Sandusky, now in the Greene State Prison in southwestern Pennsylvania, is expected to participate by video conference in the proceeding that starts Tuesday morning inside the state retirement system's downtown headquarters.
It could last three days and bring to the stand witnesses tied to Penn State and The Second Mile, a children's charity founded by Sandusky where he met at least some of his victims.
The former Penn State assistant football coach lost a $4,900-a-month pension in October 2012, the day he was sentenced to 30 to 60 years in prison for 45 counts of child sexual abuse. The decision also precluded his wife Dottie from collecting benefits.
The State Employees' Retirement System (SERS) ruled his convictions for involuntary deviate sexual intercourse and indecent assault fell under Pennsylvania's Public Employee Pension Forfeiture Act. Sandusky had opted to participate in the state-sponsored retirement system while at Penn State, which is a "state-related" university, but he was not a state employee.
At the heart of the dispute is whether Sandusky's ties to the university after his 1999 retirement, including some payments, made him a "de facto" Penn State employee while committing the crimes in question.
His lawyer has argued that he was not and that his employment contract was not renewed after the forfeiture law took effect in 1978 so its terms do not apply to him. Sandusky attorney Charles Benjamin has said Penn State made only six payments to Sandusky between 2000 and 2008, and three of them involved travel costs. The other three were speaking fees of $100, $300 and $1,500.
In a Dec. 9 filing, Benjamin also argued that Sandusky did not fit the definition of "school employee" under the forfeiture law.
"No reported case in the history of Pennsylvania jurisprudence has ever applied a 'de facto' employee analysis to deny someone his retirement earnings, and SERS should not bow to political pressure and 'mob rule' to deny claimant his retirement earnings," Benjamin wrote.
In recent weeks, there has been a dispute over the SERS witness list, which includes two former Penn State administrators facing allegations of a criminal cover-up about Sandusky, former athletic director Tim Curley and former vice president Gary Schultz.
SERS lawyer Robert Fitzgerald wrote last month that testimony by Curley and Schultz would demonstrate that Sandusky used his close relationship with Penn State after 1999, and the link between the university and The Second Mile, "to facilitate his crimes."
Schultz's lawyer Tom Farrell and Curley's lawyer Caroline Roberto wrote separately on Dec. 11 to the hearing examiner, Michael L. Bangs, to say their clients planned to assert their Fifth Amendment rights and not testify.
"As the SERS hearing will be held in the same county of Mr. Curley's jury pool, the potential for prejudice is enormous," Roberto wrote.
They did not want their clients to have to appear in person to take the Fifth. Bangs signed subpoenas for both men on Dec. 18, but a spokeswoman for Curley's legal team said he would not be at the proceedings on Tuesday.
There is currently no trial date set for Curley and Schultz, who are being prosecuted in the Dauphin County Courthouse, about two blocks from the SERS headquarters.
It likely will be several months before Bangs produces his written recommendation to the retirement system board. If the board rules against Sandusky, he may appeal to Commonwealth Court.
A spokeswoman for the State Employees' Retirement Board declined to comment ahead of the hearing, and Benjamin did not return messages seeking comment.
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