The Petitioner is entitled to an adjustment of her retirement allowance so that the actuarial equivalent of the benefit to which she was determined to be entitled is paid per G.L. c. 32, § 20(5) (c) (2), Herrick v. Essex County Retirement Board, 465 Mass. 801 (2013) and Donoghue v. State Board of Retirement, CR-11-531 (Division of Administrative Law Appeals 05/08/2015; aff’d. Contributory Retirement Appeal Board 10/03/2016.)
Pursuant to G.L. c. 32, § 16(4), the Petitioner, Jane Kenworthy Lewis, is appealing from the March 16, 2016 decision of the Respondent, State Board of Retirement, denying her request to purchase a portion of her prior non-contributing service and her request to adjust her retirement allowance so that the actuarial equivalent of the benefit to which she is correctly entitled is paid. (Exhibit 23.) The Petitioner’s timely appeal was received on March 31, 2016. (Exhibit 25.)
In the letter of appeal, Petitioner’s counsel indicated that, because this appeal involves the interpretation and application of the public employee retirement laws, and there are no factual disputes, it was the Petitioner’s intent to submit the case on the documentary evidence pursuant to 801 CMR 10.01(10)(c). A request was made for a pre-hearing order and a briefing schedule. (Id.) First Administrative Magistrate James Rooney issued an Order on Request to Submit on the Record on January 19, 2018. The Petitioner was ordered to submit a Statement of Relevant Facts and copies of any documents that were intended to be included as part of the evidentiary record along with written arguments. The Respondent was ordered to submit its response to the Petitioner’s proposed facts, a statement of any additional facts it believed were supported by the evidentiary record, copies of any documents that it intended to be included as part of the evidentiary record along with any written argument. (Attachment A.)
The Petitioner’s written submission was received on March 2, 2018. (Attachment B with proposed additional Findings of Fact 19-26 and additional Exhibits 21-25.) On August 16, 2018, the Petitioner requested that DALA decide the matter on the Petitioner’s submission; as the Respondent had not complied with the January 19, 2018 Order and submitted its proposed findings of fact, documents or arguments by April 10, 2018. I allowed the motion on August 17, 2018 and noted that the record was closed and the case had been placed in my queue.
On August 28, 2018, the Respondent sent a letter wherein it was noted that the Petitioner’s Motion dated August 16, 2018 had been granted. The Respondent cited 801 CMR 7(a)(1) for the proposition that responses to motions are permitted for 7 days. The Respondent requested that that its attachment written submission be included in the record. (Attachment D.) I deny that request. The Respondent’s letter dated August 23, 2018 is part of the record; however, the late submission is excluded. The Petitioner’s August 16, 2018 Motion spoke to the lack of any submission by the Respondent. Rather than provide a reason for the very late filing of its submission and justifying the failure to request additional time to file same, the Respondent instead filed the submission that was due over four months earlier. Further, there was no written request to re-open the record in order for the inclusion of the submission. The Respondent’s delay resulted in the Petitioner’s waiting in excess of four additional months to have her case decided. There is no indication that, had her attorney not called the matter to the attention of the Chief Magistrate, any submission would have been filed by the Respondent. Parties on both sides of the aisle are expected to comply with DALA’s Orders or follow proper channels to extended deadlines. The system can operate smoothly and efficiently only if these guidelines are observed. In reality, the Respondent is not prejudiced by this ruling. Its position was clearly set forth in letters sent to Petitioner’s counsel on December 14, 2015 (Exhibit 21) and March 16, 2016 (Exhibit 23.)
I held a hearing in the original appeal of the Petitioner, Jane Kenworthy Lewis, CR-09-879, on May 8, 2013. In the Petitioner’s March 2, 2018 written submission the Petitioner incorporated the August 14, 2015 Decision of the Contributory Retirement Appeal which adopted my eighteen (18) Findings of Fact and further incorporated the 20 exhibits submitted in that appeal.
ORIGINAL FINDINGS OF FACT
Based upon the testimony and Stipulations submitted at the May 8, 2013 hearing in the above-entitled matter, I hereby render the following findings of fact:
- Jane Kenworthy Lewis began working as an Assistant District Court Attorney for the Massachusetts Defenders Committee on November 17, 1975. Until approximately November 30, 1976, she was paid out of an “03” account. She was not a member of the Massachusetts State Employees Retirement System (“MSERS”).
- On December 1, 1976, Ms. Lewis became a permanent employee of the Massachusetts Defenders Committee and a member of the MSERS. Her job duties remained the same. She was responsible for “covering” the District Court, whether ion Lowell or Essex County. (Stipulation and Testimony.)
- Ms. Lewis’s job title of Assistant District Court Attorney did not change. During her entire tenure with the Massachusetts defenders’ Committee, the Petitioner’s primary duties were comprehensive representation of clients in the District Court, from arraignment through trial. (Id.)
- On November 13, 1981, Ms. Lewis resigned her position, left public service, and then submitted to the State Board a Withdrawal Notice, requesting a return of her accumulated total deductions. In her Withdrawal Notice, Ms. Lewis acknowledged that in consideration of such payment to her of the accumulated total deductions, “all other rights and privileges to which I was entitled as a member of such Retirement system are hereby surrendered and I understand that upon such payment my membership in the Retirement system will terminate.”
- In January 1982, the State Board refunded to Ms. Lewis her accumulated total deductions in the amount of $7,258.81.
- In April 1987, Ms. Lewis became employed by the Supreme Judicial Court and again became a member of the MSERS. In 1988, she entered into an installment plan to buy back her prior non “03” service with Massachusetts Defenders Committee from December 1, 1976-November 13, 1981, a total of 4 years 11 months. In 1993, she completed the buyback totaling $11,855.28.
- Massachusetts General Laws c. 32, §4(1)(s), created by Chapter 161 of the Acts of 2006, authorizes eligible members in service of the MSERS to buy back up to four (4) years of state contract service as creditable service, provided that they meet the criteria to be eligible. The legislation, effective October 17, 2006, provides, in pertinent part,
Any member in service of the state employees' retirement system who, immediately preceding the establishment of membership in that system or re-entry into active service in that system, was compensated for service to the commonwealth as a contract employee for any department, agency, board or commission of the commonwealth may establish as creditable service up to 4 years of that service if the member has 10 years of creditable service with the state employees' retirement system, and if the job description of the member in the position which the member holds upon entry into service or re-entry into active service is substantially similar to the job description of the position for which the member was compensated as a contract employee…” G.L. c. 32, §4(1) (s).
- On August 28, 2008, the Board adopted an Amendment to the Contract Service Buyback Policy, which states, “A member who refunds his retirement contributions terminates membership in the MSERS. If the individual later returns to service for the Commonwealth, he is considered a new member for the purposes of M.G.L. c. 32. Thus, a member of the MSERS may not purchase contract service if such contract service preceded a period of membership service for which the member took a refund.”
- On August 12, 2009, Ms. Lewis completed a State Board of Retirement Contract Service Buyback Form, wherein she requested to purchase as creditable service the period from October 17, 1975 to November 30, 1976 when she provided contract service to the Massachusetts Defenders Committee. That form lists four criteria. The form was signed by the Human Resources Director for the Committee for Public Counsel Services, the successor agency for Massachusetts Defenders Committee, who reported that Ms. Lewis had rendered service as a contract employee from November 17, 1975 to November 30, 1976.
- In correspondence dated August 27, 2009 from Robert Faneuil of the State Board of Retirement, Ms. Lewis was notified that she was not eligible to purchase her requested contract service because “employees are not permitted to buyback contract service time if said time is prior to the employee taking a refund.”
- On August 31, 2009, Ms. Lewis wrote to Robert Faneuil asking for a copy of the pertinent regulation that made her ineligible to purchase her 03 service.
- On that same date, Ms. Lewis wrote to the State Board of Retirement asking for a review by the Board of her request at its next scheduled meeting, and included an affidavit of her narrative of the facts underlying her request.
- On September 2, 2009, a Reinstatement Analyst for the State Board of Retirement responded to Ms. Lewis’s request to Robert Faneuil, enclosing a copy of the relevant provision of the State Board’s “Contract Service Buy Back Policy.”
- Ms. Lewis and her then attorney William Newman appeared before the Board at its meeting held on September 24, 2009. At that time the Board voted to table Ms. Lewis’s request to purchase her contract service.
- On September 26, 2009, Ms. Lewis’s then attorney, William Newman, wrote to the State Board of Retirement with written argument. He wrote again on October 29, 2009.
- A month later, at its meeting held October 29, 2009, the Board again took up Ms. Lewis’s request and at that time voted to deny her request to purchase contract service under G.L. c.32, §4(1)(s). The State Board of Retirement notified Ms. Lewis of the denial of her request by letter incorrectly dated September 29, 2009; the correct date was October 30, 2009. By letter dated November 12, 2009, and stamped as received by DALA on November 13, 2009, Ms. Lewis appealed timely.
- In 2011 the Board sought to codify its Contract Service Buyback Policy as a part of 941 C.M.R. 2.00. On August 18, 2011, after the public hearing held on July 7, 2011, this amendment to the Board’s regulations, 941 C.M.R. 2.09: Contract Service as Creditable Service became effective. Like the existing policy, 941 C.M.R. 2.09(3)(e)(2) provides:
“A member who refunds his or her retirement contributions terminates membership in the MSERS. If the individual later returns to service for the Commonwealth, he or she is considered a new member for the purposes of M.G.L. c. 32. Thus, a member of the MSERS may not purchase contract service if such contract service preceded a period of membership service for which the member took a refund.”
- The Petitioner is currently employed by the Supreme Judicial Court and remains a member of the State Retirement System. (Stipulation and Testimony.)
ADDITIONAL FINDINGS OF FACT
- On December 31, 2013, the Petitioner retired from the State Employees Retirement System while her appeal of the Respondent’s denial of her request to purchase creditable service was pending. (Attachment B.)
- On August 14, 2015, the Contributory Retirement Appeal Board (CRAB), adopted the Findings of Fact of the November 8, 2013 Decision of the Division of Administrative Law Appeals (DALA) in the matter of Jane Kenworthy Lewis v. State Board of Retirement, CR-09-879, but reversed DALA’s conclusion that the Petitioner was not entitled to purchase creditable service for the period from November 1975 through November 1976 during which she was employed as an “03” by the Massachusetts Defender’s Committee under G.L. c. 32, § (4)(1)(s).
- In a letter dated December 14, 2015, the Respondent presented a bill to the Petitioner representing the amount required to purchase her creditable service. The Respondent rejected the Petitioner’s request for interest on her retirement benefit pursuant to Herrick v. Essex Regional Retirement System, 465 Mass. 801, 802 (2013), indicating that interest is required only when an error is “corrected by a court.” (Exhibit )
- In a letter dated February 4, 2016, the Petitioner advised the Respondent that she had retired on December 31, 2013, without the creditable service she had been wrongly denied, and at less than her maximum retirement percentage (76%). The Petitioner further advised that, had she been granted the service when requested in 2009, she could have retired on June 30, 2014 at the maximum percentage of 80%. The Petitioner requested that a revised bill be provided for the cost to purchase that portion of her service in order to increase her retirement percentage to its maximum of 80%. (Exhibit )
- In the same letter dated February 4, 2016, the Petitioner again requested the Respondent to reconsider its position on interest to be paid on her adjusted retroactive payment, asserting that “neither G.L. c. 32, § 20(5)(c)(2) nor Herrick v. Essex County Retirement Board, 465 Mass. 801 (2013), as requiring a retirement board’s ‘error to be corrected by a court’” in order for interest to be due. (Id.)
- In a letter dated March 16, 2016, the SBR informed the Petitioner that it was unable to calculate a partial service purchase for her and that it was denying her request for interest pursuant to the holding in Herrick v. Essex Regional Retirement System, 465 Mass. 801, 802 (2013). The Petitioner was provided with her appeal rights. (Exhibit 23.)
- In a letter dated March 26, 2016, the Petitioner provided payment to the Respondent in the amount of $3,044.76 to purchase one year and 14 days of creditable service, and the Petitioner’s retirement allowance was increased retroactively to December 31, 2013. (Exhibit 24.)
- The Petitioner’s timely appeal to the March 16, 2016 decision of the SBR was received on March 31, 2016. The post-mark date is March 29, 2016. (Exhibit 25.)
After a review of all of the new exhibits and the arguments submitted in this case, I have concluded that the Petitioner is entitled to prevail in this appeal. She is entitled to a retroactive adjustment of her retirement allowance to reflect appropriate interest to which she is entitled as a result of an error under G.L. c. 32, § 20 (5)(c)(2).
I concur with the Petitioner’s assertions that G.L. c. 32, § 20(5)(c)(2) and the Supreme Judicial Court’s holding in Herrick v. Essex County Retirement Board, 465 Mass. 801 (2013) do not require a retirement board’s error to be “corrected by a court” in order for interest to be due.
G.L. c. 32, § 20(5)(c)(2) reads as follows:
When an error exists in the records maintained by the system or an error is made in computing a benefit and, as a result, a member or beneficiary receives from the system more or less than the member or beneficiary would have been entitled to receive had the records been correct or had the error not been made, the records or error shall be corrected and, as far as practicable, and future payments shall be adjusted so that the actuarial equivalent of the pension or benefit to which the member or beneficiary was correctly entitled shall be paid. If it is determined that a member has contributed an incorrect amount to the retirement system, the member shall be required to contribute an amount sufficient to correct such error or the board shall pay an amount to the member to correct such error, as the case may be. (Emphasis added.)
In accordance with the statute, an error still does exit in that the SBR is not paying the mandated “actuarial equivalent to the Petitioner. It must be noted that there is no language within Section 20(5)(c)(2), which governs the administration of retirement boards, that mandates that any adjustment to include interest be “corrected by a court.”
It must be noted here that retirement statute provides for direct appeals to the Division of Administrative Law Appeals and then to the next level, the Contributory Retirement Appeal Board, to determine factual and legal issues in appeal brought pursuant to G.L. c. 32, § 16(4). Subsequent appeals pursuant to G.L. 30A are limited in scope. These appeals related to any errors of law that may have been made at the agency level, and arbitrary and capricious conduct on the part of the agency, or the lack of evidentiary support in the record. Otherwise, the agency Decision is final. In this case, the SBR did not file a G.L. c. 30A appeal from the August 2015 Decision of the Contributory Retirement Appeal Board. Therefore, that Decision is the final word on the benefits to which the Petitioner is entitled.
The Petitioner has correctly contended that the Respondent’s interpretation of Herrick v. Essex County Retirement Board, 465 Mass. 801 (2013) is incorrect. Contrary to the SBR’s assertion, there is no language in Herrick, supra, that restrict the award of actuarial interest to cases in which errors are “corrected by a court.” In Herrick, the court stated:
We interpret § 20(5)(c)(2) to provide a remedy for all errors made by the board that affect the amount of benefits a member or beneficiary receives, allowing the error to be corrected so that members receive the actuarial equivalent of the benefits they would have received had the board not erred. Id., at p. 809.
In the case of Donoghue v. State Board of Retirement, CR-11-531 (Division of Administrative Law Appeals 05/08/2015; aff’d. Contributory Retirement Appeal Board 10/03/2016), it was noted that both the Public Employee Retirement Administration Commission and the State Board of Retirement (the Respondent) had adopted policies that advanced the notion that appropriate interest should be paid where a benefit adjustment has been made as a result of an error under G.L. c. 32, § 20(5) (c) (2), as well as when a court orders an adjustment. (Emphasis added.)
I am less sympathetic to the request of the Petitioner to require the SBR to allow her to make a partial purchase of her prior service. In actuality, that matter is not before me, and I do not have jurisdiction over the matter. The Petitioner’s original appeal on November 12, 2009 concerned the denial by the SBR of her request to purchase the entire amount of her prior service rendered between November 17, 1995 and November 30, 1976. It was the purchase of this service that was allowed by virtue of the August 2015 Decision of the Contributory Retirement Appeal Board. Any requested changes to that purchase are outside the scope of the present appeal. From the Petitioner’s written submission, it appears as if she acknowledges this fact as well.
In conclusion, the decision of the Respondent to deny the Petitioner’s request to include actuarial interest in the retroactive adjustment of her allowance is reversed. This matter is remanded back to said board in order for the board to recalculate the Petitioner’s retirement allowance to include the actuarial interest and make the appropriate payments.
Division of Administrative Law Appeals,
DATED: December 7, 2018