-: SJC-13637.
Michael Cannata versus Town of Mashpee.
-: Okay, Attorney Carter, whenever you're ready.
-: Good morning.
May it please the court.
This is an appeal from the granting of a motion
to dismiss of the appellant's verified complaint
seeking a declaratory judgment.
The lower court
basically interpreted Section 9 of General Laws
Chapter 32B, as requiring an employee
to be a participant in a town's group health insurance
at the time of retirement.
Town argued that at the time of the deferment,
Mr. Cannata should have applied and paid full policy rates
until retirement.
The facts of this case are
that Michael Cannata was a firefighter
in the town of Mashpee from September 8th, 1994
through December 19th, 2004,
which was a service time of 10.25 years.
The Barnesville County Retirement Board accepted
Mr. Cannata's years of service as vested,
and in fact, when he reached 55 on June 6th, 2021,
he started to receive his retirement
from the Barnesville County Retirement Board.
Simultaneously to applying to get his allowance
from the retirement board,
he requested the town of Mashpee to be able to re-enroll.
He had been, during his 10.25 years,
a full participant in the health insurance plan.
When he turned 55, he asked the town to re-enroll,
which the town refused.
They first gave a reason being that he was not full time,
that he did not have full years of service,
when Mr. Cannata showed evidence to the contrary,
the town changed their position
and basically said, "Well, we don't have a policy,
but it's been our practice to not allow deferred retirees
or retirees to re-enroll."
Now the courts have addressed this issue of 32B
through a line of cases.
The most relevant to this case, I would suggest,
is the McDonald case versus the town manager of Southbridge.
-: Is McDonald a, I can't remember,
there are three paragraphs.
Is that a paragraph one
or is it a paragraph three retirement?
Atty. Carter: For McDonald?
-: McDonald, I'm trying to understand
what type of retiree McDonald was,
because I understand the appeals court decision,
but I thought that the retiree was looked at as a 10,
whatever when you fill your requirements.
There are two different types of retirees, right?
I may not be using the proper terminology.
-: Tenure retiree.
-: Sorry, I can dig it up, but.
-: So McDonald was a firefighter who-
Justice Kafker: I know the facts.
But from what I understand.
Atty. Carter: He had an accidental disability retirement.
-: Right, but, again, I don't have the proper terminology
in place, but the question is,
is McDonald different from the SJC case
because it deals with a different type of retiree
as opposed to a deferred retiree,
whatever the proper terminology is.
-: Sure, I would say no,
because the issue that the appeals court hit
in this court has not overturned is whether a person who
retires, whether or not they can re-enroll
after retirement into the town plan.
And basically, the McDonald Court said
that there is nothing in the plain language
of 32B Section 9 that prevents a individual
from re-enrolling.
-: Okay, but here's my, the terminology.
Accordingly, Cannata is not a retiree by superannuation
as contemplated under paragraph one,
but a deferred retiree who is required
to follow the mandatory procedures in paragraph three.
That's what I'm trying to understand is what is McDonald?
The employee of McDonald, is he a deferred retiree like-
-: No. -: Your client here or is he a
superannuated retiree?
Which is different.
Atty. Carter: He was not a deferred retiree.
-: So isn't that important?
-: No, because again,
the appeals court addressed the issue of being...
Not the statute, not precluding someone
who wasn't on the plan from re-enrolling.
The statute basically doesn't say you cannot re-enroll.
So in other words,
the paragraph three that the town focuses on,
and that the lower court judge did,
basically sets a president.
But as the McDonald Court, in its note,
in a note, basically addressed that.
And paragraph three basically talks about
an insured employee.
Now, in this case, Cannata was not an insured employee.
And basically what the McDonald Court said was,
"Look, if you terminate your services prior to retirement,
you have a right to stay on the plan."
That's what paragraph three says.
To stay on that plan, you have to fill out an application
and pay 100%.
With the McDonald Court was talking about,
was other than insured employees, which is what Cannata was,
he wasn't an insured employee.
He was up until he deferred his retirement.
And then he then went to re-enroll.
And again, the McDonald court based their decision
on basically three factors.
They looked at the broad policy of the statute
to provide coverage.
They talked about statutory language,
which admits of more than one reading,
and they also relied on the group insurance commission
interpretation of a parallel.
-: I'm gonna give you a chance to,
your sister's gonna stand up
and argue the following from her brief.
McDonald only applies
to paragraph one, superannuation retirement
and not paragraph three, deferred retirement,
which requires the employee to be insured
for the continuation of benefits upon retirement.
Tell me why that's wrong, okay?
-: Okay, so paragraph three,
reading from the McDonald decision,
in their footnote, it says,
"It's noteworthy that the third paragraph of 32B Section 9,
which gives rights to employees
who terminate their services prior
to retirement speaks of insured employees.
The portion of Section 9 we are concerned with
does not say insured employees who retire,"
which is what Cannata was.
He was not an insured employee at the time of retirement.
And the McDonald Court said there's nothing
in the plain language of Section 9 that prevents
or preclude someone from re-enrolling.
-: Counsel, here's a question for you.
I don't know how to pronounce it, but the CIOC case?
Is that?
The C-I-O-C?
Atty. Carter: Yeah, I would've butchered it.
-: Well, we'll call, with apologies to the CIOCS out there,
if that's wrong, I'm gonna call it the CIOC case.
In that case, the court was careful to note in a footnote
that it was not dealing
with the situation of deferred retirees.
And here's my question is,
the bottom line of McDonald and CIOC
is that the statute doesn't preclude covering these people.
And the question it seems to me is about,
there are two parts.
First, you know, could a town have a policy of saying,
"We're gonna cover the McDonalds of the world,
we're gonna cover the people who,
at the time of their retirement,
they've been in service,
they haven't been using the benefits
'cause they've got it from their spouse."
At the time of their entire retirement,
they say, "I wanna sign up for healthcare now,
health insurance now."
"We're gonna cover those people,
but we're not gonna cover the people
who appear 12 years later as deferred retirees
and then suddenly want to get retirement."
Aren't they different, those people differently situated
and the town, their different kinds of retirees
and a town theoretically, I'm not talking about this case,
but theoretically could have different policies,
clear written policies saying, "We will cover the McDonalds,
we will not cover the deferred retirees."
Is that true?
-: I would agree with you
because I think that's what the CIOC said.
-: All right, so given that we're agreement in agreement
on that, I think the real question here is about,
whether there's a policy, right?
-: And there wasn't.
In fact, the town manager wrote and said,
"We don't have a policy."
Justice Dewar: But we have?
-: But we have a practice.
-: And we are at the motion to dismiss stage, right?
-: Correct. -: And in your
client's complaint,
you don't allege that the town has a policy.
-: I'm sorry. -: You don't allege
that the town has a policy of the type called
for in CIOC and McDonald.
Atty. Carter: That is, I don't allege that they have.
-: Right. -: Any practice.
-: And under the motion for 12 B6,
we have to take the allegations in your complaint
as true, right?
-: Correct. -: Okay.
Justice Dewar: Did you attach
that letter to your complaint?
You attached it, didn't you attach
the letter to your complaint?
It's incorporated into your complaint,
the town manager's letter?
-: Yes.
Yes, so in the CIOC case,
this court basically said the town is free
to adopt a policy.
There is no policy,
and in this court,
reemphasized or supported the McDonald case saying
that there was nothing in the statute
that preclude someone from re-enrolling.
-: Let me ask you a question then to follow up on that.
If the statute doesn't preclude someone from re-enrolling,
but doesn't mandate a town to provide re-enrollment
for deferred retirement employee,
and you don't allege that the town had,
and your allegation is that the town didn't have a practice
or a policy, where does that leave your client?
-: He should, under the McDonald decision,
he should have a right to re-enroll.
-: Why, under what theory?
Under the statute?
The statute doesn't, I thought we just,
I thought you've agreed that the statute doesn't mandate
a right to re-enroll?
-: But as the courts have said,
it doesn't preclude the right to re-enroll.
-: Okay, it doesn't preclude,
but it doesn't mandate.
Just leaves it sort of up to the town.
And in this case,
the town hasn't adopted a policy saying that...
The employee, the former employee,
will have an ability to re-enroll.
So on what theory
does your client's claim that he's entitled to re-enroll?
Rest, there's no policy and there's no statute mandating it.
-: So, I look at it this way.
He retires under the law with vested rights.
So he gets one benefit.
There's a statute that talks about
how towns have to cover health insurance through retirement.
That's what the courts have interpreted 32B to say.
And by now, the court's saying,
"Okay, you get this benefit over here,
but you don't get this benefit over here.
You have the years of service
and there's a statute out there that the towns accepted 32B
that talks about insurance through retirement."
And the cases have defined that
as saying, "It doesn't mean that you have to be enrolled
at the time you start taking retirement."
-: Well, I think the cases have said
that the town can cover people if they were not enrolled
at the time of retirement.
And following up on Justice Wolohojian's question, you know,
I recognize we don't necessarily have
to do this at the motion to dismiss stage,
but let's just grant that the letter is correct, right?
And so the town manager's letter saying,
the second answer saying that, you know,
"We just haven't covered these people.
We haven't covered these people,
but we haven't put that in writing."
So the implications of your argument,
implication of your argument if your client is to prevail is
that every town that doesn't want to cover these people
has to put in a policy saying,
"We don't wanna cover any of the people
we are potentially allowed to cover
to the full extent of the law."
-: It's like the Galinsky case.
In that case, the town of Irving put a policy in
that this court basically said was
in violation or contradicted the statute.
So it's a local option statute.
So if a town decides to accept 32B,
then they're accepting it,
but they have the right to limit it as long as it's in-
-: Well, hold on.
You just agreed that the statute doesn't positively
provide itself, compel towns to cover deferred retirees
who were not previously enrolled, correct?
-: No, because I think 32B,
the way it's been interpreted basically says
that this is a plan, once we cover an employee,
it's a plan from active service through retirement.
That's really what 32B says.
-: So you think that actually he does have a right
under the statute and that the town could not put
in a policy saying, "We are not covering deferred retirees?"
-: No, I think the town based on the CIOC decision
can put in a policy specifically.
-: Well, then that- -: In this particular case,
they didn't.
-: Well, in that case, I don't understand the argument.
If a statute mandates
that a person, in your client's shoes,
can receive insurance upon retirement,
then how could a town have the authority to undo that
with a policy, if it's a statute, a state statute?
-: The town, based on a CIOC decision,
a town can adopt a policy,
limiting or addressing as long
as they don't violate the statute.
And in CIOC, they basically put a thing in that said,
"Hey, we won't insure you
unless you were insured with us at the time of retirement."
-: That's why you need McDonald.
McDonald's the only case that says,
"If they don't put their policy in writing, you win."
Right?
-: That's correct. -: Your whole argument is based
on McDonald's, Justice Dreben's opinion in McDonald,
which says, "Because they didn't put it in writing,
they can't rely on it."
But again, it wasn't a deferred comp case,
it was a case in which the employee had been receiving
health insurance from their spouse, right?
-: Yes. -: So again,
but your whole argument is not,
is literally based on McDonald.
Atty. Carter: It is.
-: Yeah. -: It is.
And the fact that the statute is there
to help people who dedicate
or you put the years of service in that allows them
to receive their retirement allowance.
And the McDonald case says that
that statute carries over through retirement.
There's nothing in the statute through Larson,
through CIOC, through Galinsky, that says
that you cannot preclude someone from re-enrolling.
Those cases have all stood the test of time up until now.
So I would suggest, respectfully,
that Mr. Cannata should be allowed to re-enroll
into the town.
-: Okay. -: Thank you.
Attorney Whalen.
-: Good morning, Chief Justice and Associate Justices.
May it please the court, Susan Whalen,
on behalf of the town of Mashpee.
The town is respectfully requesting
that the court affirm the lower courts motion,
granting of the town's motion to dismiss under 12 B6.
The lower court correctly applied the facts alleging
the complaint to the plain meaning of Section 9,
paragraph three,
and this court's precedent in Larson v School Committee
of Plymouth in finding that the appellant failed
to plead sufficient facts to establish that he was entitled
to opt back into the town's health insurance plans
upon his deferred retirement, 16 and a half years
after his voluntary resignation
and his admitted non-participation
in the town's health insurance plans
during the entire period of his deferral.
-: Can you just walk me through how
Section 9 paragraph three
requires
a person who defers,
who's entitled to retirement but defers it.
How that requires upon retirement
for the employee, former employee to have
complied with paragraph three?
That is, I'm sorry, I asked such a confusing question.
Paragraph three to me at least literally read seems
to be about that interim period,
the period when the employee leaves
the public employee,
municipalities employment
is doing something else but hasn't retired,
but is entitled to retire or at some point and then retire.
So during that interim period
before retirement, paragraph three governs.
Upon retirement, it seems to me,
paragraph one starts applying to that person.
-: Well, Your Honor, you're correct
that paragraph three does refer to specifically
for deferred retirees.
And it is the statutory scheme that the legislature enacted
and amended the law in 1971 to take,
to address specifically this group of employees
who meet the minimum of credible service,
10 years vest,
go away for decades and decades,
in the private sector, where else, not in public employment.
And then when they meet the statutory age,
they can receive their retirement benefits,
which is separate, obviously,
and not paid for through the town's municipal finances.
It comes out of the retirement system
and then unbeknownst to the town, come back and say,
"Town taxpayers, we want you to now to pay
for our mine and my dependents health insurance
for the rest of our lives."
That is completely contrary
to the legislative intent of chapter 32B.
-: No, I'm just sticking to the words of the statute.
So paragraph three starts with prior to retirement
and then discusses the steps that somebody
who has the years of service
but is too young to retire needs to do.
And then,
so it seems to me paragraph three covers
that interim period prior to retirement.
-: That's correct. -: Whereas paragraph one
is about upon retirement.
-: That's correct. -: And so,
Mr. Cannata is now,
paragraph one employee because he's retired.
-: But that, and if to make that, to bring,
to have that interpretation, Your Honor,
that completely negates the provision of paragraph three.
Which is- -: Paragraph three
would still have some meaning for that interim period.
-: But the court's precedent,
which is completely on paragraph one,
which is about retirees.
And as Justice Kafker had asked my brother previously,
paragraph one is different than paragraph three
and that it was distinguished in McDonald.
All that is a retiree continues,
the law requires the maintenance
and the continuance of health insurance benefits
for a retiree in paragraph one.
The town by any policy or procedure or practice
could not negate that requirement
and the town does not, if you have pre-enrollment,
pre-retirement enrollment,
that is maintained pre-separation.
The appellant did have
or did participate in health insurance.
He separated in 2004,
he then left for 16 and a half years,
and did not continue it.
So there's nothing to be maintained,
there's nothing to continue into his retirement into 2021.
-: Well, if you read it as paragraph three
being a requirement for paragraph one,
which is I think what your position is.
Atty. Whalen: The position is that is-
-: In order for paragraph one to trigger,
the employee who retires, who leaves the employment early,
needs to continue that insurance,
health insurance through that interim period with the town.
-: That's correct. -: In order for then
to get paragraph one insurance upon retirement.
-: Right, exactly. -: And I'm wondering
where in the statutory language you're seeing that.
-: Well, this court in the statutory language,
it was clearly amended in 1971
to extend these debt benefits
to a retiree deferred retirees.
They could participate, but they had to apply
and they had to pay a hundred percent of the premium.
I would submit that-
-: And in 1971 when that happened,
was there some explanation that these deferred retirees
needed to have.
-: There was a- -: That in order
to upon retirement,
get the health insurance of paragraph one?
-: The legislative history is silent on that, Your Honor.
What it is though, what one would believe that
or at least interpret what the legislative mandate is
since Chapter 32B is in a comprehensive scheme
and it is a cost savings plan,
which is what the legislature has been for decades
and decades been concerned about is
how do we maintain health insurance costs for cities
and towns and municipalities.
And since there is the continuation
and the maintenance of insurance
for paragraph one, superannuation retirees,
they do get the most, the greatest benefits as court
has held that previously.
-: Excuse me, counsel,
just to go back to the text of the statute.
So I assume that you think that the strongest argument
that you have in the first paragraph of Section 9
is simply the words, "Shall be continued,"
which is to say that, you know, upon retirement,
your health insurance benefits shall be continued
and if you have not been having any benefits
for a very long time, there's nothing to continue.
-: That's correct. -: In response to that though,
how do you deal
with the first sentence of the third paragraph,
which doesn't actually con concern, or sorry,
the first clause before up to leading up to the semicolon,
which doesn't really concern requirements
for how to continue during the interim period,
but says, "Prior to retirement,
an insured employee who terminates his services,
dah, dah, dah, dah, who has a right to retire,
but whose retirement is deferred
shall for purposes of this chapter,
only be deemed to have been granted
a leave of absence without pay."
So paragraph three instructs us
that we're supposed to have considered
Mr. Cannata as having been
on a leave of absence without pay.
And so, he does have something to continue, right?
Does he not, because he was enrolled
at the time of his retire, his leaving his position.
-: Yes, but he didn't do that.
I mean, if he had continued and maintained
and follow the statutory steps
and had paid a hundred percent of the premium
for those 16 and a half years,
he would then be entitled
to have his participate in the town's plan upon retirement.
I think what isn't clear
and potentially could need to be further defined
by this court is at what rate?
Section 3, paragraph three clearly says,
"Deferred retirees are a lesser class
than a superannuation retiree in paragraph one."
And they must pay a hundred percent
to maintain their coverage
and their participation.
When they do retire and if they had done that,
which the appellant clearly did not do,
and it's undisputed, when they do do that,
at what rate do they participate in the town?
Do they get to reap the benefits of 9E
which the town provides 75% of the premium?
We would submit
that the reason the legislature put in paragraph three
and in fact made it onerous, which is make it difficult.
If you have only 10 years of service,
you go away for decades and decades and decades,
and you don't pay that a hundred percent
and maintain your participation in the town plans,
then you could come right back
after decades and the town doesn't even know
who these people are and what their liability is.
-: Before going too far down the policy argument,
as I understand your argument so far,
you cannot point to any language in Section 9
that makes entitlement under the first paragraph
subject to the third paragraph.
Atty. Whalen: They're just separate classes of retirees,
Your Honor. -: Right, so entitlement
to whatever paragraph one provides
is not explicitly contingent upon having opted
to pay for your own insurance
during the period of leave of absence under paragraph three.
-: Well, we believe that paragraph three is a condition
to be able to- -: If you say that,
I'm going to ask you to show me the language that says it.
-: It's not in the specific language here.
-: Okay, so I asked about whether it's explicit,
so there's nothing explicit.
Is this where then your argument
about the town's practice comes in?
-: Yes, Your Honor. -: Is that where you're
trying to fill the gap in the statutory language?
-: And in the legislative intent that towns,
just because someone has had 10 years of vested service
and is able to participate in after decades
and receive benefits from the separate bank,
which is the retirement system,
they can't come back into the town
and ask the local taxpayers to pay for their-
-: I understand the policy argument.
I'm trying to get at a separate issue.
Do you have any legal authority for the proposition
that we can look at a
town's practice in interpreting
a state statute to fill the gap?
A language gap in the state statute?
-: No, Your Honor.
No practice or policy that the town could enact
would supersede specific and clear statute.
-: Here we're talking about a gap
because I think we just established
that there's no explicit language making paragraph one
entitlement subject to paragraph three participation.
-: That's correct, there is a gap,
but again, under the policy of Chapter 32B
and the legislative intent,
they put that there for a reason and they made it onerous.
-: All right, so let's assume we were to adopt this argument,
your argument in that regard.
And so something,
the outcome in some way depends
upon the town's practice.
How could that properly have been,
how could the town's practice properly have been determined
on a motion to dismiss?
Wouldn't that have required factual development?
-: Well, there was attached to the plaintiff.
-: The attached to the complaint were contradictory
explanations from the town.
-: Well, there were the letters that explained.
There were two reasons.
One, the plaintiff did not,
was not enrolled upon retirement,
which has been the town's consistent practice.
-: But regardless of what the letters say,
12 B6 remind me of the standard.
Don't we have to view things in the light most favorable
to the claim? -: Absolutely, Your Honor.
Yes. -: Okay.
So, the most favorable
for Mr. Cannata would be that there is no town policy,
they're just making the stuff up.
-: Well, again, the town does have a practice and-
-: [Justice Wendlandt] But that's not in his complaint.
-: Well, the town, he does state that the town failed
to provide a practice.
-: Right. -: Or a policy.
-: Right. -: A written policy.
The issue is the town has a practice
and this court would then need to say that,
"Well, the town has to have it in writing and anticipate."
-: Or we need to know what the practice is,
given the contradictory things
that are in the letters, right?
-: Well, the letters, I don't believe are contradictory,
Your Honor, I believe that they state
that there were two reasons.
One, there wasn't pre-retirement enrollment,
which is required.
So everyone who in the town who for
is continued into retirement has had.
-: So can I ask you just to pivot back
to the legislative intent,
because you said the legislative intent of paragraph three
was something, and I'm trying to figure out
where you found that.
-: Well, in terms of looking
at the overall legislative intent of 32B,
clearly 32B is a cost savings plan
and the sole mechanism
which cities and towns may provide and purchase
and insurance benefits for their employees
and their retirees.
So we have all of the legislative history
which this court has.
-: So you're saying because the intent was cost savings,
paragraph three registration
during this interim period is required
because that would be the most cost savings for the town?
-: Absolutely, Your Honor.
I mean, here you have,
in the case at bar, we have someone with the bare minimum
of vested time, which is 10 years, 10.2 years.
But in this case, and when-
-: Is there any argument
that letting Mr. Cannata re-enroll
as a retiree actually results in some cost savings?
-: Doesn't cost in cost saving,
it results in tremendous cost
and burden to the municipality.
-: Even though he's one more participating as a group?
-: Absolutely.
I mean, as I'm sure you know,
in your own private experiences that health insurance
and the cost for health insurance is extraordinary
and that's one of the main drivers for cities
and towns is the ,you know, extreme cost
that it has on their physical wellbeing.
-: Can I ask you, and you articulate a
very sound public policy argument to your position.
Do we have cases that say that the legislative intent
and how we view the statute coincides
with that public policy argument?
Atty. Whalen: That is a cost savings?
-: Right. -: Yes, Your Honor.
I mean, this court certainly in Connors v City of Boston,
which is a 1999 case, I believe,
went extensively through the legislative history
as well as this court
most recently in Boss vs. Leverett in 2020.
Again, addressed the legislative history
that it is clearly a cost savings mechanism
and scheme that the legislature has been for decades
and decades right from the beginning,
intended to have the most advantageous plan for cities
and towns, you know, the economies of scale,
the ability to provide benefits.
-: So with that lens,
we then read section paragraph three
as a precondition to paragraph one.
-: That is how the town has read it.
And that is why we don't need a policy.
Paragraph three is the law.
There's no policy that the town can enact,
written or otherwise that can supersede the law.
We believe that Section 3,
paragraph three is a condition precedent.
It's a necessary bridge that brings a deferred retiree
who has the minimum level of service, 10 years,
decades later.
And if they meet those conditions, then yes,
they're welcome back into the town's plan
because again, the town has an obligation
under paragraph one to continue health insurance benefits.
-: Except that paragraph one says
that the employee shall under paragraph one,
shall pay the full premium cost.
-: Well, and then that was of course amended, Your Honor.
That's the default provision,
certainly as this court address-
-: Right, the town could have chosen
to stick with paragraph one,
but instead, the town chose under paragraph 9E?
-: Correct. -: To pick up more.
-: Yes, and it's just as this court has held,
that's just the amount of contribution by the town.
It doesn't, 9E, adopting 9E, when the town did in 2004,
doesn't supersede the continuation of benefits
in the default provision,
which is Section 9, paragraph one.
-: Sorry, just one clarifying question.
So in your view, if he had done the bridge as you said,
and been paid full freight for all those years,
would he then have to continue
to pay full freight upon retirement
or would he then switch to being a paragraph one retiree
upon retirement?
-: Your Honor, respectfully,
I believe that is the question for this court.
It's not clear.
I think you can make an argument both ways.
I won't pretend
or stand in your shoes as to which way it should be.