NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1979-14T3
BRICK TOWNSHIP PBA LOCAL 230
APPROVED FOR PUBLICATION
and MICHAEL SPALLINA,
June 21, 2016
Plaintiffs-Appellants,
APPELLATE DIVISION
v.
TOWNSHIP OF BRICK,
Defendant-Respondent.
___________________________________
Argued May 16, 2016 – Decided June 21, 2016
Before Judges Lihotz, Fasciale and Higbee.
On appeal from Superior Court of New Jersey,
Law Division, Ocean County, Docket No. L-
2815-13.
Stephen B. Hunter argued the cause for
appellants (Detzky, Hunter & DeFillippo,
LLC, attorneys; Mr. Hunter, of counsel and
on the brief).
Louis N. Rainone argued the cause for
respondent (DeCotiis, FitzPatrick & Cole,
LLP, attorneys; Mr. Rainone and Victoria A.
Flynn, of counsel and on the brief).
Paul L. Kleinbaum argued the cause for
amicus curiae New Jersey State Policemen's
Benevolent Association (Zazzali, Fagella,
Nowak, Kleinbaum & Friedman, attorneys; Mr.
Kleinbaum and Marissa A. McAleer, of counsel
and on the brief).
The opinion of the court was delivered by
FASCIALE, J.A.D.
In this declaratory judgment action, Brick Township PBA
Local 230 (PBA Local 230) and Michael Spallina (collectively
plaintiffs) appeal from a November 13, 2014 order granting
summary judgment to the Township of Brick (the Township).
Spallina retired as a police officer on accidental disability.
The order required Spallina to contribute to the cost of his
health insurance provided as a benefit along with disability
retirement payments. The judge concluded that Spallina's
obligation was required by N.J.S.A. 40A:10-21.1, L. 2011, c. 78,
§ 42, effective June 28, 2011 (Chapter 78).
Plaintiffs argue Chapter 78 does not require Spallina to
make contributions towards the cost of his health insurance
premiums because his retirement was due solely to a disability.
The Township contends Chapter 78 excludes from the obligation to
contribute to the cost of health care benefits, only those
employees completing twenty or more years of public service by
the effective date of Chapter 78. We granted amicus status to
the New Jersey State Policemen's Benevolent Association (State
PBA), which urges we reverse the court's decision, emphasizing
Chapter 78 does not require any public employee who retires with
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disability retirement benefits to make contributions towards the
cost of his or her health care insurance premiums.
We hold that Chapter 78 does not require ordinary or
accidental disability retirees to make premium payments for
health insurance benefits. Therefore, we reverse the order
under review, remand, and direct the judge to address
plaintiffs' contention, raised in the complaint, that Spallina
is entitled to reimbursement for his prior health insurance
premium contributions.
I.
PBA Local 230 is the recognized majority representative for
all non-supervisory police officers employed by the Township.
Spallina worked as a Township police officer from 1994 to 2012.
The Township, a municipal corporation, is a public employer
within the meaning of the New Jersey Employer-Employee Relations
Act, N.J.S.A. 34:13A-1 to -14.
PBA Local 230 and the Township were parties to a collective
negotiations agreement (CNA) covering terms and conditions of
police officers within the Township from January 2012 through
December 2015. Article XI, Paragraph 9 of the CNA provides:
Any Officer who retires from the Township
shall no longer have health insurance
premium sharing responsibilities, except as
in accordance with Chapter 2 and
supplemented by Chapter 78 of Public Law
2011.
3 A-1979-14T3
The Township is self-insured and its health insurance is
administered by Horizon Blue Cross. The provision for health
insurance coverage for employees and retirees, and the premium
sharing requirements for employees and retirees, is governed by
N.J.S.A. 40A:10-16 to -25.
In January 2011, Spallina sustained injuries in the line of
duty. He applied for accidental disability retirement. The New
Jersey Division of Pensions approved Spallina's application,
effective October 1, 2012.
The Township advised Spallina he must continue making
health insurance premium contributions to maintain his retiree
health benefits coverage, based on Chapter 78. According to the
Township, the obligations imposed by Chapter 78 extended to
individuals who retired, whether because of years of service or
disability.
Plaintiffs filed this declaratory judgment action pursuant
to N.J.S.A. 2A:16-51 to -62, seeking a declaration from the
court that Chapter 78 and Article XI, Paragraph 9 of the CNA do
not require Spallina to continue making health insurance premium
contributions to the Township because he was receiving a
disability retirement. Plaintiffs also sought reimbursement for
past health contributions remitted. The parties filed
4 A-1979-14T3
stipulated facts and agreed adjudication would be by summary
judgment.
The judge conducted oral argument, entered the order under
review, and rendered a written opinion. The judge found the
text of Chapter 78 to be clear and unambiguous. He concluded
Chapter 78 exempted only employees with twenty or more years of
service from the imposed contribution requirement. Because
Spallina had less than twenty years of service, the judge
concluded he was not entitled to Chapter 78's exemption.
On appeal, plaintiffs and the State PBA argue that the
premise of the judge's conclusion, that Chapter 78 applies to
disabled retirees, is fundamentally flawed. They maintain
government employees who receive disability retirement benefits
are not subject to Chapter 78, no matter their years of service.
Accordingly, plaintiffs and the State PBA contend Spallina is
relieved from health insurance premium sharing responsibilities
pursuant to Article XI, Paragraph 9 of the CNA.
II.
The primary issue on appeal is whether Chapter 78 applies
to government employees who receive disability retirement
benefits. This is a matter of statutory interpretation to which
we accord no deference to the trial judge's interpretive
conclusions. Commerce Bancorp, Inc. v. InterArch, Inc., 417
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N.J. Super. 329, 334 (App. Div. 2010) (citation omitted),
certif. denied, 205 N.J. 519 (2011); see also Manalapan Realty,
L.P. v. Twp. Comm., 140 N.J. 366, 378 (1995) (indicating that
"[a] trial court's interpretation of the law and the legal
consequences that flow from established facts are not entitled
to any special deference" (citations omitted)).
Our paramount goal in interpreting a statute is to
ascertain the Legislature's intent, and "generally[] the best
indicator of that intent is the statutory language." DiProspero
v. Penn, 183 N.J. 477, 492 (2005) (citation omitted). When
interpreting a statute, we give words "their ordinary meaning
and significance." Tumpson v. Farina, 218 N.J. 450, 467 (2014)
(quoting DiProspero, supra, 183 N.J. at 492). Only when the
statutory language is ambiguous and yields more than one
plausible interpretation do we turn to extrinsic sources, such
as legislative history. DiProspero, supra, 183 N.J. at 492-93.
A.
The language in Chapter 78 plainly identifies which
employees are subject to its requirements. Therefore, we need
not turn to extrinsic sources to resolve the issue on appeal.
State v. Shelley, 205 N.J. 320, 323 (2011) (stating that "[w]hen
the Legislature's chosen words lead to one clear and unambiguous
6 A-1979-14T3
result, the interpretive process comes to a close, without the
need to consider extrinsic aids" (citation omitted)).
N.J.S.A. 40A:10-21.1 states, in part:
(1) Notwithstanding the provisions of any
other law to the contrary, public employees
of an employer, as those employees are
specified in paragraph (2) of this
subsection, shall contribute, through the
withholding of the contribution from the
monthly retirement allowance, toward the
cost of health care benefits coverage for
the employee in retirement and any dependent
provided pursuant to N.J.S.[A.] 40A:10-16
[to -34.3], unless the provisions of
subsection c. of this section apply, in an
amount that shall be determined in
accordance with [N.J.S.A. 52:14-17.28c]
. . . .
(2) The contribution specified in paragraph
(1) of this subsection shall apply to:
(a) employees of employers for
whom there is a majority
representative for collective
negotiations purposes who accrue
the number of years of service
credit, and age if required, as
specified in N.J.S.[A.] 40A:10-
23,[1] or on or after the expiration
1
Pursuant to N.J.S.A. 40A:10-23(a), effective May 21, 2010, an
employer was given discretion to
assume the entire cost . . . of such
coverage and pay all . . . of the premiums
for employees a. who have retired on a
disability pension, or b. who have retired
after 25 years or more of service credit in
a State or locally administered retirement
system and a period of service of up to 25
years with the employer at the time of
(continued)
7 A-1979-14T3
of an applicable binding
collective negotiations agreement
in force on that effective date,
and who retire on or after that
effective date or expiration date,
excepting employees who elect
deferred retirement, when the
employer has assumed payment
obligations for health care
benefits in retirement for such an
employee; and
. . . .
(3) Employees described in paragraph (2) of
this subsection who have [twenty] or more
years of creditable service in one or more
State or locally-administered retirement
systems on the effective date of P.L. 2011,
c. 78 shall not be subject to the provisions
of this subsection.
[N.J.S.A. 40A:10-21.1(b)(1)-(3) (emphasis
added).]
The judge concluded that
[t]he plain text of Chapter 78 is clear and
unambiguous. Employees who have creditable
service of twenty or more years in one of
the retirement systems on the effective date
of Chapter 78 were exempted from the
contribution requirements. Michael Spallina
was an employee with less than twenty years
of creditable service on June 28, 2011, the
effective date of Chapter 78. [Spallina]
was approved by [the Police and Firemen's
Retirement System (PFRS)] for . . .
(continued)
retirement, . . . or c. who have retired and
reached the age of 65 years or older with 25
years or more of service credit in a State
or locally administered retirement system.
8 A-1979-14T3
accidental disability retirement after the
effective date.
We respectfully disagree with the judge's interpretation of
the scope of Chapter 78. First, subsection (b)(1) specifies
that "employees of an employer" must contribute to the cost of
health care benefits. The subsection provides a precise
definition of "employees," namely those "specified in paragraph
(2) of this subsection." For "employees of employers for whom
there is a majority representative for collective negotiations
purposes," paragraph two, in turn, states that the contribution
requirement applies specifically to employees
who accrue the number of years of service
credit, and age if required . . . or on or
after the expiration of an applicable
binding collective negotiations agreement in
force on that effective date, and who retire
on or after that effective date or
expiration date, excepting employees who
elect deferred retirement, when the employer
has assumed payment obligations for health
care benefits in retirement for such an
employee.
[N.J.S.A. 40A:10-21.1(2)(a).]
Paragraph three then carves out from the definition of
"employees" in paragraph two those who accrued twenty or more
years of service by the effective date of Chapter 78, who need
not contribute to their health insurance premiums. Thus, the
plain language of Chapter 78 does not include employees who
retire based on disability; instead, it offers a circumscribed
9 A-1979-14T3
definition of the employees intended to be affected by the
implementation of the statute, namely those who retire based on
meeting the service requirements.
B.
While we conclude that a plain reading of the statute
resolves the issue, extrinsic evidence bolsters our conclusion
that the Legislature did not intend for disability retirees to
contribute to their health insurance premiums pursuant to
Chapter 78.
"The State-administered retirement systems are funded by:
1) contributions from employees' wages; 2) contributions from
the State, as the employer; and 3) the return earned on invested
assets." Berg v. Christie, 436 N.J. Super. 220, 231 (App. Div.
2014) (citations omitted), rev'd, __ N.J. __ (2016). PFRS
members contribute a fixed percentage of their wages to the
pension fund, which is then paid out to them upon retirement
along with the State's designated contribution. "PFRS pensions
. . . are dependent upon years of service, age and contributions
to the pension fund." Sternesky v. Salcie-Sternesky, 396 N.J.
Super. 290, 300 (App. Div. 2007) (citing N.J.S.A. 43:16A-6).
N.J.S.A. 43:16A-5 governs service retirees, and sets forth when
an employee may retire based on length of service. The statute
provides employees over fifty-five "may retire on a service
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retirement allowance," which is calculated in light of the
member's total contribution and years of service. N.J.S.A.
43:16A-5(1)-(2). The statute also mandates sixty-five-year-old
and over employees "shall be retired on a service retirement
allowance . . . , except that a member hired prior to January 1,
1987 may remain a member of the system until the member attains
age 68 years or 25 years of creditable service, whichever comes
first." N.J.S.A. 43:16A-5(1).
The system is designed for individuals to pay into the fund
from their individual wages, from which they will receive a
service retirement allowance after reaching the requisite age or
years of service. However, this formula does not work for
individuals who become disabled on the job prior to reaching the
length of service or age requirements. As a result, the
legislature designated different statutory sections for
employees disabled while on the job. Without the independent
treatment of a separate statute, disabled employees would not be
entitled to a pension for failure to meet the service
requirements.
N.J.S.A. 43:16A-6 governs ordinary disability retirement
benefits, which arise when a member under fifty-five (and thus
ineligible for service retirement) with at least four years of
service becomes mentally or physically incapacitated and unable
11 A-1979-14T3
to perform his or her duties. Although an employee seeking
ordinary disability retirement must have a minimum of four years
of service, N.J.S.A. 43:16A-6(1), the employee is retiring due
to a disability, not his or her length of service or age.
N.J.S.A. 43:16A-7 controls accidental disability retirement, for
which there is no years of service or age requirement; rather,
any member may qualify so long as he or she satisfies the
statutory criteria. N.J.S.A. 43:16A-7(1). This is why
accidental disability retirees receive an "enhanced benefit" of
two-thirds of their salary at the time of the occurrence of the
accident, whereas ordinary retirees receive one-half of their
final salary if they retire at the earliest time. Sternesky,
supra, 396 N.J. Super. at 300. In short, ordinary retirement is
linked to a member's age or years of service, whereas disability
retirement is awarded because of an employee's disability.
Chapter 78 was passed in recognition of "serious fiscal
issues" confronting the State and the underfunding of the
pension system. DePascale v. State, 211 N.J. 40, 63 (2012).
Chapter 78 increased required contributions from employees and
suspended cost-of-living adjustments. The Senate Budget and
Appropriations Committee Statement, dated June 16, 2011,
elaborates on the legislative intent of Chapter 78. The
committee explained that:
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This bill makes various changes to the
manner in which . . . the Police and
Firemen's Retirement System (PFRS) . . .
operate[s] and to the benefit provisions of
th[e] system[].
. . . .
This bill requires all public employees and
certain public retirees to contribute toward
the cost of health care benefits coverage
based upon a percentage of the cost of
coverage.
. . . .
Similar provisions in the bill apply to
retirees of the State . . . and units of
local government who accrue 25 years of
service after the bill's effective date, or
on or after the expiration of an applicable
collective bargaining agreement in effect on
that date, and retire after that, who will
be required to contribute a percentage of
the cost of health care benefits coverage in
retirement, but as based on their retirement
benefit. These provisions will not apply to
public employees who, on the effective dated
[sic] the bill, have 20 or more year[s] of
service in one or more State or locally-
administered retirement systems. A 1.5%
"floor", for those retirees to whom the 1.5%
contribution in current law applies, will
also be applicable to these retirees.
[S.B. No. 2937, at 118, 120-21 (June 16,
2011) (emphasis added).]
The Senate Committee's Statement bolsters the conclusion
that Chapter 78 applies only to service retirees and not to
disability retirees. The Statement makes clear the new
provisions apply to active public employees and retirees "who
13 A-1979-14T3
accrue 25 years of service after the bill's effective date,"
while exempting those who "have 20 or more year[s] of service"
by the bill's effective date. Ibid. As aforementioned,
disability retirement is not predicated on length of service or
age, and the Senate Committee's omission of disability retirees
suggests the Legislature's intent was to mandate "regular"
retirees based on service credit and age to contribute towards
their health care benefits via withholdings from their pension
benefits.
Examining the PFRS statute in its totality, including the
amendments provided in Chapter 78, leads to the conclusion that
the Legislature sought to have active public employees
contribute to the cost of their healthcare premiums, as well as
retiring employees who will accrue twenty-five years of service
after Chapter 78 became effective, carving out those who already
accumulated twenty years of service as of the effective date.
This system encapsulates employees on the ordinary course for
retirement. Public employees who retire on disability benefits,
like Spallina, do not retire pursuant to years of service credit
or reaching a certain age, which is why disability retirees are
accorded separate statutory treatment. Instead, these employees
retire due to a disability, which, as the Senate Committee
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Statement suggests, places them outside of the scope of Chapter
78.
We consider as further insight into the issue on appeal a
letter from the Assistant Director of New Jersey Public
Employees' Health Benefit Programs, Division of Pensions and
Benefits. See Paterson PBA Local 1 v. City of Paterson, 433
N.J. Super. 416, 429 (App. Div. 2013) (allowing the court to
consider agency answers to "FAQs" as a "practical interpretation
of the statute," even though they were "not the equivalent of an
administrative agency's interpretation"). The Assistant
Director explained in a letter dated July 8, 2013 that "[s]ince
Chapter 78 refers to individuals who attain the required years
of pension membership credit as outlined in N.J.S.A. 52:14-
17.28, [Chapter 78] appears to intentionally exclude those who
retire on a disability retirement benefit." Similarly, the New
Jersey Division of Pensions and Benefits published "Fact Sheet
#11," which consistently interprets Chapter 78 by stating, in
pertinent part, "[l]ocal employees who retire on an approved
disability retirement . . . are not subject to the contribution
provisions of Chapter 78." This extrinsic evidence further
supports our conclusion that Chapter 78 does not encompass
disability retirees.
15 A-1979-14T3
III.
In conclusion, the plain language of Chapter 78 exempts
disability retirees from health insurance premium contributions.
Chapter 78's legislative history, as well as agency
interpretations, further bolster our conclusion.
As a result, we reverse the order under review, remand, and
direct the judge to address plaintiffs' contention, raised in
the complaint but not adjudicated, that Spallina is entitled to
reimbursement for prior health insurance premium contributions.
We do not retain jurisdiction.
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