HB-4131, As Passed House, May 23, 2017

HB-4131, As Passed Senate, May 18, 2017

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 4131

A bill to amend 1994 PA 350, entitled

"Public employee retirement benefits forfeiture act,"

by amending sections 2, 3, 4, and 5 (MCL 38.2702, 38.2703, 38.2704,

and 38.2705), sections 2, 4, and 5 as amended by 1996 PA 467, and

by adding section 4a.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 2. As used in this act:

(a) "Felony arising out of his or her service as a public

employee" means 1 or more of the following:

(i) A felony resulting from the misuse of public funds.

(ii) A felony resulting from the receipt of a bribe or other

financial benefit in that ~~person's~~ individual's capacity as a

public employee.

(b) "Member" means a member, vested former member, or deferred

member, or participant of a retirement system.

with a retirement benefit payable from a retirement system.

(d) "Retirement benefit" means an annuity, a retirement

allowance, a pension, a benefit from employer contributions to a

defined contribution plan, an optional benefit, a postretirement

benefit, and any other right accrued or accruing to a member under

a retirement system. Retirement benefit does not include health

benefits provided to a retirant or his or her beneficiaries by a

retirement system.

(e) "Retirement system" means a public employee retirement

system established by this state or a political subdivision of this

state.

Sec. 3. A member or retirant who, before the effective date of

the amendatory act that added section 4a, is convicted of or ~~who~~

enters a nolo contendere plea accepted by a court for a felony

arising out of his or her service as a public employee is

considered to have breached the public trust and may have his or

her rights to an otherwise vested retirement benefit and all

accumulated employer contributions, including earnings on the

employer contributions, standing to that ~~person's~~ individual's

credit in the retirement system forfeited as provided in this act.

A member or retirant who, on or after the effective date of the

amendatory act that added section 4a, is convicted of or enters a

nolo contendere plea accepted by a court for a felony arising out

of his or her service as a public employee is considered to have

breached the public trust and must have his or her rights to an

otherwise vested retirement benefit and all accumulated employer

contributions, including earnings on the employer contributions,

standing to that individual's credit in the retirement system

forfeited as provided in this act. This act applies only to the

retirement system of which the ~~person~~ individual was a member or

retirant at the time the felony was committed and only to the

retirement system established by the entity affected by the felony.

Sec. 4. (1) If a member or retirant, before the effective date

of the amendatory act that added section 4a, is convicted of or

enters a nolo contendere plea accepted by the court for a felony

arising out of his or her service as a public employee, the court

may order forfeiture as provided in this section. If a member or

retirant, on or after the effective date of the amendatory act that

added section 4a, is convicted of or enters a nolo contendere plea

accepted by the court for a felony arising out of his or her

service as a public employee, the court must order forfeiture as

provided in this section. If a court orders forfeiture under this

section, the court shall determine the extent to which a forfeiture

under this act affects the vested status of the member or retirant

under the terms of the retirement system. An order ~~shall~~ under this

section must contain all of the following, as applicable:

(a) The portion of the member's or retirant's retirement

benefit under a retirement system established by that ~~person's~~

individual's employer at the time the act or acts that resulted in

the felony were committed that accrued to ~~that~~ the member or

retirant on or after the date the first act that resulted in the

felony was committed is forfeited.

(b) The member's or retirant's accumulated contributions

standing to that ~~person's~~ individual's credit in the individual

account established for that purpose in the retirement system ~~shall~~

must be refunded to the member or retirant.

employer contributions to a defined contribution plan forfeited

under subdivision (a), the retirement system shall pay to an

individual, if any, who would otherwise be a beneficiary of the

member or retirant whose retirement benefit is being forfeited

under this act an actuarially equivalent monthly retirement

allowance at the age ~~that~~ the member or retirant would have become

eligible for unreduced retirement benefits under that retirement

system.

(d) The retirement system shall provide hospitalization and

medical coverage insurance to the member or retirant whose

retirement benefit is being forfeited under this act and to his or

her beneficiaries in the same manner and under the same

restrictions as is provided to other retirants and beneficiaries of

that retirement system.

(2) If a court enters an order described in subsection (1),

the clerk of the court shall deliver the order to the retirement

system.

Sec. 4a. (1) A retirement benefit subject to forfeiture under

this act may be frozen pursuant to a freezing order issued by the

court on a showing of probable cause that the retirement benefit is

subject to forfeiture.

(2) On an ex parte application by the prosecuting agency, the

court may determine ex parte whether there is probable cause to

believe that a member's or retirant's retirement benefit is subject

to forfeiture under this act and that notice to the member or

retirant before a freezing of the retirement benefit would cause

the loss of the retirement benefit subject to forfeiture under this

act. If the court finds that there is probable cause to believe

that the retirement benefit is subject to forfeiture and to believe

that prior notice would cause loss of the retirement benefit, the

court shall issue a freezing order freezing the retirement benefit.

(3) If a court enters a freezing order under this section, the

clerk of the court shall deliver the freezing order to the

retirement system.

(4) As used in this section, "prosecuting agency" means the

attorney general of this state, or his or her designee, or the

prosecuting attorney of a county, or his or her designee.

Sec. 5. (1) The retirement system shall comply with an order

of the court described in section 4 or 4a. The retirement system

shall not pay to a member or retirant whose retirement benefit is

forfeited or frozen under this act any retirement benefits on or

after the day the governing body of the retirement system receives

the order of the court under section 4 or 4a.

(2) A retirement system shall comply with any subsequent

orders of a court based ~~upon~~ on an appeal of an order previously

submitted to the retirement system under this act.

(3) A retirement system that complies with a court order under

this act is released and discharged from any ~~and all~~ liability

pertaining to retirement benefits arising on account of the former