Bueno v. Board of Trustees, Teachers’ Pension and Annuity Fund, A-1690-09T2; opinion by Miniman, J.A.D.; filed September 29, 2011. Before Judges A.A. Rodriguez, C.L. Miniman and LeWinn. On appeal from the Board of Trustees of the Teachers’ Pension and Annuity Fund, Department of the Treasury, Agency Docket No. TPAF #505473. DDS No. 01-2-xxxx [20 pp.]

Bertha Bueno appeals from a final agency action of the board of trustees of the Teachers’ Pension and Annuity Fund, Division of Pensions and Benefits, denying her application for retroactive service retirement benefits as untimely because it was filed more than 30 days after the board denied her application for ordinary disability retirement benefits.

In denying ordinary disability retirement benefits on Nov. 2, 2006, the board advised Bueno that she qualified for a service retirement benefit effective July 1, 2006, if she filed an application within 30 days from the date of the decision or effective date of retirement, whichever is later. The board further stated that acceptance of a service retirement would not prejudice an appeal of the board’s denial of ordinary disability retirement benefits.

After the Appellate Division upheld the board’s decision, but before the Supreme Court denied certification, Bueno applied on Feb. 5, 2009, for service retirement benefits, effective March 1, 2009. After the Supreme Court denied certification, Bueno requested that her service retirement benefits be paid retroactive to the date of her application for ordinary disability retirement benefits, i.e., as of July 1, 2006.

The board rendered an initial decision on Aug. 6, 2009, denying Bueno’s appeal based on N.J.A.C. 17:3-6.2(a), which provides that a retirement allowance is not due and payable until 30 days after the latter of the date of approval or effective date of retirement, and N.J.A.C. 17:3-6.3(a), providing that “a member shall have the right to withdraw, cancel or change an application for retirement at any time before the member’s retirement allowance becomes due and payable.” Relying on its Nov. 2, 2006, letter, the board reasoned that Bueno’s application to change her retirement type should have been received no later than Dec. 2, 2006.

Bueno’s counsel wrote to the board, disagreeing with its decision and pointing out that the 30-day conversion requirement did not appear in any statute or regulation.

The board issued its final administrative decision concluding that it could not grant retroactive service retirement benefits. Bueno’s application for a retirement date prior to March 1, 2009, was again denied. This appeal followed.

Held: Appellant was entitled to a service retirement allowance retroactive to the effective date she sought a disability retirement allowance because the regulation in effect at the time of her initial application did not prohibit her from changing her application to one for a service retirement allowance while her petition for certification was pending. The board’s practice of limiting such a conversion to the 30-day period following its denial of a disability retirement allowance constituted a rule under Metromedia, Inc. v. Director, Division of Taxation that was not promulgated in accordance with the specific rulemaking procedures of the Administrative Procedures Act.

By appealing, Bueno did not abandon her application for a disability pension and contrary to the board’s contention, Sobel v. Board of Trustees of the Teachers’ Pension and Annuity Fund does not foreclose her from converting her application and preserving her original retirement date. Bueno did not receive final notice of denial of her benefits until the Supreme Court’s June 2009 decision denying her petition for certification. Bueno filed her substitute application prior to receiving final notice from the Supreme Court and, within 30 days of its receipt, she sent a letter requesting that the division honor the July 2006 retirement date from her original retirement application.

Because no controlling statute, regulation or case precedent expressly limited the time period for conversion of a member’s existing retirement application to 30 days while an appeal is still pending, the issue is whether the board’s refusal to honor Bueno’s July 2006 retirement date constituted improper rulemaking.

In Metromedia Inc. v. Director, Division of Taxation , the Court concluded that an agency determination must be considered an administrative rule that must comply with the APA if that determination, in many or most of the following circumstances, (1) is intended to have wide coverage encompassing a large segment of the regulated or general public, rather than an individual or a narrow select group; (2) is intended to be applied generally and uniformly to all similarly situated persons; (3) is designed to operate only in future cases, that is, prospectively; (4) prescribes a legal standard or directive that is not otherwise expressly provided by or clearly and obviously inferable from the enabling statutory authorization; (5) reflects an administrative policy that (i) was not previously expressed in any official and explicit agency determination, adjudication or rule, or (ii) constitutes a material and significant change from a clear, past agency position on the identical subject matter; and (6) reflects a decision on administrative regulatory policy in the nature of the interpretation of law or general policy.

Here, factors (4), (5) and (6) weigh in favor of deeming the board’s determination rulemaking. Although the agency decision here may not satisfy factor (1) because it may encompass “a narrow select group” of members in Bueno’s situation, it satisfies factor (2), because the board announced its interpretation of the applicable statutes and regulations, its decision was intended to have continuing effect. Moreover, under factor (3), the Court found an agency determination to be “essentially prospective in nature, notwithstanding its attempted application” to a single party in the matter at hand.

On balance, the board’s decision in this matter constituted rulemaking, and due to its failure to comply with statutory rulemaking procedures, reversal is warranted.

— By Debra McLoughlin

For appellant — Samuel J. Halpern. For respondent — Jeff S. Ignatowitz, Deputy Attorney General (Paula T. Dow, Attorney General; Lewis A. Scheindlin, Assistant Attorney General, of counsel).