N.J. Super. at 351. Contrary to plaintiff's contention on appeal, the federal 

factors were not triggered because there was no dispute that she worked for the 

EBOE as a contract employee or an independent contractor. 
12 A-3151-18T3

the repayment of benefits in order to protect the qualified status of the defined 

benefit plans." N.J.A.C. 17:1-17.14(f). 

Here, the Board correctly found that plaintiff's retirement did not qualify 

as a bona fide severance from employment under the applicable regulations. 

Plaintiff's status an employee of S4T rather than the EBOE, is inconsequential. 

N.J.A.C. 17:1-17.14(a)(2) states that "[e]mployment or reemployment as a 

contract employee, a leased employee, or an independent contractor" "does not 

constitute a complete termination of the employee's relationship with the 

employer." (Emphasis added). It is undisputed that within 180 days after her 

retirement, plaintiff began working, through S4T, as a contract or leased 

employee, for the EBOE as a substitute teacher. 

The Board's decision was not arbitrary, capricious, or unreasonable in 

light of the clear language of the regulations and the facts surrounding plaintiff's 

re-employment. To hold otherwise would create a simple method for retirees

from a school system to continue their work while not of retirement age while 

simultaneously collecting their pension and a salary, which would be contrary 

to the polices governing public pensions. See Francois, 415 N.J. Super. at 350 

("An inappropriate allowance of benefits tends 'to place a greater strain on the 

financial integrity of the fund in question and its future availability for those 
13 A-3151-18T3

persons who are truly eligible for such benefits.'" (quoting Smith v. State, 309 

N.J. Super. 209, 215 (App. Div. 2007))). 

Plaintiff's final argument addresses the Board's requirement for 

repayment. She contends that even if she violated N.J.A.C. 17:1-

17.14(a)(2)(iv), any violation was unintentional and therefore she should not be 

responsible for reimbursement of the full amount of the pension benefits she 

received. Specifically, plaintiff contends that she should be required to repay

$9179.71, calculated by summing her "gross pay" from October 2015 to July 16 

when she worked for the EBOE through S4T. 

When determining the amount of the retirement allowance to be repaid, 

factors pertinent to the equities in the case should be considered. They include 

whether the retiree reasonably relied on representations in selecting a course of 

action; the diligence of the agency action in uncovering improper payment of 

retirement allowances; evidence of manipulation by the retiree and his or 

employer; and the proportionality of an order requiring repayment where noncompliance is attributable to a mistake rather than manipulation of the pension 

system. See, e.g., Skulski v. Nolan, 68 N.J. 179, 196 (1975); Vliet v. Bd. of 

Trs., Pub. Emps.' Ret. Sys., 156 N.J. Super. 83, 90 (App. Div. 1978); Indursky 

v. Bd. of Trs., Pub. Emps.' Ret. Sys., 137 N.J. Super. 335, 343 (App. Div. 1975). 
14 A-3151-18T3

However, reasonable reliance does not include relying upon outside advice when 

making post-retirement decisions, as the retiree's former employer may offer 

"more specific advice" on the effects of post-retirement employment on that 

retiree's pension as compared to an outsider. Vliet, 156 N.J. Super. at 89-90. 

The Board determined that plaintiff owed $32,431.56 since plaintiff 

received her first retirement benefits check on July 1, 2015 and her final check 

on March 1, 2017. Plaintiff acknowledged, and has not contested, that she is 

required to repay $9266.16, which represents the total of six pension checks she 

received from October 1, 2016 to March 1, 2017 after she returned to full-time 

employment with the EBOE. Also, it is undisputed that plaintiff did not 

manipulate the TPAF in any way and the Division conducted an immediate 

investigation upon notification of plaintiff's true employment status. 

In considering the equities, we find no error in the Board's decision that it 

was unreasonable for plaintiff to rely on representations from S4T that her 

pension would not be adversely affected by being placed with the EBOE. As 

evidenced by her contact with the Board after her full-time direct reemployment, she was aware that her pension could be impacted by her postretirement employment. And, she was also evidently concerned about that 

impact when she obtained advice from S4T about working through it for the 
15 A-3151-18T3

EBOE, yet she provided no explanation for why she did not contact the Division 

to determine exactly what the impact of her placement would be, as instructed 

in the letter approving her retirement. 

Balancing these equities, the Board was correct in determining that 

plaintiff was required to repay the full $32,431.56. Although her noncompliance with the regulations was seemingly unintentional, there is no reason 

why plaintiff should realize a windfall at the TPAF's expense based on her own 

actions. Under the circumstances, we have no cause to disturb the Board's 

decision. 

Affirmed.