A suit filed Thursday seeks to halt the "illegal and outrageous" attempt by Attorney General Andrew M. Cuomo and Comptroller Thomas P. DiNapoli to strip state public pension credits from lawyers who did work for school districts and other government entities.
Cuomo's effort to purge public pension funds of what he calls independent contractors is a "politically motivated gambit" that exceeds his authority as attorney general, the action contended. DiNapoli is "summarily and without due process of law" depriving longstanding members of the pension system of their benefits in violation of the state Constitution, the suit also alleged.
The plaintiffs are attorneys who received pension credits for work they performed for 20 years or more for local governments.
Their suit contends that the actions of Cuomo and DiNapoli "are contrary to the law, threaten to, and in some cases already have, improperly deprived or divest individuals of contract and property rights recognized and protected by the New York State Constitution and statute, and trammels the rights granted individuals by the Fifth and Fourteenth Amendments to the United States Constitution."
The action, Swergold v. Cuomo, 3897-08, seeks a declaratory judgment prohibiting Cuomo and DiNapoli from investigating the pension fund and striking the names of members they deem ineligible for benefits. It also asks that class action status be granted to the plaintiffs and other attorneys who may face a challenge to their public pension eligibility based on the part-time work they performed for government entities.
The suit was filed in Albany Supreme Court.
The complaint alleges that the offensive launched by Cuomo and DiNapoli violates numerous statutes and provisions of the state Constitution.
The plaintiffs cite DiNapoli's revocation of pension benefits, which they contend violates the prohibition in Article V §7 of the Constitution against pension benefits being diminished once they are bestowed on a member of the retirement system.
Cuomo has no jurisdiction to investigate pensioners because Social Security Law vests the state comptroller with exclusive authority over the retirement system, the plaintiffs contended.
The plaintiffs are Nathan M. Swergold of Woodbury, who was general counsel to a sanitary district in the Town of Hempstead; John B. Hogan of Hogan, Sarzynski, Lynch, Surowka & DeWind in Binghamton, who was attorney for the Broome-Delaware BOCES and other school districts; Terence E. Smolev of Forchelli, Curto, Schwartz, Mineo, Carlino & Cohn in Mineola, who was attorney for the Merrick Union Free School District; and Paul A. Martineau of Martineau & Martineau in Pleasantville, who was village attorney in Pleasantville.
Swergold's membership in the pension system has been revoked by DiNapoli. Hogan and Smolev have been subpoenaed by Cuomo.
Martineu's status is different from the other plaintiffs in that he contends his pension was improperly calculated and has been deprived of benefits he is entitled to.
The plaintiffs' attorney, James W. Roemer Jr., said in an interview that he himself has been served with a subpoena by Cuomo's office. Roemer has collected a state pension of nearly $120,000 a year since 2001 for work he did as a labor contract negotiator for several municipalities, including Utica, Schenectady and Saratoga Springs and Sullivan and Schoharie counties.
Roemer, of Roemer Wallens & Mineaux in Albany, said in an interview that Cuomo and DiNapoli are attacking public pension practices that have been routine for generations.
"Both the comptroller and the attorney general are taking the actions they are taking based upon their stated positions that private practice lawyers, i.e., lawyers in private practice who do work for municipalities, can't be employees of the municipalities, they must be independent contractors," Roemer said. "That is simply incorrect. There is no law to support that whatsoever."
On Wednesday, when Roemer announced his intention to file the suit, Cuomo said he believed the state would win.
"I'm confident we'll prevail," he said.
WIDESPREAD PRACTICE
Cuomo announced Thursday that he has asked all 685 school districts in the state to provide employment information as part of his investigation. He said he has evidence of widespread "double dipping" in which employees who have retired and are collecting public pensions have been placed back on district payrolls.
Cuomo said his office is focusing on whether such arrangements are legal, or whether laws should be changed to prohibit the practice.
To date, DiNapoli's office has suspended or revoked the memberships of nine attorneys in the public pension system, including Swergold's, and reduced service credits for three others. Cuomo said last week that "hundreds and hundreds" of people, primarily attorneys, will be implicated.
DiNapoli said in a statement that attorneys losing their public pension eligibility or pension credits are free to seek administrative or judicial review of those decisions.
"As state comptroller, I have the legal authority and the fiscal responsibility to state taxpayers and to the members of the Retirement System to make sure that only eligible employees receive state pension benefits," DiNapoli said. "That authority will not be threatened by lawyers filing lawsuits."
Cuomo's office last week reached a $50,000 settlement with Albany attorney Maureen Harris, who had pension credits rescinded by DiNapoli. Harris received credits for about a year while on the payroll of the Hamilton-Fulton-Montgomery BOCES, though Cuomo's office said she did no legal work for the regional school district in eastern New York at her Albany firm, Girvin & Ferlazzo.
Cuomo also reached a $50,000 settlement with Hodgson Russ of Buffalo for having its attorneys on the payrolls of numerous western New York BOCES districts. Those attorneys were not enrolled in the state pension system.
Cuomo argued that Internal Revenue Service regulations spell out when workers are employees and when they are independent contractors, a distinction he said lawyers should be aware of better than most professionals.
He also rejected the contention that since attorneys' arrangements with BOCES districts and other government units have been going on for decades, they are valid because they have not been challenged.
"The best defense, which is not a defense in my opinion, is, 'Well, we were doing it for so long and no one said anything,'" Cuomo said. "That doesn't cut it as a legal defense."
Cuomo said the arrangements were a type of "political patronage" in which local government officials hired attorneys, who also happened to be politically active locally, and made them eligible for pension benefits by classifying them as employees.
"Many levels of government, regulations that were misused, politics -- you put those factors together, and that's the stew that we're dealing with," Cuomo said.
Roemer's firm and DeGraff, Foy & Kunz in Albany are co-sponsoring a Web site, http://snysr.com, which has information about the "harassment and injustices" that members of the state retirement system are facing. The site says that "Operation Pushback" began Thursday and it gives information about the suit, including the fact that plaintiffs are seeking class action status.
"Annually salaried part-time public employees are being unfairly harassed and illegally deprived of their rightful benefits," the site declares.
Roemer called the site "informational" rather than a solicitation for plaintiffs to join the class.
Earl T. Redding of Roemer Wallens & Mineaux and David F. Kunz and George J. Szary of DeGraff, Foy & Kunz are also representing the plaintiffs in the case.
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