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.