On February 4, 2014, Donald Vanarelli, Esq. argued before the New Jersey Supreme Court on behalf of Thomas Saccone in a case entitled Thomas Saccone v. Board of Trustees of the Police & Firemen’s Retirement System. Legal counsel for four disability rights organizations filed amicus curiae, or friend of the court, briefs on behalf of Mr. Saccone, and participated in oral argument. Thomas Saccone is a retired fireman with a severely disabled son. For many years, the son has received Supplemental Security Income and Medicaid, public benefits based on financial need which are critical in meeting the son’s care needs. In August 2008, Tom asked his pension provider, the Police and Firemen’s Retirement System (PFRS), to pay the survivor’s benefits which the son will receive upon Tom’s death to a special needs trust established under Tom’s Last Will and Testament in order to protect the son’s eligibility for public benefits. The PFRS denied the request, and Tom has been appealing that denial through state courts and administrative agencies since that time. The injustice of the denial is now being reviewed by the highest court of New Jersey. The opening statement presented to the Supreme Court by Mr. Vanarelli during oral argument of the Saccone case is reproduced below.
GOOD MORNING EVERYONE
MAY IT PLEASE THE COURT:
This case is about a father’s right to direct his PFRS retirement benefit to a SNT for his severely disabled son in order to protect the son’s eligibility for needs-based public benefits that the son desperately needs, and upon which the son relies for financial support and medical care.
Rather than exercise its parens patriae authority to compel the Board to interpret the PFRS legislation to protect this disabled beneficiary, the lower court instead blindly adhered to an overly literal reading of the legislation.
What’s more, the Appellate Division ignored the injustice of its ruling by disingenuously suggesting that, even though Mr. Saccone has been completely unsuccessful in his years of effort to protect his son Anthony’s public benefits, somehow “the possibility exists” that
- a guardian might appear and save the day
- a pooled trust or d4a trust might be established by a guardian or court
- Anthony might be able to assign the benefit
The Appellate Division stated that these possibilities “weigh against Mr. Saccone’s claim of necessity.” (p. 19). I submit to you that this is an intellectually dishonest position because these so-called “possibilities” are, in fact, illusory. I say that because:
- Anthony has no guardian, he’s never had a guardian and the father’s estate plan appoints a financial institution and care manager to assist Anthony in the future, but no guardian
- A d4a or pooled trust won’t work because funds transferred to either trust after age 65 are subject to a transfer penalty in NJ = ineligibility for public benefits
- Assignment won’t work–the court stated (p.9) that the benefit is not assignable
The heartbreak of this case is that there will be no one, after Thomas Saccone’s death, to carry on the fight to establish a trust for Anthony, and there is no trust, other than the one we proposed in this case, that will protect Anthony’s entitlement to Medicaid and Supplemental Security Income (SSI).
BOTTOM LINE: UNLESS THE COURT RULES THAT THE STATUTORY DEFINITION OF “CHILD” SHOULD BE INTERPRETED TO INCLUDE A SNT, THIS SO-CALLED “BENEFIT” FROM THE PFRS WILL ACTUALLY BE A DETRIMENT, RESULTING IN A LOSS OF ANTHONY’S ESSENTIAL PUBLIC BENEFITS.
We have been fighting this battle since August 2008: for 5 ½ years. During those 5 ½ years, Mr. Saccone has been made to feel that he is somehow trying to defraud the State. From Day 1, the Board has made no secret of its negative view of public benefits planning by stating that:
“The division cannot be a party to an effort to enable Mr. Saccone to continue to be eligible for public assistance by not reporting the benefit he receives as a beneficiary, as taxable income.”
And the Appellate Division did nothing to dispel this suggestion of wrongful intent/conduct. Ten years after this Court’s decision in In re Keri, 181 NJ 50, State agencies and courts are still refusing to recognize that planning for a disabled loved one is a legally permissible option. In fact, encouraging the use of SNTs is the public policy of our State. So I ask this Court to again recognize, as it did in In re Keri a decade ago, that individuals have a legally protected right to engage in public benefits planning.
This is a matter of public importance, that has not been addressed by this Court. If this decision is permitted to stand, public retirees with disabled children will be powerless to prevent the PFRS from taking automatic action that will cause the retirees’ disabled children to lose the public benefits that are vital to their well-being.
THE RELIEF WE REQUEST RESTS ON FOUR PILLARS:
(1) PERMITTING THE RETIREMENT BENEFITS TO BE DIRECTED TO A SNT FURTHERS THE GOALS OF THE PFRS LEGISLATION
(2) THE RELIEF WE SEEK ALSO FURTHERS NEW JERSEY’S PUBLIC POLICY FAVORING SNTs
(3) THE DEATH PENSION BENEFIT BELONGS TO THE RETIREE, THOMAS SACCONE, NOT TOM’S DISABLED SON ANTHONY
(4) THE REGULATORY LANGUAGE RELIED UPON BELOW BECAME EFFECTIVE AFTER MR. SACCONE WAS APPROVED FOR RETIREMENT BENEFITS. THEREFORE, IT SHOULD NOT APPLY
* * * * *
I. THE RELIEF MR. SACCONE SEEKS FURTHERS THE GOALS OF THE PFRS LEGISLATION
As you know, public pensions are designed to induce employees to enter and remain in public service. This Court has recognized that:
- Public benefits law is remedial social legislation, which should be liberally construed in favor of the employee. Steinmann, 116 N.J. 564; Geller, 53 N.J. 591
- “Administrative regulations … cannot … frustrate the policy embodied” in the retirement statutes, and literal interpretations of statutory terms should be avoided if “inconsistent with the overall purpose of the statute.” Steinmann; Lee, 199 N.J. 251; State Farm, 146 N.J. 1; State v. Sisler, 177 N.J. 199
According to legislative history, the primary goal of N.J.A.C. 17:4-3.5(b) is the financial integrity of the pension system, so that accumulated pension benefits will not revert to a retiree’s estate if he/she dies without a surviving spouse/child. 37 N.J. Reg. 4521(a). The State has admitted this in its brief. [State’s App. Div. brief, Db13].
What Mr. Saccone is attempting to do here has no negative fiscal effect on the PFRS. The survivor’s benefit terminates when Anthony dies, whether it is directed to a special needs trust or not.
II. PERMITTING THE FUNDS TO BE DIRECTED TO A SNT FURTHERS PUBLIC POLICY FAVORING SNTs
I’m reading from N.J.S.A. 3B:11-36 which provides, in pertinent part, as follows:
The Legislature finds and declares that … it is in the public interest to encourage persons to set aside amounts to supplement and augment assistance provided by government entities to persons with severe chronic disabilities…Therefore, legislation is appropriate to facilitate the establishment of [special needs] trusts.
Thus, the relief Mr. Saccone seeks would further this public policy, while having no effect on the fiscal integrity of PFRS.
III. THE DEATH PENSION BENEFIT BELONGS TO THE RETIREE, THOMAS SACCONE, NOT TOM’S DISABLED SON ANTHONY
The Appellate Division’s holding, that the survivor benefit, which Mr. Saccone earned as a result of his almost 40 years of public employment, is Anthony’s benefit, not Mr. Saccone’s property, is erroneous.
The Appellate Division’s holding relies upon LaSala, 335 N.J. Super. 1, for the proposition that a member cannot control a statutorily created pension benefit. But the reason the LaSala benefit could not be assigned or controlled was that the pension benefit in that case had not yet accrued. That’s not the situation in our case: Mr. Saccone’s pension benefits have fully vested.
From a common sense perspective, and based on the Fiola case (193 N.J. Super 340), this benefit is a form of deferred compensation for Mr. Saccone’s employment; I don’t see how we can pretend that it belongs to Anthony.
It’s clear that this legislation was not intended to take ownership of this benefit away from the retiree; it was meant to protect the surviving wife and child, as well as the fiscal integrity of the PFRS.
IV. THE REGULATORY LANGUAGE RELIED UPON BELOW BECAME EFFECTIVE AFTER MR. SACCONE WAS APPROVED FOR RETIREMENT BENEFITS. THEREFORE, IT SHOULD NOT APPLY TO THIS CASE.
Mr. Saccone was approved for PFRS benefits in the year 2000. The revision to N.J.A.C. 17:4-3.5, which purported to prohibit a member from designating a beneficiary for the receipt of pension death benefits, was revised effective 2006. I submit, therefore, that the restrictive revision should not apply to Mr. Saccone. His rights and obligations were fixed in 2000 when he was approved for PFRS benefits.
The PFRS “Fact Sheet,” posted on the PFRS website, advises its members that “You may choose to designate an established trust to receive the group life insurance and/or pension benefit.” (Fact Sheet #68, SCA126-SCA128). In fact, the website indicates that this “Fact Sheet” was revised again in April 2012, but the above-quoted language remains.
So even though the Appellate Division brushed off this argument, why shouldn’t an employee be able to rely on the information the PFRS is giving him? Why shouldn’t the PFRS be held to provide the employee benefits that they promise on their website?
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