California court rules firefighter's pension benefits should be recalculated

In a recent case, a pensioner chose to treat two pensions under the County Employees Retirement Law of 1937 as separate. This choice freed him from the limitations of reciprocity, including the disability offset, the California Court of Appeal said.

The plaintiff in the case of Casson v. Orange County Employees Retirement System was a firefighter for Santa Ana City for 27 years. He took a service retirement in 2012 and began receiving monthly pension payments of about $7,200 through the California Public Employees Retirement System (CalPERS).

The plaintiff started working as a firefighter for the Orange County Fire Authority, which used the Orange County Employees Retirement System (OCERS) for its pension system. He did not opt for reciprocity between his CalPERS pension and his OCERS pension.

The plaintiff had an on-the-job injury that prevented him from performing his essential job functions. He applied to OCERS for a service-connected disability retirement.

In June 2017, OCERS approved his application and granted him monthly disability retirement payments of $4,222.81.

In August 2017, OCERS notified the plaintiff that it would impose a disability offset under section 31828.5 of California’s Government Code due to his CalPERS pension payments. Section 31838.5 prevented granting a disability allowance exceeding the amount that a member would get if they stayed in a single pension system. After the offset, his monthly OCERS payments would be $1,123.87.

The retirement board of OCERS agreed with the imposition of the disability offset. The trial court denied the plaintiff’s petition seeking to set aside the disability offset. The plaintiff appealed.

Disability offset canceled

The California Court of Appeal for the Fourth District, Third Division reversed the trial court’s judgment. The appellate court instructed the trial court to grant the plaintiff’s petition and to order OCERS to cancel the disability offset and to recalculate the pension benefits.

The plaintiff’s service retirement from CalPERS was not considered a disability allowance and should not be included when calculating the plaintiff’s total disability allowance, the appellate court said. After excluding this, the plaintiff’s disability allowance of $4,222.81 did not violate section 31838.5, the appellate court added.

The plaintiff chose to treat the CalPERS and OCERS pensions as separate. This choice prevented him from receiving reciprocity’s benefits but also freed him from reciprocity’s limitations, including the disability offset in section 31838.5, the appellate court concluded. Imposing the limitation on him would be unfair, the appellate court said.