Determining Federal Crimes that Trigger State Pension Forfeiture

O’Neill v. State Employees’ Retirement System, 2020 WL 6129169 (Pa. Cmwlth. 2020) (unreported), allocatur granted Aug. 4, 2021, appeal docket 25 EAP 2021

On November 14, 2007, Joseph J. O’Neill became a member of the State Employees’ Retirement System (SERS) by virtue of his commission that same day as a judge on the Municipal Court of Philadelphia County. On November 16, 2011, one of O’Neill’s fellow judges on the court called O’Neill to ask that O’Neill treat favorably a defendant scheduled to appear in O’Neill’s courtroom for a hearing that afternoon. About 10 months later, agents from the Federal Bureau of Investigation questioned O’Neill about that phone call, asking whether anyone contacted him prior to the hearing to request that he rule in favor of any particular party. O’Neill denied that anyone had asked him for a favor and said that nobody asked him to fix the hearing.

On March 11, 2016, in the United States District Court for the Eastern District of Pennsylvania, O’Neill was charged with two counts of making false statements to federal agents, a violation of 18 U.S.C. § 1001, which provides, in relevant part:

“[W]hoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully—

    • falsifies, conceals, or covers up by trick, scheme, or device a material fact;
    • makes any materially false, fictitious, or fraudulent statement or representation; or
    • makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry;

shall be fined under this title [or] imprisoned…”

On May 26, 2016, O’Neill pled guilty to both counts, thereby terminating his commission as a judge on the Municipal Court of Philadelphia County.

Shortly thereafter, O’Neill applied to SERS for his pension benefit. By letter dated June 16, 2016, SERS informed O’Neill that pursuant to Act 140 of 1978, also known as the Public Employee Pension Forfeiture Act, he had forfeited his pension benefit as of May 26, 2016—the date of his guilty plea. He would be eligible to receive only the money he had previously contributed to the pension fund, less any fines or restitution owed.

Act 140 prohibits, inter alia, public officials and employees from receiving pension benefits after pleading guilty “to any crime related to public office or public employment[,]” including 18 Pa.C.S. § 4906, which criminalizes (1) intentionally and falsely incriminating another person to law enforcement and (2) making false reports to law enforcement about incidents that did not occur or about which the reporter has no information. Act 140 also bars such pension disbursements when the criminal offense in question is “substantially the same” as 18 Pa.C.S. § 4906, including federal offenses. SERS concluded that 18 U.S.C. § 1001—the crime for which O’Neill pled guilty—was substantially the same as 18 Pa.C.S. § 4906.

O’Neill timely appealed the determination to the SERS Board, at which points SERS filed an Answer and a Motion to Dismiss based on Merlino v. Philadelphia Board of Pensions and Retirement, 916 A.2d 1231 (Pa. Cmwlth. 2007). Salvatore Merlino became a member of a Philadelphia pension plan in 1981, when he was sworn-in as a municipal police officer. While working as an officer in 2002, he seized two boxes that he suspected contained illegal drugs. He claimed to another officer that a drug identification dog indicated that the boxes contained drugs, an assertion that led to a search warrant. The U.S. Attorney’s office eventually prosecuted the case, at which point Merlino asserted to the prosecuting attorney that the dog had, indeed, indicated the presence of drugs in the boxes. His assertion was later discovered to be false, which led to the dismissal of the indictment. In 2004 Merlino pled guilty to making a false statement to a federal agency under Section 1001. His pension was forfeited, he challenged the forfeiture, and the Commonwealth Court eventually ruled that Section 1001 and Section 4906 are substantially the same for purposes of Act 140 because both require that a defendant knowingly make a false statement to law enforcement. 

The SERS Board denied SERS’s Motion to Dismiss and directed that the appeal proceed to a hearing. On August 6, 2018, the hearing officer found Merlino to be controlling and, therefore, recommended that the Board affirm the SERS determination. On September 3, 2019, the Board confirmed the May 26, 2016, forfeiture of O’Neill’s pension benefit. He appealed the decision to the Commonwealth Court.

Before the Commonwealth Court, O’Neill argued that the Board erred in three ways. First, he argued that the elements of Section 4906 and Section 1001 are different and that, therefore, the offenses cannot be considered substantially the same under Act 140. The “false incrimination” offense under Section 4906, he argued, requires showing that the defendant knowingly gave false information to law enforcement with the intent to implicate another person. Similarly, the “false report” offense under Section 4906 requires showing that the defendant either reported an incident that the defendant knew nothing about or falsely reported an incident knowing that the incident did not actually occur, O’Neill argued. He asserted that due to the differences in the elements of the two offenses, conduct that violates Section 1001 does not necessarily violate Section 4906 and, thus, the two offences cannot be considered substantially the same under Act 140.

In response, the SERS Board argued that the elements of an offense do not have to be identical to the elements of Section 4906 in order for the two offenses to be considered substantially the same under Act 140. Instead, the SERS Board argued, such similarity can exist so long as the two crimes target the same behavior. Citing Merlino, the SERS Board concluded that Section 4906 and Section 1001 are substantially the same under Act 140 because both the elements and the mens rea of both offenses make it illegal to knowingly lie to law enforcement.

The Commonwealth Court sided with the SERS Board. The Court had previously ruled that determining whether a federal crime is “substantially the same” as a forfeiture-triggering crime under Act 140 requires comparing the elements and mens rea of the two crimes. Roche v. 14 State Employees’ Retirement Board, 731 A.2d 640 (Pa. Cmwlth. 1999). Later, in Merlino, the Commonwealth Court applied the Roche standard, finding that Section 1001 is substantially the same as Section 4906 for purposes of Act 140. It later applied the Roche-Merlino precedent in Reilly v. Luzerne County Retirement Board (Pa. Cmwlth., No. 2335 C.D. 2013, filed September 29, 2014). Robert Reilly was a member of the Luzerne County Employees’ Retirement System by virtue of his role as the Luzerne County Clerk of Courts, an office to which he was elected. The FBI, investigating campaign contributions Reilly had received, asked him if he had received any money from a specific donor aside from a $200 contribution Reilly had already acknowledged. Reilly told the FBI he had received nothing more from the donor, despite knowing he had received at least three other payments from the donor. He subsequently pled guilty to violating Section 1001 and the Luzerne County Employees’ Retirement System Board voted to deny Reilly’s pension benefit. Reilly challenged the denial all the way to the Commonwealth Court, where he attempted to distinguish Merlino by asserting that the conduct that led to him being charged with violating Section 1001 did not violate Section 4906. He argued that he did not try to implicate another individual, did not try to report an offense, and did not furnish information concerning an offense, nor did he have any information concerning any offense. The Commonwealth Court rejected this argument, explaining that the particular facts underlying the federal conviction are irrelevant to determining whether a federal crime and state crime are substantially the same for Act 140 purposes. Instead, courts must compare the elements of the two crimes, including the required mens rea, to see if they are substantially similar. The Commonwealth Court also concluded that it was bound by Merlino. In a concurring opinion, Judge Patricia McCullough agreed that Merlino was controlling but explained that, were it not so, she would have sided with Reilly because he had merely denied committing a crime, conduct that does not implicate Section 4906.

Additionally, and relying on Commonwealth Court precedent in Scarantino v. Public School Employees’ Retirement Board, 68 A.3d 375 (Pa. Cmwlth. 2013), the Court explained that Act 140’s use of the phrase “substantially the same” cannot be interpreted to mean “identical.” To interpret the Act in that way would violate the rules of statutory construction. Due to Roche, Merlino, Reilly, and Scarantino, the Commonwealth Court disagreed with O’Neil’s first argument.

O’Neill also argued that that the underlying facts of a petitioner’s federal conviction should be considered when determining whether a federal offense is substantially the same as one of the forfeiture-triggering state crimes enumerated in Act 140. As such, he argued, Merlino is factually distinguishable from his case. To make these arguments, O’Neill relied on Judge McCullough’s concurring opinion in Reilly and on the PA Supreme Court’s citation to Petition of Hughes, 532 A.2d 298 (Pa. 1987), in Shiomos v. State Employees’ Retirement Board, 626 A.2d 158 (Pa. 1993). In Shiomos, the PA Supreme Court addressed a similar problem, determining that a violation of the federal Hobbs Act was substantially similar to a state bribery offense, and, in doing so, cited Hughes, in which the PA Supreme Court considered whether Article II, Section 7 of the Pennsylvania Constitution, which prohibits those who have been convicted of “infamous crimes” from holding public office, should bar the election of a candidate who was convicted of violating the federal Hobbs Act. O’Neill argued that a quote from Hughes—”the facts underlying [the candidate’s] conviction is relevant . . . in considering whether his conviction was for an ‘infamous’ crime within the meaning of Article II, Section 7”—was used to support the Supreme Court’s reasoning in Shiomos and, therefore, that same quote supports his argument that the Commonwealth Court should consider the underlying facts of his conviction and conclude that those facts make his case distinguishable from Merlino. 

The Commonwealth Court disagreed, explaining that there is no precedent to support O’Neill’s argument that the facts underlying a federal conviction must be examined when determining whether a federal crime is substantially the same as one of the forfeiture-triggering state crimes.  The Court explained that Reilly rejects this exact argument and the Supreme Court’s citation to Hughes in Shiomo was done to support its conclusion that a particular Hobbs Act violation is equivalent to a violation of Section 4701—not for the notion that O’Neill articulated.

Finally, O’Neill argued that the SERS Board erred by not properly considering that the PA Supreme Court has not yet held that Sections 1001 and 4906 are substantially the same under Act 140. The Commonwealth Court explained that this argument misunderstands the role of stare decisis. The Court is bound by Merlino and its progeny because those cases have not been overruled by the Supreme Court, nor by an en banc decision of the Commonwealth Court. Crocker v. Workers’ Comp. Appeal Bd. (Ga. Pac. LLC), 225 A.3d 1201, 1210 (Pa. Cmwlth. 2020) (quoting Pries v. Workers’ Comp. Appeal Bd. (Verizon Pa.), 903 A.2d 136, 144 (Pa. Cmwlth. 2006)).

O’Neill appealed the Commonwealth Court’s decision. The Pennsylvania Supreme Court granted his Petition for Allowance of Appeal to consider three questions:

(1) Whether the Commonwealth Court erred in holding that O’Neill forfeited his pension under Act 140 by determining that the federal offense to which he pled guilty, 18 U.S.C. § 1001, was substantially the same as the Pennsylvania state offenses defined in 18 Pa.C.S. §§ 4906(a) and 4906(b).

(2) Whether the Commonwealth Court erred when it relied upon unsound law in Merlino by failing to engage in the proper analysis to factually distinguish Merlino.

(3) Whether the Commonwealth Court erred when it failed to properly consider that the PA Supreme Court has not held that 18 U.S.C. § 1001 is substantially the same as 18 Pa.C.S. § 4906 when it declined to examine the underlying facts of O’Neill’s federal conviction.

For more information, contact Kevin McKeon or Dennis Whitaker.