Hawes v. Maine Public Employees Retirement System

STATE OF MAINE SUPERIOR COURT
KENNEBEC, SS. CIVIL ACTION
DOCKET NO. AP-20-48

SUSAN M. HAWES,
Petitioner

V. DECISION AND ORDER
(M.R.Civ. P. 80C)

MAINE PUBLIC EMPLOYEES
RETIREMENT SYSTEM, BOARD
OF TRUSTEES
Respondent

INTRODUCTION
Before the court is the Petition for Review of Final Agency Action filed by
Susan M. Hawes, seeking to reverse the decision of the Board of Trustees of the
Maine Public Employees Retirement System (MPERS or the System) that adopted
the Recommended Final Decision of the Administrative Hearing Officer. The
appeal purports to be brought pursuant to 5 M.R. S. §§ 11001-11002 (Maine
Administrative Procedure Act) and M.R.Civ.P. 80C.
For the reasons discussed below, the court concludes that Ms. Hawes lacks
standing to bring this petition on her own beahlf and, therefore, it must be dismissed.
Alternatively, if Ms. Hawes does have standing, the court concludes that the petition
should be denied.
BACKGROUND
This case involves a dispute over the calculation of the disability retirement
benefit for Philip Hawes, a former deputy sheriff and Susan's husband. At all
relevant times during the proceedings before MPERS, Susan was designated as her
husband's representative. In addition, the court understands that Susan had a
Durable Power of Attorney authorizing her to act on behalf of her husband, although
a copy of that document has not been made part of the administrative record.
The following factual summary is taken from the Recommended Final
Decision ofthe hearing officer (F. Mark Terison, Esq.) dated August 12, 2020, which
was later adopted by the Board of Trustees on October 15, 2020. (R. at 28.2 &
28.16).
In September 2018, MPERS granted disability retirement benefits to Philip.
Because he was also receiving SSDI benefits for the same disability, however,
MPERS was required to reduce or offset Philip's disability retirement benefit in
accordance with 5 M.R.S. § 18530( 4 )(B)( 1), which provides:
The initial disability retirement benefit must be reduced if necessary so
that the benefit plus any benefits under paragraph A [under workers'
compensation laws or the federal Social Security Act] do not exceed
80% of the person's average annual earnings. For the purposes of this
subparagraph, "average annual earnings" means the total of the
person's average final compensation plus other wages and earnings
from employment for the calendar year in which the person had the
highest total of other wages and earnings from employment during the
5 years immediately preceding the year in which the person became
disabled. (Emphasis supplied).

Susan and Philip showed the sum of $7,726 as real estate rental income on
their joint federal tax return for 2015. MPERS counted Y2 of that amount (or $3,863)
as Philip's likely highest "earnings from employment" outside of his salary as a
deputy sheriff. (R. at 28.17). The effect of this was to increase Philip's average
annual earnings such that he would receive a monthly disability retirement benefit,
after the required offset, of $1,740.50. (R. at 28.18). When Susan learned of this
in November 2018, she insisted that the calculation was "incorrect," and that the real

2
estate rental income was "not joint," but was "100% the result of [her] effort and
[her] responsibility for the past fourteen years." Susan and Philip submitted a sworn
statement affirming that Philip had virtually nothing to do with the rental income or
properties and that it was identified as income on the couple's joint tax return, but
"[t]he rental income is not joint." (R. at 3.8).
MPERS explained to Susan that increasing Philip's average annual earnings
was advantageous to Philp because it increased his monthly benefit amount. (R. at
28.19). Nevertheless, at Susan's insistence and based on her sworn statement,
MPERS recalculated Philip's benefit amount by excluding the rental income from
"other wages and earnings from employment." This had the effect of reducing
Philip's monthly benefit amount to $1,482.97. (R. at 16.72).
Six months later, in May 2019, Susan contacted MPERS and sought to have
Philip's benefit amount recalculated to include his half of the rental income as
reflected in the 2015 joint tax return. Susan maintained that Philip had a "legal right"
to have his 50% of the rental income included in his benefit calculation because he
was a co-owner of the prope11ies and the bank account used for property
management, and because his name was on the deeds and mortgages.
Susan's request was denied by the MPERS Disability Retirement Business
Unit Leader, who pointed out that the income had to be from "wages or earnings
from employment," and that Susan's prior statements, including the one under oath,
showed that Philip had not "actively earn[ ed] the rental income by proving property
management services." (R. at 28.20). The issue was reviewed by the Executive
Director Designee (EDD), who upheld the decision to exclude the rental income
from Philip's "average annual earnings" computation because it was not considered
to be "wages and earnings from employment."

3
Philip, with Susan as his designated representative, appealed and the matter
was assigned to an independent administrative hearing officer, who scheduled an
evidentiary hearing for December 12, 2019. At this point, legal counsel for Philip
entered an appearance on his behalf. Up to this point, however, Susan herself had
been dealing with the staff of MPERS on this issue. 1
Susan testified at the evidentiary hearing. She testified that she was concerned
in November 2018 that Philip's initial benefit amount as calculated by MPERS was
too "high" and would result in him being responsible for an overpayment in the
future. She also testified that she was confused when she insisted that Philip's Yi of
the rental income should be excluded from his benefits calculation. Specifically, she
testified that she confused what was happening with Philip in 2018 with what he was
doing in 2015. Some exhibits were introduced into evidence in support of the
argument that Philip had done some property maintenance work at the rental
prope1iies, including replacing a handrail and doorknob, painting, waterproofing the
basement of one of the buildings, cleaning up between tenancies and mowing the
lawn. At the close of the evidence, the matter was sent back to the EDD for
reconsideration. On March 2, 2020, the EDD affirmed the System's calculation of
benefits for Philip.
The matter was then returned to the hearing officer, who received written
arguments from the parties. After also receiving comments from the parties on his
Recommended Decision (R. at 23.2), the hearing officer issued his Recommended
Final Decision on August 12, 2020. That Decision was adopted by the Board of
Trustees on October 15, 2020. (R. at 25.2 & 28.2).

1
There is reference in the administrative record that Philip had legal counsel regarding some
other issue involving MPERS, but that is all the court knows about that.

4
On December 14, 2020, Susan, acting pro se, filed the instant Petition for
Review of Final Agency Action, alleging that '[s]he is the power of attorney,
representative payee, and caregiver for her husband, Philip Hawes, a 50-year-old
former Corrections Officer receiving Maine Public Employees Retirement System
(MPERS) disability benefit," and that she had exhausted "her" administrative
remedies. Petition at ,I,I 1 & 3.
STANDING
The Maine Administrative Procedure Act authorizes an appeal to the Superior
Court from a final agency action by "any person who is aggrieved by the final agency
action." 5 M.R.S. § 11001(1). In order to be an "aggrieved" person, one must have
suffered a "particularized injury," meaning that the agency action "operated
prejudicially and directly upon the party's property, pecuniary or personal rights."
Nelson v. Bayroot, LLC., 2008 ME 81. ,I 10, 953 A.2d 328.
The court agrees with MPERS that Ms. Hawes is not an aggrieved person
within the meaning of the Maine Administrative Procedure Act. Only Philip's rights
were adjudicated by the MPERS Board of Trustees. Susan has not sought to bring
this petition on behalf of Philip pursuant to her authority under the power of attorney.
Rather, she has filed the petition in her own name and on her own behalf and seeks
to appeal from the Board's Decision and Order "denying the Petitioner [Susan
Hawes] the disability retirement benefit defined in 5 M.R.S. § 18530(4)(B)(l)."
Petition at ,I 3. The court concludes that Susan Hawes lacks standing to bring this
petition on her own behalf and, therefore, it should be dismissed.
In the event the comi is mistaken on the issue of standing, it will address the
merits of the petition.

5
STANDARD OF REVIEW
When an administrative agency's decision is appealed pursuant to M.R.Civ.
P. 80C, this comi reviews the agency's decision directly for abuse of discretion,
errors of law, or findings not supported by the evidence. Centamore v. Dep 't of
Human Servs., 664 A.2d 369, 370 (Me. 1995). "An administrative decision will be
sustained if, on the basis of the entire record before it, the agency could have fairly
and reasonably found the facts as it did." Seider v. Bd. ofExam 'rs of Psychologists,
2000 ME 206, ~ 9, 762 A.2d 551. The comi will "not attempt to second-guess the
agency on matters falling within its realm of expertise," meaning judicial review is
limited to "determining whether the agency's conclusions are unreasonable, unjust
or unlawful in light of the record." bnagineering, Inc. v. Superintendent ofIns., 593
A.2d 1050, 1053 (Me. 1991 ). "Inconsistent evidence will not render an agency
decision unsupported," Seider, 2000 ME 206, ~ 9, and the party seeking to overturn
the agency's decision bears the burden of proof, and that party must prove that there
is no competent evidence in the record to support the Board's decision. Bischoff v.
Bd. ofTrs., 661 A.2d 167, 170 (Me. 1995).
This court must examine "the entire record to determine whether, on the basis
of all the testimony and exhibits before it, the agency could fairly and reasonably
find the facts as it did." Friends of Lincoln Lake v Board of Environmental
Protection, 2001 ME. 18 ~13, 989 A. 2d 1128. The court may not substitute its
judgment for that of the agency's on questions of fact. 5 M.R.S. § 11007(3).
Determinations of the believability or credibility of the witnesses and evidence,
supported by substantial evidence in the record, should not be disturbed by this court.
Cotton v Maine Employment Security Commission, 431 A. 2d 637,640 (Me. 1981).
The issue is not whether the court would have reached the same result the agency

6
did, but whether the "record contains competent and substantial evidence that
supports the result reached" by the agency. Seider v. Board of Examiners of
Psychologists, 2000 ME 206, ,r 8, 762 A.2d 551 quoting CWCO, Inc. v.
Superintendent ofInsurance, 1997 ME 226, ,r 6, 703 A. 2d 1258, 1261.
When this court reviews an agency's interpretation of a statute that is both
administered by the agency and within the agency's expertise, the first inquiry is
whether the statute is ambiguous or unambiguous. Competitive Energy Servs., LLC
v. Pub. Utils. Comm 'n, 2003 ME 12, ,r 15, 818 A.2d 1039. If the statue is
unambiguous, it is interpreted according to its plain language. Arsenault v. Sec '.Y of
State, 2006 ME 111, ,r 11, 905 A.2d 285. If, on the other hand, the statute is
ambiguous, deference is given to the agency's interpretation if the interpretation is
reasonable. Id.; see also SAD 3 Educ. Ass 'n v. RSU 3 Bd. of Dirs., 2018 ME 29, ,r
14, 180 A.3d 125 ("When a dispute involves a board or agency's interpretation of a
statute it administers, 'the agency's interpretation, although not conclusive, is
entitled to great deference and will be upheld unless the statute plainly compels a
contrary result."') (citations omitted). Ultimately, the goal of statutory interpretation
is to give effect to the Legislature's intent, Manirakiza v. Dep 't of Health & Hum.
Servs., 2018 ME 10, ,r 8, 177 A.3d 1264, but only if"the plain language of the statue
is ambiguous will we look beyond that language to examine other indicia of
legislative intent, such as legislative history," Id. ( quoting Scamman v. Shaw's
Supermarkets, Inc., 2017 ME 41, ,r 14, 157 A.3d 223); see also L 'Heureux v.
Michaud, 2007 ME 149, ,r 7, 938 A.2d 801 ("Statutory language is ambiguous if it
is reasonably susceptible to multiple interpretations.").

7
DISCUSSION
The hearing officer's Recommended Final decision was detailed,
comprehensive and well-reasoned. He expressly found that Susan's testimony on
significant points was "unbelievable." (R. at 28.25). There was clearly competent
evidence in the record for the hearing officer to find that the rental income was not
"wages and earnings from employment" that Philip had engaged in. Moreover, the
court cannot find that MPERS committed an error of law in its interpretation that the
phrase "wages and earnings from employment" must involve some element of
"active participation" in some form of employment-like activities and cannot simply
involve the receipt of passive income. See Courtois v. MPERS, CUMSC-AP-2011­
26 (June 27, 2012) (Warren, J.).
CONCLUSION
The entry is:
The Petition for Review of Final Agency Action is DISMISSED for lack of
standing. Alternatively, the Petition is DENIED and the Decision of the Maine
Public Employees Retirement System, Board of Trustees is AFFIRMED.
The Clerk is directed to incorporate this order into the docket by reference
pursuant to M.R. Civ. P. 79(a).
Date: October 7, 2021

s
Justice, Superior Court

8