Monday, February 16, 2015

Seven more people may have gotten improper pension benefits


Another seven retired Scranton nonuniform employees may have received $408,550 double pension benefits improperly, a Sunday Times investigation found.

It is the second time in less than a month that enhanced benefits included in a 2002 retirement incentive have come under question. The pension board is already investigating whether six retirees were improperly awarded the perk, which the newspaper found totaled more than $475,00 over 12 years.

The newspaper’s latest finding involves employees who retired in 2007, and got the same deal granted to the 2002 retirees, which doubled their pensions and allowed them to retain health care coverage. That decision was based on a 2006 court ruling in a case filed by retired clerical worker Joseph Schimes.

Initially, the pension board determined Mr. Schimes was ineligible because he only had 21 years of service as of 2002. The incentive required an employee have 25 years to qualify. Mr. Schimes argued the union contract allowed him to buy up to 10 years of service which would make him eligible. A Lackawanna County judge agreed and ordered the board to pay him the benefits. A state appellate court upheld that ruling in December 2006.

In January 2007, the pension board determined the Schimes ruling meant eight other employees were also entitled to the perk because they were “similarly situated” to Mr. Schimes.

His case differs from the other retirees, however.

Records show that of the eight people approved in 2007, seven appear to have had 25 years or more of service as of Dec. 31, 2002. That means they were eligible to take the perk then, but opted not to retire. Because they were eligible, their circumstances are not similar to Mr. Schimes’, and therefore the ruling in his case should not have applied to them, the newspaper found. Told of the newspaper’s findings, attorney Larry Durkin, the pension board solicitor, said the board will investigate the matter. He said he could not comment further because he has not reviewed the documents.

“I will let them know about it and we will go from there,” he said.

It is not clear what steps the 2007 board took to determine who was eligible under the Schimes case.

Pension board minutes from the Jan. 24, 2007 meeting state only that the board “recognizes there are other employees who are similarly situated” to Mr. Schimes. The solicitor at the time, Mike Savitsky,told the board that it was his opinion that “anyone who was under age 55 who had the time would be able to qualify,” according to the meeting minutes.

At a special meeting held five days later, the board voted to send letters to five people it believed were impacted by the Schimes ruling. Three — Janice Gilhooley, Maureen Biglin and Kathleen Ruane — opted to retire under the offer. The other two, John Hazzouri and Mary Ann Kitlas, declined. Three months later, the board approved another five workers from the Department of Public Works, who are part of the non-uniform pension plan, for the enhanced benefits — Tom Lavin, Charles Miller, Joseph Nagy, George Pettinato and John Boyd.

The newspaper found that Mr. Boyd had 19 years of service as of 2002, so he would not have qualified then for the retirement incentive offer and would fall under Mr. Schimes’ case. The other employees each had 25 to 29 years of service.

In an interview Friday, Mr. Schimes, 63, of Old Forge, said he warned the 2007 pension board members they were improperly using his case to award the benefits to the other people because their circumstances differed. 

He said he raised several issues, including that none of the people the board identified had applied to retire in 2002 as he did. His protests were ignored, however.

“I asked Mike Savitsky, ‘Do you have copies of their pension applications in December 2002?’ He said ‘No.’ I said ‘how can you extend the deadline unilaterally just because you feel like it?’” Mr. Schimes said.

Mr. Savitsky did not respond to phone messages or a detailed email seeking an explanation of how eligibility was determined.

Eileen Hurchick, president of the pension board in 2007, declined to comment, referring all questions to Mr. Durkin.

Contacted Friday, Ms. Ruane confirmed she was eligible for the enhanced retirement benefit in 2002, but chose not to take it.

“I was young and wasn’t ready to leave yet so I just chose not to take it at that time. I would have had to have gotten another job somewhere else,” she said.

Ms. Ruane said she did not plan to retire in 2007 either, but when the board contacted her and notified her she qualified for the enhanced benefit, she decided to take it.

“I didn’t apply. They were the ones that notified me,” she said. “When the opportunity came up again, I thought better of it because of the benefits.”

Mr. Schimes said he found it unusual that the board, on its own, opted to contact the employees and notify them of the benefit since it was under no obligation to do so.

“Normally when you retire, you make the decision to retire. Someone does not come ask you to retire,” he said.

Mr. Schimes said he did not want to retire either, but he had no choice because his wife was seriously ill at the time and he needed to ensure he would keep his medical coverage. He had to fight in the courts for five years to win his benefits, and said he thinks it is unfair others were included.

“They allowed these people to continue to work and earn their full salary for five years, then they turn around and gave them the same pension they gave me,” he said.

It is unclear what action to board could take should it determine excess benefits were improperly awarded.

The city code allows the pension board to alter a retiree’s benefits if an error was made in calculating the amount of the benefit. Whether the board will seek to do that remains to be seen.

City controller Roseann Novembrino, who sits on the pension board, said she could not comment because the case may result in litigation. Attempts to reach other current board members were unsuccessful.
Mr. Schimes said he does not fault the 2007 retirees.

“These are lay people. They’re not going to take time to review this stuff. They were only going by what they were told by someone in a position of authority,” he said.

Still, he believes the board is obligated to stop any excess payments going forward.

“There’s no reason for them to get the extra benefits. You can’t force the government to do something that is wrong,” he said.


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