Goodrich v. Bd. of Trustees of Me. Pub. Employees Ret. Sys. Respondent, AP-10-11

• Decision Date: 17 March 2011
• Docket Number: AP-10-11
• Parties: ELLEN M. GOODRICH, Petitioner v. BOARD OF TRUSTEES of Maine Public Employees Retirement System Respondent
• Court: Maine Supreme Court

ELLEN M. GOODRICH, Petitioner

v.BOARD OF TRUSTEES of Maine Public Employees Retirement System Respondent

AP-10-11

STATE OF MAINE KENNEBEC SUPERIOR COURT

Dated: March 17, 2011

ORDER ON APPEAL OF ADMINISTRATIVE ACTION PURSUANT TO RULE 80C

Pending before the court is the March 4, 2010 appeal by the petitioner, Ellen M. Goodrich, from the February 23, 2010 decision of the Board of the Maine Public Employees Retirement System ("MPERS") denying Goodrich's appeal from a Hearing Officer's decision and upholding denial of her request for Group Life Insurance ("GLI") coverage. Goodrich contends that the MPERS Board's decision is in violation of statutory provisions, is unsupported by substantial evidence on the record as a whole, and is arbitrary and capricious and characterized by an abuse of discretion. The parties were heard at oral argument on September 9, 2010. The court has reviewed the record, considered the parties' written and oral presentations, reviewed pertinent case law, and issues the following order.

Factual Background

The facts, as found by MPERS, do not appear to be in dispute. The petitioner, age 52, resides in Vassalboro, Maine and has worked for School Union 52 for twenty-five years.¹ (R. 10.11, 25.5.) She is currently an education technician II. (Id.) Although she became eligible forGLI coverage in 1995, when educational technicians became classified as teachers for retirement system purposes, her employer did not inform her of this status. (R. 10.12-10.13, 25.5.)

On September 18, 2006, Lynn Pease, Survivor Services Supervisor at MPERS² , wrote to Ms. Goodrich, indicating that MPERS could not ascertain whether her employer had provided her a GLI application when she became eligible. (R. 1.10, 25.5.) Quoting the Maine State Retirement System Rule 601³ , the letter explained,

"Whenever it is determined...that, through an error by MSRS personnel or payroll personnel, deductions for insurance are not taken, the participant will be given the option to:

1. Pay back premiums from the date of eligibility or date last payments were taken;

2. File evidence of insurability with coverage effective on the date approved by the insurance company from which the policy was purchased; or

3. Wait for an open enrollment". (There are no plans for an open enrollment in the near future.)

(R. 1.10.) The letter went on to provide, "If you choose to select coverage and pay back premiums or are refusing coverage you should complete an Application for Group Life Insurance Coverage. ... If you select coverage we will calculate the premiums due from the date of your eligibility of March, 1997⁴ through the present and notify you of the amount." (Id.) The letter concluded, "If we have not received a response by October 18, 2006, you will be considered tohave refused coverage." (Id.) The petitioner acknowledged receiving the letter (R. 10.11, 25.5), but did not respond within thirty days or by the October 18, 2006 deadline. (R. 25.5.) She testified before the hearing officer that she did not elect option one, payment of back premiums, because she "did not feel it was [her] responsibility to pay back the premiums for something that [she] never received," and that it was not her fault that she had not had the insurance coverage initially. (R. 10.12.)

In January 2007, the petitioner filed a Request for Basic and / or Additional Insurance Coverage Requiring Evidence of Insurability with MPERS, noting on the application that she did not wish to make back premium payments. (R. 1.28, 25.5.) The record does not show whether the petitioner submitted the requisite evidence of insurability to Aetna at that time. (R. 25.5.) In June 2007, the petitioner's counsel requested that MPERS review the petitioner's eligibility based upon her recent submission. (R. 1.38, 25.5.) In July 2007, Ms. Pease informed the petitioner's counsel that Aetna had not received the required evidence of insurability form and requested that the petitioner submit one. (R. 1.35,25.5.) In October 2007, the petitioner filed another Request for Basic and / or Additional Insurance Coverage Requiring Evidence of Insurability. (R. 1.34, 25.5.) In November 2007, the petitioner filed the appropriate form with Aetna. (R. 10.24-25, 25.5.) In January 2008, Aetna notified the petitioner that it was declining coverage due to her current medical conditions. (R. 1.26-1.27, 25.5-25.6.)

In February 2008, the petitioner, through counsel, informed MPERS that Aetna had declined to insure the petitioner, and she requested that MPERS provide her with GLI on a prospective basis without requiring payment of back premiums. (R. 1.24, 25.6.) On March 10, 2008, Lynn Pease denied the petitioner's request on behalf of MPERS, explaining that because the petitioner had neither paid back premiums nor provided evidence of insurability within thirtydays from the September 2006 notification letter, she was considered to have refused coverage, and since her evidence of insurability resulted in denial of coverage by Aetna, she would remain refused. (R. 1.23, 25.6.) On or about April 11, 2008, the petitioner, through counsel, requested that the case be expedited in order for it to be consolidated with two other similar cases that were awaiting final decision by John C. Milazzo, Chief Deputy Executive Director and General Counsel of MPERS. (R. 1.21.) The record does not reflect any consolidation of this case with other pending cases. On April 18, 2008, Marlene McMullen-Pelsor, Manager of Payrolls Administration, Employer and Ancillary Services for MPERS, affirmed Ms. Pease's decision denying GLI coverage to the petitioner. (R. 1.22, 25.6.) On April 29, 2008, the petitioner appealed that decision on the ground that she had been entitled to GLI from 1995 on and that she had never refused it, in 1995, 1997, or 2006. (R. 1.18, 25.6.) On June 9, 2008, General Counsel Milazzo issued an Initial Decision affirming the staff's decision that the petitioner was not eligible for GLI coverage at that time because she had not complied with the terms of the September 2006 letter, so her only remaining option "was to apply under the evidence of insurability procedure," and Aetna's denial under that procedure was final. (R. 1.7-1.10, 25.6.) General Counsel Milazzo's final decision, issued December 9, 2008, attached and incorporated the initial decision because the petitioner had not presented new evidence or new arguments subsequent to the initial decision. (R. 1.5.)

The petitioner's appeal of General Counsel Milazzo's final decision was heard before hearing officer Rebekah Smith on March 27, 2009. (R. 10.1 et seq.) The hearing officer's report, dated June 3, 2009, recommended affirming General Counsel Milazzo's decision because the petitioner "did not enroll when initially offered the opportunity in 2006 and, as an employee later seeking coverage, she has been denied coverage by the insurer after submitting evidence ofinsurability." (R. 21.7.) MPERS's Board of Trustees adopted the recommendation of the hearing officer and, in a final decision dated February 23, 2010, affirmed General Counsel Milazzo's denial of GLI to the petitioner. (R. 25.9.) The petitioner timely appealed to this court.

Standard of Review

When reviewing an agency decision in its appellate capacity, "[t]he standard of review is 'limited to whether the governmental agency abused its discretion, committed an error of law, or made findings not supported by substantial evidence in the record.'" Seider v. Bd. of Exam'rs of Psychologists, 2000 ME 206,¶ 8, 762 A.2d 551, 555 (quoting Davric Maine Corp. v. Maine Harness Racing Comm'n, 1999 ME 99, ¶ 7, 732 A.2d 289, 293) (brackets omitted); see also 5 M.R.S. § 11007(4)(C) (2010) (On review, "ft]he court may . . . [r]everse or modify the decision if the administrative findings, inferences, conclusions or decisions are . . . [i]n violation of constitutional or statutory provisions [or u]nsupported by substantial evidence on the whole record"). "When the dispute involves an agency's interpretation of a statute administered by it, the agency's interpretation, although not conclusive, is entitled to great deference and will be upheld unless the statute plainly compels a contrary result." Maritime Energy v. Fund Ins. Review Bd., 2001 ME 45,¶ 7, 767 A.2d 812, 814 (quotations omitted).

"A person aggrieved by final agency action, stemming from an agency's adjudicatory role in which the agency has applied an agency regulation, may challenge both the agency action and the validity of the rule in the Superior Court action." Conservation Law Found, v. Dep't of Envtl. Prot., 2003 ME 62, ¶19, 823 A.2d 551, 558. "The standard of review for a challenge to the validity of a rule, whether raised in a declaratory judgment action or a Rule 80C petition, is contained in 5 M.R.S.A. § 8058(1)." Id. at ¶21, 823 A.2d at 559.

If the rule exceeds the rule-making authority of the agency, it is invalid. 5 M.R.S.A. § 8058(1). If a rule does not exceed the rule-making authority, the courtnext reviews "any other procedural error" related to the promulgation of the rule. Id. . . . Finally, if the rule is procedurally correct and within the agency's rulemaking authority, it is reviewed substantively "to determine whether the rule is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law." Id.

Id. Because the petitioner's appeal also consists of an attack upon the regulation applied as arbitrary and capricious and contrary to statute, the court must consider the standard of review for agency rules and regulations as well.

Discussion

The court agrees with MPERS's delineation of the issues in this case:

I. Whether Petitioner's automatic eligibility for GLI coverage began one month and one day after her first day of eligible employment in 1995, and expired thirty-one days thereafter.

II. Whether Petitioner refused GLI coverage in 2006 pursuant to Rule 601.

(Br. of Resp. at 2.) The corollary subissue to issue II, then, is whether the...