Hartnett v. Contributory Ret. App. Bd.

241 N.E.3d 43

494 Mass. 612

Susan HARTNETT

v.CONTRIBUTORY RETIREMENT APPEAL BOARD & others.¹

SJC-13568

Supreme Judicial Court of Massachusetts, Suffolk.

Argued May 8, 2024.

Decided September 11, 2024.

Public Employment, Retirement. Retirement. Pension. Municipal Corporations, Retirement board, Pensions. Contributory Retirement Appeal Board. Public Employee Retirement Administration Commission. Administrative Law, Agency’s interpretation of statute. Statute, Construction. Practice, Civil, Judgment on the pleadings. Words, "Two consecutive years."

Civil action commenced in the Superior Court Department on October 1, 2021.

The case was heard by Jackie A. Cowin, J., on motions for judgment on the pleadings.

The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

Maryanne Reynolds, Assistant Attorney General, for Contributory Retirement Appeal Board & another.

Natacha Thomas for Boston retirement system.

Gerald A. McDonough (Thomas F. Gibson, Cambridge, also present) for the plaintiff.

Present: Budd, C.J., Gaziano, Kafker, Wendlandt, Georges, & Wolohojian, JJ.

WENDLANDT, J.

₆₁₂This case concerns the question whether the years 1990 and 2002 are "[two] consecutive years" as that phrase is used in the second sentence of the public employee pension statute, G. L. c. 32, § 5 (2) (a) (anti spiking provision). Retirement benefits for a member of the public pension system depend ₆₁₃on the member’s annual compensation over a specified period of time, including the years of service immediately before the member’s retirement. Enacted as part of broader reforms to the public pension system in the wake of the Great Recession,² the anti spiking provision precludes a public pension plan member from garnering a disproportionate pension payment based on a sudden "spike" in the member’s annual salary near the end of her public employment. The provision requires examination of a look-back period of five years of qualifying service immediately prior to retirement. If, between any "[two] consecutive years" during that look-back period, the member’s salary more than doubles, the standard rules for calculating the member’s pension amount are replaced by those set forth in the anti spiking provision.

The defendants Contributory Retirement Appeal Board (CRAB), Public Employee Retirement Administration Commission (PE RAC), and Boston retirement system (BRS) (collectively, agencies) contend that the plaintiff, Susan Hartnett, who worked for the Commonwealth until 1990 and then rejoined public service twelve years later in 2002 at a salary that was more than double her 1990 salary, is subject to the anti spiking provision because her years of service in 1990 and 2002 are "[two] consecutive years." Concluding that the anti spiking provision is not triggered because the years 1990 and 2002 are not "[two] consecutive years" under the anti spiking provision, we affirm the Superior Court judge’s judgment in favor of Hartnett.

1. Background. a. Facts. The following facts largely are undisputed. Hartnett worked for the Commonwealth from 1978 to 1990. During that time, she paid contributions to the State retirement system. When she left State service, she withdrew her pension plan contributions. See G. L. c. 32, § 10 (4). Thereafter, Hartnett earned a master’s degree in public administration and for the next decade worked for a nonprofit organization.

In July 2002, Hartnett returned to public service, this time working for the city of Boston (city) and receiving an annual compensation more than double the amount she had received in 1990, twelve years earlier. Hartnett continued in public service with the city for approximately three years and eight months, ₆₁₄during which time she paid into the BRS pension plan. Prior to the end of her employment by the city, as provided by G. L. c. 32, § 3 (6) (d), she bought back her pension plan contributions for her prior years of State senice.³ She left the city’s employ in April 2006, but deferred her retirement.

In 2016, following the Legislature’s passage of the 2011 Pension Reform Act, St. 2011, c. 176, which included the anti spiking provision, see infra, Hartnett informed BRS that she was retired. Although BRS initially calculated her pension amount without applying the anti spiking provision, after an audit by PERAC, BRS informed Hartnett that the anti spiking provision governed the amount she was due under the pension statute, reducing her monthly benefit amount by approximately $500. BRS also sought to recoup past overpayment.

b. Prior proceedings. Hartnett challenged BRS’s application of the anti spiking provision, appealing the decision to CRAB, which then assigned the appeal to the Division of Administrative Law Appeals (DALA); PERAC subsequently was permitted to intervene as a party. The DALA administrative magistrate affirmed BRS’s decision to apply the anti spiking provision. Hartnett then appealed to CRAB, which affirmed the DALA administrative magistrate’s decision.

Hartnett next sought judicial review of CRAB’s decision in the Superior Court pursuant to G. L. c. 30A, § 14. On cross motions for judgment on the pleadings, a Superior Court judge entered a judgment in favor of Hartnett. The judge agreed with CRAB that the anti spiking provision generally would apply to a member in Hartnett’s circumstances because " ‘[two] consecutive years’ in the [anti spiking provision] means [two] consecutive years of creditable service, whether contiguous or not." However, the judge also determined that application of the anti spiking provision would violate G. L. c. 32, § 25 (5).⁴

The agencies timely appealed, and Hartnett filed a timely cross appeal. We transferred the case to this court sua sponte.

2. Discussion. "Pursuant to G. L. c. 32, public employees who participate in the Commonwealth’s retirement system … and ₆₁₅meet certain age and years of service criteria receive a government pension … at retirement." O’Leary v. Contributory Retirement Appeal Bd., 490 Mass. 480, 481, 191 N.E.3d 1045 (2022). Relevant to the present case, for members joining before April 2, 2012, the pension amount received by the member depends on the greater of either the highest average annual amount of regular compensation for "three consecutive years of creditable service" or the average annual amount of regular compensation for the final three years of creditable service, "whether consecutive or not"⁵ (emphases added). G. L. c. 32, § 5 (2) (a).

The aforementioned standard calculation does not govern the amount a member receives if the anti spiking provision is triggered. The anti spiking provision provides:

"Notwithstanding the previous sentence, if in the [five] years of creditable service immediately preceding retirement, the difference in the annual rate of regular compensation between any [two] consecutive years exceeds [one hundred percent], the normal yearly amount of the retirement allowance shall be based on the average annual rate of regular compensation received by the member during the period of [five] consecutive years preceding retirement" (emphasis added).

G. L. c. 32, § 5 (2) (a). Put another way, the anti spiking provision governs if during the look-back period - the five years of creditable service immediately preceding retirement - the member’s annual compensation between any "[two] consecutive years" more than doubled. Id.

The agencies contend that "[two] consecutive years" means "two years of creditable service that immediately follow each ₆₁₆other without another intervening year of creditable service." Applying this construction, the agencies argue that the years 1990, when Hartnett left State service, and 2002, when Hartnett returned to public service for the city, are two consecutive years. In contrast, Hartnett contends that the "[two] consecutive years" must be two back-to-back years. As such, she maintains that the phrase does not capture years separated by a gap of twelve years.

[1, 2] a. Standard of review. A party challenging an agency’s determination generally bears a "heavy burden" (citation omitted). Police Dep’t of Boston v. Kavaleski, 463 Mass. 680, 689, 978 N.E.2d 55 (2012). We grant deference to an agency’s reasonable interpretation of a statute it is tasked with enforcing. Alves’s Case, 451 Mass. 171, 173, 884 N.E.2d 468 (2008). See Boston Retirement Bd. v. Contributory Retirement Appeal Bd., 441 Mass. 78, 82, 803 N.E.2d 325 (2004) (deferring to PERAC’s interpretation of provision of G. L. c. 32).

[3, 4] The weight we give to an agency’s decision is, however, "one of deference, not abdication, and this court will … overrule agency interpretations of statutes or rules when those interpretations are arbitrary or unreasonable" (quotation and citation omitted). Armstrong v. Secretary of Energy & Envtl. Affairs, 490 Mass. 243, 247, 189 N.E.3d 1212 (2022). An issue of statutory interpretation "presents a question of law for the court," Pelonzi v. Retirement Bd. of Beverly, 451 Mass. 475, 478 n.8, 886 N.E.2d 707 (2008), and "[w]here an agency determination involves a question of law, it is subject to de novo judicial review," Flemings v. Contributory Retirement Appeal Bd., 431 Mass. 374, 375, 727 N.E.2d 1147 (2000).

[5, 6] In construing a statute, "we begin with its plain language." Matter of the Estate of Mason, 493 Mass. 148, 152, 222 N.E.3d 1082 (2023), quoting Metcalf v. BSC Group, Inc., 492 Mass. 676, 214 N.E.3d 1043 (2023). This is because "a statute must be interpreted according to the intent of the Legislature," which we derive "from all [of the statute’s] words construed by the ordinary and approved usage of the language, considered in connection with the cause of its enactment, the mischief or imperfection to be remedied and the main object to be accomplished." Matter of the Estate of Mason, supra at 151, 222 N.E.3d 1082, quoting Harvard Crimson, Inc. v. President & Fellows Of Harvard College, 445 Mass. 745, 749, 840 N.E.2d 518 (2006).

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