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Danae Reis filed a timely appeal, under G. L. c. 32, §16(4), of a May 7, 2007 decision of the New Bedford Retirement System denying her request for a death benefit under the provisions of M.G.L. c. 32, §11(2)(b) as the surviving beneficiary of her late husband, Anthony Reis. I held a hearing in the appeal on May 28, 2008 at the Division of Administrative Law Appeals, 98 North Washington Street, Boston, Massachusetts. At the hearing, I admitted twenty exhibits in evidence. Danae Reis testified for herself. Her daughter, Leesel D. Tortura, also testified on
behalf of Mrs. Reis. Mark Pina, Anthony Reis's son, testified for the New Bedford Retirement System. I made two tapes of the hearing.
Based on the testimony and exhibits presented at the hearing, I make the following findings of fact:
1. Anthony Reis was born on February 3, 1935. He became a police officer in the New Bedford Police Department on September 22, 1974. Ex. 1.
2. When he became an officer, he enrolled in the New Bedford Retirement System and designated his mother, Amelia Correia, as his beneficiary should any sum be due him from the Retirement System at his death under M.G.L. c. 32, § 11(2)(c). Ex. 1.
3. In 1987, Anthony Reis married Danae Reis. The couple lived together in Massachusetts until 1992. That year, the company Mrs. Reis worked for was sold and she moved to Florida. Mr. Reis remained a police officer in New Bedford. The couple agreed that he would move to Florida when he retired. Reis Testimony.
4. After Mrs. Reis left for Florida, Mr. Reis continued to be in regular phone contact with her and each of them traveled occasionally to see the other in Massachusetts or Florida. Reis testimony.
5. For a time after his wife left for Florida, Mr. Reis lived with his son, Mark Pina, at house long in the Reis family. He moved out to live with a girlfriend. Pina testimony.
6. On May 17, 1996, Mr. Reis executed a Change of Beneficiary Form making his son his sole beneficiary under M.G.L. c. 32, § 11(2)(c) in case of his death. Ex. 2. Pina was unaware he was his father's beneficiary until after Mr. Reis died. Pina testimony. He, as well as Mrs. Reis, was also unaware that Mr. Reis had designated Pina as the beneficiary of a life insurance policy. Pina and Reis testimony.
7. On January 18, 2000, Mr. Reis filed with the Retirement System an "Application by Member for Voluntary Retirement Allowance," seeking superannuation retirement effective February 29, 2000 after he turned 65. From the retirement options available, he chose "Option B," which, in accordance with M.G.L. c. 32, § 12(2)(b), would provide him with a retirement allowance for life and a lump sum benefit consisting of the unexpended balance of his annuity account for his named beneficiary upon his death. The portion of the form describing Option B included an opportunity for the person applying for retirement to list his beneficiaries. Mr. Reis did not complete this section. Ex. 3.
8. The retirement application form included a "Spousal Acknowledgment." The Acknowledgment quoted at length from the second paragraph of M.G.L. c. 32, § 12(1), which begins, " For any member who is married, an election shall not be valid unless accompanied by the signature of the member's spouse indicating the member's spouse's knowledge and understanding of the retirement option selected." Ex. 3.
9. Mrs. Reis did not sign at the Spousal Acknowledgment. Rather, the Acknowledgment was unsigned, and in the place for the spouse's signature was the notation "N/A." Ex. 3. To this point, Mr. Reis had not mentioned Mrs. Reis in any of the documents he had submitted to the Retirement System, but neither his initial enrollment form, the change of beneficiary form, or the retirement application specifically asked him to state whether he was married or to whom. See Exs. 1, 2, and 3. He had, however, told Mrs. Reis just before he retired that everything was in her name. Reis Testimony.
10. Mrs. Reis identified the signature on the application as being Mr. Reis's. The hand that printed responses on the rest of the form, which included the "N/A" in the spousal acknowledgment section, was not his, however. Reis Testimony.
11. On January 27, 2000, the Retirement System voted to approve Mr. Reis's application and he retired effective February 29, 2000. Exs. 4 and 5.
12. On April 3, 2002, Mr. Reis filed in person at the Retirement System an "Annual Affidavit of Retired Members and Survivors." The new Bedford affidavit form included a printed notification to recipients that in accordance with 840 CMR 15.01, each member must file an annual affidavit with the Retirement System. The form instructed recipients to "provide the following information ON THIS FORM accurately and IN ITS ENTIRETY, to the best of your knowledge under the penalties of perjury." Ex. 6 (emphasis in original).
13. The new Bedford affidavit form included lines at which the recipient was required to list his current marital status and his beneficiary name. Mr. Reis wrote that he was married and that his beneficiary was his wife, Danae C. Reis. He listed her date of birth and Social Security number as requested.
14. On April 25, 2002, the Retirement System sent Mr. Reis a letter in which it stated that after reviewing his affidavit, it "found that the beneficiary you had listed on the form [Danae Reis] is different from the beneficiary we have on file for you [Mark Pina]." The Retirement System enclosed a change of beneficiary form and declared that it could not "enter this change into the system until the change of beneficiary form has been completed and returned to the office." Ex. 7.
15. There is no evidence in the record of a any response to the letter by Mr. Reis.
16. On June 27, 2003, Mr. Reis appeared at the Retirement System and filed his annual affidavit for that year. He again listed Danae Reis as his beneficiary. Ex. 10. He described his marital status as separated; in all other years he listed himself as married. Exs. 6, 10, 11, and 12.
17. There is no evidence in the record of any response by the Retirement System to the continuing discrepancy between Mr. Reis's annual affidavit and this 1996 designation of Mark Pina as his beneficiary.
18. On March 12, 2004, Mr. Reis filed his annual affidavit in person at the Retirement System. As before, he listed his wife Dane Reis as his beneficiary. Ex. 11. Again, there is no evidence in the record of a response from the Retirement System.
19. In 2004, Mr. Reis entered an assisted living facility in Dartmouth called Sunrise. Mrs. Reis, who still lived in Florida, called him daily. Reis testimony. Her daughter, Leesel Tortura, saw him twice per week and ran errands for him. Tortura testimony. Pina picked him up a few times to take him to breakfast. Pina testimony.
20. After entering the assisted living facility, Mr. Reis spoke again to his wife about his retirement benefits. He told her all the paperwork was in order and everything was in her name. Reis testimony. He told Tortura as well that he would be leaving everything to Mrs. Reis. Tortura testimony.
21. While in the assisted living facility, Mr. Reis gave power of attorney to Mrs. Reis and Ms. Tortura. Reis and Tortura testimony. Tortura thereafter managed his expenses. Tortura testimony.
22. His doctors also requested that Mrs. Reis seek a guardianship over him because he was not taking care of himself. Mrs. Reis and Ms. Tortura were subsequent appointed his guardians. His mind remained sharp, however. Reis testimony.
23. The Retirement System sent Mr. Reis's 2005 annual affidavit form to Tortura because she had power of attorney. She bought it to Mr. Reis, and filled out every section except for the identity of his beneficiary. This Mr. Reis filled out, again listing Mrs. Reis as his beneficiary. He signed the annual affidavit on March 7, 2005, had it notarized, and mailed it to the Retirement System, which received it on March 28, 2008. Tortura Testimony and Ex. 12. As in previous years, Mr. Reis listed his wife as his beneficiary, again without any response from the Retirement System. Ex. 12.
24. In 2006, the Retirement System changed its annual affidavit form to delete the requirement that the death benefit beneficiary be listed. Ex. 18.
25. On August 23, 2006, Anthony Reis died. Ex. 13.
26. On February 16, 2007, Mrs. Reis wrote the Retirement System claiming Mr. Reis's death benefit. Ex. 15.
27. The Retirement System sought an opinion from Michael Sacco, Esq. as to how to respond to Mrs. Reis's death benefit claim. Attorney Sacco responded in an April 11, 2007 letter to the Retirement System that:
since Mr. Reis designated Mr. Pina as his beneficiary pursuant to Section 11(2)(c), and that designation was never revoked prior to Mr. Reis's death, the designation of Mr. Pina remains in full force and effect. Accordingly, Mr. Pina remains Mr. Reis's lawful and duly designated beneficiary.
Finally, please note that identifying Mrs. Reis as the beneficiary on the Annual Affidavits does not have the legal effect of designating her as the beneficiary "on a prescribed form filed with the board" as contemplated in Section 11(2)(c). Ex. 16.
28. After receiving Attorney Sacco's opinion letter, the Retirement System voted to accept his recommendation that Pina be named the beneficiary of Mr. Reis' retirement benefits. It informed Mrs. Reis of this decision in a letter dated May 7, 2007.
29. On May 22, 2007, Mrs. Reis filed an appeal with the Division of Administrative Law Appeals. Ex. 17.
CONCLUSION AND ORDER
A public employee in Massachusetts has a "contractual relationship" with the retirement system to which he belongs. M.G.L. c. 32, § 25(5). The contractual nature of this relationship generates "material expectations on the part of employees." Opinion of the Justices, 364 Mass. 847, 303 N.E.2d 320, 328 (1973). Those "expectations should in substance be respected," particularly the "core ... [of the employee's] reasonable expectations." Id.
A core expectation of an employee who has chosen a retirement option that may provide payments to his beneficiaries after his death is that the beneficiaries he designated be the ones actually paid by the retirement system. Chapter 32 establishes a method by which an employee can make the identity of his beneficiaries known to his retirement board. It provides that:
Any member, upon his written notice on a prescribed form filed with the board prior to his death, may nominate, and from time to time change one or more beneficiaries ...
M.G.L. c. 32, § 11(2)(c).
By requiring the filing of a "prescribed form" to nominate or change beneficiaries, the statute helps in a variety of ways to meet a retiree's expectation that the person he desires to be his beneficiary will be the one who is actually paid benefits after his death. Use of a "prescribed form" provides a readily available and clear way for the retiree to inform his retirement board of the identity of his beneficiary. It also narrows the inquiry the board must make after the death of a retiree and eases the administration of the retirement benefits system. The board need not look far and wide to determine a retiree's intentions. Rather, the board may review its own files to look for the latest prescribed form designating a beneficiary to determine to whom to pay benefits. Payment to the correct beneficiary is particularly important because the statute provides that payment made by a board to a retiree's "beneficiary or beneficiaries of record surviving at his death shall bar the recovery of such payment by any other person." M.G.L. c. 32, § 11(2)(c).
Disputes over the identity of the correct beneficiary often focus on conflicts between the deceased retiree's apparent wishes and the ease of administration by the affected board. The decisions tend to favor results that most likely meet the retiree's actual expectations over results consistent with administrative ease.
For example, when a board's file contained no designation of a retiree's daughter as his beneficiary, the Supreme Judicial Court nonetheless ruled in her favor taking into account oral testimony that showed that a proper designation had been filed in person and the board had simply lost it. O'Connor v. Boston Retirement Board, 304 Mass. 471, 23 N.E.2d 862 (1939); see also Marcus v. State Board of Retirement, CR-9336 (DALA dec. 1/8/87; no CRAB decision)(change of beneficiary form that was mailed to retirement board given effect, though it was not in the board's files, because there was no evidence that the completed form had not been received).
Moreover, although generally a designation must be on file at the time of a retiree's death, see Griffin v. State Retirement Board, CR-96-182 (DALA dec. 5/16/97; no CRAB decision)(beneficiary designation received after retiree's death ineffective), not all designations on file are given effect if they are demonstrably inconsistent with the retiree's intentions. When the evidence establishes that the latest designation on file is not genuine, it is not honored. See Johnson-Alli v. State Board of Retirement, CR-01-956 (DALA dec. 1/24/03; no CRAB decision). In the case of a separation or divorce, although the board's files may still list the ex-spouse as a beneficiary, that designation is not honored if the ex-spouse has waived the right to benefits in a valid separation agreement or divorce decree. See King v. State Board of Retirement, CR-06-527 (DALA dec. 6/22/07; no CRAB decision), Farrington v. State Board of Retirement, CR-04-1136 (DALA dec. 2/17/06; no CRAB decision), and Rodgers v. State Board of Retirement, CR-01-1000 (DALA dec. 8/29/02; no CRAB decision).
Finally, when a beneficiary designation is on file, although not quite in the form a board expected, it may be given effect if it "substantially complies" with the requirements of the state retirement system. Smith v. Contributory Retirement Appeal Board, Superior Court No. 05-3364, Memorandum of Decision and Order on Plaintiff Marsha Smith's Motion for Judgment on the Pleadings (May 2, 2007; Hamlin, J). Smith's circumstances are illustrative of the meaning of substantial compliance. When Smith died, the State Retirement Board's files contained two documents that identified her beneficiaries. One was a completed nomination of beneficiary form, while the other was an application for early retirement in which Smith named her daughter as her sole beneficiary. Although the early retirement application provided the latest information on Smith's wishes, the Board did not rely on it because Smith had withdrawn her application to retire. This forum affirmed the Board's decision, "[a]lthough this result is harsh for the Petitioner, and ... is probably not what [Smith] intended," because M.G.L. c. 32, § 12(1) makes an option selection in a retirement application ineffective if the member dies before retiring. Smith v. State Board of Retirement, CR-04-344 (DALA dec. 2/14/05; CRAB dec. 7/5/05). The result changed in the Superior Court, which examined whether Smith had substantially complied with the beneficiary designation standards of the statute. It looked at whether there was evidence that Smith meant to change her beneficiaries and had taken steps that, for all practical purposes, were similar to those required by the statute. Memorandum of Decision at 6. It found that, although Smith did not follow the exact procedures set forth in the statute, she did intend to change her beneficiaries and had attempted to effect that change in a manner that was allowable at the time she filed her retirement application. Memorandum of Decision at 6-7.
In light of these decisions requiring that a retiree's wishes be honored to the extent possible under the statute, I examine the beneficiary designation question presented here. The documents on which the Retirement System and Mrs. Reis rely on are on file with the Retirement System, and hence there is no dispute about whether a filing was made. The only dispute is about whether the form on which Mrs. Reis relies is "a prescribed form." See M.G.L. c. 32, §11(2)(c).
I note at the outset that the statute reads a prescribed form, rather than the prescribed form, meaning that there can be more than one prescribed form. In this case, the Retirement System has in its files three forms that are indisputably prescribed forms for designating beneficiaries: the form in which Mr. Reis enrolled in the retirement system and designated his mother as his beneficiary, the change of beneficiary form in which he designated his son as his beneficiary, and his retirement application that provided an opportunity for him to identity his beneficiary, one that he did not take. The question then is whether the annual affidavits Mr. Reis submitted in which he repeatedly designated his wife as his beneficiary are, in this instance, a fourth type of prescribed form.
All annual affidavits provide information pertinent to the continued correct payout of retirement benefits to either a retired member or to his eligible beneficiaries. If the member is still living, he must provide his name and current address, and certify that he is still living. 840 CMR 15.01(1)(a)(b)and (c). If the beneficiary is receiving payments, the beneficiary must provide the same information, and, to the extent relevant to continued receipt of benefits, the beneficiary's marital status or dependency status. 840 CMR 15.01(1)(a)(b)(c)(d) and (e).
Annual affidavits need not request the identity of the beneficiary of a living member of the retirement system, but a board may request "such additional information as the board may require to determine whether the member or beneficiary is entitled to continued receipt of benefits." 840 CMR 15.01(1)(f). During the period in which Mr. Reis was submitting annual affidavits, the New Bedford Retirement System required that members list their beneficiaries in their annual affidavits and include information on each beneficiary's relationship to the member, date of birth, and Social Security number. See Exs. 6, 10, 11, and 12.
Printed on the form were statements that informed members that, by regulation, they must submit a completed form annually, that the form must be accurately filled out in its entirety, and that the failure to submit a completed form in a timely manner might lead to retirement benefits being stopped until a properly completed form was submitted. See Exs. 6, 10, 11 and 12. A reasonable person examining the New Bedford annual affidavit form would understand that the entire form needed to be filled out with the correct current information and that all of this information would be used by the Retirement System in administering the retiree's benefits.
There is nothing on the New Bedford form to suggest that the information requested about beneficiaries was to be treated any differently from the other information requested or that, should a change occur in that information, the change needed to be made on another form before it could take effect. For example, an address a retiree listed on the form would be the address the Retirement System used thereafter to send retirement checks. If the retiree then changed his address, then the next time he filled out the affidavit, he would fill in the new address on the form, and the Retirement System would then mail his checks to this new location. The form similarly asked for current beneficiary information with no hint on it that the retiree need do anything other than fill in the correct current information, whether his beneficiaries were the same as before or had changed.
The breadth of information about beneficiaries sought on the annual affidavit would also have suggested to a reasonable person reading the form that it was a proper form for designating a beneficiary. It sought not only the name of the beneficiary, but also the relationship between the beneficiary and the retiree and the beneficiary's date of birth and Social Security number. This is more information than is sought on the retirement application, which requests only the name of each beneficiary and the percentage of benefit each is to receive. It is even more information than the change of beneficiary form requests. That form, too, asks only for the name and address of each beneficiary and the percentage each is to receive.
Thus, when it came time for Mr. Reis to fill out his first annual affidavit in 2002, he was faced with a form that required him to list accurately his intended beneficiary, whether that person was the same one he had previously designated or not. Had he intended to keep his son as his beneficiary, he could have simply listed his son's name. He instead listed Mrs. Reis. Whatever happened between the time he retired, when he failed to list on the retirement application that he had a spouse who should have completed the spousal acknowledgment, and the time he filled out his first annual affidavit, Mr. Reis by then acknowledged in the affidavit that he was married and he provide all the information needed to designate his wife as his beneficiary.
The Retirement System asserts that even if the affidavit could apparently have been used to change beneficiaries, Mr. Reis was soon informed otherwise by letter on April 25, 2002. In that letter, the Retirement System enclosed a change of beneficiary form instructing him to file it if he actually intended to list his wife as his new beneficiary. The Retirement System views his subsequent failure to file a new change of beneficiary form as proof that he still intended to leave his son as his beneficiary.
Mrs. Reis objected to the admission of the April 25, 2002 letter on the grounds that there is no evidence that the Retirement System actually mailed it or that it was received. I allowed the letter to be admitted. I assume the regularity of the Retirement System's files and also that, if the files contain a letter from the Retirement System to a retiree, the letter was actually mailed. I also assume the regularity of the mail. The address listed on the letter was Mr. Reis's then-current address, and hence I assume the letter arrived there. Beyond that, I am unwilling to assume. There is no proof one way or the other that Mr. Reis ever opened the letter. Sometimes people do not open letters, including letters dealing with important financial matters. For instance, in an insurance case cited by the Superior Court in Smith v. Contributory Retirement Board, the insured had received two letters clarifying the documents his insurance company wanted him to file to change the beneficiaries on his annuities. After his death, the letters were found unopened, and hence were not considered by the Appeals Court when deciding who were the proper beneficiaries of the annuities. Strauss v. Teachers Ins. & Annuity Assoc., 37 Mass. App. Ct. 357, 639 N.E.2d 1106, 1108-1109 (1994).
Since there is no proof that Mr. Reis opened or did not open the April 25, 2002 letter, I will consider both possibilities. If he failed to open the letter, he would not have known the Retirement System's view that completing a change of beneficiary form was necessary to name his wife as his beneficiary. In that case, his continued decision to list his wife on his annual affidavit form reflected a reasonable belief that this made her his beneficiary and should be given effect. If he did open the letter and understood it, the situation becomes much harder to fathom. Obviously, he did not file a change of beneficiary form, as the Retirement System requested. But did he thereby mean to change his mind again and have his beneficiary be his son? That is not at all apparent. First, on at least two occasions after he received the letter, Mr. Reis went to the Retirement System's offices, each time to submit another annual affidavit. Since on each occasion he had the documents witnessed by a Retirement System employee, he had an opportunity then to discuss his beneficiaries with Retirement System staff. There is no evidence in the record as to what was said (or not said) on these occasions, but what is known is that after Mr. Reis continued in 2003 and thereafter to file affidavits listing his wife as his beneficiary, the Retirement System sent him no further communications asking him to submit a change of beneficiary form. That could be because of something Mr. Reis told a Retirement System staffer on one of the times he went there or it could be that the Retirement System's practice is to notify a retiree once in this sort of situation and not thereafter. The record lacks any evidence clarifying this point.
The Retirement System's position appears to be that Mr. Reis knew he could not change his beneficiary by merely listing that person on his annual affidavit and yet, armed with this knowledge, he continued to list his wife as his beneficiary knowing that the Retirement System would still consider his son to be his beneficiary. While Mr. Reis's actions are not always easy to understand, I find it hard to accept that he acted this way. The Retirement System's version of events would have had a retired police officer year after year knowingly and repeatedly filing a false affidavit that he signed under the pains and penalties of perjury. And to what end? Presumably, to deceive his wife in some manner. There is no evidence, however, even hinting at deception, particularly when Mrs. Reis lived in Florida and never saw these affidavits.
I am unwilling to engage in the speculation that would be necessary to conclude that Mr. Reis submitted affidavit after affidavit knowing his beneficiary designation was inoperative. Rather, I conclude that the New Bedford Retirement System's annual affidavit was, as it appeared to be, a prescribed form on which a retiree could designate of change a beneficiary. Mr. Reis four times designated his wife as his beneficiary on this prescribed form, thus showing his intentions as clearly as he could.
Accordingly, I reverse the decision of the New Bedford Retirement System and order that it pay Danae Reis 100 percent of the unexpended balance of Anthony Reis's annuity account.
DIVISION OF ADMINISTRATIVE LAW APPEALS
/s/ James P. Rooney
DATED: March 12, 2008