Appellate Division Holds That Disability Retirees Are Not Required to Pay Health Insurance Contributions

In Brick Twp. PBA Local 230 & Michael Spallina v. Twp. of Brick, issued on June 21, 2016, the Appellate Division held that law enforcement officers who retire on an ordinary or accidental disability pension, and who did not have twenty (20) years of pensionable service as of June 28, 2011 when Chapter 78 became effective, are not required to contribute toward their insurance coverage, provided that the collectively negotiated agreement mandates retiree health coverage.  Firm Partner Paul L. Kleinbaum, Esq. represented the State PBA as amicus curiae in the appeal, with the assistance of Firm Associate Marissa A. McAleer, Esq.

 

The lawsuit was initially brought by the Brick Township PBA Local 230 after the Township required one of its officers who retired on a disability pension to contribute toward his coverage because he did not have 20 years of pensionable service as of June 28, 2011.  At the time of the officer’s retirement, the PBA contract required the Township to pay for coverage for officers who retired on a disability pension. The PBA and its member, Michael Spallina, then sued the Township. The trial court concluded that Chapter 78 required disability retirees to contribute pursuant to the Chapter 78 contribution tables if they did not have 20 years of pensionable service when that law went into effect on June 28, 2011, and dismissed the PBA’s lawsuit. The local PBA then appealed and the State PBA joined the appeal as amicus.

 

The issue in this case was a matter of first impression, and the Appellate Division framed the issue as “whether Chapter 78 applies to government employees who receive disability retirement benefits.” As amicus curiae, we argued with PBA Local 230 that the trial court decision was in error and that Chapter 78 does not require retirees who retire on an accidental or ordinary disability pensions to make contributions towards the cost of health insurance benefits, even if they did not have 20 years of pensionable service as of June 2011.  As noted, this assumes that the PBA contract at the time of the officer’s retirement required a public employer to pay the premiums for the disability retirees.  

 

The Appellate Division agreed with the PBA’s position that the clear language of Chapter 78 does not require that contributions be made by those who retire on disability pensions (accidental or ordinary) even if they had less than 20 years of pensionable service.  The Appellate Division therefore reversed the trial court’s decision and sent the case back to the trial court to address the issue of Mr. Spallina’s entitlement to reimbursement for the contributions he previously made towards his health insurance premiums under his PBA collective negotiations agreement, an issue not addressed by the trial court.

 

This decision was a unanimous opinion, and therefore, the Township does not have an automatic right of appeal to the New Jersey Supreme Court.  The Township does have the right to request that the Supreme Court hear an appeal, but it is discretionary with the Court.  Also, the decision will be published. This means that it will serve as precedent and will be binding throughout New Jersey unless it is reversed by the Supreme Court.

 

The case is significant because it affects all public employees, not just law enforcement officers.  Public employees who retire on an accidental or ordinary disability pension can now rest assured that they will not be required to make contributions towards the cost of their health insurance premiums, even if they did not have 20 years of pensionable service when Chapter 78 became effective.  The key is that the applicable collective bargaining agreement must provide for employer-paid benefits at an employee’s retirement.

 

 

©2016 Zazzali, Fagella, Nowak, Kleinbaum & Friedman. Blog is provided for informational purposes only. It is not intended as legal advice nor does it create an attorney/client relationship between the Zazzali Law Firm and any readers or recipients. Readers should consult counsel of their own choosing to discuss how these matters relate to their individual circumstances. Reproduction in whole or in part is prohibited without the express written consent of the Zazzali Law Firm.

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