The opinion
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1180-19
MICHAEL SEXTON,
Petitioner-Appellant,
v.
BOARD OF TRUSTEES,
TEACHERS' PENSION AND
ANNUITY FUND,
Respondent-Respondent.
__________________________
Submitted September 28, 2021 – Decided October 25, 2021
Before Judges Currier and Smith.
On appeal from the Board of Trustees of the Teachers'
Pension and Annuity Fund, Department of the
Treasury.
Stephanie Sexton, appellant pro se.
Andrew J. Bruck, Acting Attorney General, attorney for
respondent (Melissa H. Raksa, Assistant Attorney
General, of counsel; Connor V. Martin, Deputy
Attorney General, on the brief).
PER CURIAM
Appellant Michael Sexton appeals from respondent's final determination
denying his requests to convert his group life insurance policy and to change his
retirement date. Because respondent did not err in its application of the pertinent
regulations, we affirm.
For many years, appellant worked as a nurse in a school system and was
enrolled in the Teachers' Pension and Annuity Fund (TPAF). After a cancer
diagnosis, appellant applied for Ordinary Disability Retirement on March 22,
2018. On the application, appellant listed his retirement date as October 1, 2018.
He did so because he intended to return to work in September to help transition
the incoming nurse.
In approximately mid-April 2018, appellant submitted an application and
check to Prudential Insurance Company to convert his group life insurance
policy, which covered active employees, to an individual policy, which would
cover appellant after his group policy coverage expired. Unfortunately,
appellant died on May 3, 2018, while both applications were still pending.
Because appellant's retirement date was not until October, he was considered an
active member of TPAF at the time of his death.
Appellant's wife, Stephanie Sexton, was the beneficiary of appellant's
group life insurance policy. Because the retirement application was pending at
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the time of appellant's death, Stephanie was given a choice to receive payment
on either active or retired status. Stephanie opted for the retired status payment
and benefits were paid to her under the policy.
On July 11, 2018, Prudential denied appellant's request to convert his
group life insurance policy to an individual life insurance policy, stating,
"[u]nder the terms of the Group Contract, benefits were paid under the Group
Life Contract. I am returning [the] check . . . submitted for the conversion."
Stephanie appealed the decision. She also requested that TPAF change
appellant's retirement date from October 1, 2018 to April 1, 2018. Although
respondent expressed its sympathy for the events, it advised that a conversion
policy could not become effective until thirty-one days after a member ceased
employment. In other words, a TPAF member had to live thirty-one days after
the termination of employment to qualify for a conversion.
Through counsel, Stephanie appealed to the TPAF Board of Trustees
(Board). In June 2019, the Board issued its final determination, denying the
conversion of the group life policy. In coming to this decision, the Board relied
on N.J.A.C. 17:3-3.8. The Board also denied Stephanie's request to change
appellant's retirement date, advising the request for a retroactive amendment was
prohibited under N.J.A.C. 17:3-6.1.
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Following an appeal of the Board's decision, the Board issued findings of
fact and conclusions of law supporting its decision denying the conversion of
appellant's policy. The Board found the "regulatory language . . . [was] clear
and unambiguous." Therefore, it could not grant the requested relief.
Appellant asserts the same arguments before this court – requesting the
conversion of the group life policy and amendment of the applicable retirement
date.
Our review is limited. We review "agency decisions under an arbitrary
and capricious standard." Zimmerman v. Sussex Cnty. Educ. Servs. Comm'n,
237 N.J. 465, 475 (2019). "An agency's determination on the merits 'will be
sustained unless there is a clear showing that it is arbitrary, capricious, or
unreasonable, or that it lacks fair support in the record.'" Saccone v. Bd. of Trs.
Police & Firemen's Ret. Sys., 219 N.J. 369, 380 (2014) (quoting Russo v. Bd. of
Trs., Police & Firemen's Ret. Sys., 206 N.J. 14, 27 (2011)).
It is clear the regulations prohibit appellant from obtaining the relief he
seeks. As the Board noted, N.J.A.C. 17:3-3.8(b) states:
If a member is covered by group life insurance during
employment, the coverage ceases 31 days subsequent
to the member's termination date from employment,
regardless of the cause of termination. . . . The
converted individual policy will not take effect until the
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expiration of the group life insurance policy at the
conclusion of the 31-day grace period.
N.J.A.C. 17:3-6.1(a) states that a member's retirement application
becomes effective on the first of the month following receipt of the application
unless a future date is requested.
The Board properly applied these regulations in denying appellant's
requests. Because thirty-one days must pass after employment ends in order for
conversion to take effect, and appellant's employment had not ended prior to his
death, the Board could not convert the group life insurance policy to an
individual policy. Similarly, the regulations did not permit a retroactive
retirement date.
Stephanie acknowledges that appellant's policy was not eligible for
conversion. But she argues that the Board has the equitable powers to "relax
requirements on a case-by-case basis." We disagree. There was no injustice to
appellant. His beneficiary was given the option to choose whether to receive
payment from the group life insurance policy based on active or retired status.
Stephanie received the policy benefits.
Moreover, respondent contends that if appellant's requests were granted,
it would "contravene the entire statutory pension scheme and disrupt the Board's
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essential function of administering TPAF as directed by law. . . . This function
is intertwined with preserving the fiscal integrity of TPAF."
Because the Board complied with the regulations governing these
circumstances, its decision was not arbitrary or capricious. Given our deference
to the Board's specialized knowledge in its own area and its authority to create
the controlling regulations, we see no reason to disturb its decision.
Affirmed.
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