A man who was drawing a pension after retiring from his job as a firefighter in Santa Ana can still draw a full disability pension from his next government job, despite language in state law appearing to require him to take a steep discount, a state appeals panel has ruled.
On Jan. 30, a three-justice panel of the California Fourth District Appellate Court, Division Three, ruled in favor of plaintiff Nicholas Casson, in his dispute with the Orange County Employees Retirement System.
At stake in the fight is nearly $37,000 per year for Casson, and untold sums of taxpayer funds for others, should the ruling hold sway across the California public pension system.
The court fight dates back to 2020, when Casson filed suit in Orange County Superior Court against OCERS.
In the lawsuit, Casson asserted the Orange County public worker pension system had improperly sliced his monthly disability pension payments by 75%, because they said, under state law, he wasn’t eligible for the full amount of the disability pension he had claimed.
According to the appellate decision, Casson had served as a firefighter for the city of Santa Ana for 27 years. He retired in 2012, and began drawing his service pension immediately through the California Public Employees Retirement System (CalPERS). His monthly pension payment was about $7,200 per month.
He also immediately began a new career with the Orange County Fire Authority, and began amassing a second pension through that agency.
However, according to the appellate decision, Casson did not “elect reciprocity between the two pensions.” Under reciprocity, all of the service credits amassed in a previous job are imported to a new job. If he had elected reciprocity, Casson would have essentially started earning pension benefits through the OCFA with 27 years of service credit. Instead, he essentially started anew, amassing pension benefits as a first year firefighter.
Five years into his tenure with the OCFA, Casson purportedly was injured severely enough to no longer be able to perform his duties. He then applied for, and was approved for, a disability pension, worth 50% of his final OCFA salary, or $4,222 per month.
Two months later, however, OCERS notified Casson that, because he was already drawing from his first non-reciprocal pension, they would reduce his disability pension payment to $1,123 per month. OCERS cited a California law which prohibits pensioners from receiving more from a “disability allowance” that what pensioners would have received under a single pension system.
OCERS asserted prior California court decisions backed its interpretation of the law, forbidding Casson from drawing his full disability allowance at the same time he was drawing a full CalPERS pension.
Casson, however, argued the law should only be read to apply to reciprocal pensions, as he claimed he gave up potentially lucrative benefits by not electing reciprocity.
Other pension systems filed briefs in the case, backing OCERS conclusion. The justices particularly noted the San Bernardino County Employees’ Retirement Association argued that a decision in Casson’s favor would not only rewrite legal precedent over the question, but would lead to “absurd” results, in which public employees “could conceivably service retire from one system, go to work for a second system and receive a disability retirement, then go to work for a third system in a different position,” potentially earning retirement benefits at 200% of their final salary, if they receive disability benefits from the third system.
OCERS further noted the plain language of the law does not limit its application only to reciprocal pensions.
An Orange County Superior Court judge sided with OCERS, agreeing the plain language of the law backed OCERS’ interpretation.
But on appeal, the Fourth District justices sided with Casson, drawing a distinction between a public workers’ service retirement pension and disability payments.
The justices said there was no reason under California state law “to treat Casson’s CalPERS service retirement as a ‘disability allowance.’”
“Here … Casson began receiving service retirement payments from CalPERS several years before he suffered his disability,” the justices wrote. “… It is a straight service retirement payment not a disability payment,” and therefore, not subject to the offset that would appear to be otherwise required by the law.
“Our holding is limited to this: When a pensioner receives a service retirement under a CERL pension and becomes a member of a second CERL pension and does not elect reciprocity, his or her first service pension cannot be considered part of a ‘disability allowance’…” the justices wrote.
The opinion was authored by Fourth District Appellate Presiding Justice Kathleen E. O’Leary. Associate Justices William W. Bedsworth and Thomas A. Delaney concurred in the decision.
Casson has been represented by attorneys from the firm of Adams, Ferrone & Ferrone, of Westlake Village.
OCERS has been represented by attorneys with the firm of Reed Smith, of San Francisco.