Committee Approves Disability Pension Legislation Changes

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The Senate State Government Committee released bill S-1913 (Sweeney) May 14. The legislation would tighten the criteria and the process by which disability pensions are granted in the various pension systems including the Teachers’ Pensions and Annuity Fund (TPAF).

In recent years there has been an increase in the number of public employees particularly in the public safety sector receiving disability pensions. Media accounts last year highlighted this increase from $68 million in 2007 to $91.5 million in 2010. The number spiked after the rules were relaxed following the Supreme Court’s decision in Richardson v. Board of Trustees Police and Fireman’s Retirement System which replaced the traditional three prong test with a new five prong test that made it much easier to receive accidental disability pension for disabling injuries.

Richardson’s and Its Progeny’s Impact

Prior to the Supreme Court decision a member was required to demonstrate that:
  1. his injuries were not induced by the stress and strain of the normal work effort;
  2. that he met involuntarily with the object or matter that was the source of the harm; and
  3. the source of the injury itself was a great rush of force or uncontrollable power.
The problem was that many accidents did not represent an external force or unstoppable power. The Pension Boards and the Courts could not agree on the meaning of the old test and for 20 years chaos in the pension system existed with regard to disability cases. Before the decision accidents which were caused by a fall or an altercation were often rejected because the Board of Trustees to any one of the pension systems would decide that the injuries were part of the nature of the job and therefore did not constitute a traumatic event.
The Supreme Court in overturning that view specifically pointed out that those accidents were just the kind of events that if resulting in disability would result in eligibility for an accidental disability pension. So the Richardson case modified the parameters such that an accident would qualify for eligibility for an accidental disability pension if it results in permanent and total disability as a direct result of a traumatic event that was:
  1. identifiable as to time and place;
  2. undesigned and unexpected;
  3. caused by a circumstance external to the member (not the result of pre-existing disease which is aggravated or accelerated by the work);
  4. that the traumatic event occurred during the member’s regular and assigned duties and not the result of willful negligence; and
  5. resulted in mental or physical incapacity from performing the usual duties of the job.
The Court would later go on in Guadagno v. Board of Trustees of the Police and Fireman’s Retirement System to expand the definition of traumatic event to include those who suffer psychological injuries even without a physical injury if the disability results from direct personal experience of a terrifying or horror inducing event that includes actual or threatening death or serious injury or similarly serious threat to the physical integrity of the member or another person. The event itself causing the psychiatric trauma must be viewed objectively as capable of causing a reasonable person to suffer such trauma.

The Bill

The legislation S-1913 (Sweeney) represents a major change in the eligibility standards for the accidental disability pension. Specifically anyone applying for ordinary disability and accidental disability benefits would have to be certified as not only incapacitated for their former job but also for another other available job that might be assigned for the same pay. In addition in the Judicial Retirement System (JRS) the bill would establish an ordinary disability (needs 10 years of service to qualify) benefit at 1.5 percent of compensation multiplied by years of service with a minimum of 40 percent. Currently JRS does not distinguish between ordinary or accident disability; it only has a disability retirement with a benefit of three-fourths of final salary.
For members of JRS Police and Firemen's Retirement System (PFRS) and State Police Retirement System (SPRS) an ordinary disability retirement would not be available until the member has attained 10 years of service instead of the current requirement of four years for PFRS and SPRS and nominal years for JRS. This is the current requirement for Public employees Retirement System (PERS) and TPAF.
The bill would also establish a fraud unit within the Office of the Attorney General for the prevention and identification of fraudulent disability pension claims and payments.
Other changes to the current structure include that an application for accidental disability must be filed within two years instead of the current five years of the original traumatic event: Also a temporary joint labor and management Accidental Disability Pension Review Committee would be created. The committee would study the current requirement that a member of TPAF JRS PERS PFRS and SPRS must be permanently and totally disabled as a direct result of a traumatic event in order to be deemed eligible for the receipt of an accidental disability benefit and develop a recommendation for specific criteria.
The bill now heads to the Senate Budget and Appropriations Committee.