Court Sides With Perac In Dispute Over What Disability Retirees Can Earn

SEPTEMBER 2002
- Disability retirees have suffered another setback in their battle
with the Public Employee Retirement Administration Commission (PERAC)
over what they can earn to supplement their pensions. This time, a
Mass. court has sided with PERAC's broader definition of the term
"earned income".

By way of
background, under Chapter 32 (retirement law), disability retirees can
supplement their pensions by earning no more than a specific sum
according to a formula in the law. Since PERAC adopted a broader
definition of what should be considered earned income, some disability
retirees found that they have supposedly earned too much under the
formula.

The retirees first turned
to the Contributory Retirement Appeal Board (CRAB) for relief from
PERAC's broader definition. When we reported on this over a year and a
half ago, disability retirees suffered their first setback when CRAB
found in favor of PERAC's definition in a number of cases (November
2000 Voice).

And as we also
reported then, some retirees appealed their CRAB decision to the
courts. Included among them was Daniel Burke, a disability retiree from
the Medford Police Department, whose case is the first decision on this
controversy to be issued by the courts.

PERAC's Broader Definition Valid

In
Burke's case, the Superior Court ruled that PERAC acted properly when
it included shareholder distributions, that he had received as the 50%
owner of a business for which he was also an employee, as part of his
earned income. A decision on an appeal to the higher (appeals) court
had not been made by Burke at press time.

"It
should be noted that the Burke ruling does not govern the decisions in
similar cases now pending before other judges," comments Association
Counsel Bill Rehrey. "Regardless one must assume that this decision
will be brought to their attention and accorded proper weight in their
deliberations."

In Burke, the court
found that PERAC has the authority to overrule the decision by the
Medford Retirement Board excluding his shareholder distributions from
earned income. More importantly, the court upheld PERAC's broader
definition of earned income since no other definition existed within
the retirement law.

As part of its
disability retirement bill (H4340), our Association has included a
provision, which defines earned income more broad ly than PERAC. H4340
was reported favorably by Public Service and is currently before House
Ways and Means.

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