Ouellette v. Contributory Retirement Appeal Board

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13-P-291 Appeals Court
JACQUELINE OUELLETTE vs. CONTRIBUTORY RETIREMENT APPEAL BOARD
& others.1
No. 13-P-291.
Suffolk. December 9, 2013. - September 30, 2014.
Present: Grainger, Brown, & Carhart, JJ.
Public Employment, Accidental disability retirement, Retirement,
Retirement benefits. Public Employee Retirement
Administration Commission. Contributory Retirement Appeal
Board. Retirement. Administrative Law, Agency's
interpretation of statute. Words, "Member in service."
Civil action commenced in the Superior Court Department on
December 3, 2009.
The case was heard by Bonnie H. MacLeod, J., on a motion
for judgment on the pleadings.
John M. Becker for the plaintiff.
Kirk G. Hanson, Assistant Attorney General, for
Contributory Retirement Appeal Board & another.
1
Public Employee Retirement Administration Commission and
Haverhill retirement board.
2
BROWN, J. At issue in this appeal is whether the
Contributory Retirement Appeal Board (CRAB) properly concluded
that the accidental disability retirement allowance of
Jacqueline Ouellette was subject to the statutory cap set forth
in G. L. c. 32, § 7(2)(a)(ii).
Background. Ouellette worked for the city of Haverhill as
a police officer from January, 1981, until December 5, 2003. On
March 3, 2004, the Public Employee Retirement Administration
Commission (PERAC) approved Ouellette's application, submitted
through the Haverhill retirement board (board), for a voluntary
superannuation (regular) retirement, effective December 31,
2003. See G. L. c. 32, § 5.
On August 14, 2005, the plaintiff applied for an accidental
disability retirement allowance, claiming posttraumatic stress
disorder stemming from two incidents that occurred in November,
2003. After two medical panel reviews, PERAC unanimously
certified that Ouellette satisfied all the statutory criteria
for accidental disability retirement.2 See G. L. c. 32, § 7(1).
2
In 2000, Ouellette was first assigned to the unit
responsible for investigating sex crimes. In October, 2002,
Ouellette transferred to the information technology (IT)
department, performing IT duties until her retirement.
Ouellette claimed in her application for accident disability
retirement that in November, 2003, she sustained personal
injuries upon learning that one of the sexual assault victims
had committed suicide and that a pedophile priest would need to
be retried.
3
On February 27, 2008, upon granting Ouellette's request
for accidental disability retirement, effective February 14,
2005, PERAC imposed, pursuant to G. L. c. 32, § 7(2)(a)(ii), a
seventy-five percent cap on her disability retirement allowance.
General Laws c. 32, § 7(2)(a)(ii), as appearing in St. 1987,
c. 697, § 33, provides in pertinent part that "for any employee
who was not a member in service on or before January [1, 1988,]
or who has not been continuously a member in service since that
date, the total yearly amount . . . as determined in accordance
with the provisions of clause (i) shall not exceed seventy-five
percent of the annual rate of regular compensation as determined
in this paragraph . . . . " PERAC reasoned that the plaintiff
was not a member in service continuously until the effective
date of her disability retirement allowance, because she became
a "member inactive" on December 31, 2003, the date of her
superannuation retirement.3
3
There are two kinds of membership in the State employees'
retirement system. As herein relevant, a "member in service" is
"[a]ny member who is regularly employed in the performance of
his duties . . . ." G. L. c. 32, § 3(1)(a)(i), as amended
through St. 1971, c. 94. The member in service retains that
status "until his death or until his prior separation from the
service becomes effective by reason of his retirement . . . ."
Ibid. The definition of a "member inactive" includes "[a]ny
member in service who has been retired and who is receiving a
retirement allowance, any member in service whose employment has
been terminated and who may be entitled to any present or
potential retirement allowance . . .," or any member in service
who is on an authorized leave of absence without pay other than
as provided in clause (i) . . ." [for not more than one year].
4
Ouellette appealed PERAC's refusal to lift the cap to CRAB.4
See G. L. c. 32, § 16(4). An administrative magistrate of the
division of administrative law appeals (DALA) affirmed PERAC's
decision.5 Following Ouellette's submission of an objection,
CRAB adopted the magistrate's findings and issued a final
decision affirming PERAC's imposition of the cap. On review, a
judge of the Superior Court affirmed CRAB's decision. This
appeal ensued.
Discussion. The case turns on the meaning of the provision
in § 7(2)(a)(ii), "any employee who was not a member in service
on or before [January 1, 1988,] or who has not been continuously
a member in service since that date." PERAC interprets the
provision as requiring that the employee be a "member in
service" continuously until the effective date of her accidental
disability retirement. The plaintiff contends that because she
was continuously a member in service until her injury the cap
does not apply.
G. L. c. 32, § 3(1)(a)(ii), as appearing in St. 1978, c. 523,
§ 1.
4
By PERAC's calculations, the sum of Ouellette's annuity
and pension allowances after application of the cap was
$41,200.92. Absent the cap, Ouellette would have received a
total yearly accidental disability allowance of $45,467.88.
5
Two witnesses testified at the DALA hearing: Ouellette
and John Boorack, a senior actuarial analyst. No transcript of
their testimony has been provided.
5
General Laws c. 32, § 7, governs the conditions for an
accidental retirement allowance and the amount awarded. Section
(7)(1) controls eligibility. Section 7(2), on the other hand,
governs the amount that the member can receive once the member
has met the conditions set forth in § 7(1). Section 7(2) also
limits when the accidental disability retirement allowance can
take effect (effective date).
Pursuant to the first paragraph of G. L. c. 32, § 7(2), a
member's disability allowance becomes effective on the latest of
three possible dates: (1) the date of the injury or the hazard
undergone, (2) the calendar date falling six months prior to the
date of the submission of the written application for disability
retirement, or (3) the date for which the member last received
regular compensation.6 No challenge is made to CRAB's
determination that the effective date of Ouellette's accidental
disability retirement was February 14, 2005.
Section 7(2)(a), sets out the components of the allowance
that the member receives as of the effective date of the
retirement. An accidental disability allowance consists
primarily of an annuity and a pension, with provision for
6
Accidental disability retirement provides more generous
benefits than regular superannuation and ordinary disability
retirement and has a stricter standard of eligibility. See
Murphy v. Contributory Retirement Appeal Bd., 463 Mass. 333, 347
(2012).
6
additional upward adjustments not applicable here. See G. L.
c. 32, § 7(2)(a)(i)-(iii). The normal annual allowance is the
sum of "(i) [a] yearly amount of annuity equal to the yearly
amount of the regular life annuity specified in clause (i) of
Option (a) of subdivision (2) of section twelve . . . [and] (ii)
[a] yearly amount of pension equal to seventy-two per cent of
the annual rate of his regular compensation on the date such
injury was sustained or such hazard was undergone, or equal to
seventy-two per cent of the average annual rate of his regular
compensation for the twelve-month period for which he last
received regular compensation immediately preceding the date his
retirement allowance becomes effective, whichever is greater
. . . ." G. L. c. 32, § 7(2)(a)(i)-(ii). These provisions were
contained in the version of § 7(2)(a)(i)&(ii), as amended
through St. 1970, c. 644, § 1. In 1987, the Legislature added
after the language just quoted from 7(2)(a)(ii), additional
language capping that sum at seventy-five percent of the annual
rate of regular compensation for "any employee who was not a
member in service on or before January [1, 1988,] or who has not
been continuously a member in service since that date" (emphasis
supplied), with the added proviso that no individual who was a
member in service on January 1, 1988, whose allowance is limited
by the seventy-five percent cap shall receive an amount of
pension that is less than seventy-two percent of that
7
individual's regular compensation on January 1, 1988. G. L.
c. 32, § 7(2)(a)(ii), as appearing in St. 1987, c. 697, § 33.
All parties agree that the starting date of the continuous
service requirement is January 1, 1988; however, they do not
agree on the ending date. CRAB read the requirement language to
run from January 1, 1988, until the effective date of
Ouellette's accidental disability retirement. CRAB found that
when Ouellette began receiving her superannuation retirement
allowance in December, 2003, she became a member inactive. CRAB
concluded that as a result Ouellette was not a member in service
continuously from January 1, 1988, through February 14, 2005,
the effective date of her accidental disability retirement, and
therefore was not entitled to avoid the limitation on her
allowance.
"We review CRAB's decision under a deferential standard and
will reverse only if its decision was based on an erroneous
interpretation of law or is unsupported by substantial
evidence." Foresta v. Contributory Retirement Appeal Bd., 453
Mass. 669, 676 (2009). See G. L. c. 30A, § 14(7). Accordingly,
we give substantial deference to CRAB's interpretation of any
ambiguous statutory text, see Souza v. Registrar of Motor
Vehicles, 462 Mass. 227, 228-229 (2012), "unless [the] statute
unambiguously bars [its] approach." Goldberg v. Board of Health
of Granby, 444 Mass. 627, 633 (2005). On the other hand, no
8
judicial deference at all is given to an erroneous
interpretation of a statute. See Herrick v. Essex Regional
Retirement Bd., 77 Mass. App. Ct. 645, 647-648 (2010), S.C., 465
Mass. 801 (2013).
We deal here with a claim of legal error.7 We conclude that
CRAB's interpretation of the statute was reasonable and thus did
not constitute an error of law. The statutory language was
susceptible of multiple interpretations. Faced with an
7
The plaintiff's position is that the Legislature intended,
when it enacted the new cap on disability retirement benefits,
to exempt from the cap persons who were already employees at the
time the amendment was enacted, provided they continued in
public service with no break until the date of injury -- that
is, the new limitation on benefits was to apply to new employees
(an employee "not a member in service on or before [January 1,
1988,]") and to persons who, even if employed on or before
January 1, 1988, left or had a break in public service after
that date and then returned and were subsequently injured
(employee "who has not been continuously a member in service
since that date") (the latter were given a lesser protection of
a limitation on the cap). In this view, CRAB's interpretation
that the phrase employee "who has not been continuously a member
in service since that date" includes not only an employee with a
break in service before injury but also an employee who has
served continuously since on or before January 1, 1988, up until
the date of injury and applies and receives superannuation
retirement before applying for disability retirement, adds a
category not contemplated by the Legislature. Further, the
plaintiff argues that, in reducing the retirement benefit to the
latter, CRAB makes an irrational distinction between two
categories of employees, both of whom were employed on or before
January 1, 1988, and both of whom served continuously until they
were injured (where the only relevant distinction should be the
delay in application, which is already taken into account in
§ 7[2] by a later effective date of disability retirement).
Thus, the plaintiff contends, CRAB's interpretation is not an
equally reasonable one and the rule deferring to the agency's
choice of an equally rational interpretation does not apply.
9
ambiguity about which end date the Legislature had in mind for
purposes of the continuous service requirement, CRAB logically
looked to the surrounding text for meaning. See Franklin Office
Park Realty Corp. v. Commissioner of Dept. of Envtl. Protection,
466 Mass. 454, 462 (2013) ("Words grouped together in a statute
must be read in harmony . . ."). As with the relationship
between the body paragraphs of a unified essay and a thesis
statement in an introductory paragraph, CRAB could properly have
concluded the end date related back to the effective date. The
overall structure of § 7(2) and the use of the effective date to
set the relevant time frame in other provisions of that statute
supported CRAB's interpretation.8 Moreover, CRAB's selection of
the latest possible date furthered the obvious cost containment
purpose of the cap.9 See id. at 461. While it is possible to
construe the statute in the manner urged by Ouellette, who
maintains that the date of the injury should always be the
8
As CRAB pointed out, the effective date of the retirement
factors into the calculation of "the annual rate of regular
compensation," which in turn is used to determine the pension
component of the allowance as well as limit on the total annual
amount of the allowance. See G. L. c. 32, §§ 7(2)(a)(ii) &
7(2)(c).
9
Two cost-saving mechanisms are provided by the cap.
First, all employees attaining member in service status after
January 1, 1988, are subject to the seventy-five percent cap.
Second, individuals who attained member in service status on or
before that date are also subject to the cap if they are unable
to meet the continuous service requirement of the exemption.
10
operative end date, CRAB's choice between plausible
interpretations cannot correctly be said to be wrong.
Nothing in the case law or G. L. c. 32 required CRAB to
apply the date of injury as the operative date. It is well-
settled that the member must have been in service on the date of
the disabling accident (vis a vis the date of the application)
in order to be eligible for accidental disability retirement.
See State Retirement Bd. v. Contributory Retirement Appeal Bd.,
12 Mass. App. Ct. 306, 308 (1981) (Olson case); Leal v.
Contributory Retirement Appeal Bd., 42 Mass. App. Ct. 330, 332
(1997). These cases are premised on the legislative purpose
expressed in G. L. c. 32, §§ 3(1)(a)(ii) & 3(1)(c),10 to preserve
for members the rights, privileges, and potential benefits for
which they qualified during their years of public employment.
See Gannon v. Contributory Retirement Appeal Bd., 338 Mass. 628,
631-633 (1959); Boston Retirement Bd. v. McCormick, 345 Mass.
692, 695-696 (1963); Leal v. Contributory Retirement Appeal Bd.,
42 Mass. App. Ct. at 332.
10
Section 3(1)(c) of G. L. c. 32 states: "No description
of a person having any rights or privileges under the provisions
of sections one to twenty-eight inclusive, such as member in
service, member inactive, beneficiary or otherwise, shall serve
to deprive him of any such rights or privileges. A member shall
retain his membership in the system so long as he is living and
entitled to any present or potential benefit therein."
11
The Olson line of cases, relied on by the plaintiff, is
inapposite. All of these cases involved member eligibility for
accidental disability benefits, a question which is evaluated
under a different statutory section (G. L. c. 32, § 7[1]) and
language. None provided any analysis of the appropriate
calculation of the retirement allowance under G. L. c. 32,
§ 7(2). Eligibility for benefits is not challenged here.
Different principles and policy considerations materially
impacted the decisions.11 We conclude that CRAB did not err by
limiting these cases to their holdings.
Consistent with this line of cases, following her
superannuation retirement, Ouellette was permitted to secure a
more lucrative accidental disability retirement for which she
had qualified while a member in service. She was not deprived
of any right to a potential retirement allowance or of any other
statutory right, privilege, or benefit under G. L. c. 32, §§ 1-
28. To the extent that Ouellette argues that she had a
reasonable financial expectation of receiving, pursuant to G. L.
c. 32, § 7(2)(a), a full accidental disability retirement, the
11
For example, the Gannon and McCormick decisions, upon
which the latter two cases were built, were based in part upon
the employees' statutory rights under G. L. c. 32, § 14(1)
(providing that while living, employees who become entitled to
payments under G. L. c. 152 retain all the rights of members in
service until their effective retirement dates). As Ouellette
was not receiving payments under G. L. c. 152, this provision
did not apply to her.
12
benefits defined as contractual rights and benefits under G. L.
c. 32, § 25(5), that are immune from subsequent reduction are
limited to those belonging to members of retirement systems who
are retired for superannuation. See G. L. c. 32, § 25(5)
(members entitled to contractual rights and benefits with regard
to superannuation retirement); Smolinski v. Boston Retirement
Bd., 346 Mass. 210, 211-212 (1963) (finding § 25[5] inapplicable
to accidental disability retirement as it applies only to those
"retired for superannuation"). No cap was placed on Ouellette's
superannuation retirement benefits here. In light of this
clear, longstanding precedent predating her employment,
Ouellette had no reasonable expectation frustrated by the
imposition of the cap on her accidental disability retirement
allowance.
No other alleged violations of the standards of G. L.
c. 30A, § 14(7), argued by Ouellette, have any substance.
Conclusion. In the absence of governing precedent, CRAB
wrote on a blank slate, bringing its specialized knowledge of
retirement law to bear in its interpretation of G. L. c. 32,
§ 7(2). Even if we would have made another selection in
deciding the issue in the first instance, we find CRAB's
construction of the statutory scheme reasonable and not
inconsistent with the statutory text or the case law.
13
It is fair to say that Ouellette's particular circumstances
may not have been the type of situation envisioned by the
Legislature in fashioning an exemption from the cap. The
statutory language does not provide any exceptions to the
continuous service requirement. We are not at liberty "to add
words to a statute that the Legislature did not put there."
Retirement Bd. of Somerville v. Buonomo, 467 Mass. 662, 672
(2014). To ignore CRAB's reasonable interpretation in order to
bring Ouellette within the coverage of the exemption would
create bad law. See Leblanc v. Friedman, 438 Mass. 592, 602-603
(2003) (Cowin, J. dissenting).
The judgment of the Superior Court affirming the decision
of CRAB is affirmed.
So ordered.