MATTER OF SEIFERHELD v. Kelly

*564OPINION OF THE COURT

Smith, J.

Petitioner, a New York City police officer, retired in 2004 and was awarded accident disability benefits. In the following years, the Police Department received information indicating that petitioner was not disabled; that he had made false representations to the Pension Fund; and that he had ingested cocaine, thus becoming ineligible to return to duty. The City, understandably, claims that it should not have to continue paying him a pension.

Despite the common-sense appeal of the City’s position, we affirm the Appellate Division’s order annulling the termination of petitioner’s pension benefits. The Appellate Division correctly held that the benefits can be terminated only by the trustees of the Police Pension Fund, who have not taken the necessary action. However, while we recognize the technical merit of petitioner’s argument, we express our distress at the way the system has malfunctioned in this case.

I

In December 2003, petitioner, after 11 years on the police force, applied for accident disability retirement. He claimed that as a result of a line-of-duty accident (a fall while walking on ice and snow) he suffered from constant pain in his right shoulder and neck, loss of range of motion in his neck and shoulder, and pain radiating into his arm, which prevented him from performing police duty. His application was granted, and he was awarded accident disability retirement on May 12, 2004 (see Administrative Code of City of NY § 13-252).

The following month, the Police Department received information that petitioner was working, and began an investigation that led a department official to report that petitioner was “performing construction work on a daily basis.” The investigation included observations of the work, some of them videotaped. An investigator’s reports say that petitioner was seen picking up siding, passing it to others, lifting it over his head and nailing materials above his head with both arms extended for some time—all tasks performed without apparent difficulty.

The Police Department informed the Police Pension Fund in November 2004 that petitioner “may no longer be disabled,” and the Pension Fund agreed in December 2004 to “reexamine” petitioner. The reexamination included an interview by the *565Pension Fund’s Medical Board at which petitioner, according to the board’s memorandum of the interview, said that he “cannot lift any heavy objects . . . cannot work overhead . . . has no outside work and his major occupation is babysitting his two children.”

Despite the difference between petitioner’s assertions and the videotapes, neither the Police Department nor the Pension Fund suggested—and neither, so far as the record shows, has suggested to date—that petitioner was guilty of fraud or misrepresentation, or that he should refund any of the pension money he had received. However, the Pension Fund’s Medical Board did conclude in May 2005 that petitioner’s condition “has improved dramatically,” and recommended disapproval of his retirement application. The Pension Fund’s trustees took no action on this recommendation for approximately two years, other than to remand the matter twice to the Medical Board, which twice reaffirmed its previous recommendation, noting in its second reaffirmance on September 19, 2006 that petitioner “seems to have made a remarkable recovery from his injury.”

Finally, on April 11, 2007, the Pension Fund Board of Trustees voted, over the dissent of several trustees, to invoke New York City Administrative Code § 13-254, entitled “Safeguards on disability retirement,” under which a disability pensioner found to be able to work may be returned to city service. The “safeguards” procedure soon hit a snag, however. Petitioner was placed on a list of candidates eligible to become police officers, but on July 6, 2007 he was informed that he was “medically disqualified” for that position “due to the presence of an unauthorized substance, cocaine, in your hair sample.”

On July 12, the New York City Law Department advised the Pension Fund that “notwithstanding” petitioner’s disqualification, “he is no longer deemed to be disabled, and he is no longer entitled to a disability pension.” There is no indication in the record that the Pension Fund’s Board of Trustees ever considered or acted on this advice, but on July 18, 2007 the Pension Fund’s Director of Pension Payroll advised petitioner “that your pension benefit will be suspended beginning with the July 2007 payroll.”

Petitioner brought this CPLR article 78 proceeding, seeking to annul the determination to suspend his pension benefits. Supreme Court denied the application (22 Misc 3d 1132[A], 2008 NY Slip Op 52670[U]). The Appellate Division reversed, annulling the suspension of benefits (70 AD3d 460 [2010]), and *566granted leave to appeal to this Court. We now reluctantly affirm.

II

The “safeguards” statute, New York City Administrative Code § 13-254, under which the Pension Fund tried to bring petitioner back to work, says, in relevant part:

“Once each year the board [of trustees of the Police Pension Fund] may . . . require any disability pensioner, under the minimum age or period for service retirement elected by him or her, to undergo medical examination. . . . Upon the completion of such examination the medical board shall report and certify to the board whether such beneficiary is or is not totally or partially incapacitated physically or mentally and whether he or she is or is not engaged in or able to engage in a gainful occupation. If the board concurs in a report by the medical board that such beneficiary is able to engage in a gainful occupation, he or she [sic] shall certify the name of such beneficiary to the appropriate civil service commission . . . and such commission shall place his or her name as a preferred eligible on such appropriate lists of candidates as are prepared for appointment to positions for which he or she is stated to be qualified. Should such beneficiary be engaged in a gainful occupation, or should he or she be offered city-service as a result of the placing of his or her name on a civil service list, such board shall reduce the amount of his or her disability pension ... if any, to an amount which, when added to that then earned by him or her, or earnable by him or her in city-service so offered him or her, shall not exceed the current maximum salary for the title next higher than that held by him or her when he or she was retired.” (§ 13-254 [a].)

The statute is complicated. In simplified summary, adequate for present purposes: A disability pensioner found to be able to work is put on a civil service list, and his or her pension is reduced based on outside earnings and the amount “earned . . . or earnable” in any city job that is offered.

The application of the statute to this case presents something of a puzzle, because although petitioner was put on a civil *567service list, he was not, and evidently could not be, offered a job because of his cocaine use. If the statute is mechanically applied, petitioner might actually benefit from using cocaine, because he presumably does not want to be offered a city job; he wants to remain retired and receive his pension. Supreme Court, in a thoughtful opinion, correctly concluded that this anomaly could not have been intended by the statute’s authors.

Supreme Court wrote: “These provisions ... do not contemplate a situation where the beneficiary refuses to return to City service . . . or . . . where the beneficiary is disqualified from City service for reasons unrelated to the physical or mental ability to work.” (2008 NY Slip Op 52670[U] at *8.) We do not necessarily agree that a beneficiary’s refusal to return would not be covered by the text of the statute; the statute seems to contemplate a pension reduction for money “earnable” by a beneficiaiy who is “offered” city employment. In the situation before us, however, Supreme Court was right that there is a problem the text of the statute does not address. Where a beneficiary who would otherwise be brought back to city employment is disqualified from that employment by his own fault, either the reduction or suspension of his benefits must be a consequence, though the statute does not expressly say so.

The Appellate Division reversed Supreme Court’s order, without discussing Supreme Court’s analysis of the statute, because the suspension of petitioner’s benefits “was not directed by the Board of Trustees” of the Pension Fund (70 AD3d at 462). The Appellate Division was correct.

It is clear from a reading of the safeguards statute that action under that statute must be taken by the board (“the board may . . . require”; “such board shall reduce”). Elsewhere, the Administrative Code, in two apparently redundant sections, says that the Pension Fund “shall be administered by a board of trustees” and that “[e]very act of the board of trustees shall be by resolution” (Administrative Code of City of NY § 13-202 [a], [b]; § 13-216 [a], [b]). The City points to no relevant exception to these provisions, or to any other provision of law that authorizes a suspension of benefits without a board vote.

The City’s argument on this point is that, because petitioner was no longer entitled to benefits, ceasing to pay them was a “purely ministerial act.” We disagree. However well justified a reduction or termination of benefits may be in this case, the Board of Trustees has to do it. There might be cases in which *568the impropriety of paying benefits is so obvious that Pension Fund employees can simply stop paying, without either advance approval or ratification from the board; this might be true, for example, if the statute said on its face, “No benefits shall be paid to any beneficiary who has a positive drug test.” But the application of the confusing safeguards statute to this case is something the trustees must address. Of course the trustees should weigh the advice of the City’s Law Department in deciding the question, but the decision is theirs, subject to appropriate judicial review.

Nor can we accept the dissent’s argument that the Board of Trustees revoked petitioner’s pension by its April 11, 2007 vote. The minutes of the April 11 meeting say nothing about terminating benefits. They make clear that the trustees voted to bring petitioner “back off disability” through the safeguards statute, which offers no grounds, at least on the facts as they existed on April 11, for terminating benefits rather than reducing them. Indeed, the City has not argued here that petitioner’s benefits were terminated on April 11. The City’s position is that petitioner would have continued to be entitled to benefits but for his positive drug test in July.

Though petitioner is entitled to prevail here, the case as a whole is very troubling. It seems from the record that petitioner either has received or is in a position to claim accident disability benefits for the last seven years, and counting. Yet any reader of this record must have serious doubt that he was ever really disabled. Whether any of the benefits paid to him may be recouped is a subject on which we express no opinion. But we do express the hope that the Pension Fund’s Board of Trustees will generally act to protect the Fund and the public with more efficiency than it has displayed in this case.

Accordingly, the order of the Appellate Division should be affirmed, without costs, and the certified question answered in the affirmative.