Thursday, May 9, 2019

Legal Malpractice: Final Average Salary - Tier 4 and Tier 6 Members

Introduction

In an April 15, 2015 posting, I outlined a fight between a NYCERS member and the NYCERS management over the calculation of the member’s projected pension benefit, in particular, over her final average salary (FAS). As a point of reference the management of NYCERS is engaging in this harassment over the difference between an annual benefit $5,300 versus $8,400.

In a March 20, 2019 letter the NYCERS Deputy General Counsel denied the member’s legally supported request for a proper calculation of her projected retirement benefit. The counsel’s letter failed to provide legal justification for the denial.

In response to the denial letter the member wrote to the Board of Trustees. She then received a second denial letter, dated April 22, 2019, this time from the NYCERS General Counsel, Ilyse Sisolak. This letter attempted to provide the legal support that the first denial letter lacked. This new letter, unfortunately, is either completely incorrect or purposely deceptive. I will assume that it is incorrect.

The Part-Time Law

In 1992, the governor signed Chapter 749 which was a response to NYCERS defeat in the Doctors Council part time litigation. Listed below is the first part the general counsel’s legal argument for denial of the member’s pension rights:

NYCERS First Argument

The new law added Ad. Code Section 13 -638 4 titled “Membership rights in NYCERS and BERS for part-time service credit for service, dual employment positions, membership rights of school crossing guards." The legislative history for this law establishes that the only purpose for Chapter 749 was to permit part-timers to receive service credit and a final average salary (FAS) from their part-time service. The purpose was never to change a Tier 4 member's FAS for full time service. New York Retirement and Social Security Law (RSSL) Section 608 subdivision (d) was added as part of Chapter 749 in order to account for the new calculation created for members with part-time service within Article 15 of the RSSL. Once this section was added, one could not, from the four comers of the statute, discern whether section (a)' or section (d) should be used to calculate a Tier 4 member's FAS; however, the legislative history made it clear that for full time Tier 4 members, RSSL S. 608(a) was the proper statute to use.

Using a tactic that her deputy general counsel used, Ms. Sisolak makes a statement about a section of law, Section 608(d), without quoting the actual law. Quoted below is the current wording of the statute.

Section 608(d) of the NYS RSSL

d. Subject to the provisions of subdivision c of this section, and notwithstanding the provisions of subdivision a of this section, with respect to members of the New York city employees' retirement system and the New York city board of education retirement system who are subject to the provisions of this article, a member's final average salary shall be determined pursuant to the provisions of paragraph fourteen of subdivision e of section 13-638.4 of the administrative code of the city of New York, provided, however, that the applicable provisions and limitations of the term "wages", as defined in subdivision l of section six hundred one of this article, shall apply to such determinations of final average salary.

As of 1992 when Section 608(d) was created, all NYCERS and BERS Tier 4 members became subject to this subdivision “notwithstanding the provisions of subdivision a of this section”. This language is totally clear. There is no limitation with respect to full or part-time members. There is no confusion in this language. All Tier 4 NYCERS members are covered. Therefore, there is no reason to go searching the legislative history of Chapter 749. Ms. Sisolak is searching for confusion where none exists. Ms. Sisolak’s argument is simply wrong.

As an aside, you will notice that she again provides no quotes from the legislative history to support her comments.

The Tier 6 Law

Ms. Sisolak also added a second argument referring to Chapter 18 of the Laws of 2012, the “Tier 6” law. Again she provides no quotes from Chapter 18.

NYCERS Second Argument

In 2012, the NYS Legislature passed Chapter 18 of the Laws of 2012, which created Tier 6. Enactment of the Tier 6 legislation clarified that Chapter 749 only applied to part-time service. This law further modified RSSL Section 608(a) to explicitly delineate that the first sentence within this subsection, which sets forth the FAS calculation for Tier 4 members applies to NYCERS members who joined prior to April 1, 2012. The second sentence explicitly excludes NYCERS and states that it only applies to the New York state systems. Therefore, the Ad Code provisions are only to be used for part-time service and NYCERS Tier 6 members, because they are not covered by RSSL Section 608(a). As such, Chapter 18 of the Laws of 2012 provides the statutory basis for how NYCERS calculated your pension and the assertion that there is no statutory basis is incorrect.

As a reference you can see how Chapter 18 of the Laws of 2012 amended Section 608 by clicking on the link.

Chapter 18 makes no specific reference to the part-time issue.

As background, after the passage of 749 in 1992, there were still Tier 4 members in the state retirement systems that were covered by Section 608(a).

In the first sentence of the modified Section 608(a) you can clearly see that the Chapter 18 is protecting the rights of those members who first became members before April 1, 2012. It does not explicitly include NYCERS in this sentence as Ms. Sisolak claims.

In the new added second sentence of Section 608(a), all NYSLERS and NYSTRS members who join after April 1, 2012 are made subject to the new Tier 6 five year FAS calculation. It also does not explicitly exclude NYCERS as Ms. Sisolak claims.

If according to Ms. Sisolak’s argument Section 608(a) still applied to full time NYCERS Tier 4 members, they would have escaped the new Tier 6 five year calculation. We all know they did not.

Actually Section 608(d) (see above) was already pulling Tier 4 NYCERS members into Section 13-638.4. It is true that Section 608(d) was modified by Chapter 18 but only so far as pointing specifically to subdivision e and by adding limitations to the definition of wages. All Tier 4 NYCERS members had already been routed to Section 13-638.4 via the Part-Time Law.

In turn, Chapter 18 modified Section 13-638.4.e by adding a component that applied the new 5 year calculation to new NYCERS members. You can refer to a previous post for the gory details of Section 13-638.4.e.

Conclusion

I see no logic in NYCERS arguments on this issue. It is clear to me that this member is entitled to the six consecutive year FAS in calculating her pension benefit.

NYCERS, unfortunately, has all the initial power in these situations. Unless NYCERS changes its position, the member will have to file an Article 78 which is difficult but not overwhelming. But even if she wins, NYCERS will appeal and then the cost of fighting becomes onerous.

This usually breaks the ordinary member unless you are Mr. King.

Chapter 18: Section 608 Modifications

§ 54. Subdivisions a, b, c and d of section 608 of the retirement and social security law, subdivision a as amended by chapter 379 of the laws of 1986, subdivisions b and c as amended by chapter 286 of the laws of 2010 and subdivision d as added by chapter 749 of the laws of 1992, are amended to read as follows:

a. [A] For members who first become members of a public retirement system of the state before April first, two thousand twelve, a member's final average salary shall be the average wages earned by such a member during any three consecutive years which provide the highest average wage; provided, however, if the wages earned during any year included in the period used to determine final average salary exceeds that of the average of the previous two years by more than ten percent, the amount in excess of ten percent shall be excluded from the computation of final average salary. For members who first become members of the New York state and local employees' retirement system or the New York state teachers' retirement system on or after April first, two thousand twelve, a member's final average salary shall be the average wages earned by such member during any five consecutive years which provide the highest average wage; provided, however, if the wages earned during any year included in the period used to determine final average salary exceeds that of the average of the previous four years by more than ten percent, the amount in excess of ten percent shall be excluded from the computation of final average salary. Where the period used to determine final average salary is the period which immediately precedes the date of retirement, any month or months (not in excess of twelve) which would otherwise be included in computing final average salary but during which the member was on authorized leave of absence at partial pay or without pay shall be excluded from the computation of final average salary and the month or an equal number of months immediately preceding such period shall be substituted in lieu thereof.

b. … c. …

d. Subject to the provisions of subdivision c of this section, and notwithstanding the provisions of subdivision a of this section, with respect to members of the New York city employees' retirement system and the New York city board of education retirement system who are subject to the provisions of this article, a member's final average salary shall be determined pursuant to the provisions of paragraph fourteen of > subdivision e of section 13-638.4 of the administrative code of the city of New York , provided, however, that the applicable provisions and limita- tions of the term "wages", as defined in subdivision l of section six hundred one of this article, shall apply to such determinations of final average salary.

No comments: