Retirement for Disability – Latest Developments in CalPERS’ Requirements

Category: Special Bulletins
Date: Apr 28, 2017 05:15 PM
Retirement for Disability – Latest Developments in CalPERS’ Requirements

Retirement for disability can already be a cumbersome and confusing process. The California Public Employees’ Retirement System’s (CalPERS) new and additional mandates – as set forth in its March 30, 2017 Circular Letter – raises the ante. The Letter informs all contracting public agencies of the following six requirements pertaining to the disability retirement of local safety members:

  1. Submission of a disability retirement application;
  2. An eligibility determination when a member is facing pending discipline or was terminated for cause;
  3. Information that must be included in a resolution or certification of delegate in support of an application for disability retirement;
  4. Determination of when a disability is “extended and uncertain” in duration;
  5. Requirement of competent medical evidence of continuous disability;
  6. Medical qualifications for disability retirement; and
  7. Disability re-evaluation procedures for members under the minimum age for service retirement.

While local agencies are likely familiar with some of the requirements described in the Letter, we highlight here those stated requirements that are likely new or little known, to local agencies.

CalPERS recently announced that it will be conducting an audit into the industrial disability retirement (IDR) process for 60 contracting agencies. It is our understanding that the scope of the audit will include requesting medical records to assess the validity of IDR claims and seek disclosure of safety officer personnel records to ensure legal compliance. In addition, CalPERS indicates it will audit to see whether members granted IDR who are younger than 50 are being re-evaluated to determine if the member is still eligible for IDR.   

Duty to Provide Relevant Personnel and Medical Records

According to CalPERS “[a]n employer must forward all relevant personnel documents and medical records to CalPERS and obtain CalPERS’ determination that the member is eligible to apply for disability retirement before an employer starts the process of a disability determination for any of the following circumstances:

  • Disciplinary process underway prior to the member’s separation from employment.
  • The member was terminated for cause.
  • The member resigned in lieu of termination.
  • The member signed an agreement to waive his or her reinstatement right as part of a legal settlement (i.e., Employment Reinstatement Waiver).
  • The member has been convicted of or is being investigated for a work-related felony.

CalPERS relies on Government Code sections 20128, 20221 and 20223 for the proposition that CalPERS may require a member (and its employer) to provide information it deems necessary to determine entitlement to benefits and information affecting his or her status as a member.

Evidence of Continuous Disability

A qualifying disability must be permanent or “extended and uncertain.” CalPERS indicates that extended and uncertain means the disability will last at least twelve consecutive months from the date of the application for a disability retirement.  In the past, CalPERS used an unofficial six-month measurement.

CalPERS will require medical records of the member’s physical or mental incapacity to perform the duties of their position from one year before their last day of physical work to the present in order to establish a continuous disability.  There must be medical evidence from the last day of physical work to the present, with no gaps in the medical treatment of more than six months.

Confirmation of a Permanent and Stationary Date for Industrial Disability Retirement

In cases of an industrial disability retirement preceded by a workers’ compensation claim wherein there is a dispute concerning the date on which the member became permanent and stationary, the employer or member must now make a “Petition for Finding of Fact” before the Workers’ Compensation Appeals Board (WCAB) in which the WCAB must certify the date on which the member’s condition became permanent and stationary.  This date then becomes the effective date of the member’s retirement.

The problem will inevitably arise, however, that members who otherwise qualify for an industrial disability retirement may be denied an IDR if the member has not been found permanent and stationary by the qualified or agreed-upon medical examiner.  In some cases, a member’s workers compensation case may go on for years.  This means employers may find themselves providing advanced disability pension payments for much greater periods of time.  

Duty to Re-Evaluate Disability Retirees

The Circular Letter also requires that a contracting agency conducts regular re-evaluations of determinations for disability retirees who are under voluntary service retirement age. The purpose “is to verify whether the recipient remains physically or mentally disabled from the position which they disability retired for the condition(s) that they were approved for.” CalPERS recommends gathering the following information:

  • Is the retiree currently employed?

- What type of work is he/she doing? Is he/she working within his/her work restrictions?

- Obtain a duty statement and physical requirements of the job for comparison.

- When an independent medical examination is deemed necessary, submit these documents for the examiner’s review.

  • Is the retiree currently being treated for his/her disability?

- If so, obtain a list of his/her treating physician(s) and contact information, and request his/her medical records since retirement.

  • If the retiree is not currently being treated or the medical records received from the treating physician do not substantiate a continuous disability, the member should be evaluated by an Independent Medical Examiner.
  • If indicated, consider surveillance.

To support requiring re-evaluation, CalPERS relies on Government Code section 21192, which gives authority to the employer from whose employment a person was retired to require any recipient of a disability retirement allowance under the minimum age for voluntary retirement for service applicable to members of his or her class to undergo a medical examination.

How This Affects Your Agency

A. Disclosure of Peace Officer Personnel Records

CalPERS has and will continue to demand the disclosure of peace officer personnel records to determine a member’s eligibility for disability retirement in the event the officer was terminated or discipline is pending. But Penal Code section 832.7 establishes that peace officer personnel records (or information obtained therefrom) are confidential and may not be disclosed in any criminal or civil proceeding without the peace officers written consent or a Pitchess motion: the discovery procedure required to access peace officer personnel records. (See People v. Superior Court (Johnson) (2015) 61 Cal.4th 696 [California Supreme Court held that even prosecutors must comply with the Pitchess procedures if they seek information from confidential peace officer personnel records]). Thus, there is a potential conflict between CalPERS’ right to these records under the Government Code and the prescribed discovery procedures required under Pitchess.

Agencies should avoid unilaterally disclosing peace officer records without first notifying the officer concerning the request and obtaining his or her consent/waiver in writing. If the officer decides not to provide consent to disclosure, the agency should consult with legal counsel.

B. Disclosure of Medical Records

Confidentiality of Medical Information Act

Under California’s Confidentiality of Medical Information Act (CMIA), an employer is generally prohibited from using, disclosing, or knowingly permitting its employees or agents to use or disclose medical information pertaining to an employee unless the employer first obtains written authorization from the employee. There are several important exceptions to the requirement for written authorization. For example, medical information may be used in a lawsuit, arbitration, grievance, or other claim or challenge to which the employer and employee are parties and in which the employee has placed in issue his or her medical history, mental or physical condition, or treatment. In addition, medical information may be used exclusively for purposes of administering and maintaining employee benefit plans, including healthcare plans and plans providing short-term and long-term disability income, and workers’ compensation. Accordingly, when an employee applies for disability retirement and CalPERS is administering disability benefits for the employee, an authorization may not be required under the CMIA. Nonetheless, agencies should obtain consent with a written waiver and authorization for release of the medical records.

Health Insurance Portability and Accountability Act (HIPAA)

HIPAA’s privacy rule applies to covered entities: health plans, health care clearinghouses or health care providers conducting certain health care transactions electronically. Also affected by HIPAA are hybrid entities whose business activities include both covered and non-covered functions and health plan sponsors.

CalPERS maintains that member consent and a HIPAA release are not required because it is not a covered agency. However, agencies should be careful not to unilaterally disclose medical records to CalPERS without first notifying the employee and obtaining written consent.

C. Duty to Re-Evaluate Retirees

CalPERS will require all contracting agencies to periodically re-evaluate retirees under the voluntary service retirement age of 50 years old. CalPERS justifies this new requirement based on the combination of Government Code sections 21192 and 20221. Section 21192 gives authority to the board or governing body of the employer from whose employment a person was retired to require any recipient of a disability retirement allowance under the minimum age for voluntary retirement for service applicable to members of his or her class to undergo a medical examination. Section 20221 provides that each employer must provide CalPERS with any information concerning any member that CalPERS requires in the administration of the System.

 If an agency chooses not to re-evaluate, CalPERS has other recourse available: it can re-evaluate a retiree on its own under Government Code sections 20128 and 20223.

Although CalPERS asks agencies to re-evaluate disability retirees, neither CalPERS nor the Government Code requires the employer to hire back the retiree if he/she is found to no longer qualify for a disability retirement.

The issues presented here are not exhaustive so please consult with legal counsel as to the appropriate response to CalPERS’ circular letter and any pending or future related audit.

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