In re In re

• Decision Date: 21 June 2021
• Docket Number: DOCKET NO. A-2059-18
• Citation: 257 A.3d 683,468 N.J.Super. 229
• Parties: IN RE N.J.A.C. 17:2-6.5.
• Court: New Jersey Superior Court — Appellate Division

468 N.J.Super. 229

257 A.3d 683

IN RE N.J.A.C. 17:2-6.5.

DOCKET NO. A-2059-18

Superior Court of New Jersey, Appellate Division.

Argued April 21, 2021

Decided June 21, 2021

Jason E. Sokolowski argued the cause for appellant New Jersey Education Association (Zazzali, Fagella, Nowak, Kleinbaum & Friedman, attorneys; Richard A. Friedman, Summit, of counsel and on the briefs).

Robert E. Kelly, Deputy Attorney General, argued the cause for respondent Board of Trustees, Public Employees' Retirement System (Gurbir S. Grewal, Attorney General, attorney; Sookie Bae, Assistant Attorney General, of counsel; Robert E. Kelly, on the brief).

Before Judges Ostrer, Accurso and Vernoia.

The opinion of the court was delivered by

OSTRER, P.J.A.D.

To receive an accidental disability pension, a public employee must prove that his or her "disability was not the result of his [or her] willful negligence." N.J.S.A. 43:15A-43(a). For over fifty years, the Public Employees' Retirement System (PERS) Board defined "[w]illful negligence" as "1. [a] [d]eliberate act or deliberate failure to act; or 2. [s]uch conduct as evidences reckless indifference to safety; or 3. [i]ntoxication, operating as the proximate cause of injury." N.J.A.C. 17:2-6.5(a) (2017); see N.J.A.C. 17:2 hist. n. (stating that these rules were adopted before September 1, 1969). In 2017, the Board amended the first alternative to read: "Deliberate act or deliberate failure to act that reflects an intentional or purposeful ... deviation from the standard of care exercised by a reasonable person in similar circumstances." 50 N.J.R. 646(a) (Dec. 13, 2017) (adoption); see also 49 N.J.R. 2189(a) (July 17, 2017) (proposal).¹ On appeal, the New Jersey Education Association asks us to invalidate the amendment, arguing that the change extends the statute beyond its intended meaning, and thereby disqualifies public employees from receiving accidental disability benefits who are properly qualified for such benefits under the statute.

We agree and invalidate the Board's 2018 amended "willful negligence" definition because it strays from the Legislature's intent, and because the Board's own reasoning supporting its rule is arbitrary and self-contradictory.

I.

We presume a regulation is valid, N.J. State League of Muns. v. Dep't of Cmty. Affs., 158 N.J. 211, 222, 729 A.2d 21 (1999), and review it narrowly and deferentially, In re N.J.A.C. 12:17-2.1, 450 N.J. Super. 152, 166, 160 A.3d 727 (App. Div. 2017). We defer to an agency's rule-making because we recognize that "certain subjects are within the [agency's] peculiar competence." In re Amend. of N.J.A.C. 8:31B-3.31 & N.J.A.C. 8:31B-3.51, 119 N.J. 531, 543, 575 A.2d 481 (1990). When a statute is "silent or ambiguous" about an issue, we may not replace an agency's "permissible" interpretation of that statute with our own view.

Kasper v. Bd. of Trs. of the Tchrs.' Pension & Annuity Fund, 164 N.J. 564, 581, 754 A.2d 525 (2000) (quoting 2 Am. Jur. 2d Administrative Law § 525 (1994) ).

But our deference has limits. We accord "less deference" to a newly minted agency interpretation, "which has not previously been subjected to judicial scrutiny or time-tested agency interpretation." See id. at 580, 754 A.2d 525 (quoting 2 Am. Jur. 2d Administrative Law § 524 (1994) ). That is especially so when the new interpretation departs from a prior, long-standing interpretation. See Safeway Trails, Inc. v. Furman, 41 N.J. 467, 484, 197 A.2d 366 (1964). In Safeway Trails, the Court reviewed an Attorney General's opinion that reversed a prior opinion. The Court stated that if an agency's statutory "construction is not uniform and consistent, it will be taken into account only to the extent that it is supported by valid reasons." Ibid. (quoting Burnet v. Chi. Portrait Co., 285 U.S. 1, 16, 52 S.Ct. 275, 76 L.Ed. 587 (1932) ). Furthermore, we owe no deference at all to an agency's interpretation of judicial precedent. Bowser v. Bd. of Trs., Police & Firemen's Ret. Sys., 455 N.J. Super. 165, 171, 188 A.3d 375 (App. Div. 2018).

At bottom, an agency's rulemaking "must be reasonable and not arbitrary" and must further the Legislature's goals. Pascucci v. Vagott, 71 N.J. 40, 50, 362 A.2d 566 (1976). We shall set aside a regulation that is "unreasonable or irrational," Bergen Pines Cnty. Hosp. v. N.J. Dep't of Hum. Servs., 96 N.J. 456, 477, 476 A.2d 784 (1984), or that "violate[s] the enabling act's express or implied legislative policies," Williams v. N.J. Dep't of Hum. Servs., 116 N.J. 102, 108, 561 A.2d 244 (1989) ; see also In re N.J. Individual Health Coverage Program's Readoption of N.J.A.C. 11:20-1, 179 N.J. 570, 579, 847 A.2d 552 (2004) (stating that "[a]dministrative regulations ‘cannot alter the terms of a statute or frustrate the legislative policy’ " (quoting Med. Soc'y of N.J. v. N.J. Dep't of L. & Pub. Safety, 120 N.J. 18, 25, 575 A.2d 1348 (1990) )); In re Amend. of N.J.A.C. 8:31B-3.31, 119 N.J. at 543-44, 575 A.2d 481 (stating that appellate courts determine whether a rule "is arbitrary, capricious, unreasonable, or beyond the agency's delegated power"). Ultimately, "we are ‘in no way bound by an agency's interpretation of a statute or its determination of a strictly legal issue.’ " Russo v. Bd. of Trs., Police & Firemen's Ret. Sys., 206 N.J. 14, 27, 17 A.3d 801 (2011) (quoting Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93, 312 A.2d 497 (1973) ).

II.

To determine if the Board's amendment conforms to the Legislature's express or implied policy, we turn first to the statute. The PERS statute withholds accidental-disability pensions from employees whose disability results from their "willful negligence," N.J.S.A. 43:15A–43(a) — but the statute does not define "willful negligence," let alone a "deliberate act or deliberate failure to act." Neither do the statutes for the Police and Firemen's Retirement System (PFRS), the Teachers' Pension & Annuity Fund (TPAF), and the State Police Retirement System (SPRS), which likewise deny accidental-disability pensions because of willful negligence. See N.J.S.A. 18A:66-39(c) (TPAF) ; N.J.S.A. 43:16A-7(a)(1) (PFRS) ; N.J.S.A. 53:5A-10(a) (SPRS).² Because the PERS statute's plain meaning is unclear, we turn to other sources, including related provisions of law, for interpretative help. See In re H.D., 241 N.J. 412, 418, 228 A.3d 1235 (2020).

The Legislature did define "willful negligence" in a related provision of law: the Workers' Compensation Act. As adopted in 1911, the act provided: "For the purposes of this act, willful negligence shall consist of (1) deliberate act or deliberate failure to act, or (2) such conduct as evidences reckless indifference to safety, or (3) intoxication, operating as the proximate cause of injury." L. 1911, c. 95, § 3, ¶ 23.³ The PERS regulation that stood for over fifty years tracked the Workers' Compensation Act's original language. So did regulations dealing with the three other major public pension systems, see N.J.A.C. 17:3-6.5(a) (TPAF); N.J.A.C. 17:4-6.5(a) (PFRS); N.J.A.C. 17:5-5.4 (2018) (SPRS), until, in 2019, SPRS adopted the same amendment PERS did, see 51 N.J.R. 349(a) (Mar. 4, 2019) (proposal); 51 N.J.R. 1059(a) (June 17, 2019) (adoption).⁴ Notably, when PFRS readopted its regulations in 2019, it did not adopt the PERS amendment. See 51 N.J.R. 270(a) (Feb. 19, 2019).

The PERS Board's initial decision to import the Workers' Compensation Act's definition conformed with judicial interpretation of the Workers' Compensation and pension laws. The Workers' Compensation Act's and the accidental-disability pension law's shared goal to assist disabled workers led our Court to consistently interpret common concepts in the two laws. See Gerba v. Bd. of Trs. of the Pub. Emps.' Ret. Sys., 83 N.J. 174, 181-82, 416 A.2d 314 (1980) (discussing earlier applications of Workers' Compensation Act's concept of causation to PERS statute); Roth v. Bd. of Trustees, Pub. Emps.' Ret. Sys., 49 N.J. Super. 309, 319-20, 139 A.2d 761 (App. Div. 1958) (applying Workers' Compensation Act's concept of causation to PERS statute).

Even if these laws are not strictly in pari materia, both secure benefits to workers disabled on the job. And both erect an impediment to workers who are willfully negligent. This justifies interpreting "willful negligence" consistently. See Shambie Singer & Norman J. Singer, Sutherland Statutory Construction, § 51:3 (7th ed. 2020) (stating that how one views a statute's "object or purpose" is more important than its "subject matter" in deciding if "different statutes are closely enough related to justify interpreting one in light of the other"); see also Brewer v. Porch, 53 N.J. 167, 174, 249 A.2d 388 (1969) (stating that "[a]cts in pari materia as well as related acts not strictly in pari materia, should be examined" to ascertain a statute's meaning); Bank of Montclair v. McCutcheon, 107 N.J. Eq. 564, 567, 152 A. 379 (Prerog. Ct. 1930) (stating that "statutes relating to the same or similar subject-matter are to be construed together").

We recognize that over the years, the Legislature has stepped in to decouple the two laws in some respects. See Gerba, 83 N.J. at 182, 416 A.2d 314. But not as the laws relate to willful negligence. The Legislature's inaction on this point suggests its approval of uniform treatment of the "willful negligence" provisions; "an agency's construction of a statute over a period of years without legislative interference will under appropriate circumstances be granted great weight as evidence of its conformity with the legislative intent." Malone v. Fender, 80 N.J. 129, 137, 402 A.2d 240 (1979). Thus, we conclude that the Legislature intended the Workers' Compensation Act's definition of "willful negligence" to apply to the PERS statute.

That leads us to ask what the Legislature meant when it defined "willful negligence" in the Workers' Compensation Act as a "deliberate act or deliberate failure to act" (the first of three alternative definitions ...