Mass Appeals Court Affirms That Public Employees Who Commit Crimes May Lose Retirement Benefits

On January 18, 2013, the Massachusetts Appeals Court released three decisions that dealt with state law that forfeits certain pension rights for public employee who engaged in criminal acts. All three cases dealt with the particular section of the law that compels the forfeiture of a retirement allowance if the employee is convicted of a crime related to his or her office or position. In two cases, the Court found the crimes committed were related to the public employee’s position, whereas in one case, the Court found that it did not. There is a remote chance that the Supreme Judicial Court will agree to review one or all three cases.

The Massachusetts legislature and courts have long been unsympathetic to public employees who engage in criminal conduct, whether on or off duty. Massachusetts public employees who engage in criminal misconduct can lose their job, their health insurance, and their liberty. Massachusetts courts have refused to reinstate public employees, even when a neutral arbitrator concludes that the employees were unjustly terminated, if the employees committed certain criminal acts. To add insult to injury and to deter employees from committing criminal acts, public employees also can lose some or all of their pension and retirement benefits.

Let’s start with a brief overview of the ways that the legislature penalizes the pensions of public employees who engage in misconduct. Under G.L. c. 32, Section 10, a public employee who is terminated for “moral turpitude” can lose their right to a retirement allowance. Under G.L. c. 32, Section 15, public employees forfeit their retirement allowance, if a retirement board finds that the employee misappropriated funds or property of their government employer. See G.L. c. 32, Section 15(1). This forfeiture applies even if the employee is never convicted of a crime. See G.L. c. 32, Section 15(1)-(2). The employee is entitled to a refund of their contributions, minus the expenses necessary to provide full restitution for misappropriation and the board’s costs in pursuing the forfeiture. See G.L. c. 32, Section 15(1)

If, however, the employee is actually convicted for misappropriation, then forfeiture of retirement benefits is automatic and the employee is entitled to a refund of contributions once the employee makes restitution for misappropriation. See G.L. c. 32, Section 15(3). Same goes if the employee is convicted for violation of the state’s anti-bribery/anti-corruption/anti-extortion laws, in relation to police or licensing duties. See G.L. c. 32, Section 15(3). The employee also loses the right to refund of retirement contributions.

Even if the public employee obtained no personal gain from the criminal conduct, the employee still can lose their right to a retirement allowance if convicted of a crime relating to their office or position. See G.L. c. 32, Section 15(4). Public employee who “merely” are convicted of a crime related to their office or position are entitled to a refund of their contributions to the retirement system (although without interest). Courts have been quite willing to apply this provision to public employees.

The legislature has turned up the heat and penalties in recent years. In 2011, the General Court added a provision that required public employees to refund any retirement benefits received after they committed the act that led to the conviction. See G.L. c. 32, Section 15(6). In 2012, the General Court prohibited public employees from receiving a retirement based upon any compensation intentionally withheld or intentionally misreported to any place that the employee was required to report this compensation. This penalty applies, even if the reporting was not required for purposes of pension calculations.
In Flaherty v. Justices of Haverhill Div. of Trial Court, the head of Haverhill’s Highway Department stole at least $500 of paving supplies from the City. (This crime was a family affair, as Flaherty involved his son). He retired, started receiving retirement benefits, and then was convicted two years later. He received $148,000 in retirement benefits, whereas he contributed only $84,000 throughout his employment to his retirement account. Under G.L. c. 32, Section 15(4), he lost his right to a retirement allowance but was entitled to a refund of his contributions into the system, minus the benefits he received. As such, he was ordered to refund $64,000. The Appeals Court upheld this penalty and rejected Flaherty’s claim that the punishment violated the excessive fines clause of the 8th Amendment of the U.S. Constitution. The Court also rejected his claim that he was entitled under the law to keep the benefits he received until he was convicted.

In Durkin v. Boston Retirement, a police officer, while off duty and inebriated, mistakenly shot a fellow police officer. He pled guilty to assault and battery by means of a dangerous weapon. The Appeals Court affirmed that the criminal convicted triggered the penalties under G.L. c. 32, Section 15(4), as it found that the A&B related to the police officer position. The court wrote,“This violation was directly related to his position as a police officer as it demonstrated a violation of the public's trust as well as a repudiation of his official duties. Clearly, at the heart of a police officer's role is the unwavering obligation to protect life, which Durkin himself recognized at his hearing. His extreme actions violated the integrity of the system to which he was sworn to uphold.”

The troublesome nature of this case is that it could be read by less sophisticated judges or retirement boards to seek the loss of a pension if the police officer committed any crime. After all, a police officer is expected to enforce traffic laws and a conviction for DUI or simply speeding, some might argue, is related to their office or duty. However, one should anticipate that the court’s conclusion was connected to the extreme and unusual facts – an unjustified and inebriated shooting of a fellow officer, followed by leaving the scene.

The case of Retirement Board of Maynard v. Tyler, which involves the most reprehensible and horrifying allegations of the three cases here, demonstrates that not all crimes committed by public employees result in the loss of a pension. This case involved a firefighter who sexually abused a child of a fellow firefighter and a relative of another. The Court held that these crimes, despicable as they are, did not relate to the official duty or position of being a firefighter or EMT, given that they occurred off duty and on private property. Had the sexual abuse occurred while the employee was on duty, or uniformed, or at a fire station, the result might have been different.

The Court noted that Tyler could have been fired for moral turpitude, which would have resulted in the loss of his pension. But the Town never sought this option.