S.C. v. Board of Trustees, Public Employees' Retirement System

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-3749-24 S.C.,1 Petitioner-Appellant, v. BOARD OF TRUSTEES, PUBLIC EMPLOYEES' RETIREMENT SYSTEM, Respondent-Respondent. Submitted September 21, 2026 – Decided September 25, 2026 Before Judges Sabatino and Torregrossa-O'Connor. On appeal from the Board of Trustees of the Public Employees' Retirement System, Department of the Treasury, PERS No. xx2664. Fusco & Macaluso PC, attorneys for appellant (Amie E. DiCola, on the briefs). 1 We use initials for appellant because of her confidential medical and mental health information, portions of which are contained in a confidential appendix and discussed by necessity in this posted opinion. R. 1:38-3(a); see also N.J.A.C. 17:1-1.2(c). Jennifer Davenport, Attorney General, attorney for respondent (Deborah E. Wassel, Assistant Attorney General, of counsel; Payal Y. Ved, Deputy Attorney General, on the brief). PER CURIAM S.C., a former State employee, appeals the June 19, 2025 final agency decision of the Board of Trustees of the Public Employees' Retirement System ("the Board") denying her claim for ordinary disability benefits under N.J.S.A. 43:15A-42. The Board overturned a contrary finding of disability by an administrative law judge ("ALJ") dated April 14, 2025. Appellant worked for sixteen years mainly as a technical assistant in the Department of the Treasury. Her job entailed creating and processing purchase orders. She reported having an adverse sensitivity to smells in the workplace, including to perfume worn or intentionally sprayed by co-workers, who she claimed harassed her about her sensitivity. 2 She reported headaches, nausea, and other symptoms. Her office building was inspected for possible environmental contamination, but no testing was done. Appellant stopped working in June 2020. She moved to Florida and at that time was in her mid-fifties. She applied initially for accidental disability 2 Apparently appellant pursued claims of workplace harassment without success and we do not address or comment upon the subject. A-3749-24 2 benefits, but when that claim was denied, she pivoted to seeking ordinary disability benefits. Appellant was evaluated by a board-certified neuropsychiatrist, a private practitioner who is also a clinical assistant professor of psychiatry at Cooper Hospital ("appellant's neuropsychiatry expert"). According to that expert's testimony, his practice is split evenly between patient treatment and clinical assessments. In his report, appellant's neuropsychiatry expert diagnosed her with several disabling conditions, chiefly multiple chemical sensitivities ("MCS").3 The expert stated he has treated several patients with chemical sensitivities in the past. The expert also diagnosed her with post-traumatic stress disorder and 3 MCS is defined by Stedman's Medical Dictionary as "a symptom array of variable presentation attributed to recurrent exposure to known environmental chemicals at dosages generally below levels established as harmful; complaints involve multiple organ systems." Stedman's Medical Dictionary 809520, Westlaw (database updated Nov. 2014). Symptoms include "perceived hypersensitivity to the smell of chemicals, nausea, dizziness, headache, upper respiratory discomfort, runny eyes, chest and throat pain, arthralgia, dyspepsia, fatigue, lack of concentration, memory difficulties, depression, anxiety, mood disruption, and a range of other cognitive and psychological disturbances ." Gesualdo M. Zucco and Richard L. Doty, Multiple Chemical Sensitivity, 12 Brain Sci. 46, 46 (2022) [https://doi.org/10.3390/brainsci12010046]. The underlying causes of this syndrome "are not fully understood," and there is "doubt as to whether MCS is an actual unitary clinical entity." Id. at 47. A-3749-24 3 other conditions. His report and corresponding trial testimony concluded appellant is "100% totally and permanently disabled" due to her sensitivity to chemicals and smells. The Board countered with expert testimony from a Florida psychologist. ("the Board's psychology expert"). According to his testimony, that expert almost exclusively does assessments, with very limited treatment cases. He is not board-certified, although appellant's trial counsel stipulated to his qualifications to testify in this case. He acknowledged that he has not treated a patient with a diagnosis of MCS and had no specific training with the condition. The Board's psychology expert concluded in his report that, as of the time of his evaluation in 2023, appellant was not disabled. He administered several psychological tests, identified as M-FAST, Beck Depression Inventory-2, Beck Anxiety Inventory, the Rey 15-Item test, and the MMPI-3. His report concluded that the results of those tests "are considered to be largely invalid and inconsistent with [appellant's] presentation." The expert observed that appellant's reports of severe symptoms of anxiety and depression were not manifest during his examination. He noted that two brief measures used to test for attempts at effort or simulation were in the elevated range, signifying to him that appellant may be exaggerating her condition. A-3749-24 4 In October 2024, ALJ Kim C. Belin conducted a one-day hearing at which appellant and the parties' two experts testified. The ALJ issued a fifteen-page initial decision on April 14, 2025, concluding that appellant is disabled and unable to work. The ALJ found "both doctors provided credible testimony," but noted that the neuropsychiatrist's opinions were consistent with those of appellant’s treating physician, who also diagnosed her with MCS. The record reflects that the treating physician has treated appellant for many years, since 2012. The physician attested that appellant "suffers from [MCS] causing inflammation within [the] body, causing shortness of breath, pain of muscles and joints." He also issued a letter in August 2020 stating that appellant's "chemical sensitivity condition has severely advanced to permanent damage to her hearing," and that her "body is unable to recover from repeated injuries from chemicals in the workplace." The ALJ also noted that the Board's psychological expert, unlike appellant's expert, did not have specific training in MCS or treat patients with the condition. The ALJ further noted that the Board's expert, who examined appellant in 2023, was unable to opine about whether appellant was disabled when she left her job three years earlier. A-3749-24 5 On the whole, the ALJ found the appellant's expert's opinion "more compelling," and concluded she was entitled to ordinary disability benefits. The Board took exception to the ALJ's decision and reversed it in a nine- page final agency decision. The Board rejected the ALJ's expert credibility findings for several reasons. Among other things, the Board noted that, unlike appellant's neuropsychiatrist, the Board's expert had performed "extensive" objective tests, which did not substantiate the claimed disability. The Board further highlighted a report from a non-testifying Florida clinical neuropsychologist, who examined appellant in October 2022 and detected "an exaggeration of psychological distress." The Board found its own expert's opinion finding no disability was "entitled to greater weight" because it was "based on objective testing and was consistent with the treatment records." Before us, appellant argues the Board failed to give sufficient deference to the ALJ's role as fact finder and her first-hand opportunity to have evaluated the credibility of the competing experts. Appellant contends the final agency decision is arbitrary and capricious, and unfairly rejects the substantial credible evidence in the record supportive of the ALJ's findings of proven disability. The A-3749-24 6 Board contends that we must defer to its expertise, and that the final agency decision recited adequate reasons for overturning the ALJ's determination. We review these arguments cognizant of several principles. "Our review of a pension board's decision in the fact sensitive matter of disability retirement benefits is limited." Rooth v. Bd. of Trs., Pub. Emps.' Ret. Sys., 472 N.J. Super. 357 , 364 (App. Div. 2022) (citing Allstars Auto Grp., Inc. v. N.J. Motor Vehicle Comm'n, 234 N.J. 150, 157 (2018)). "PERS and other pension agencies are owed deference in their implementation of the retirement benefits statute." Ibid. (citing Russo v. Bd. of Trs., Police and Firemen's Ret. Sys., 206 N.J. 14, 27 (2011)). We are also mindful that traditionally, "an appellate court reviews agency decisions under an arbitrary and capricious standard." Zimmerman v. Sussex Cnty. Educ. Servs. Comm'n, 237 N.J. 465, 475 (2019). "In order to reverse an agency's judgment, an appellate court must find the agency's decision to be 'arbitrary, capricious, or unreasonable, or [ ] not supported by substantial credible evidence in the record as a whole.'" In re Stallworth, 208 N.J. 182, 194 (2011) (quoting Henry v. Rahway State Prison, 81 N.J. 571, 579-80 (1980)). "The burden of demonstrating that the agency's action was arbitrary, capricious A-3749-24 7 or unreasonable rests upon the [party] challenging the administrative action. " In re Arenas, 385 N.J. Super. 440, 443-44 (App. Div. 2006). That said, it also has been long recognized that when a contested case is submitted for a hearing, the agency must review the record submitted by the ALJ and give attentive consideration to the ALJ's initial decision. N.J. Dep't of Pub. Advocate v. N.J. Bd. of Pub. Utilities, 189 N.J. Super. 491, 506 (App. Div. 1983). The agency head remains the primary factfinder and maintains the ultimate authority to reject or modify findings of fact, conclusions of law, or interpretations of agency policy. Id. at 507 ; see also N.J.S.A. 52:14B-10(c); N.J.A.C. 1:1-18.6(b). Nonetheless, ALJs are not mere conduits for transmitting evidence to the agency head, and they should not be considered "second-tier players or hold an inferior status as factfinders." In re Hendrickson, 235 N.J. 145, 160 (2018). Consequently, when, as here, an agency strays from the factual findings of an ALJ, we need not accord the agency the level of deference we ordinarily recognize in reviewing final administrative decisions, although we are mindful of the agency's greater latitude with regard to the testimony of expert witnesses as opposed to lay witnesses. See N.J.S.A. 52:14B-10(c). Applying these principles here, we reverse the Board's final agency decision and order the reinstatement of the ALJ's initial decision. Although we A-3749-24 8 respect the Board's role in administering the PERS pension program, the Board's final agency decision in this case did not adequately justify its total rejection of the ALJ's detailed findings. Among other things, the Board unduly faulted the ALJ's credibility findings because appellant's neuropsychologist, unlike the Board's expert, did not administer psychological tests to confirm his diagnosis of MCS. The Board's final agency decision does not, however, discuss the neuropsychologist's testimony that MCS is "largely considered a clinical diagnosis," and that "testing in this context is not absolutely necessary to derive at a conclusion." The neuropsychologist did acknowledge that he had considered the various testing of appellant conducted by other professionals, and found no need to administer such tests himself. 4 The Board also appears to have placed strong reliance on comments within a report of the non-testifying neuropsychologist who examined appellant in October 2022, which stated that "[o]n the Psychological portion of the assessment, [appellant's] response pattern suggests exaggeration of 4 In this regard, we note the record includes a January 2021 report of a clinical neuropsychologist who conducted a mental status evaluation of appellant (apparently for a worker's compensation claim) and tested her cognitive abilities; he concluded that the results of the examination were "consistent with the appellant's allegations." A-3749-24 9 psychological distress." That examiner concluded that "[appellant's] current level of cognitive functioning is at expected levels of functioning overall" with "one possible exception to intact cognitive functioning: (a) visual memory." The examiner added a caveat that "[b]ased on the findings, [appellant's] current difficulties within visual memory are not clinically significant to qualify for a diagnosis at this time. As such, no diagnosis will be provided at this time ." (emphasis added). No other report in the record makes a conclusive diagnosis of exaggeration or symptom magnification, although the Board's testifying expert did opine that appellant's examination did not corroborate her subjective complaints. In addition, the ALJ had the opportunity to hear the testimony of appellant herself and evaluate the veracity of her contentions. Given this mixed record with competing opinions, the ALJ was in a unique position to consider the evidence firsthand and weigh the credibility of appellant's board-certified neuropsychiatrist against that of the agency's own testifying expert, who is neither a physician nor board-certified, nor as experienced with MCS. In the circumstances presented, the agency failed to justify sufficiently its rejection of the factual findings of the ALJ. We accordingly reverse the final agency decision. A-3749-24 10