An appeals court has ruled that the city acted wrongly in terminating the disability pension of a former police officer who was vilified when he was found to be doing construction work after he retired and then tested positive for cocaine.

James J. Seiferheld “has suffered an eight-year ordeal without pension or medical benefits,” said his attorney, Robert Ungaro. “He has seen his character and actions unfairly portrayed so as to advance a political agenda antithetical to civil-service pensions.”

Ice-Related Disability

Mr. Seiferheld was granted a disability pension by the Police Pension Fund in 2004 after falling “on ice and snow, which caused various neck and shoulder injuries that prevented him from performing police duty,” according the unanimous decision March 12 by a five-judge panel of the state Appellate Division. He had been a police officer for 11 years. The amount of the pension has been reported at $4,364 a month.

Shortly after he was granted the pension, the NYPD received information that Mr. Seiferheld was working elsewhere, and an investigation “showed that Seiferheld was performing construction work on a daily basis without apparent difficulty,” the opinion said.

Mr. Ungaro said that disability pensions are for officers who can no longer perform police duties and do not restrict them from taking other jobs. “He was hanging vinyl siding, which is hardly the equivalent of making an arrest,” the attorney said in an interview. The city said Mr. Seiferheld was filmed lifting heavy materials above his head.

In September 2006, the Pension Fund medical board reported that Mr. Seiferheld “seems to have made a remarkable recovery.” The board of trustees voted to return Mr. Seiferheld to duty as a police officer. But that became impossible after he tested positive for cocaine use.

‘Police Rules Didn’t Apply’

“As a retiree he was no longer subject to departmental regulations,” Mr. Ungaro said. “Whatever he did at a party was not the concern of the Police Department.”

The fund’s trustees were unaware of the drug-test results when they ordered Mr. Seiferheld added to the civil-service hiring list, the opinion said. In 2007, the city Department of Law instructed the Pension Fund to stop paying him, saying he was no longer disabled and therefore ineligible for a pension. He has not been paid since July 18, 2007.

A previous decision by the Court of Appeals, the state’s highest court, found that the Department of Law could not unilaterally cut off Mr. Seiferheld’s disability pension and that a vote by the Pension Fund board of trustees was necessary. “However well-justified a restitution or termination of benefits may be in this case, the Board of Trustees has to do it,” according to the decision in that appeal.

After that ruling, the city claimed that the pension could be restored only by a vote of the trustees, leading to the appeal that was decided March 12.

That decision said that the Pension Fund trustees must now vote on what to do with Mr. Seiferheld’s pension. The judges said they had two options: terminating it or reducing it. They ordered that the case be sent back to the trustees for action.

Mr. Ungaro said that 20 years have passed since Mr. Seiferheld became a police officer. That’s the threshold at which officers hired before 2010 become eligible for retirement. Civil-service pensions are protected by the State Constitution, he said, meaning it is unlikely that a move to end or reduce his client’s payments would stand.

He said his client’s reputation had suffered because of publicity about the case and criticized the Department of Law for presenting the facts of the case in a negative light. The Daily News called Mr. Seiferheld a “druggie ex-cop.” A New York Post headline said, “Cop a Shirk Jerk.” The case drew the attention of then-Mayor Michael Bloomberg, whose spokesman called Mr. Seiferheld’s situation “fraud.”

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