G.A. and D.D. Sandusky v. PA State Employees' Retirement Board
127 A.3d 34
| Pa. Commw. Ct. | 2015Background
- Gerald Sandusky was a long‑time Penn State coach who retired June 29, 1999, then received a signed "Retirement Perquisites" agreement (lump sum $168,000, lifetime tickets, office/access, collaborative outreach commitments) and was rehired for a 95‑day emergency term to finish the 1999 season.
- After retirement he worked full‑time for his nonprofit, The Second Mile, ran camps through his private company, and accepted a few speaking engagements for which Penn State paid him separately.
- In 2012 Sandusky was convicted of sexual offenses committed between 2005–2008; SERS notified him that his pension and his wife's derivative benefit were forfeited under the Pension Forfeiture Act because he allegedly was a Penn State ("school") employee during the relevant period.
- An administrative hearing officer found Sandusky was not a Penn State employee after 1999 (lump sum was a severance payment; benefits consistent with emeritus status; work was for The Second Mile) and recommended reinstatement of pension.
- The State Employees’ Retirement Board reversed, concluding the Agreement and ongoing benefits constituted "regular remuneration" and an employment relationship; the Commonwealth Court reversed the Board, reinstated the pension, and remanded to calculate interest.
Issues
| Issue | Sandusky's Argument | Retirement Board's Argument | Held |
|---|---|---|---|
| Whether Sandusky was a "school employee" after 9/13/2004 for Pension Forfeiture Act purposes | He was not — post‑1999 payments were severance/fringe/emeritus perqs and his post‑1999 work was for The Second Mile (independent), not PSU | The Retirement Perquisites Agreement plus ongoing payments/benefits/ticket access and collaborative promotion of PSU created a continuing employee relationship and regular remuneration | Sandusky was not a school employee after 1999; Pension Forfeiture Act did not apply (reversal) |
| Whether the $168,000 lump sum was "regular remuneration" or a severance payment | It was a severance/non‑regular payment tied to retirement and excluded from "regular remuneration" | It was an advance/payment for ongoing outreach services and thus remuneration for employment | Lump sum is a severance payment (prima facie) and not regular remuneration; excluded |
| Whether office, facility access, and tickets constituted "regular remuneration" | Those were customary emeritus privileges or donor‑relation perks, not proof of paid employment | They were valuable consideration provided in exchange for ongoing services and thus part of remuneration | Those perks did not show regular remuneration or an employment relationship; Board erred in equating "valuable consideration" with "regular remuneration" |
| Whether interest is owing on wrongfully withheld pension benefits | If benefits reinstated, Sandusky sought interest | Board argued no statutory contractual interest under SERS; contested common‑law interest | Common‑law interest awarded at legal rate (6%) because withholding was wrongful and no statute mandated denial; remand to compute interest |
Key Cases Cited
- Zimmerman v. Public School Employees’ Retirement Board, 522 A.2d 43 (Pa. 1987) (ten‑factor test to distinguish employee vs. independent contractor)
- Christiana v. Public School Employees’ Retirement Board, 669 A.2d 940 (Pa. 1996) (definition and exclusion of severance/non‑regular remuneration)
- Dowler v. Public School Employes’ Retirement Board, 620 A.2d 639 (Pa. Cmwlth. 1993) (payments tied to agreed retirement are prima facie severance)
- Golebieski v. Public School Employees’ Retirement Board, 636 A.2d 268 (Pa. Cmwlth. 1993) (acts benefiting a school do not alone make one a school employee)
- Cianfrani v. State Employees’ Retirement Board, 479 A.2d 468 (Pa. 1984) (Cianfrani II) (Retirement Code construed as contractual; limits on statutory interest)
- Braig v. Pennsylvania State Employees’ Retirement Board, 682 A.2d 881 (Pa. Cmwlth. 1996) (common‑law interest may be awarded where withholding was wrongful and not mandated by law)