Could SUNY make the retirement system option for medical residents and interns effective only from July 1, 2003, ignoring their earlier years of state service?

Plain-English summary

Since around 1970, SUNY medical residents and interns had been excluded from the public retirement programs that were generally available to SUNY employees: the SUNY Optional Retirement Program (ORP), the New York State Teachers Retirement System (NYSTRS), and the New York State and Local Employees Retirement System (NYSLERS). In October 2002, the State Comptroller wrote to SUNY taking the view that residents and interns were in fact state employees and therefore mandatory members of NYSLERS to the extent they were not in ORP or NYSTRS. SUNY then decided to offer them the choice of joining ORP, NYSTRS, or NYSLERS, with default placement under the statutes if they failed to elect. SUNY made the offer effective July 1, 2003, even for residents and interns who had begun state service earlier. SUNY and the Comptroller jointly asked the AG whether the prospective-only effective date was valid.

The AG said it was not. The residents' and interns' statutory right to membership ran from the date they commenced state service, not from a date SUNY chose later.

The legal architecture. Since 1976, full-time state employees have been mandatory members of NYSLERS unless they participated in NYSTRS, the State Police and Fire Retirement System, or a New York City public retirement system, or elected an optional retirement program (Retirement and Social Security Law §§ 40(c)(5), 500(b)(2)-(4), 600(a), (b)(2)-(3)). The exception for temporary or provisional employees (§ 40(g) and 2 N.Y.C.R.R. § 302.1, § 324) does not cover full-time residents and interns. The statutory definition of "mandatory member" reaches anyone who "enters the employment of a public employer which participates for such employees in the New York state employees' retirement system in positions in which they shall work full time." There is no carve-out for full-time employees who are also enrolled as students.

The SUNY ORP. Education Law Article 8-b creates the SUNY Optional Retirement Program. The ORP is a defined contribution plan rather than the defined-benefit structure of the state retirement systems; an electing employee contracts directly with one of several insurers. Vesting occurs after one year of service (Education Law § 392(4)). Mandatory contributions come from both the employee and the employer (§ 392). Employees eligible for ORP are those in positions requiring the performance of educational functions in subjects certified by the SUNY Chancellor, including medicine (§ 390(3)). An eligible employee may elect ORP, NYSTRS, NYSLERS, or another public retirement system; if no election is made, the default is NYSTRS (if the NYSTRS Board determines eligibility) or NYSLERS (§ 393(1)(a), (b)).

The effective-date rule. For mandatory members, the effective date of membership in a state retirement system is the date the employee commenced state service. Matter of Oliver v. County of Broome confirmed that principle. Retirement and Social Security Law § 609(c) ties creditable service to active service with a participating employer. The SUNY ORP statutes parallel this: "date of entry into service" determines effectiveness of the election or default (Education Law § 393(1)(a), (b)). Education Law § 393(1)(e) handles the special case where a state employee becomes eligible for ORP because the Chancellor newly certifies the position. For those employees, the election to participate in ORP is effective on the date of election.

Application to the residents. The AG ran the two scenarios. For residents and interns who chose ORP, the AG noted an argument that, because the Chancellor's certification newly brought their positions into ORP eligibility, the participation could begin on the date of election under § 393(1)(e). But for residents and interns who would land in NYSTRS or NYSLERS (whether by election or by default), the membership statutorily began on the date they commenced state service. SUNY's "prospective only as of July 1, 2003" decision didn't match that rule.

The AG flagged the defenses. The statute of limitations might bar some old claims. The doctrine of laches might cut off others where the petitioner unduly delayed in demanding the relief, drawing on Sheerin v. New York Fire Department Pension Funds, McKenzie v. Comptroller, CSEA v. Patchogue-Medford School District, and Devens v. Gokey. But "the offer should not have been prospective only" was a legal conclusion about SUNY's policy decision, not a determination of how each individual claim would resolve.

Currency note

This opinion was issued in 2004. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Why was SUNY's prospective-only effective date a problem?
A: Because the underlying statutory entitlement to mandatory membership in a state retirement system runs from the date the employee commenced state service, not from the date the employer decides to offer the choice. Matter of Oliver v. County of Broome and Retirement and Social Security Law § 609(c) establish that rule.

Q: Are SUNY medical residents and interns "employees" for retirement purposes?
A: Yes. The AG accepted the Comptroller's October 2002 conclusion that residents and interns are state employees and therefore mandatory members of NYSLERS to the extent they are not in another public retirement system or program. The statute defines mandatory members in terms of full-time employment with a participating public employer, with no student exception.

Q: What is the SUNY ORP?
A: A defined contribution plan created by Education Law Article 8-b for SUNY employees in positions requiring the performance of educational functions in certified subject areas. It vests in one year, requires both employee and employer contributions, and gives participants more control over investments and more portability than the defined-benefit state systems.

Q: Could a resident or intern who started before July 1, 2003 claim retroactive membership?
A: The AG said the statutory right existed. Practical recovery would still have to confront timing defenses: the statute of limitations and the doctrine of laches. The AG cited Sheerin and a line of Appellate Division cases recognizing laches as a defense where the claimant unduly delayed in seeking relief.

Q: Did the AG order SUNY to do anything?
A: No. The AG issues opinions, not orders. The opinion told SUNY and the Comptroller that the July 1, 2003 effective date was inconsistent with the residents' and interns' statutory rights. Practical remedy depended on how affected residents and interns asserted their claims and on defenses like laches.

Background and statutory framework

Two parallel statutory schemes intersect here. The Retirement and Social Security Law governs the state retirement systems (NYSLERS and NYSTRS), including mandatory-membership rules under §§ 40(c)(5), 500(b), and 600. The Education Law governs the SUNY ORP under Article 8-b, with election procedures in § 393. The two have to be read together because an ORP-eligible employee can opt out of NYSLERS or NYSTRS by electing the ORP.

The Comptroller's October 2002 letter was the trigger. The Comptroller concluded that residents and interns were full-time state employees, not student-trainees outside the system, and therefore had been wrongly excluded from public retirement membership since approximately 1970. The Comptroller's position followed the broad statutory definitions of mandatory member, which reach all full-time employees of participating employers without a student exception.

SUNY's response was to offer a choice (ORP, NYSTRS, or NYSLERS) with a July 1, 2003 effective date. The AG concluded that the prospective-only date was inconsistent with Retirement and Social Security Law § 609(c) and Matter of Oliver v. County of Broome, which together establish that creditable service begins when state service begins. Education Law § 393(1)(e) preserves a narrower rule for ORP elections triggered by new Chancellor certifications, but does not displace the broader rule for NYSTRS or NYSLERS membership.

The laches and timeliness footnote draws on Sheerin v. New York Fire Department Pension Funds (laches in pension context generally), McKenzie v. Comptroller (Comptroller-specific laches), CSEA v. Patchogue-Medford School District (school district pension), and Devens v. Gokey (older retiree claim case). Those decisions confirm that legal entitlement is not automatic recovery; delay can defeat or limit a remedy.

Citations and references

Statutes:

• Education Law Article 8-b (SUNY ORP)
• Education Law § 390(3) (positions eligible for ORP)
• Education Law § 392 (ORP funding)
• Education Law § 392(4) (one-year vesting)
• Education Law § 393(1)(a), (b) (election or default placement)
• Education Law § 393(1)(e) (effective date for newly certified positions)
• Retirement and Social Security Law § 40(c)(5)
• Retirement and Social Security Law § 40(g) (temporary/provisional exception)
• Retirement and Social Security Law § 500(b)(2), (3), (4)
• Retirement and Social Security Law § 600(a), (b)(2), (3)
• Retirement and Social Security Law § 609(c) (creditable service)

Regulations:

• 2 N.Y.C.R.R. § 302.1
• 2 N.Y.C.R.R. § 324

Cases:

• Matter of Oliver v. County of Broome, 113 A.D.2d 239 (3d Dep't 1985)
• Matter of Sheerin v. New York Fire Dept. Arts. 1 & 1B Pension Funds, 46 N.Y.2d 488 (1979)
• Matter of McKenzie v. Comptroller of State of N.Y., 268 A.D.2d 828 (3d Dep't), lv. denied, 95 N.Y.2d 760 (2000)
• Matter of Civil Serv. Employees Ass'n v. Board of Educ., Patchogue-Medford Union Free Sch. Dist., 239 A.D.2d 415 (2d Dep't 1997)
• Matter of Devens v. Gokey, 12 A.D.2d 135 (4th Dep't), aff'd 10 N.Y.2d 898 (1961)

Prior AG opinion:

• Op. Att'y Gen. No. 91-F2

Source

• Landing page: https://ag.ny.gov/libraries-documents/opinions/opinions-year
• Original PDF: https://ag.ny.gov/sites/default/files/opinions/2004-F2_pw.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

EDUCATION LAW ART. 8-b, §§ 390, 392, 393; RETIREMENT & SOCIAL SECURITY LAW §§ 40(c)(5), 40(g), 500(b), 600; 2 N.Y.C.R.R. §§ 302.1, 324.

SUNY hospital residents and interns, as mandatory members of a public retirement system or program, have a statutory right to retirement participation as of the date they commenced state service.

February 10, 2004

D. Andrew Edwards, Jr.
University Counsel
State University of New York
State University Plaza
Albany, New York 12246

Alan P. Lebowitz
General Counsel
Office of the State Comptroller
110 State Street
Albany, New York 12236

Formal Opinion
No. 2004-F2

Dear Gentlemen:

You have jointly requested the opinion of the Attorney General as to whether the option to join the SUNY Optional Retirement Program ("ORP"), the New York State Teachers Retirement System ("NYSTRS") or the New York State and Local Employees Retirement System ("NYSLERS") can be made effective July 1, 2003 for SUNY medical residents and interns who commenced service prior to that date.

As outlined in your letter and attachment, since approximately 1970, SUNY medical residents and interns were excluded from participation in the public retirement programs and systems otherwise available to SUNY employees, i.e., the SUNY ORP, NYSTRS and NYSLERS. In an October 2002 letter, the Office of the State Comptroller informed SUNY that it considered SUNY medical residents and interns to be state employees and therefore mandatory members of NYSLERS, to the extent they did not participate in the SUNY ORP or NYSTRS. SUNY subsequently determined that it would offer all medical residents and interns currently on the payroll the option of joining ORP or one of the two retirement systems. Pursuant to statute, if the residents and interns fail to make an election, they will be enrolled in NYSTRS (if determined eligible for membership in that system by the NYSTRS Board) or NYSLERS. The option to join or the default enrollment was made effective July 1, 2003, even as to residents and interns who commenced service prior to that date.

BACKGROUND

Since 1976, membership in NYSLERS has been mandatory for all full-time state employees, unless they participate in NYSTRS, the State Police and Fire Retirement System, or a New York City public retirement system, or elect to join an optional retirement program, see Retirement & Social Security Law §§ 40(c)(5), 500(b)(2), (3) and (4), 600(a), (b)(2) and (3), or they serve on a temporary or provisional basis, see Retirement & Social Security Law § 40(g); 2 N.Y.C.R.R. §§ 302.1, 324.2; see generally 2 N.Y.C.R.R. § 324.1. The statutory scheme defines mandatory members as those who "[e]nter the employment of a public employer which participates for such employees in the New York state employees' retirement system in positions in which they shall work full time." Retirement & Social Security Law §§ 500(b)(4), 600(b)(3). There is no exemption for employees of a participating public employer who are also students enrolled with the participating employer.

Optional retirement programs have been created for certain SUNY employees. See Education Law Art. 8-b; see also Education Law Art. 3, Part V (Education Department optional retirement program); Art. 125-A (CUNY optional retirement program). Unlike the state retirement systems, which are defined benefit plans providing fixed pensions determined by the terms of the plan, the SUNY ORP is a defined contribution plan pursuant to which an electing employee enters a contract for retirement benefits with one of the specified insurers; the ORP allows participating employees more control over their contributions and permits greater pension mobility. See Op. Att'y Gen. No. 91-F2. An employee vests in the ORP after one year of service. See Education Law § 392(4). The pension benefit is funded by mandatory employee and employer contributions. See Education Law § 392.

Employees eligible to elect participation in the SUNY ORP are those employed in positions requiring the performance of educational functions in various subject areas, including medicine, as certified by the Chancellor of the State University. Education Law § 390(3). An eligible employee may elect to join the ORP, or NYSTRS, NYSLERS or another public retirement system (consistent with the membership rules applicable to the public retirement systems). See Education Law § 393(1)(a). If an eligible employee fails to make an election, he is deemed to have elected membership in NYSTRS or another public retirement system in which his membership is otherwise required (here, NYSLERS). Id. § 393(1)(b). SUNY has determined that its residents and interns are eligible to elect participation in ORP. According to the statutory scheme, if they do not elect ORP, or fail to make an election, they will be members of NYSTRS (if the NYSTRS Board determines they are eligible for membership in that retirement system) or NYSLERS.

ANALYSIS

You have asked whether SUNY can offer its current residents and interns who commenced service prior to July 1, 2003, participation in the ORP or membership in one of the state retirement systems on a prospective basis as of that date. For the reasons discussed below, we believe that the residents and interns would have a statutory right to retirement membership as of the date they commenced state service and accordingly, as long as they had a valid legal claim for benefits retroactive to that date, retirement participation should not have been offered on a prospective basis only.

By deciding to offer its current residents and interns the option to join ORP, NYSTRS or NYSLERS, SUNY has recognized that the residents and interns are automatically entitled to participate in one of these retirement benefit plans, i.e., that they are mandatory members. See Retirement & Social Security Law §§ 40(c)(5), 500(b)(2) and (4), 600(b)(2) and (3).

As a general principle, the effective date of membership in a state retirement system for a mandatory member is the date the employee commences state service. See Matter of Oliver v. County of Broome, 113 A.D.2d 239, 240 (3d Dep't 1985); see also Retirement and Social Security Law § 609(c) (creditable service is generally active service with a participating employer). The statutes governing the SUNY ORP likewise refer to "date of entry into service" as the date an eligible employee's election or default entry into a retirement system is effective. See Education Law § 393(1)(a), (b).

Education Law § 393(1)(e) governs the effective date for state employees who become eligible to elect the ORP when, inter alia, the position held by such employees is certified by the Chancellor as an eligible position. The election to participate in ORP is then effective on the date of such election. Id. Thus, to the extent the positions of residents and interns have been newly certified by the Chancellor as qualifying for participation in ORP, it could be argued that any residents or interns who now elect ORP commence participation in that program as of the date of their election. Residents and interns who commenced service prior to July 1, 2003, however, would have a statutory right to membership in NYSTRS or NYSLERS as of the date they commenced state service.

Because the residents and interns have a statutory right to retirement participation as of the date they commenced state service, as long as they had an enforceable legal right to retroactive membership at the time the decision to offer prospective participation was made, we believe retirement participation should not have been offered on a prospective basis only. Even assuming a claim for retroactive membership would not be barred by the applicable statute of limitations, the doctrine of laches may apply to defeat such a claim or limit the available remedy where the petitioner has unduly delayed in demanding the relief sought. See, e.g., Matter of Sheerin v. New York Fire Dept. Arts. 1 & 1B Pension Funds, 46 N.Y.2d 488, 495-96 (1979); Matter of McKenzie v. Comptroller of State of N.Y., 268 A.D.2d 828, 829 (3d Dep't), lv. denied, 95 N.Y.2d 760 (2000); Matter of Civil Serv. Employees Ass'n v. Board of Educ., Patchogue-Medford Union Free Sch. Dist., 239 A.D.2d 415, 416 (2d Dep't 1997); Matter of Devens v. Gokey, 12 A.D.2d 135, 137 (4th Dep't), aff'd 10 N.Y.2d 898 (1961).

Very truly yours,

ELIOT SPITZER
Attorney General