Court Opinion

ID: 8207970
Source: CourtListenerOpinion
Date Created: 2022-09-21 14:06:00.158858+00
Date Added: 2024-06-11T16:41:28.509257
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
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                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-2398-20

VERONICA VARGAS,

          Petitioner-Appellant,

v.

BOARD OF TRUSTEES,
PUBLIC EMPLOYEES'
RETIREMENT SYSTEM,

     Respondent-Respondent.
_________________________

                   Argued September 12, 2022 – Decided September 21, 2022

                   Before Judges Mawla and Marczyk.

                   On appeal from the Board of Trustees of the Public
                   Employees' Retirement System, Department of the
                   Treasury, PERS No. xx7232.

                   Justin P. Kolbenschlag argued the cause for appellant
                   (Pashman Stein Walder Hayden, PC, attorneys; Justin
                   P. Kolbenschlag, of counsel and on the briefs; Joshua
                   P. Law, on the briefs).

                   Robert E. Kelly, Deputy Attorney General, argued the
                   cause for respondent (Matthew J. Platkin, Acting
                   Attorney General, attorney; Donna Arons, Assistant
             Attorney General, of counsel; Robert E. Kelly, on the
             brief).

PER CURIAM

      Petitioner Veronica Vargas appeals from a March 18, 2021 final decision

of the Board of Trustees (Board) of the Public Employees' Retirement System

(PERS), which denied her request to reopen her retirement application to remove

her ex-husband as her pension survivor beneficiary. We affirm.

                                          I.

      We derive the following from the summary judgment record. Petitioner

worked for the State of New Jersey for over thirty-three years. She married Rick

Vargas (Rick)1 on September 10, 2011. Petitioner did not have any children

with Rick, but she had one adult daughter from a prior relationship. On October

24, 2014, petitioner filed for her PERS service retirement, which would become

effective on February 1, 2015. Petitioner claims she was initially inclined to

select her daughter as her survivor beneficiary, but claims a human resource

director told her it was in her best interest to select her spouse. Petitioner asserts

she was not aware at the time she selected Rick as the beneficiary that the

selection was irreversible.       The Board approved petitioner's retirement

1
  We use Rick's first name because he shares a surname with petitioner. We
intend no disrespect.
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                                          2
application at its meeting on February 18, 2015, and named Rick as her survivor

beneficiary.2

      Petitioner filed for divorce on May 22, 2018.          During the divorce

proceedings, the parties attended mediation, where Rick agreed to waive any

right to petitioner's pension and survivor benefits in exchange for her reciprocal

waiver of any right to his 401K account. The parties ultimately settled the case

2
   "At the time of retirement, a member shall receive benefits in a retirement
allowance payable throughout life, or the member may, on retirement, elect to
receive the actuarial equivalent of the member's retirement allowance, in a lesser
retirement allowance payable throughout life[.]" N.J.S.A. 43:15A-50. A PERS
member may choose one of nine options to receive retirement benefits. N.J.S.A.
43:15A-50; N.J.A.C. 17:2-6.1(d). The two retirement benefit options pertinent
in this matter are:

            1. Maximum Option [which] provides the largest
            allowance for the member but does not include a
            pension benefit paid to a beneficiary upon the member's
            death.

                  ....

            9. Option D [which] provides, upon the member's
            death, a lifetime monthly retirement allowance equal to
            [twenty-five] percent of the member's monthly
            retirement allowance to a beneficiary. If the member's
            beneficiary predeceases the member, the member's
            retirement allowance shall increase to the Maximum
            Option.

            [N.J.A.C. 17:2-6.1(d)(1), (9).]

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on December 17, 2018, and entered into a marital settlement agreement (MSA),

which memorialized Rick's waiver of any right to petitioner's PERS pension

benefits. The final judgment of divorce was entered on December 24, 2018,

which incorporated the MSA.

      Petitioner originally filed an application with the Division of Pensions in

May 2019 to change her pension survivor designation, and to implement the

terms of the MSA and judgment of divorce. The Division of Pensions denied

that application, and petitioner then appealed to the Board. On appeal to the

Board, she again referenced the MSA, but also indicated Rick was abusive

during the course of the marriage and had addiction issues. Petitioner further

indicated she had been diagnosed with Stage 4 lung cancer. Accordingly, she

submitted it would not be fair for Rick to be a beneficiary of her pension. On

September 3, 2019, the Board denied petitioner's application as untimely

pursuant to N.J.A.C. 17:2-6.3, and because the MSA did not clearly reflect any

agreement with respect to Rick's waiver of the survivor benefit.

      Petitioner resubmitted her application on October 22, 2019, along with an

October 11, 2019 consent order, which specifically indicated that Rick waived

and relinquished all rights to petitioner's pension survivor benefits. On July 21,

2020, the Board again denied petitioner's application, finding it was time-barred

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                                        4
pursuant to N.J.A.C. 17:2-6.3. Petitioner retained counsel and filed a motion

for reconsideration, arguing the Board was obligated to exercise its equitable

authority in light of the competent evidence and that petitioner demonstrated

good cause to depart from strict adherence to the time limitations set forth in

N.J.A.C. 17:2-6.3.

      On March 18, 2021, the Board denied the motion for reconsideration. In

addition to noting petitioner's application was untimely pursuant to N.J.A.C.

17:2-6.3, the Board determined a private agreement between two parties cannot

waive the rules and regulations governing PERS. The Board further "declined

to exercise its equitable authority under the facts of this case" because petitioner

selected her beneficiary while she was still married and was notified several

times of the limited time period in which she could amend her application.

Moreover, she had collected her pension benefit for over four years before

attempting to make this change.

      Thereafter, petitioner filed this appeal.

                                        II.

      Petitioner argues the following before us:

            POINT I

            THE PERS BOARD'S FINAL ADMINISTRATIVE
            DECISION WAS ARBITRARY, CAPRICIOUS, AND

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                                         5
            UNREASONABLE BECAUSE THE BOARD FAILED
            TO CONSIDER THE INDIVIDUAL EQUITIES OF
            APPELLANT'S APPLICATION TO DETERMINE
            WHETHER THERE EXISTED GOOD CAUSE TO
            REOPEN      APPELLANT'S     RETIREMENT
            APPLICATION AND PERMIT A CHANGE TO HER
            BENEFICIARY DESIGNATION.

            POINT II

            THE PERS BOARD'S FINAL ADMINISTRATIVE
            DECISION MUST BE REVERSED AS A MATTER
            OF   LAW,    AS  PETITIONER  ACTUALLY
            ESTABLISHED GOOD CAUSE TO REOPEN HER
            RETIREMENT APPLICATION AND SHOWED
            THAT PERMITTING THE REQUESTED CHANGE
            WOULD ONLY SERVE THE ESSENTIAL ENDS OF
            JUSTICE AND PUBLIC POLICY.

                  A.    Reversing  the   Board's    Final
                  Determination Would Serve the Policy of
                  the Law.

                  B.   Reversing     the Board's  Final
                  Determination Would Serve the Ends of
                  Essential Justice.

      Petitioner primarily relies on In re Van Orden for the proposition that the

Board has the inherent power upon a showing of good cause to reopen its

proceedings to approve a change in beneficiary designation when necessary to

serve the ends of essential justice and the policy of the law. 383 N.J. Super.

410, 419 (App. Div. 2006). She also relies on Minsavage ex rel. Minsavage v.

Board of Trustees, Teachers' Pension Authority and Annuity Fund, 240 N.J. 103,

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                                       6
109 (2019), and Steinmann v. State, Department of Treasury, Division of

Pensions, Teachers' Pension & Annuity Fund, 116 N.J. 564 (1989), in support

of her arguments. In short, petitioner contends the Board was required to

consider the individual equities of petitioner's application and depart from the

blind application of its regulations, given the good cause the petitioner

demonstrated. Petitioner further indicates it would be unjust to allow Rick to

retain a portion of her pension benefits after his clear waiver.

      The Board counters that it properly denied petitioner's request to change

her freely chosen, irrevocable retirement option given she filed her application

more than four years after her retirement became due and payable. The Board

notes the Division of Pensions and Benefits provided petitioner with a quotation

letter on February 12, 2015, which set forth the amounts that would be payable

to petitioner and her beneficiary under all the available options. Moreover, the

Division advised petitioner, "[o]nce you retire, you cannot change your payment

method option." The quotation further states, "[i]f you choose payment method

options A, B, C, D, 2, 3, or 4, under no circumstances can you change your

beneficiary selection once you retire, even if your beneficiary dies before you."

Moreover, when the Board approved petitioner's retirement on February 18, it

advised her she would have thirty days after the effective date of her retirement

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                                        7
or the date of the Board's approval, whichever is later, to "make any changes to

[her] retirement." The thirty-day time period expired on March 20, 2015.

      The Board argues that while it has the inherent authority to reopen

administrative matters upon a showing of good cause, reasonable grounds, and

reasonable diligence pursuant to Minsavage, 240 N.J. at 108-09, it determined

here petitioner had made no such showing and declined to reopen her

application. The Board submits that notwithstanding the serious allegations

against Rick, the Board is in no position to accept or reject those claims or

change a beneficiary on this basis. Moreover, the parties' agreement in the MSA

does not transform an irrevocable designation into a revocable one. Stated

differently, petitioner's divorce—four years after she made her pension

selection—does not abrogate the statutory and regulatory irrevocability of her

initial designation.

                                       III.

      Our role in reviewing the decision of an administrative agency is limited. In

re Stallworth, 208 N.J. 182, 194 (2011) (citing Henry v. Rahway State Prison, 81

N.J. 571, 579 (1980)). We accord a strong presumption of reasonableness to an

agency's exercise of its statutorily delegated responsibility, City of Newark v.

National Resource Council in Department of Environmental Protection, 82 N.J. 530,

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                                        8
539 (1980), and defer to its fact-finding. Utley v. Bd. of Rev., Dep't of Lab., 194

N.J. 534, 551 (2008). We will not upset the determination of an administrative

agency absent a showing that it was arbitrary, capricious, or unreasonable; that it

lacked fair support in the evidence; or that it violated legislative policies. Lavezzi

v. State, 219 N.J. 163, 171 (2014); Campbell v. Dep't of Civ. Serv., 39 N.J. 556, 562

(1963).

      On questions of law, our review is de novo. In re N.J. Dep't of Env't Prot.

Conditional Highlands Applicability Determination, Program Int. No. 435434,

433 N.J. Super. 223, 235 (App. Div. 2013) (citing Russo v. Bd. of Trs., Police &

Firemen's Ret. Sys., 206 N.J. 14, 27 (2011)). We are "in no way bound by the

agency's interpretation of a statute or its determination of a strictly legal issue."

Mayflower Sec. Co. v. Bureau of Sec. in Div. of Consumer Affairs of Dep't of

Law & Pub. Safety, 64 N.J. 85, 93 (1973).

                                         A.

      The cases relied upon by petitioner are distinguishable from the facts in

this matter. In Van Orden, the plaintiff filed his application for retirement on

April 10, 2003, seeking a retirement allowance based on an anticipated

retirement from service as of July 1, 2003. 383 N.J. Super. at 413. Significantly,

however, at the time he applied for retirement, he was engaged in matrimonial

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                                          9
litigation. Ibid. In his initial application, he selected a payment option that

would provide him with the maximum benefits during his life, but no payments

to his wife in the event of his death. Id. at 413-14. The plaintiff's wife filed a

motion in the Family Part arguing the plaintiff improperly changed his pension

designation, and the Family Part judge agreed. Ibid. The court ordered the

plaintiff to file an amended application and to name his wife as a beneficiary.

Id. at 415. The plaintiff complied with the court order and filed the amended

application on August 1, 2003—within thirty days of PERS approving his initial

application. Ibid.

      The final judgment of divorce was entered on February 3, 2004, wherein

the plaintiff's wife relinquished all interest in the plaintiff's pension. Ibid. The

plaintiff sought to revive his original pension benefit selection on February 10,

2004, which would have provided him with the maximum benefit along with no

death benefit being provided to his beneficiary. Ibid. The Board denied the

plaintiff's application because he did not request the change within the requisite

time period pursuant to N.J.A.C. 17:2-6.3. Id. at 416. We reversed and noted

the Board was mistaken when it concluded it was powerless to consider

appellant's unique circumstances to determine whether there was good cause to

reopen or modify the plaintiff's pension option. Id. at 418. Moreover, because

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                                        10
the Board did not consider the equities presented by appellant's unique

circumstances, we determined the Board erred as a matter of law. Id. at 419.

      We noted the petitioner in Van Orden presented a compelling argument

for reopening the proceedings because he was ordered by a judge to change his

pension selection during the course of the divorce proceeding. Id. at 421.

"[Petitioner] dutifully followed the court's command and made the change,

protecting his wife's potential interest." Ibid. When the plaintiff's wife later

relinquished her interest, the plaintiff was unable to undo the "court -mandated

selection" to reinstate his original pension choice.

      The facts before us here are far afield from Van Orden. PERS provided

petitioner documents that informed her the selection of the pension option was

permanent. Moreover, while petitioner's health status and divorce subsequent

to her pension selection are unfortunate, they are not the type of compelling or

unique circumstances that we contemplated in Van Orden. The petitioner in Van

Orden was forced by the court to change his pension selection from his original

choice. Petitioner here was not compelled in any manner to change her pension

selection, and when she did attempt to do so, it was four years after she received

her pension. Accordingly, we find no merit in petitioner's reliance on that case.

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                                       11
      Similarly, petitioner's reliance on Steinmann and Minsavage is unavailing.

Steinmann involved a teacher who applied for retirement benefits after twenty-

five years of service. 116 N.J. at 566. She fell while teaching a class and

suffered injuries, which prompted her to apply for retirement.                Ibid.

Accordingly, Steinmann was eligible for early or deferred retirement based on

her twenty-five years of service. Id. at 568. In addition, she could have applied

for accidental-disability benefits, and if rejected, she could have qualified for

ordinary-disability benefits. Ibid. Her options were further complicated by the

fact that a workers' compensation award reduced accidental- and ordinary-

disability benefits and, therefore, the calculation had to await an adjudication of

the workers' compensation claim. Ibid. Importantly, the Court determined the

Board did not inform Steinmann that ordinary-disability benefits would be

subject to an offset by a workers' compensation award or that she could convert

to early retirement and thereby avoid any offset. Id. at 570. The Court therefore

reversed the Board's decision denying Steinmann's conversion request. Id. at

578. The Court determined Steinmann could not have made an informed choice

about her retirement until she knew the amount of her workers' compensation

award. Id. at 575. Specifically, the Court noted, "it was the Board's regulation,

combined with its failure to provide . . . Steinmann with information material to

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                                       12
her decision, that prevented the petitioner from selecting her retirement option

with adequate knowledge of the relevant facts." Id. at 576.

        The facts in Steinmann are distinguishable from petitioner's case. The

plaintiff in Steinmann had a pending workers' compensation claim at the time

she applied for her pension and the Board did not tell her this impacted her

selection. Here, petitioner did not receive inaccurate information from the

Board and only sought to change her pension options because of life

circumstances occurring long after her pension selection.

        In Minsavage, the Supreme Court addressed whether a widow could

modify the retirement application of her recently deceased husband, even though

his application was never approved because he selected a retirement option for

which he was ultimately ineligible. 240 N.J. at 105. David Minsavage died of

cancer after he accumulated twenty-four years and nine months of teaching

service—just short of the twenty-five years required for an early retirement.

Ibid.    Because he did not qualify for his retirement selection, the Board

determined his wife was only entitled to reimbursement of his pension

contributions and a group life insurance benefit. Id. at 106. The Court noted

while the husband did not live long enough to qualify for early retirement, his

family would have been entitled to greater benefits had he selected and qualified

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                                      13
for ordinary disability on his retirement application. Ibid. The Court indicated

the Board acted unreasonably by denying the wife's request to modify the

retirement and that she should have been given an opportunity to at least present

evidence to prove she exercised reasonable diligence to modify her husband's

pension selection. Id. at 110. The Court concluded that such proof must include

evidence that her husband qualified for ordinary disability retirement, and that,

but for his incapacity, he would have changed his retirement selection to

ordinary disability. Ibid.

      Minsavage turned on the potential incapacity of the husband and its

impact on his ability to correct his pension retirement selection. That is very

different from petitioner's claims in this case, where there is no suggestion she

chose the incorrect pension option at the time she applied. Rather, she is seeking

to change her pension options because of her post-retirement divorce and

unfortunate illness, both of which occurred long after she selected her pension.

                                       B.

      Generally, a "member shall have the right to withdraw, cancel, or change

an application for retirement at any time before the member's retirement

allowance becomes due and payable . . . by sending a written request signed by

the member." N.J.A.C. 17:2-6.3(a). "A member's retirement allowance shall

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                                       14
not become due and payable until 30 days after the date the Board approved the

application for retirement . . . ." N.J.A.C. 17:2-6.2. As noted above, however,

our courts have recognized the Board may honor a petitioner's request to reopen

a retirement selection upon a showing of "good cause, reasonable grounds, and

reasonable diligence[.]" Steinmann, 116 N.J. at. 573.

      The Board's power to reopen proceedings is not at issue in this case.

Rather, it is whether petitioner's circumstances were sufficient to establish good

cause to reopen the pension selection. In our view, petitioner has not established

good cause. The cases discussed above in which our courts have directed the

Board to allow a petitioner to change their pension option involve unusual

circumstances involving the initial pension selection, and petitioner's claims do

not implicate the same principles articulated in those cases so as to establish

good cause. The "unique and individual circumstances" contemplated by these

cases that required the Board to reopen a pension option selection involved

issues surrounding the pension selection process itself. However, they did not

include personal circumstances or hardships, no matter how unfortunate, that

occur years after the pension selection and that have nothing to do with the

original selection of the pension option. That is, the distinguishing factor in

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                                       15
these cases is that they all involved issues encountered by the petitioners at or

around the time of their initial pension selection, unlike petitioner here.

      We noted in Van Orden the circumstances there were "unique and,

therefore, unlikely to frequently reoccur."       383 N.J. Super. at 422 n.7.

Petitioner's divorce and illness after several years of collecting her pension is

not a unique situation that is unlikely to reoccur.3 We are mindful of the Board's

"need to preserve the actuarial integrity of the pension system and that such need

underlies the prohibition against changing payment options after [a pension]

becomes due and payable." Ibid. The Board's decision here was consistent with

that goal and was not arbitrary, capricious, or unreasonable under the

circumstances.

      Affirmed.

3
   We hasten to add that our decision should not be interpreted as barring
petitioner from seeking relief in the Family Part consistent with Rick's waiver
of petitioner's survivor benefit, including establishing a constructive trust to
benefit petitioner's daughter should petitioner predecease Rick.
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