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Full text of "Report of the attorney general for the year ending .."

nblic Document 



No. 12 



0H|E (Uotmnanuiealtl) of MasBUttyuszttB 



REPORT 



OF THE 



ATTORNEY GENERAL 



FOR THE 



Year Ending June 30, 1989 




Publication of this Document Approved by Ric Murphy. State Purchasing agent 

■_-... coTiMATcn pact dcd rnpv c* t 



he Honorable Senate and House of Representatives: 

I have the honor to transmit herewith the Report of the Department 
e Attorney General for the year ending June 30, 1989. 

Respectfully submitted, 

JAMES M. SHANNON 
Attorney General 



P.I 



T. David Raftery 
Jamin Raskin 70 
Robert Ritchie 21 
Susan Roberts 
Carmen Rodriguez 



Margaret Zaleski 
ReedZars 
Judith Zeprun 
Peter Zuk 
Samuel Zurier 7 



Assistant Attorneys General Assigned To 
Division of Employment Security 



Maria Galvagna^ 
William Luzier 



Maria Moynihan 
Neal Steingold *• 



Budget Director 
Patrick J. Moynihan 

Chief Clerk 
Edward J. White 

Fiscal Affairs Manager 
Elizabeth M. Connolly 



APPOINTMENT DATE 



TERMINATION DATE 



1. 


8/3/88 


50 


7/12/88 


2. 


9/6/88 


51 


7/15/88 


3. 


9/26/88 


52. 


7/29/88 


4. 


10/3/88 


53. 


8/10/88 


5. 


10/11/88 


54. 


8/26/88 


6. 


10/12/88 


55. 


8/31/88 


7. 


10/17/88 


56. 


9/23/88 


8. 


11/14/88 


57. 


9/28/88 


9. 


11/17/88 


58. 


10/10/88 


10. 


11/21/88 


59. 


10/21/88 


11. 


11/28/88 


60. 


10/28/88 


12. 


12/12/88 


61. 


11/11/88 


13. 


12/16/88 


62. 


12/30/88 


14. 


1/3/89 


63. 


1/3/89 


15. 


1/9/89 


64. 


1/31/89 


16. 


2/13/89 


65. 


2/14/89 


17. 


2/27/89 


66. 


3/8/89 


18. 


3/6/89 


67. 


3/24/89 


19. 


3/20/89 


68. 


3/29/89 


20. 


3/31/89 


69. 


4/10/89 


21. 


5/15/89 


70. 


4/21/89 


22. 


6/5/89 


71. 


4/28/89 


23. 


6/12/89 


72. 


5/1/89 






73. 


5/5/89 






74. 


5/12/89 






75. 


5/24/89 






76. 


5/26/89 






77. 


6/2/89 






78. 


6/23/89 






79. 


6/29/89 






80. 


6/30/89 



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P.D. 12 15 



COMMONWEALTH OF MASSACHUSETTS 

In accordance with the provisions of Section 1 1 of Chapter 12 and of Chapter 
32 of Chapter 30 of the General Laws, I hereby submit the Annual Report for 
the Department of the Attorney General. This annual report covers the period 
from July 1, 1988 to June 30, 1989 and is the first report I have filed as the 
Attorney General of the Commonwealth of Massachusetts. 

One of my top priorities for 1989 was to strengthen our environmental law 
enforcement effort. To that end my office, along with the Executive Office of 
Environmental Affairs, created and will coordinate a 34-member Environmental 
Crime Strike Force. The strike force, which went into action in May 1989, uses 
prosecutors, scientists, investigators, and police officers to target high-priority 
threats to public health and natural resources. The focus is on cases involving 
drinking water supplies, wetlands, illegal dumping and toxic discharges to 
sewage systems. The Massachusetts Strike Force, one of the largest in the 
country, is statewide in its scope and cuts across agency lines. 

By pooling the resources of the Executive Office of Environmental Affairs, 
the Department of Environmental Quality Engineering, the Division of Fisheries 
and Wildlife, the MDC, the Massachusetts Water Resources Authority and my 
department we expect the prosecution of environmental crime in Massachusetts 
will be more effective. Because prosecutors will be involved in the earliest 
stages of a probe stronger prosecution can be brought. 

Of the many environmental cases we've brought this year one is particularly 
noteworthy for its farreaching implications.Responding to growing evidence that 
chlorofluorocarbons or CFCs, are destroying the stratospheric ozone layer, the 
Environmental Protection Division brought the first case by a state to stop the 
release of these man-made chemicals. In a landmark settlement, a Hyannis 
company agreed to a phase-out of CFC emissions by the end of 1988. The 
company will also pay a $700,000 fine, the highest civil penalty ever assessed 
in a Massachusetts environmental case. 

The settlement provides legal approaches for other states to consider. The 
federal Environmental Protection Agency has defaulted on this issue by releasing 
rules to control CFC production only through market restrictions, and then 
scheduling the effective date of the rules to the uncertain time when the 
international ozone treaty is ratified. CFC emissions are explicitly exempt from 
federal air regulations and those of many states. Massachusetts, however, never 
granted this exemption, so the compounds are regulated like other chemicals in 
this category and require a permit. 

Many states have the legal authority to bring similar actions under their 
Clean Air Acts, but some may have to amend existing statutes and regulations 
to regulate ozone depleting substances. 

Fighting drugs remains my highest priority. Currently we have six lawyers 
handling narcotics cases. And the return of the state troopers has bolstered our 
efforts considerably. The Narcotics Unit I created at the start of my 
administration has led to the arrest of 88 alleged cocaine traffickers, charges 
against 20 more defendants for various drug violations, the seizure of 
approximately 90 pounds of cocaine and sizeable amounts of other narcotics. 
Most of these arrests have yielded guns - including machine guns and high- 



16 P.D. 12 



powered rifles. We have had 11 convictions after trial, guilty pleas by 12 
defendants and over 70 defendants are now under indictment 

But it has become obvious that aggressive enforcement of existing laws is 
not enough. Drug traffickers today are highly organized and well financed. If 
we're going to put sophisticated drug cartels out of business, our drug laws must 
recognize that drug dealing is a big business, aggressively marketed on the 
streets, in schools, and in the workplace. The consequences of conviction must 
be powerful enough to deter highly lucrative activity. At the present time they 
are not. 

To remedy this situation, I have filed the Massachusetts Narcotics 
Enforcement Act of 1989 and refiled the anti-racketeering bill. A key provision 
is narcotics forfeiture which would take the proceeds of drug dealing and use it to 
fund investigators and prosecutions. Criminals too often serve their time and 
return to their riches. The legislation would also double the time a convicted 
dealer would have to serve before becoming eligible for parole. 

I would also like to make note of the enormous success of the Victims' 
Compensation and Assistance Division, which I created in 1987. The division 
processed more claims and paid out more compensation dollars ($3.5 million) 
than ever before in the history of the program. In addition, counselling, referral 
and creditor intercession for victims and survivors of violent crime were increased 
dramatically. 

The performance of each bureau within the department continues to be 
characterized by commitment, vigilance and skill. A detailed account of the 
year's progress follows. 



P.D. 12 17 



CIVIL BUREAU 

The Civil Bureau defends state employees and the Commonwealth in civil 
actions. Much of the work of the bureau's four divisions - Industrial Accidents, 
Contracts, Eminent Domain, and Torts - involves the protection of the 
Commonwealth against monetary damages. 

INDUSTRIAL ACCIDENTS 

The Industrial Accident Division serves as legal counsel to the 
Commonwealth in all worker's compensation cases involving state employees. 
Pursuant to G.L. c. 152, § 69 A, the Attorney General must approve all 
payments of benefits and disbursements for related medical and hospital expenses 
in compensation cases. In contested cases the division represents the 
Commonwealth before the Department of Industrial Accidents and appellate 
matters before the Appeals Court and the Supreme Judicial Court. 

Recent amendments to G.L. c. 152 have considerably overhauled the process 
of filing and litigating claims. Specifically, the reforms have created an expedited 
scheduling requirement, designed to process claims from filing to hearing in 90 
days. Also, a new mandatory appearance has been added to the process requiring 
a conciliation stage for all claims. The purpose of the conciliation is to promote 
settlement of claims before they go to dispute resolution. Another requirement 
of the recent amendments is a new 14 day time frame in which the insurer has to 
approve or deny all claims or be penalized. 

The amendments have created four new Board locations within the 
Department of Industrial Accidents. In addition to the Boston office, there are 
now Board locations in Lawrence, Fall River, Worcester and Springfield. 
Accordingly, the staff of the division appears at these locations. 

In response to these amendments, the division has continued to appear before 
the Worker's Compensation Advisory Council in an attempt to further clarify 
specific sections of the act that pertain to the Commonwealth. 

The division's efficiency in implementing the various amendments to Chapter 
152 is reflected in the increased number of processed payments and resolved 
claims. There were 17,718 First Reports of Injury filed during Fiscal Year 1989 
for state employees with the Division of Industrial Accidents - a decrease of 232 
over fiscal year 1988. Of the lost time disability cases, the division reviewed and 
approved 4,010 new claims for compensation and 50 claims for resumption of 
compensation. This represents an increase of 805 claims this fiscal year. In 
addition, the division disposed of 49 claims by way of lump sum agreements, 
and 43 by payment without prejudice. 

The division appeared for the Commonwealth on 2,647 contested formal 
assignments before the Department of Industrial Accidents, an increase of 349 
over the previous fiscal year. The division also appeared before the superior court 
concerning enforcement of orders pursuant to G.L. c. 152 § 12(1) and before the 
Appeals Court on appeals from decisions of Industrial Accident Review pursuant 
to M.G.L. c. 152 § 12(2). 

This fiscal year the division acquired responsibility for "Line of Duty" or 
"Assault Pay" cases pursuant to G.L. c. 92, § 63B and G.L. c. 30, § 58. Line 



18 P.D. 12 



of Duty and the Assault Pay provisions act as the compensation scheme for 
police officers who are injured on the job. Previously these cases had been 
handled by the Government Bureau. In addition to evaluating new cases, the 
division continually reviews the accepted cases to bring the medical reports up to 
date and to determine present disabilities and eligibility for compensation. 

Total disbursements by the Commonwealth for state employees' Industrial 
Accidents claims, including accepted cases, board and court decisions and lump 
sum settlements, and statutorily awarded attorney fees and penalties for the period 
July 1, 1988 through June 30, 1989 were as follows: 

General Appropriation to Division of 
Industrial Accidents 

Incapacity Compensauon $34,416,025.00 

Medical Payments 7,754,018.00 

Attorney Fees 549,592.78 

Penalties 74.714.79 

TOTAL DISBURSEMENT $42,794,350.57 

A comparison to this year's and last year's figures show several trends. While the 
number of reported injuries declined by 232, the number of people who filed 
claims increased by 805. This increase of 805 claims plus the increase of 
disputed claims, along with new cost of living increases, attorneys' fees, 
penalties, and higher average weekly rates, accounts for the additional $12.5 
million expended over last year. 

The division is also responsible for pursuing the Commonwealth's 
subrogation claims. Pursuant to G.L. c. 152 § 15, the division is entitled to 
seek recovery from third party tort-feasors. The recovery under § 15 includes 
compensation and medical bills paid to a claimant as a result of a third parties 
negligence. In Fiscal Year 1989 the division recovered $120,240.53 in liens 
against third party tort-feasors, overpayments, and charge backs. 

Under chapter 152 § 65 the division has the responsibility of defending the 
Worker's Compensation Trust Fund against claims for reimbursement made 
under G.L. c. 152 §§ 37 and 37A. The trust fund, and related sections, 
encourages employment of handicapped and disabled workers. The fund relieves 
the insurer from the burden of compensating employee disability due to the 
combined effect of the previous injury and one received later. 

Pursuant to St. 1951, c. 547, amended by St. 1955, c. 607, §§ 1,2, further 
amended by St. 1956, c. 560, §§ 1,2, the Chief of the Industrial Accident 
Division represents the A ttorney General as a sitting member on the Civil Defense 
Claims Board. The Claims Board reviews and processes claims for compensation 
of unpaid civil volunteers who were injured during the course of their volunteer 
duties. 

During Fiscal Year 1989, division attorneys were asked to assist workers in 
private industry who were having problems with compensation claims against 
private industry and their insurers. Every effort was made to assist these 
employees or refer them to appropriate persons or agencies. 

This year, in order to make expenditures more accountable, the legislature 
mandated that the Public Employee Retirement Administration (P.E.R.A.) 



P.D. 12 19 



charge back to the agencies some of the costs of the compensation system. 
Previously these costs had been directly appropriated. The resulting reduced funds 
for lump sum settlements has proved detrimental to managing the case load. 
Hopefully, the legislature will re-examine, in the next fiscal year, the charge 
back program and lump sum settlements in general. 

CONTRACTS 

The Contracts Division assists the Attorney General in carrying out statutory 
and traditional duties in the broad area of the Commonwealth's contractual 
relationships of all descriptions. In that role, the Contracts Division has primary 
responsibility in three areas: 

A.) Litigation in which the Commonwealth is a party involving contract 
issues; 

B.) Advice and counsel to state agencies concerning contract matters; and 
C.) Review of contracts for approval as to form. 

A. LITIGATION 

The Contracts Division represents the Commonwealth, its agencies and 
officers in all civil actions involving contracts and contract-related disputes. This 
includes claims made against the Commonwealth as well as affirmative claims 
initiated by the Commonwealth. In contract actions against the Commonwealth, 
G.L. c. 258, section 12 is the controlling statute and the Attorney General 
represents the Commonwealth in the superior court in all such disputes. A 
majority of the cases being handled by the division concern public building, state 
highway, and public works construction disputes. Other representative matters 
involve employment contracts, leases, statutory and regulatory construction, and 
disputes regarding construction bonds. 

Construction contracts disputes generally fall into two separate categories: 

1.) Bid protests in which bidders for a sub-contract or general contract dispute 
the results of a competitive bid prior to the formal award of the contract; and 

2.) Claims for extra costs or additional compensation under a construction 
contract due to delay's in the construction process, differing site conditions or 
remedies provided by statute. 

In bid disputes, protesting parties often seek temporary restraining orders or 
preliminary injunctions in the superior court to delay the commencement of 
construction until the bid dispute is resolved. The Attorney General vigorously 
opposes such delays which have the potential for tremendous excess costs to the 
public. During Fiscal Year 1989, division attorneys successfully resisted all such 
efforts. 

Claims under construction contracts for work already begun are complex 
litigation generally involving multiple parties, including architects, consulting 
engineers, sub-contractors, materialmen, and sureties. Actual trials of these 
matters involve lengthy hearings before the court and court-appointed masters. 
As a result, the Contracts Division has begun to consider alternative dispute 
resolution processes which may provide a simplified, expedited substitute for 



20 P.D. 12 



formal litigation. Such alternative dispute resolution processes have potential to 
better protect state agencies, save taxpayer dollars, and provide prompt and fair 
resolution of disputes for those doing business with the Commonwealth. 

The Attorney General has placed renewed emphasis on instituting affirmative 
claims against parties owing funds to the Commonwealth. Such claims could 
involve an architect or engineer who provided inferior services to the public or 
major utilities which have delayed public construction by failing to relocate their 
pipes, poles, and conduits. 

The Contracts Division advises the Attorney General in matters referred for 
litigation from the Department of Labor and Industries to enforce orders made by 
that agency under its authorizing legislation in architect selection and bid protest 
matters. Likewise, the Contracts Division advises the Attorney General in 
matters referred for litigation from the Inspector General, as the Attorney General 
is the sole agency authorized by law to accept referrals from the office of 
Inspector General for civil action to redress instances of waste, fraud and abuse in 
government. In both cases, the Contracts Division would generally appear as 
counsel in any such litigation. 

Under the supervision of the Attorney General, the Contracts Division has 
begun advance planning for resolution of disputes arising out of the $4 billion 
dollar Central Artery and Third Harbor Tunnel project. This has included 
consultation with the Executive Office of Transportation and Construction, the 
Department of Public Works and other interested agencies. 

During the fiscal year 54 new actions were commenced and 43 files were 
closed. As of June 30, 1989, there were 172 pending cases in the division 
representing a total dollar exposure to the Commonwealth of $68,565,938. 
Likewise, the division is handling affirmative claims on behalf of the 
Commonwealth in excess of S10 million dollars. 

On a daily basis, the division receives requests for legal assistance from state 
agencies and officials. Problems involve formation of contracts, performance, 
bidding procedures, bid protests, contract contents, contract interpretation, and 
other miscellaneous matters. The most frequent requests received during the fiscal 
year concern indemnification clauses in contracts, procedural matters in 
employment contracts, and advice in advance of anticipated construction contract 
litigation. 

The Contracts Division also receives requests for assistance in purchasing 
matters for goods and services, as opposed to construction. Division attorneys 
counsel the state Purchasing Agent, interpret regulations and attend informal 
protest hearings. A similar role is played with respect to the Department of 
Public Works, Metropolitan District Commission, Secretary of Transportation, 
Board of Regents of Higher Education, Mental Health, Mental Retardation, 
Youth Services, Environmental Management, Water Resources, State Lottery 
Commission, Public Welfare, and Division of Capital Planning and Operations. 

The Division reviews many state contracts, leases and bonds submitted bv 
state agencies. All contracts are logged in and out, and a detailed status record is 
maintained. The average contract is approved within 48 hours of its submission 
to the division. During the fiscal year, the Contracts Division received for 
approval as to form a total of 545 contracts. Seventy-nine contracts were rejected 
and later approved after consultation regarding contract form with the agency 
involved. 



P.D. 12 21 



EMINENT DOMAIN 

The Eminent Domain Division represents the Commonwealth in the defense 
of petitions for the assessment of damages resulting from land acquisition bv 
eminent domain. The Commonwealth acquires land for a variety of purposes, 
including land for state colleges, recreation and parks, flood control, easements, 
and rights of way for roads. The division deals primarily with the Department of 
Public Works, the Metropolitan District Commission, the Department of 
Environmental Management, State Colleges, the Armory Commission, the 
Department of Food and Agriculture, the Department of Fisheries & Wildlife and 
Environmental Law Enforcement, The Department of Environmental Protection, 
and the Division of Capitol Planning and Operations. 

The division also provides legal advice to the Real Estate Review Board to 
assist in settling damage claims on takings of government-owned land for 
highway purposes, and in some instances, the division is called upon to testify 
before the Governor's Council prior to their granting approval for the payment of 
land damage cases settled by the Office of the Attorney General. 

Informal advisory services on eminent domain questions are rendered to 
practically every state agency and many cities and towns. Agencies with eminent 
domain or real estate questions either write or call the division for consultation 
and advice. The division also appears before legislative committees to give 
advice on legislation of importance to the Department of the Attorney General as 
well as other state agencies. 

Chapter 79 of the General Laws prescribes the procedure in eminent domain 
proceedings. Under Chapter 79, when property is taken, the taking agency makes 
an offer of settlement known as a pro tanto, which makes available to the 
owners an amount the taking agency feels is fair and reasonable but reserves to 
the prior owners the right to proceed, through the courts, to recover more 
money. In the event of a finding by the court or jury, the pro tanto payment is 
subtracted from the verdict and the taking agency pays the balance, with 10 
percent interest from the date of the taking to the date of the judgment. During 
Fiscal Year 1989, approximately 66 land damage cases were disposed of in the 
various superior courts throughout the Commonwealth. The disposition of these 
cases resulted in a savings to the Commonwealth of more than $13 million. 

If occupied buildings are situated on parcels acquired by eminent domain, the 
occupants remaining become tenants of the Commonwealth and are obligated to 
pay rent under a lease agreement or for use and occupancy. The problem of rent 
collection is handled by a Special Assistant Attorney General who is assigned to 
the Department of Public Works on a full-time basis. The Special Assistant 
Attorney General is under the direct supervision of the Right of Way Bureau 
with review supervision front the Eminent Domain Division. The attorney's 
primary function is to represent the Department of Public Works in all matters 
related to state-owned property being leased or rented to the general public. This 
includes negotiating settlements, closing out uncollectibles, filing suit to 
enforce the payment of rent, as well as taking action in eviction matters. In 
those cases wherein rent is owed to the Commonwealth and there is a land 
damage case pending, the Eminent Domain Division trial attorney handles both 
matters at the time of trial. During the past fiscal year, 17 rent cases were closed 



22 P.D. 12 



out and approximately $136,132 was collected and turned over to the State 
Treasurer. 

This division has also represented a number of agencies in litigation related to 
the agencies' leases, such as a commercial landlord seeking to evict an agency for 
non-payment of rent, or when a dispute arises over lease terms. With ever tighter 
agency budgets, such actions are on the increase. 

The Eminent Domain Division also has the responsibility of protecting the 
Commonwealth's interests in all petitions for registration of land filed in the 
Land Court. In each case, a determination must be made as to whether or not the 
Commonwealth, or any of its agencies or departments, has an interest which 
may be affected by the petition. If such a determination is made, no decree issues 
without the division being given a full and complete opportunity to be heard. 
Some of these issues are tried to a conclusion while others are amicably agreed 
upon and the rights of the Commonwealth are protected by stipulation. 

Land Court matters involve the full-time activities of an Assistant Attorney 
General. Its jurisdiction covers every type of land transaction from foreclosure 
and tax takings to determination of title absolute as well as all the equity rights 
arising therefrom. 

The Eminent Domain Division is involved in almost every petition to 
confirm or register title. The involvement requires the determination of all 
interests in state highways, the preservation of the taking lines, the 
determination of drainage and other easements, and the assurance that the decree 
is entered subject to all of the above. 

Further, the Land Court has jurisdiction to determine the nature and extent of 
riparian and littoral rights. 

Title and boundary disputes in intertidal lands in particular are increasing in 
number each year as well as disputes regarding the use of intertidal lands by their 
owners. The division closely monitors these disputes in order to protect public 
rights in tidelands and in access to beaches. 

The title registration process continues to present new and diverse issues. 
Alleged private ownership of railroad Rights of Way raise serious questions as to 
whether the Rights of Way are fully abandoned and as to the effect of private 
ownership on the Commonwealth's interest in preserving public rail 
transportation corridors. The Secretary of Transportation has power under a 
statute of questionable validity, to overrule the issuance of local building permits 
which affect former railroad rights of way and a challenge to said statute is likely 
to take place in the context of a Title Regulation Case. 

The Commonwealth has become involved with problems due to filling and 
dredging that have taken place along the shores and areas developed by beach 
associations, especially on the Cape and Islands. Dredging has been done with 
the material dredged being placed upon the shores, changing private access rights 
to and from the beaches. 

More than 290 cases involving the Eminent Domain Division were disposed 
of in the Land Court in Fiscal Year 1989. 

Most rental agreements, pro tanto releases, general releases, deeds of grants 
and conveyance, and documents relating to land under the control of the state's 
departments or agencies must be reviewed and approved as to form by the 
Eminent Domain Division. 

The division continues to assist the Department of Food and Agriculture to 



P.D. 12 23 



expedite and to carry out the mandates of Chapter 780 of the Acts of 1977, 
known as the Agricultural Preservation Restriction Act. This act helps to 
preserve the limited farm land remaining in Massachusetts by providing a 
method whereby the farmers receive compensation for the so-called 
"developmental rights" in their land without destroying its productive capacity 
and value as farm land. A deed is then filed in the appropriate county registry 
wherein the land use is restricted in perpetuity to farming and agricultural uses. 
Since the inception of this program in 1977, more than 25,000 acres of farm 
land have been permanendy protected in Massachusetts. 

The most important case brought to a conclusion this past fiscal year was 
Commonwealth of Massachusetts vs. Samuel Skinner^ Secretary of 
Transportation, et al, United States District Court, Civil Action No. 89-0151. 

In January 1989, the Eminent Domain Division, in cooperation with the 
Government Bureau, filed this suit on behalf of the Department of Public Works 
against the United States Secretary of Transportation and the Federal Highway 
Administration (FHWA). The suit sought to (1) recover SI, 462,680.45 in federal 
funds due the Commonwealth as reimbursement for costs incurred by the 
Commonwealth in highway right of way acquisition cases in which eminent 
domain takings and litigation had occurred; and (2) resolve long standing disputes 
over the respective roles of the Massachusetts Department of Public Works 
(DPW), the Department of the Attorney General, and FHWA under the relevant 
federal programs. The complaint concerned various cases involving eminent 
domain settlements and awards made in the period from the late 1970's through 
the early 1980's, and for which the FHWA had refused to reimburse the 
Department of Public Works. 

In addition to reimbursement, our complaint sought an interpretation of the 
effect of federal regulations and state law on the Attorney General's respective 
rights and obligations in litigation arising from highway takings; and an 
injunction preventing FHWA from failing to reimburse the Commonwealth in 
the future. 

The settlement of this 14-year-old controversy produced an agreement wherein 
the Federal Highway Administration agreed to reimburse the Commonwealth 
SI. 2 million (or 86.8 percent of the monies sought) on these old cases, and to 
recognize for the first time the full scope of the role and powers of the Attorney 
General under Massachusetts law in controlling and settling litigation regarding 
highway cases. The FHWA also agreed, for the first time, to a streamlined 
mechanism to resolve future disputes. 

The Massachusetts Department of Public Works, as well as the Metropolitan 
District Commission, predict an extremely heavy workload for Fiscal Year 1990. 
The Department of Environmental Management is still deeply committed and 
involved in the Heritage State Park projects in Lowell, Lynn, Holyoke, North 
Andover, Lawrence and Fall River. These ambitious undertakings are expected to 
cost in excess of S100 million and can be expected to result in extensive 
litigation for this division. 

Many of these takings by DEM, MDC, and Fisheries & Wildlife involve 
cases in less developed areas of the state, where numerous title problems abound 
(such as South Beach on Martha's Vineyard), making litigation of these matters 
among the most complicated in the division's history. 

The recent DEM taking (in September 1989) at Mt. Greylock in the 



Z4 r.u. iz. 



Berkshires has already spawned not only a land damage suit, but one presenting 
complex "inverse condemnation" claims as well. 

This division expects that during the upcoming fiscal year and in the future 
we will be called on to defend increasing numbers of similar cases involving 
claims of "inverse condemnation" or "regulatory takings" - claims that state 
officials or agencies, through actions or through regulation, have in effect 
"taken" property rights without official taking orders and without awarding 
constitutionally required compensation. These concepts are well recognized and 
frequently applied by the federal courts and courts of other states, but have not to 
date been successfully brought in Massachusetts, although our Supreme Judicial 
Court has recognized the concept 

Currently, the Eminent Domain Division along with the Environmental 
Protection Division, is defending such a "regulatory takings" suit brought by 
owners of several houses in Chatham. The homes washed into the sea due to 
erosion from wave action, after DEP allegedly improperly denied the owners 
permission to build necessary stone seawalls to protect them. 

As the real estate market continues to tighten, the likelihood of efforts by 
developers to protect anticipated profits, or even stave off financial ruin, creates 
the probability that we will continue to see an increase in such "regulatory 
takings" or "inverse condemnation suits". 

As well, with increased public attention (as well as increased regulation) 
devoted to hazardous waste issues, many land damage cases now being filed 
involve potential questions of the effect on a property's value of the presence or 
absence of some sort of hazardous waste, with the result that these cases require 
increased need for more extensive preparation by division attorneys and 
substantial agency expense for complex engineering or other expert evaluation. 

The Massachusetts Executive Office of Transportation and Construction is in 
the process of developing the primarily federally-funded project to depress the 
Central Artery and construct a third harbor tunnel. This project is now 
underway. The project will likely result in an increase in law suits particularly 
those for so-called "special and peculiar damages" against the Commonwealth, 
and create serious relocation problems for residents of the North End as well as 
the many businesses located in close proximity to the Central Artery Corridor. 
The Central Artery project has already led to a case involving the largest pro 
tanto award in the state's history: $48 million, for the 150 Causeway Street 
building. We are advised that the plaintiff will seek an additional $30 million in 
damages in this case. 

One can readily see that the workload of this division can be expected to 
increase dramatically as we enter the last decade of this century. We look forward 
to and will accept all challenges presented. 

TORTS 

The Torts Division handles primarily tort and civil rights suits brought 
against the Commonwealth and its employees, the investigation and preparation 
of reports for the district courts on Petitions for Compensation to Victims of 
Violent Crimes, Contributory Retirement Appeals Board (CRAB) cases, and 
collection cases. 



P.D. 12 25 



With the creation of a new division for the handling of Petitions for 
Compensation to Victims of Violent Crimes in Fiscal Year 1989 all new cases 
are now assigned to the Victims of Violent Crime Division (VC). 

Collections cases are handled by both Torts Division attorneys and attorneys 
assigned to the Civil Bureau on a bureau-wide basis. CRAB cases are distributed 
among all Civil Bureau attorneys. 

At the close of Fiscal Year 1989, the division had 1,131 open cases and under 
review 66 claims against the Commonwealth where the Attorney General acts as 
executive officer. New cases filed this year totalled 341. A total of 255 cases 
were closed in FY 1989. 

Aggressive defense of all cases Filed during Fiscal Year 1989 resulted in 94 
cases settled without trial. Dismissals or summary judgments on behalf of the 
Commonwealth were obtained in 148 cases and 16 cases were tried. 

As in previous fiscal years the critical problem of the unavailability of funds 
to settle claims prior to trial has remained a major issue. When liability cases 
can be settled prior to trial, there is generally a substantial saving for the 
Commonwealth. 

CRIMINAL BUREAU 

The Criminal Bureau is comprised of six divisions: Public Integrity, 
Narcotics, Victim Compensation, Division of Employment Security, Criminal 
Appellate Division and Special Prosecutions. 

During the 1989 Fiscal year, the bureau prosecuted a wide variety of cases 
developed by its own investigations division, as well as those referred by other 
government agencies or the district attorneys. 

In May 1989, Attorney General James Shannon and Governor Michael 
Dukakis established the Environmental Crime Strike Force, designed to use 
prosecutors, scientists, investigators and police officers to target high-priority 
threats to public health and natural resources. The Strike Force is coordinated by 
the Department of the Attorney General and the Office of Environmental Affairs 
and specializes in major cases that involve threats to drinking water supplies, 
harm to wetlands, illegal dumping and toxic discharges to sewage systems. 

The Strike Force has a steering committee composed of the Chief of the 
Attorney General's Criminal Bureau, Chief of the Attorney General's Public 
Protection Bureau, Chief of the Attorney General's Environmental Protection 
Division, the Assistant Secretary for Law Enforcement of the Executive Office 
of Environmental Affairs and the Deputy Commissioner of the Department of 
Environmental Quality Engineering. 

PUBLIC INTEGRITY DIVISION 

Fiscal Year 1989 reflected continued progress in the Attorney General's efforts 
to investigate and prosecute crimes involving public corruption. During the 12- 
month period between July 1, 1988 and June 30, 1989, the Public Integrity 
Division indicted approximately 20 individuals and one corporation for a broad 
array of offenses, including: larceny, procurement fraud, bribery, conflict of 
interest, tax evasion, forgery, uttering, CORI violations, perjury, insurance 



zo r.u. iz 



fraud, and conspiracy. In addition, eight defendants pleaded guilty to public 
corruption offenses and several were incarcerated. 

Cases that were disposed of during Fiscal Year 1989 included the following: 

A supervisor in the Department of Revenue pleaded guilty to charges of 
larceny, tax fraud, tax evasion and conflict of interest following indictments in 
June and October, 1988. He received a five-and-1/2 to eight-year sentence to 
State Prison, probation, and was ordered to pay restitution to the 
Commonwealth in the amount of S155,000. 

A former state college president pleaded guilty to eight indictments including 
forgery, larceny, conflict of interest and tax fraud charges. He received concurrent 
state prison terms of seven to 10 and three to five years. 

Two employees of the Lynn Housing Authority were indicted for their 
participation in a scheme to solicit and receive bribes in connection with the 
granting of public housing certificates. Both individuals pleaded guilty to all 
such charges. One defendant was sentenced to serve 60 days in the House of 
Correction while the other received a suspended sentence. 

A contractor and a supplier pleaded guilty to participating in a scheme to 
defraud the Metropolitan District Commission in connection with the supply and 
servicing of traffic signal equipment. 

An "03" consultant to both the Department of Personnel Administration and 
the State Office of Minority and Women Business Assistance was indicted and 
later pleaded guilty to stealing money from the Commonwealth. She received a 
lengthy term of probation and was ordered to pay fines and restitution. 

In addition to the foregoing disposed-of cases, a number of new indictments 
were obtained during Fiscal Year 1989 including: 

The former Chief of Staff to the Speaker of the House of Representatives, the 
Speaker's Business Director, and a State House photographer were charged with a 
total of 19 indictments stemming primarily from their involvement in schemes 
to defraud the Commonwealth and to receive bribes and illegal gratuities. The 
charges also included allegations of perjury before the State Ethics Commission. 

The former Executive Director of the Massachusetts Criminal Justice 
Training Council was indicted on eleven separate charges including larceny, 
submission of false claims, bribery, conspiracy, tax fraud, and several violations 
of G.L. c. 268 A and 268B. He was charged along with a registered lobbyist, who 
also served as a consultant to the Training Council. In addition, a former State 
Representative was indicted for allegedly stealing money from the 
Commonwealth pursuant to a series of "no-show" consulting contracts with the 
Training Council. The three men face a total of 20 indictments. 

A Springfield businessman was indicted for giving a cash bribe to the 
Executive Director of the State Office of Minority and Women Business 
Assistance. 

An Essex County Probation Officer was charged with receiving unlawful 
gratuities, larceny, and violations of the CORI statute. These offenses were 
alleged to have been committed while he was employed by the Probation 
Department. 

A landscaping corporation and its two principal owners were charged with 
submitting fraudulent documents and stealing money in connection with a series 
of contracts for roadside spraying with the Department of Public Works. In 
addition, a DPW employee was charged with violating the state's conflict of 



P.D. 12 27 



interest statute for actions in supervising the performance of such contractual 
services. 

A bookkeeper was indicted for embezzling state funds from a Plymouth-based 
non-profit corporation that provided treatment services to mentally retarded men 
and women. 

An employee of the Department of Personnel Administration was charged 
with larceny, forgery, and uttering in connection with the theft of money from 
that state agency. 

A Department of Revenue employee was also indicted on larceny, forgery and 
uttering charges stemming from a scheme to steal income tax refund checks. 

A Department of Public Works supervisor was charged with participating in a 
"no-show" scheme. 

All of the foregoing cases were investigated by financial investigators and/or 
State Police and Metropolitan Police officers assigned to the Attorney General's 
Criminal Bureau. The civilian investigators brought years of federal law 
enforcement experience to the division from the FBI and the IRS. At the close of 
the fiscal year, a substantial number of ongoing investigations were active. 

In addition to the investigative resources on staff in the Criminal Bureau, the 
Public Integrity Division worked closely with representatives of several other 
state agencies including: the State Ethics Commission; the Office of Inspector 
General; the Criminal Investigations Bureau and the Office of Internal Affairs of 
the Department of Revenue; the Office of Campaign and Political Finance; and 
the State Auditor's Office. The division continued to maintain working 
relationships with federal, county and local law enforcement agencies. 

Throughout most of the year, the division was staffed with five attorneys and 
secretarial and paralegal assistance. 

The volume and variety of charges brought and guilty pleas obtained during 
Fiscal Year 1989 marked the successful evolution of the Attorney General's 
commitment to establish a prosecutorial unit with the exclusive mission to 
investigate and prosecute public corruption offenses. 



NARCOTICS 

During the period between July 1, 1988, and June 30, 1989, 72 defendants 
were arrested in 31 cases. Police officers assigned to the division seized 
approximately 55 pounds of cocaine, and quantities of phensyclidine ("PCP" or 
"angel dust"), lysergic acid dymethyline ("LSD"), and marijuana. In addition, 
they seized approximately 5104,884.50 in cash believed to have been involved in 
narcotics transactions. Of that sum, 561,884.50 has been ordered forfeited to the 
Commonwealth. 



VICTIM COMPENSATION 

The Victim Compensation and Assistance Division was established by 
Attorney General Shannon in 1987 to administer the Victims' Compensation 
Program pursuant to the Massachusetts Victim of Violent Crime Compensation 



Z5 f.U. 1Z 



Act of 1968, G.L. c. 258A. Under the Act, the Commonwealth reimburses 
victims or their dependants for out of pocket losses, including medical expenses, 
lost wages, counselling, funeral expenses and loss of support caused by personal 
injury or death which results from violent crime. 

The division's mission is two-fold: first, pursuant to G.L. c. 258A, this 
division is charged with investigating all claims for compensation, and with 
representing the Commonwealth before the District Court on cases involving 
claims for compensation. Second, the division's staff of Victim Advocates 
provides counselling and referral services to victims and their families, to assist 
them with the myriad problems facing victims of violent crime. 

The investigation function requires that the division's staff verify the facts of 
the claim through contact with law enforcement, social services, health care 
providers, funeral homes and employers. The division employs two full-time 
investigators for this purpose. 

In the area of victim advocacy, the division staff provides counselling and 
support to victims throughout the process of recovery. This support includes 
such things as helping to make funeral arrangements for families who have lost 
children as the result of homicide and finding emergency housing for elderly 
victims who no longer feel safe in their homes after being beaten and robbed. 

In its representation of the Commonwealth in the District Court, the 
division's legal staff prepares reports and recommendations for payment of 
victims' compensation claims, and in many cases assists pro se claimants to 
present their claims in court. The legal staff also presents the Commonwealth's 
case for non-payment where the claimant does not meet the eligibility 
requirements of G.L. c. 258 A. 

Following is one example of the impact the Victim's Compensation and 
Assistance Program has had on victims in Fiscal Year 1989. 

Mary Doe was struck by a hit and run driver and suffered extensive injuries. 
She eventually lost her job as the result of her physical inability to return to 
work. 

Because she lost her job, and consequently her health care benefits, she was 
forced to forego necessary medical attention. When her claim was received by the 
division, she was in imminent danger of losing a leg unless she was 
immediately fitted with a rehabilitative brace. Unfortunately, there was only one 
source for such a brace in the Commonwealth, and that source required 
prepayment of all costs. 

Upon learning of the victim's situation, an advocate in the division informed 
the staff of the facts of the claim, and it was deemed a priority. The advocate 
contacted the brace provider, and persuaded him to immediately equip the victim 
with the needed brace. As quid pro quo, the advocate assured the provider that the 
case would be given priority throughout the approval process. 

A division attorney requested an expedited hearing with the Court, at which 
the attorney, victim and advocate explained the special circumstances to the 
judge. The judge immediately issued a Finding and Judgment, which was hand 
carried to the Treasurer for payment. As the result of receiving the brace, the 
victim's leg was saved. 



P.D. 12 



29 



STATISTICS - FY 1989 
The division opened 504 claims for compensation, as follows: 



ASSAULTS HOMICIDE SEXUAL QUI OTHER 

ASSAULT 



308 



83 



55 



The division closed 706 claims for compensation, as follows; 
ASSAULTS HOMICIDE SEXUAL QUI OTHER 



470 



113 



SEXUAL 
ASSAULT 

87 



83 



MALE FEMALE AGE 0-17 18-64 65+ UNKNOWN 
225 481 60 615 29 2 



DISPOSITION OF CLOSED CASES: 

Compensation awarded: 504 

Denied/Dismissed: 202 



30 



P.D. 12 



FUNDING AND EXPENDITURES FY 1989 

The Victim's Compensation Program received $3,139,189 in Commonwealth 
funds in Fiscal Year 1989. In addition, the program received $353,000.00 in a 
grant under the Federal Victims of Crime Act for Federal Fiscal Year 1989. The 
information on disbursements of state and federal funds in Fiscal Year 1989 was 
as follows: 

DISBURSEMENTS 



Pavee 


Amount 


Number of 






Pavments 


Claimants 


$2,645,527.13 


545 


Attorneys 


175,440.03 


126* 


Physicians 


99,300.80 


144* 


Hospitals 


422,631.67 


174* 


Funeral 


4,872.40 


4* 


Other 


149.400.98 


192* 


Total 


$3,497,173.01 




♦Direct payment 


to service/care providers. 




Victim Age 


Amount 


Number of 
Payments 


0-17 


$242,220.11 


65 


18-64 


3,179,722.52 


460 


65 + 


73,410.38 


19 


Unkn. 


1.820.00 
$3,497,173.03 


1 


Total: 


545 




CRIME INFORMATION 




Crime 


Amount 


Number of 
Pavments 


Assaults 


$2,349,368.05 


460 


Homicide 


883,898.73 


89 


Sexual Assault 


172,065.45 


63 


Other 


91.840.78 


32 


Total 


$3,497,173.01 
PAYMENTS BY COUNTY 


545 


Name 


# of Judgments Total Paid Compensation 


Barnstable 


18 


108,828.86 


Berkshire 


3 


7,506.92 


Bristol 


40 


187,865.85 


Dukes 


3 


2,118.28 


Essex 


46 


330,306.48 


Franklin 


1 


20,385.05 


Hampden 


23 


133,437.34 


Hampshire 


5 


10,887.40 



P.D. 12 



31 



Middlesex 


120 


Nantucket 


1 


Norfolk 


46 


Plymouth 


17 


Suffolk 


179 


Worcester 


41 



682,087.67 

278.00 

311,169.51 

142,958.02 

1,270,413.74 

288.929.89 



TOTALS 



545 



$3,497,173.01 



The following charts and graphs illustrate the growth in the Victims 
Compensation Program since Attorney General Shannon created the Division: 



Total Payments lo Victims Under C.2S8A 




Number of Victim 

Compensation Claims for 

FY 1969 -89 




Compensation ol Victims ol Violent Crime 





Number 


TOTAL 


Federal 




Fiscal Year of claims 


Expenditure VOCA State 


1969 


4 


$991 




$991 


1970 


18 


$29,451 




$29,451 


1971 


47 


$64,977 




$64,977 


1972 


45 


$59,930 




$59,930 


1973 


116 


$206,963 




$206,963 


1974 


163 


$749,984 




$749,984 


1975 


198 


$987,997 




$987,997 


1976 


81 


$372,467 




$372,467 


1977 


287 


$1,124,972 




$1,124,972 


1978 


251 


$1,122,644 




$1,122,644 


1979 


202 


$656,616 




$656,616 


1980 


169 


$469,033 




$469,033 


1981 


256 


$907,679 




$907,679 


1982 


278 


$905,270 




$905,270 


1983 


252 


$1 ,004,272 




$1 ,004,272 


1984 


225 


$1,010,825 




$1,010,825 


1985 


219 


$935,303 




$935,303 


1986 


285 


$966,486 




$966,486 


1987 


308 


$1 ,368,747 


$387,000 


$981 ,747 


1988 


462 


$2,647,018 


$321 ,000 


$2,326,018 


1989 


545 


$3,497,173 


$353,000 


$3,144,173 



TOTALS 4,411 $19,088,801 $1,061,000 $18,027,801 

20 YEAR AVERAGE 210 908,991 353,667 858,467 

FY87-89 AVERAGE 438 2,504,313 353,667 2,150,646 



32 P.D. 12 



EMPLOYMENT AND TRAINING DIVISION 1 

The purpose and intent of the Attorney General's Employment and Training 
Division of the Criminal Bure-au is to provide the Department of Employment 
and Training with whatever legal assistance and representation is necessary to 
effect criminal enforcement. This division also handles many appellate matters 
which arise from decisions granting or denying unemployment compensation 
benefits to individual claimants, in addition to other agency related litigation. 

The Employment and Training Law is highly complex and its language is 
technical as well as legal. Under the law, employers with one or more employees 
become subject to G.L. c. 151 A, and are expected to comply with its provisions. 
The efficient and economical administration of the employment security program 
in Massachusetts depends in large measure on the cooperation and compliance of 
well-informed employers throughout the Commonwealth, for it is they who pay 
the entire cost of its operations. The Employment Security Program also insures 
individuals who become unemployed through no fault of their own a weekly 
benefit check if they meet the requirements of the law. 

FUNCTIONS. ACCOMPLISHMENTS AND OBJECTIVES OF THE 
EMPLOYMENT AND TRAINING DIVISION. 

I. Prosecution of Employers For Failure To Pav Employment 
Security Taxes. 

Whenever an employer fails to comply with the law and does not file the 
necessary reports required or pay the taxes owed to the Department of 
Employment and Training, that employer may become the subject of 
prosecution by this division. 

The Assistant Attorneys General make every effort to fully inform the 
employers of their rights and obligations under the law. As a result, some 
initially intransigent taxpayers, when faced with the prospect of criminal 
prosecution, decide to pay their taxes, making pursuit of criminal process against 
these persons impractical. Otherwise, rigorous enforcement is pursued. 

During the fiscal year ending June 30, 1989, 1,216 employer tax cases were 
handled by this division. On July 1, 1988, 1,152 cases were on hand; 64 
additional cases were received during the fiscal year; and 187 cases were closed, 
leaving a balance of 1 ,029 employer tax cases on hand as of June 30, 1989. 

Applications for criminal complaints were brought in the Boston Municipal 
Court, charging 68 individuals with 693 counts of nonpayment of taxes, totaling 
Sl,271,581.81 in monies owed the Commonwealth's agency by the delinquent 
employers. The Boston Municipal Court issued complaints against 56 
individuals for 574 counts of nonpayment of taxes totaling SI, 102,942. 10. In 
addition, during the fiscal year ending June 30, 1989, this division obtained three 
convictions on employer tax cases and the court found facts sufficient to warrant 
a finding of guilty in an additional 21 cases. 

During the fiscal year ending June 30, 1989 S704.438.29 in overdue taxes 
was collected. Monies collected were deposited to the Massachusetts 
Unemployment Compensation Fund. 



P.D. 12 33 



II. Prosecution of Claimants Fraudulently Collecting 
Unemployment Benefits 

Whenever an individual is found to be collecting unemployment benefits 
while gainfully employed and earning wages, the matter is referred to the 
Attorney General's Division for consideration of prosecution. Criminal 
complaints are brought only when the facts surrounding the offense have been 
investigated and the criminal intent substantiated by the evidence obtained. 
Complaints are sought against offenders in the jurisdiction where the crime is 
committed, which is the jurisdiction where the local office from which the 
claimant applied for benefits is located. 

During the fiscal year ending June 30, 1989, 673 fraudulent claims for 
unemployment benefits were handled by this division. On July 1. 1988 there 
were 612 cases on hand; 61 additional cases were received during the fiscal year, 
and 65 cases were closed, leaving a balance of 608 fraudulent cases on hand June 
30, 1989. 

Applications for criminal complaints were brought in various courts of the 
Commonwealth holding jurisdiction over the offenses involved, charging 43 
individuals with 801 counts of larceny totaling SI 35. 169.00 in unemployment 
insurance collected from the Commonwealths agency. The courts issued 
complaints against 37 individuals for 628 counts of larceny totaling 
5109,397.00. In addition, during the fiscal year ending June 30. 1989. this 
Division obtained 12 convictions on larceny cases and the court found 
sufficient to warrant a finding of guilty in an additional 2 1 cases. 

During the fiscal year ending June 30. 19S9. S163.552.15 was collected in 
restitution from the fraudulent claimants, all of which has been restored to the 
Unemployment Insurance Fund of the Massachusetts Department of 
Employment and Training. 

///. Actions Brought By Or Against The Commissioner Of The 
Department Of Employment and Training. 

During the fiscal year ending June 30, 1988, actions brought by or against 
the Commissioner of the Massachusetts Department of Employment and 
Training numbered 31. On July 1. 19SS. 2S cases were on hand, and three 
additional cases were received during the course of the fiscal year. 

Seven cases filed in the Supreme Judicial Court or the Appeals Court of the 
Commonwealth were handled by the Attorney General's Employment and 
Training Division during the fiscal year ending June 30. 1989. T- sases were 
on hand July 1. 1988. Five additional cases were received, increasing the total of 
cases on hand to seven. Three of the cases were argued and closed reducing the 
balance of cases on hand to four. Of the three cases argued), the court upheld the 
position of the Commissioner in one case: the court dismissed one case for the 
plaintiffs failure to timely prosecute: and one case was voluntarily dismissed 
without costs and with prejudice. 

IV. Other Activities. 



34 P.D. 12 



During the fiscal year, this division received the resources to initiate an 
aggressive enforcement program directed at individuals who default on their legal 
obligations in criminal matters prosecuted by the division. This program has 
proved to be highly successful. 

In addition, a special investigation yielded several defendants who were 
charged with forgery, uttering false documents, and receiving stolen property 
after several missing unemployment compensation checks were fraudulently 
negotiated in communities north of Boston. Jail terms were part of the 
disposition in those cases. 



P.D. 12 35 



EMPLOYMENT AND TRAINING DIVISION 

(Statistical Report) 

FISCAL YEAR ENDING JUNE 30. 1989 



Cases On Hand July 1,1988 
Employer tax cases - 1,152 

Employee fraudulent claims cases - 612 

Appellate cases, 
(On appeal from Board/Review Decisions) - 2 

D.E.T. Commissioner Actions, 

(Brought by or against the Commissioner) - 28 1794 

Additional Case Referrals: 

Employer tax cases - 64 

Employee fraudulent claims cases - 6 1 

Appellate cases 

(On appeal from Board/Review Decisions) - 5 

D.E.T. Commissioner Actions, 

(Brought by or against the Commissioner) - 3 133 

Total Cases On Hand During Fiscal Year 1 927 

Cases Closed: 

Employer tax cases - 1 87 

Employee fraudulent claims cases - 65 

Appellate cases, 

(On appeal from Board/Review Decisions) - 3 

D.E.T. Commissioner Actions, 

(Brought by or against the Commissioner) - 1 256 



Cases Remaining On Hand June 30, 1989 

Employer tax cases - 1029 

Employee fraudulent claims cases - 608 

Appellate cases, 

(On appeal from Board/Review Decisions) - 4 

D.E.T. Commissioner Actions, 

(Brought by or against the Commissioner) - 30 1,671 



Total Monies Collected : $867,990.44 

From Employers - $704,438.29 
From Employees - $163,552.15 



36 P.D. 12 



Criminal Complaints Brought: 

Tax Cases: Application was made for 68 complaints 

involving 693 counts brought against 50 
employer accounts for delinquent taxes totaling 
$1,271,581.81. The court issued 56 
complaints involving 574 counts against 40 
employer accounts for delinquent taxes totaling 
$1,102,942.10. 

Larceny Cases: Application was made for 43 complaints 
involving 801 counts brought against 43 
individuals for collecting benefits fraudulently in 
the amount of S135, 169.00. The courts issued 37 
complaints involving 628 counts against 37 individuals 
for collecting benefits fraudulently in the amount of 
S109,397.00. 



CRIMINAL APPELLATE DIVISION 

The Criminal Appellate Division handles appeals from cases prosecuted by 
the Criminal Bureau and represents the Commonwealth in criminal matters in 
federal court (including the United States Supreme Court). The division also 
handles a wide range of post-conviction litigation including federal habeas corpus 
actions challenging state convictions; civil rights suits brought by incarcerated 
persons, petitions for annual review of inmates confined as sexually dangerous 
persons at the Treatment Center at Bridgewater; and supervisory powers 
litigation in the Supreme Judicial Court. 

The division provides formal opinions to the Governor in the rendition of 
fugitives from justice, files amicus curiae briefs in significant appellate cases, 
and contributes to policy and legislative matters concerning law enforcement 

There were 297 pending cases in the division at the conclusion of Fiscal Year 
1989. These cases predominantly involved the defense of federal habeas corpus 
petitions attacking state criminal convictions and appeals therefrom, and the 
defense of state correctional authorities and other state officials and judges who 
had been sued in the course of their official duties. 

The number of new cases handled by the Criminal Appellate Division was 
171. 

In the United States Supreme Court, the Criminal Appellate Division 
continued to prevail. It wrote the brief in Massachusetts v. Morash in which the 
Commonwealth sought and obtained reversal of a decision of the Supreme 
Judicial Court which had held that an employer was not subject to state criminal 
prosecution for nonpayment of earned but unused vacation time because such a 
prosecution was preempted by federal law. The division also co-authored the brief 
in Massachusetts v. Oakes in which the Commonwealth sought and obtained 
reversal of a decision of the Supreme Judicial Court which had vacated a 



P.D. 12 37 



defendant's conviction on the ground that the underlying Massachusetts 
pornography statute was facially overbroad as a matter of federal constitutional 
law. The United States Supreme Court reinstated Oakes' conviction and remanded 
the case to the Supreme Judicial Court for a determination as to whether the 
statute was overbroad as specifically applied to Oakes. 

Of the 15 cases in which briefs were submitted in the United States Court of 
Appeals for the First Circuit, eight cases were argued. 

Eleven cases were argued in the Supreme Judicial Court including Globe 
Newspaper Co. v. Blackbourne in which the division was successful in arguing 
that autopsy reports of the Commonwealth's Medical Examiner are not public 
records. The division prevailed in In re: John Doe-Grand Jury Investigation in 
which the Supreme Judicial Court reversed a superior court decision and held that 
the state immunity statute is constitutional. Also successfully defended were the 
1988 amendments to the Controlled Substances Act against constitutional 
challenge. Commonwealth v. Cedeno. 

Nineteen briefs were filed by the division in the Massachusetts Appeals 
Court; nine were argued. 

The division also successfully opposed fourteen petitions brought in the 
Supreme Judicial Court, pursuant to G.L. c. 211, §3. The petitions seek to 
invoke the power of the court to exercise its superintendency powers over the 
inferior courts. 

In the federal district court the division defended more than 60 federal habeas 
corpus petitions challenging the constitutionality of state court criminal 
convictions. 

The division continued to represent the Commonwealth in cases involving 
annual review of inmates confined as sexually dangerous persons at the 
Bridgewater Treatment Center. During the fiscal year, 22 petitions by those 
inmates were disposed of in Superior Court bench trials. 

The Criminal Bureau also processed the rendition of fugitives from justice. 
Demands from both law enforcement officials of the Commonwealth and 
Governors of other states were examined, and the number of opinions rendered on 
the legality of each demand rose to 275 in Fiscal Year 1989. 



SPECIAL PROSECUTIONS DIVISION 

During Fiscal Year 1989, the Special Prosecutions Division functioned as 
two units: Tax/Major Frauds Unit and Environmental/General Crimes Unit 



TAX/MAJOR FRAUDS UNIT 

Continuing the initiative begun in Fiscal Year 1989 when the tax 
prosecution unit was formed by agreement between the Attorney General and the 
Commissioner of the Department of Revenue, this unit enjoyed its most 
productive year thus far. 



38 P.D. 12 



The disposition of 49 criminal tax cases during Fiscal Year 1989 resulted in 
the largest total of fines imposed since the unit was formed. The record amount 
of $709,415 in fines included the highest corporate fine imposed thus far on a 
corporate tax defendant ($150,000) and the highest fine imposed on an individual 
defendant ($125,000). Seven defendants received jail sentences with the longest 
sentence being 10 months in the House of Corrections. 

Prosecution of fraud cases covered several schemes and scams including the 
following: a state welfare case worker was convicted after setting up bogus 
AFDC accounts and then receiving the money; two persons were convicted who 
filed false medical insurance claims and defrauded Blue Cross/Blue Shield; a 
conviction was imposed on a person guilty of extortion over a 19 year period; a 
"stock market" hoax led to the conviction of the person who engineered it and a 
law professor who embezzled clients funds was also convicted. 

Indicunents were also brought in cases involving commerical bribery, larceny 
and forgery. 



ENVIRONMENTAL CRIMES/GENERAL 
CRIMES UNIT 

Fiscal Year 1989 saw the formation of the Environmental Crimes Strike 
Force. The joint effort employs the resources of the Attorney General, the 
Department of Environmental Protection, the Department of Fisheries, Wildlife 
and Environmental Law Enforcement and the Metropolitan District 
Commission. Its stated goal is to target and develop high-priority cases in the 
areas of hazardous waste and materials, solid waste and air and water pollution. 

Dispositions of cases already pending involved a corporate defendant convicted 
of the illegal release of hazardous material. The defendant received the largest fine 
($125,000) ever imposed in Massachusetts in a state criminal environmental 
case. 

The illegal transportation of hazardous waste led to the conviction of a second 
corporate defendant as well as the individual who participated in the illegal act. 

Indictments were also brought for violations of the state's solid waste, 
hazardous waste and wetlands protection statutes as well as the Clean Waters 
Act. 

The General Crimes Unit found itself handling cases which included every 
type of crime that can be prosecuted. For example, General Crimes received and 
handled those cases referred by the district attorneys' offices for reasons of 
conflict. Among such cases referred and prosecuted by this office were vehicular 
homicide, assault and battery and rape cases. 

Other cases received were referred by a number of sources including state 
agencies and departments, citizen complaints, local police departments and other 
bureaus and divisions within the Attorney General's Office. Among such cases 
handled were forger)', uttering, larceny and commercial bribery. 

MEDICAID FRAUD CONTROL UNIT 

The Attorney General established the Massachusetts Medicaid Fraud Control 



P.D. 12 39 



Unit (MFCU) in 1978 to investigate and prosecute Medicaid fraud, patient abuse 
and fraud in the administration of the Medicaid program. The Commonwealth's 
Medicaid program is administered by the Department of Public Welfare (DPW). 

In Fiscal Year 1989, the Medicaid Fraud Control Unit continued to be one of 
the most productive and successful units in the nation. MFCU is a white collar 
criminal prosecutorial team whose mission is to investigate and pursue health 
care provider fraud and protect elderly nursing and rest home residents from 
physical and financial abuse. 

The unit prosecutes both institutional health care providers and ambulatory 
providers such as dentists, doctors, psychiatrists, laboratories, pharmacies and 
transportation companies. MFCU also prosecutes instances of physical abuse to 
patients residing in the Commonwealth's 750 licensed long-term care facilities. 

During Fiscal Year 1989, the unit opened 69 new cases, initiated 18 
prosecutions and obtained 19 convictions. As a result of these convictions, 
defendants paid $204,125 in restitution, $165,715 in fines and $107,500 in costs 
and damages. In addition to those sums, the unit's efforts resulted in an additional 
$252,700 in Medicaid program recoveries as well as costs, penalties and damages 
of $470,750. Finally, through MFCU endeavors, over $31,000 in personal needs 
allowance monies was returned directly to nursing and rest home residents. A 
Medicaid provider's conviction of a program related offense, such as filing false 
claims or larceny, results in permanent exclusion from the program.The majority 
of MFCU prosecutions were initiated through special grand jury. Fiscal Year 
1989 saw the selection of the thirteenth such special grand jury impaneled to 
investigate allegations of Medicaid fraud and other serious crimes. 

In Fiscal Year 1989, MFCU completed several noteworthy cases and 
continued to experience success with its inventive investigative initiatives. In 
the dental provider area, MFCU's innovative "open mouth review" strategy 
resulted in the successful completion of six cases and $180,500 in restitution, 
fines, costs and damages. An "open mouth review" is a collaborative effort 
between the unit and the Department of Public Welfare. A team, comprised of 
MFCU personnel, including a registered dental hygenist, and DPW dental 
consultants examine, chart, and photograph preselected Medicaid recipient's teeth. 
The results of the review are compared to the billings to determine whether or 
not the provider is fraudulently billing. 

In one of these cases, a dentist repeatedly billed for expensive repair work 
allegedly performed on recipients' fractured front teeth when, in fact, he was only 
filing down and buffing their teeth. The dentist pled guilty to filing Medicaid 
false claims and larceny, received a lengthy period of probation, paid $15,000 in 
restitution and $12,500 in fines. 

In the medical transportation area, MFCU prosecuted two cases which 
resulted in over $160,000 in restitution, fines, cost and damages. In one of those 
cases, which involved a week-long trial, MFCU introduced evidence that a taxi 
company was stealing from the Medicaid program by vastly overstating the 
miles recipients were transported. Following the jury's guilty verdict, the judge 
imposed $13,000 in restitution and fines amounting to $78,000 for filing 
Medicaid false claims and larceny. 

The unit conducted an investigation of a medical doctor and his counseling 
center based on an allegation that unsupervised therapists used the doctor's 
Medicaid provider number to bill for individual, one-hour long therapy sessions 



P.D. 12 



when the doctor never saw the patients. This fraudulent scheme resulted in 
significant overpayments made by both Medicaid and Medicare. In resolution of 
this matter, guilty pleas for filing Medicaid false claims and larceny were entered 
and restitution, fines and costs of $92,500 were paid by the defendant 

Abuse, mistreatment and neglect in the Commonwealth's long-term care 
facilities remained a unit priority. Since the enactment of the Patient Abuse 
Statute, 1980 G.L. c.265, §38, designed to provide protection to the most 
vulnerable segment of the state's population, the MFCU has aggressively 
investigated and prosecuted caregivers who mistreat and physically assault 
nursing and rest home residents. During the past year, the unit convicted a 
registered nurse, a licensed practical nurse and an orderly for patient abuse. 

In addition to the imposition of suspended jail sentences, probation, fines, and 
penalties, each defendant was barred from working in any capacity in the health 
care industry for their probationary period. 

Personal needs spending allowance is the amount of money every nursing and 
rest home resident is permitted to keep each month before the remainder of their 
resource check is applied to their room and board. This monthly stipend can be 
spent by the patient in any way he or she chooses. As noted above, the MFCU 
secured favorable resolutions in three cases which resulted in patients' directly 
recovering over $31,000 in personal spending monies. 

In Fiscal Year 1989, the unit also entered into two notable civil settlements 
which resulted in hundreds of thousands of dollars being returned to DPW. One 
case involved a marketing scheme in which a pharmaceutical company offered 
points redeemable for free airline tickets to Massachusetts physicians who 
prescribed a new hypertension drug. The outcome of the unit's investigation into 
this company's questionable program was a settlement agreement whereby the 
company agreed to stop the program and pay DPW the amount of $195,000. The 
second significant settlement was reached by the unit and a chain of pharmacies 
which had improperly charged the Medicaid program a higher institutional price 
for a medical supply product which it purchased from wholesalers at a reduced 
rate. The pharmacy chain agreed that the cost savings it realized should have been 
passed on the DPW and refunded $95,000 in overpayments. 



1 By virtue of Chapter 236 of the Acts of 1988, the Massachusetts Division 
of Employment Security is now known as the Department of Employment and 
Training, and the Director is now known as the Commissioner. Paralleling this 
change, the unit formerly denominated the Employment Security Division is 
now the Employment and Training Division. 



P.D. 12 41 

PUBLIC ADVOCACY BUREAU 

During Fiscal Year 1989 the Public Protection Bureau was restructured into 
two bureaus: the Public Advocacy Bureau, and the Public Protection Bureau. The 
divisions included in the Public Advocacy Bureau are Public Charities, Utilities, 
Insurance, and Antitrust. The bureau brings affirmative litigation on behalf of 
the public and represents the public in insurance and utility rate hearings. The 
bureau also represents state agencies and boards that are involved in the public 
interest. 

DIVISION OF PUBLIC CHARITIES 

The Attorney General represents the public interest in the proper solicitation 
and use of all charitable funds. The Attorney General is authorized to "enforce the 
due application of funds given or appropriated to public charities within the 
Commonwealth and prevent breaches of trust in the administration thereof." 
G.L. c. 12, sec. 8. The Division of Public Charities is established by G.L. c. 
12, sec. 8B to carry out the Attorney General's responsibilities in this area. 

The Attorney General's enforcement role extends to a wide range of charitable 
activity in order to protect charitable donors from diversion and waste of funds, 
and to ensure that the beneficiaries of charitable funds receive the intended 
benefits. Through the Division of Public Charities, the Attorney General takes 
enforcement action (1) to ensure that charitable funds held by trustees and 
charitable organizations are used properly and (2) to protect the public from 
deceptive and fraudulent fundraising practices. In addition, the Attorney General 
is an interested party in the probate of each estate in which there is a charitable 
interest and in legal actions to modernize the provisions of philanthropic 
bequests. 

To further protect the public interest in this area, the Division of Public 
Charities registers over 25,000 charitable organizations and approximately 188 
fundraisers operating in Massachusetts. A charitable organization is one which is 
nonprofit and whose purpose is to benefit a portion of the public; in addition to 
philanthropic organizations, examples of public charities include nonprofit 
hospitals, schools, social service providers, and cultural organizations. As well 
as registering and obtaining financial reporting by charitable organizations and 
fundraisers, the Attorney General is the defendant in all proceedings brought in 
the Supreme Judicial Court to wind up the affairs of a charitable organization. 

In the year ending June 30, 1989, the division's work in carrying out this 
array of responsibilities involved four main areas: 

(a) registering and receiving financial information from charities and 
fundraisers to assure accountability for charitable funds; 

(b) participation as an interested party in numerous estates and trusts in 
which there is a charitable interest; 

(c) enforcement of the due applicaton of funds by charitable corporations; 
and 

(d) litigation to protect the public from fraudulent or deceptive 
solicitation, and from misapplication of donated funds. 



42 P.D. 12 

A. CHARITABLE ACCOUNTABILITY 

Central to the Attorney General's responsibilities in seeing to the due 
application of charitable funds is the enforcement of laws requiring 
accountability by charities and fundraisers. The enforcement of accountability 
requirements is essential to prevent misuse of charitable funds and to promote 
the well-being of charities by fostering in individual donors and in the general 
public a trust and support of all public charities. 

1.) Registration of Charities Under GL. c. 12. § 8E 

All public charities, with the exception of religious organizations and certain 
federally chartered organizations, must register with the division. 

In cooperation with the Secretary of State, the division receives the Articles 
of Organization of newly filed G.L. c.180 non-profit corporations. The division 
reviews the articles to determine if the nonprofit is a public charity. If it is a 
public charity, information about the charity is entered on the computer, and the 
organization is sent annual reporting material. 

As part of the division's compliance project, every new organization 
registered with us receives a packet of information about its registration 
obligations. This packet includes a copy of our General Laws booklet, the 
division's two guides ("Questions Commonly Asked To The Division Of Public 
Charities" and "Guide To The Registration And Filing Requirements Of The 
Division Of Public Charities"), and appropriate forms. The packet also puts the 
organization on notice that it is required to obtain a certificate from the division 
if the organization will be soliciting charitable funds. 

This year 2,874 new charitable organizations' articles were reviewed, 
determined to be charitable, and entered into the computer. Over 25,000 charities 
are registered with the division. 

2.) Annual Financial Reporting By Charities Under G.L. c.12. § 8F 

All registered charities must submit annual financial reports to the division. 
The registrations and financial reports are public record and public viewing files 
are kept. 

Annual filings must be accompanied by a $25 fee. The division is 
responsible for the collection and processing of fee checks. This year we received 
a total revenue of $299,925 in fees paid to the Commonwealth for annual 
filings. 

3.) Issuance Of Certificates To Charities That Fundraise 

Under G.L. c. 68, § 19, every charitable organization which intends to solicit 
funds from the public, except religious organizations, must apply to the division 
for a solicitation certificate before engaging in fundraising. Upon receipt, the 
division reviews the application for compliance with statutory requirements. 
Unless there is a problem with the application, all certificates are issued within a 
10-day statutory period. 

This year, 3,650 certificates were issued and $36,500 in certificate fees were 
received and processed. 

4.) Registration Of Professional Solicitors And Fund Raising 
Counsel 

Under §§22 and 24 of G.L. c. 68, all persons acting as professional 
solicitors or professional fundraising counsel for soliciting charitable 
organizations must register annually with the division. Solicitors must also file 
a surety bond in the amount of $10,000. All fundraisers must also file with the 
division a copy of each fundraising contract which they sign with any charitable 



P.D. 12 43 

organization. 

Each registration submittal is reviewed by the division to confirm that it 
meets the requirements as set forth in the statute. During the fiscal year ending 
June 30, 1989, a total of 188 registrations were received and approved, resulting 
in the accrual of fees to the Commonwealth of $1,880. Of these 188 
registrations, 123 were renewals of previous registrations, and 65 were new 
registrations obtained as a result of increased enforcement of this registration 
requirement by the division. Of this total of 188, 140 are fundraising counsel and 
48 are solicitors. 

The division revised the Solicitation Registration form (Form 10A) which all 
professional solicitors and commercial co-venturers must submit for each 
solicitation through the year. Form 10A discloses to this office and the public 
what the solicitation campaign will involve and how much money is expected to 
be raised. The revisions were made to make sure that this form complies with 
the requirements established by the United States Supreme Court in its Riley 
decision of 1988. At the same time, the form was strengthened in a manner 
consistent with Riley to help the division ensure that charities and their 
solicitors are complying with the state's solicitation requirements. 

In addition, the division developed and distributed a new financial report form 
for all professional solicitors and commercial co-venturers (Form 11). This form 
must be filed at the end of the year for each solicitation campaign, and requires 
that an accounting be made by the solicitor for all monies actually raised from 
the public. 

Both Form 10A and Form 1 1 must now be signed by a representative of the 
charity as well as by the solicitor. This requirement should cause charities to 
monitor closely the activities of their solicitors. 

5.) Administrative Enforcement of Registration and Filing Requirements 

In December, because of the outpouring of donations, the division focused its 
compliance resources on Armenian earthquake relief groups. All organizations 
reported in the media, plus groups in our computer list, were checked. All 
charities soliciting for this purpose were brought into compliance. Subsequently, 
the charities were asked to submit interim financial reports accounting for the 
contributed funds. 

Beginning in January, the division embarked on a priority compliance project 
to ensure registration and filing compliance by a list of 400 significant and 
active charities. In this project, a complete compliance review is conducted of 
each charity's registration file. Deficiencies are brought to the attention of the 
charity, with followup as necessary until there is compliance. 

In total, 1,258 charities were contacted during the year to rectify filing 
deficiencies. 

6.) Litigation to Enforce Registration and Filing Requirements 

ADDISON GILBERT FOUNDATION 

In September, the division issued a notice of intent to sue to this charity for 
failure to file the required audit for 1985 and 1986, and for failure to file at all for 
1987. Shortly thereafter the charity filed the required documents. 

ATTORNEY GENERAL v. DORCHESTER VIETNAM COMBAT 

VETERANS 

The division filed suit on December 13, 1988 against a Dorchester-based 



44 r.LA 1Z 

veterans organization for failing to register with the Division of Public 
Charities. The court approved a stipulated preliminary injunction under which 
the organization agreed to submit the missing annual registration forms to the 
Division of Public Charities. 

ATTORNEY GENERAL v. NATIONAL AWARENESS FOUNDATION, et 

al. 

On February 3, 1989, the division filed suit against this Washington D.C.- 
based charitable organization and its solicitor for violations that included 
soliciting charitable contributions without the required registration. The division 
obtained a consent judgment from the charity and a stipulated preliminary 
injunction from the solicitor. 

ATTORNEY GENERAL v. A CHILD'S WISH COME TRUE, et al. 

On March 27, 1989, the division filed suit against this charity and its 
professional solicitor. Violations included failing to file the annual financial 
reports with the division and soliciting charitable contributions without the 
required certificate. The solicitor agreed to a preliminary injunction, and after a 
hearing the Superior Court judge entered a preliminary injunction against the 
charity. 

ATTORNEY GENERAL v. OBIE KNOX ELKS LODGE, et al. 

On May 17, 1989, the division filed suit against the sponsors of two circuses 
held in Western Massachusetts as well as their professional solicitor. Violations 
included soliciting charitable contributions without the required registration. The 
division obtained preliminary injunctions. 

ATTORNEY GENERAL v. HEAVEN'S CHILDREN. INC., et al. 

On May 31, 1989, the division filed suit against this organization and its 
president for failing to comply with the annual reporting requirements. The 
division obtained a stipulated preliminary injunction enjoining the defendants 
from soliciting contributions until the organization files an annual financial 
report for calendar year 1988 and audits for 1987 and 1988. 

7.) Enforcement Of Charitable Gaming Laws 

The division of Public Charities protects the public from misuse by non- 
profit organizations of their statutory license to fundraise through charitable 
gaming activities. The division enforces the Attorney General's Regulations (940 
CMR 13.00) relating to the conduct of fundraising Las Vegas Nights (Bazaars) 
and Raffles. These regulations to enforce the provisions of G.L.c. 271, §7A, the 
Massachusetts statute authorizing the holding of charitable gambling events by 
qualifying organizations. 

B. ESTATES AND TRUSTS IN WHICH THERE IS A 
CHARITABLE INTEREST 

Under G.L. c.12 § 8G, the Attorney General is an interested party in the 
probate of all estates in which there is a charitable interest and in all other 
judicial proceedings affecting charitable trusts. 

1.) Review of Wills and Trusts 

This year, we received and reviewed 1,877 new wills, 1,544 of which 
contained charitable bequests. A total of 525 executor accounts and 2,178 trustee 
accounts were reviewed and approved. The division also reviewed and assented to 
112 petitions for sale of real estate and 46 petitions for appointment of trustees. 

Ninety-one new probate cases were opened, and the division was involved in 
725 actions on existing probate cases, which included petitions for cy pres or 
instructions to modernize or clarify outmoded trust terms. The division reviewed 



RD. 12 45 

4,386 other miscellaneous probate matters. 

2.) Public Administration 

The division represents the State Treasurer in the public administration of 
intestate estates which escheat to the Commonwealth because the decedent had 
no heirs. During Fiscal Year 1989, $373,645.37 was received in escheats. This 
division also handles petitions from public administrators representing heirs in 
intestate estates who are found after an estate has been administered and are then 
entitled to a reimbursement of escheated funds. 

During Fiscal Year 1989, the division reviewed and approved 64 intestate 
estates, 10 petitions for sale of real estate and 63 accounts in public 
adminstrations. 

3.) Municipal Trusts 

To ensure that charitable bequests left in trust to municipalities in the 
Comnonwealth are duly administered and distributed, the division is conducting a 
municipal trust project. Updated status reports of the trusts held by 
municipalities are obtained. Periodically, a sampling of communities are 
requested to report in more detail the financial status and distributions of the 
charitable trusts held by them. Improved compliance with trust terms is obtained 
in appropriate cases. 

4.) Wellesley College v. Attorney General 

In 1873, Henry F. Durant gave land to Wellesley College in trust to be used 
for college purposes with an additional requirement that the land never be leased 
for longer than seven years. Wellesley College filed this action seeking court 
authorization to deviate from the terms of the trust by leasing the vacant land to 
a developer who will work in conjunction with Harvard Community Health Plan 
to build a continuing care facility for retired Wellesley faculty and staff. 

The statutory role of the Attorney General involved reviewing the facts to 
assure that the deviation was permissible according to Massachusetts case law. In 
addition, the Attorney General required the college to give publication notice so 
that any potentially interested parties could have the opportunity for appropriate 
input. The Attorney General agreed that the deviation should be authorized, but 
required that the college take all reasonable steps to utilize governmental housing 
programs to financially assist potential residents of modest means to obtain 
housing at the continuing care facility. The court granted the relief in this form. 

5.) Wigglesworth v. Cowles 

The Attorney General and the Trustees of the Stephen Caldwell Memorial 
Convalescent Home obtained a judgment which prevents an Ipswich 
convalescent home from reverting to the heirs of the donor. 

This case involved an attempt by third generation descendants of Roxana 
Cowles to force a forfeiture of property bequeathed by Cowles in her will to be 
used as a nursing home. The will specified that Roxana Cowles' own home was 
to be used as the nursing home. The trustees accumulated trust funds until the 
early 1950's, when they had enough money to actually construct a nursing 
home. Because of structural problems and state licensure requirements, the 
trustees then razed the house and built a nursing facility that met the health and 
safety requirements of the time, and which has operated successfully for 30 years. 

The heirs contended that even though the trustees could not have successfully 
fulfilled the testatrix' intent using the old building, and have successfully carried 
out the purpose of the charitable trust by erecting another suitable building, the 



46 P.D. 12 

trust fails because the trustees did not use the old building. The Attorney General 
opposed the heirs' characterization of the trustees' actions as a breach of the terms 
of the trust that would today trigger a forfeiture of the land and buildings over to 
the private ownership of the heirs. The court adopted the Attorney General's 
arguments. The heirs have filed an appeal. 

6.) Crosby el al (Trustees of Curtis Trust) v. Shannon 

This case involves a 53-acre tract of land and four buildings in the Town of 
Cohasset which were left in trust in the 1920's by George E. Curtis to be used 
as a home for feeble, deformed, or invalid women. The home has never been 
established. The trustees have filed a complaint for cy pres, asking the court to 
approve a sale of the property, with the proceeds to be used for grant-making. As 
a reason for this change, the trustees cite problems with the property and argue 
that the intent of the testator to establish a home can no longer be realized. The 
division successfully opposed the immediate granting of the trustees' request by 
the court, on the ground that a more extensive exploration should be made of 
alternatives for carrying out the trust as closely as possible to the donor's intent. 
In December, a state grant was awarded to the town of Cohasset to conduct 
engineering and architectural studies of the land and buildings in order to 
determine definitively whether the property is appropriate for use as intended by 
the donor. 

7.) Isabella Stewart Gardner Museum, Inc., v. Shannon 

The museum, established under the will of Isabella Stewart Gardner, sought 
court permission to deviate from a term of the will that directs that the fourth 
floor and attic of the museum shall be set aside as a residential space for the 
director of the museum. The museum sought to move its administrative offices 
to the fourth floor and use its first floor administrative space for an expanded 
conservation laboratory. Because of the museum's unique nature, the museum's 
proposal was a matter of public controversy. After careful review, the Attorney 
General agreed that the relief requested by the museum was necessary and 
appropriate, so long as any alterations of the fourth floor space do not 
irretrievably prevent the space from use as a residential space in the future. After 
hearing, the court approved the form of relief proposed by the Attorney General. 

C . ENFORCEMENT OF THE DUE APPLICATION OF FUNDS BY 
CHARITABLE CORPORATIONS 

The assets of all charitable corporations in the Commonwealth are considered 
by law to be held in trust by the corporation for the purposes for which the 
assets were first obtained. The Attorney General represents the public's interest 
in the proper use of these assets. 

1.) EOHS Service Providers 

The division is notified by the Executive Office of Human Services when a 
potential problem within the jurisdiction of the Division of Public Charities is 
identified in EOHS audits of nonprofit corporations that provide services 
pursuant to contracts with EOHS agencies. 

Investigation of nine such referrals were completed by the division, with 
action taken as appropriate. 

2.) Dissolutions 

To enforce the public's interest in the disposition of charitable assets, the 
Attorney General is a party to all voluntary dissolutions of charitable 
corporations under G.L. c. 180, § 11 A. Under a procedure developed with the 



P.D. 12 47 

Supreme Judicial Court, dissolving charities submit draft dissolution pleadings 
to our office. The division provides an informational packet of model pleadings 
and other material to charitable cooperations which request information regarding 
the correct procedure for dissolution. Following our review, negotiation of 
necessary modifications and our assent, the pleadings are filed with the Supreme 
Judicial Court. We review and negotiate the pleadings to ensure that: 

(1) there are adequate grounds for dissolution; 

(2) charitable assets are not diverted to non-charitable uses; and 

(3) any assets remaining after repayment of outstanding debts are 
transferred, with court approval, either (a) as restricted assets to 
a charitable corporation with a similar charitable purpose, or (b) 
as funds restricted to such a purpose to a charitable corporation 
whose purposes are broader than those of the dissolving charity. 

After review of proposed pleadings and negotiation of necessary 
modifications, the division assented to 17 motions by dissolving charitable 
corporations for interlocutory orders permitting transfer of assets to other 
charities for similar charitable purposes, and to 32 final judgments dissolving 
charitable corporations. 

For example, after negotiation and modification, the division assented to the 
petition of the HCHP Hospital (formerly Parker Hill Hospital) to transfer its 
remaining restricted funds to the Brigham and Women's Hospital. Another case 
involved an agreement for a financially troubled visiting nurse association, 
District Nursing Association of Fall River, Inc. ("Fall River VNA"), to transfer 
its assets and operations to the Visiting Nurse Association of Southeastern 
Massachusetts. After extensive negotiations with both parties, our office 
assented to the transaction, subject to the restrictions that the Southeastern 
Massachusetts VNA would receive the Fall River assets in trust for the benefit 
of citizens in the Fall River area. After our office's assent, the Single Justice 
approved the transfer of assets and, following said transfer, a final judgment of 
dissolution. 

3.) In Re Saint Mary of the Graces ofWatertown 

This action was commenced by Saint Mary of the Graces, Inc. (the "Society") 
in Middlesex Superior Court as an ex parte proceeding under G.L. c.180, § 1 1 for 
dissolution of a non-charitable, nonprofit corporation and distribution of its 
remaining assets to its members. The division had intervened to prevent 
distribution to the members of any charitable assets. The Society had operated in 
large degree as a non-charitable mutual benefit membership group, but a portion 
of the Society's activities had been dedicated to encouraging religion through an 
annual festival and parade for promoting devotion to Saint Mary of the Graces. 
After extensive negotiauons, the parties agreed to treat a portion of the assets as 
held in charitable trust. On November 29, 1988, the court entered a stipulated 
judgment of dissolution providing for 36 2/3 percent of the society's assets to be 
distributed to the Sons of Divine Providence in East Boston in trust for the 
religious purposes of its Madonna Queen National Shrine. 

4.) Vilner Synagogue v. Attorney General 

The Attorney General is made a party to all charitable corporate dissolutions 
pursuant to c. 180, § 11 A. This is a contested dissolution case in which various 



48 P.D. 12 

entities have come forward to claim the assets of the Vilner Synagogue, one of 
the last remaining Orthodox synagogues in Boston. 

In the summer of 1988, the case was recommitted to a master for 
recommendation of a plan of distribution. After hearings, the master issued a 
report recommending that the assets be distributed to the Charles River Park 
Synagogue. 

In October, the Attorney General filed a motion for an order to require Vilner 
to account for all artifacts, memorabilia, and historically significant documents 
of Vilner. The Attorney General obtained an injunction ordering Mendel Miller, 
the chairman and sole remaining member of Vilner, to refrain from dissipating 
Vilner's assets. The court requested that the accounting proceeding be filed as a 
separate action (See below). 

In November, the Attorney General sought the appointment of a receiver to 
ensure that all of Vilner's assets will be applied to charitable purposes as 
originally intended, to sell the synagogue building and to distribute the assets in 
accordance with the pending dissolution proceedings. On December 20, Attorney 
Terry Jean Seligmann was named as receiver by the Single Justice. 

In February 1989, the Attorney General, the receiver and Charles River Park 
Synagogue negotiated a joint motion for agreed upon plan of distribution, which 
was filed in lieu of objections to the master's report. The matter is still pending. 

5.) Shannon v. Mendel Miller 

On December 7, 1988, the division filed this action in the Supreme Judicial 
Court for Suffolk County, as companion litigation to the dissolution 
proceeding, Vilner Congregation v. Attorney General As discussed above, the 
division had asked the sole remaining member, director and officer of the Vilner 
Congregation to account for Vilner assets which he had not placed before the 
court for distribution through the dissolution, but Miller declined. The lawsuit 
seeks a court order to compel such an accounting. The matter is pending. 

6.) Attorney General v. Coalition for Reliable Energy, et al. 

The Attorney General filed a complaint in 1987 alleging that the Coalition 
for Reliable Energy ("CRE"), its directors and its managing agent (BMc 
Strategies, Inc.) violated G.L. c. 93 A and G.L. c. 12, § 8 by deceiving the 
public to believe that CRE was a charity promoting all forms of reliable energy, 
while in fact it was a front for the joint owners of Seabrook designed to promote 
demand for consumption of nuclear electricity generated by Seabrook. 

After the superior court judge denied CRE's motion for summary judgment, 
CRE filed a motion requesting the judge to exercise his discretion to report his 
decision for interlocutory appeal. CRE argued that judicial economy would be 
promoted by appeal, because an appellate finding that CRE's advertisements do 
not constitute commercial speech would dispose of the Attorney General's G.L. 
c. 93A claim. The Attorney General argued in opposition that judicial economy 
would not be promoted by appeal because (1) the issue of commercial speech 
requires fact-finding of material disputed facts as to whether CRE is an alter ego 
for the Seabrook owners and whether CRE's advertisements were economically 
motivated, (2) those same facts also must be tried in order to dispose of the 
Attorney General's other claims under G.L. c. 12, § 8 and G.L. c. 68, 
irrespective of the G.L. c. 93A claim, and (3) trial could moot the very issues 
CRE seeks to appeal. 

On July 28, 1988 Judge Walter E. Steele denied CRE's motion. Discovery 
and preparation for trial are continuing. 



P.D. 12 49 

7.) Attorney General v. Boston Basics et. al. 

This is a pending lawsuit filed against David McHollan, Robert Foley, and 
five corporations controlled by them (four charitable human service providers and 
one for-profit corporation) for misappropriation of funds. Early in the case, 
Foley negotiated a consent judgment. However, McHollan moved out of state 
and could not be located for service of process. 

After the development of new leads, McHollan was traced to Tampa, Florida, 
where he was personally served. McHollan responded by Filing a motion to 
dismiss. In response, the division argued that there was personal jurisdiction 
because the cause of action arose from McHollan's control and operation of the 
corporation within Massachusetts, and that there was no insufficiency in service 
of process because any delay was caused by McHollan's evasion of service. Judge 
John M. Xifaras denied McHollan's motion. 

8.) Attorney General v. St. Mary's Albanian Orthodox Diocese 
House. Inc., et al. 

This case involved the issue of whether the Diocese House occupied by the 
late Bishop of the St. Mary's Albanian Orthodox Diocese was a charitable asset 
of the church or a personal asset of the Bishop. A member church of the Diocese 
alleged that the house was bought and maintained solely with donated funds and 
thus was an asset of the church. Executors for the estate of the late Bishop 
alleged that the Bishop paid for and maintained the Diocese House with his own 
funds. The division negotiated a settlement in which a portion of the sale 
proceeds were paid over to the member church of the Diocese. 

9.) Rockport Lodge v. Attorney General 

Rockport Lodge is a nonprofit vacation home in Rockport for women of low 
and moderate income. The lodge trustees proposed to close the lodge this 
summer and filed a cy pres petition to transfer the lodge to an organization 
providing for the needs of the homeless. A group of lodgers opposed these 
changes and requested that control of the lodge be transferred to them. 

The division made extensive efforts to facilitate a compromise resolution 
which would accomodate the interests of all. After the lodgers developed a plan 
for operation of the lodge, the trustees transferred control to a new board 
comprised of lodgers. 

10.) Worcester Hospitals 

Three Worcester-area hospitals, Worcester Memorial Hospital, Inc., Worcester 
Hahneman Hospital, Inc. and Holden Hospital, Inc., have affiliated with each 
other in order to save costs at the urging of the Department of Public Health, and 
plan ultimately to merge or consolidate. After negotiation, our office assented to 
relief entered by the Worcester Probate Court which would allow each hospital to 
transfer endowment funds donated for the use and benefit of that hospital to 
MCCM, Inc., a common parent of each hospital. The assented-to relief will 
allow MCCM to administer the funds for the benefit of the entire three-hospital 
system. Our office agreed with the hospitals' assertion that the relief was 
justified as a deviation from impractical restrictions limiting expenditure of a 
hospital's endowment for the benefit of that hospital, because the affiliated 
hospitals each provide different levels of care to the same geographic population 
and are interdependent upon each other. 



50 r.u. i- 

D. CHARITABLE SOLICITATIOX ENFORCEMENT 

L) Charitable Sweepstakes Information Packet 

In response to numerous inquiries from members of the public, the division 
prepared and the Attorney General issued an information packet on direct-mail 
charitable sweepstakes solicitations. The packet contains information on whs- 
charities are increasingly engaging in this type of fundraising, how such 
sweepstakes work, and the reasons that donors should be wary when deciding to 
participate in such sweepstakes. The packet also includes tips to follow if a 
person does decide to participate and tells where to get further information on all 
charities which solicit for funds. At the end of the packet, financial information 
is provided on nine charities which sent sweepstakes materials to Massachusetts 
residents in 1988. 

2 -. . I rney General v. Jeffrey Young and Matthew Pinkham d b a 
Citizens Against Drunk Driving (CADD) 

Jeffrey Young and Matthew Pinkham were sued by the division in November 
of 1988 for violating the Massachusetts Charitable Solicitation Act by 
misrepresenting their for-profit organization to contributors. The two men were 
sued again in January for failing to honor a preliminary injunction issued in the 
first case to prevent further violations. 

Pinkham and Young were the principals of a for-profit fund-raising company, 
Loram Marketing. Inc., which was soliciting contributions throughout 
Massachusetts in late 1988. The Attorney General's original complaint alleged 
that the defendants solicited charitable funds using the name "Citizens Against 
Drunk Driving"* i C.A.D.D. ) and misrepresented that C.A.D.D. was a charitable 
organization associated with the well-known Mothers Against Drunk Driving 
(M.A.D.D.) and Students Against Driving Drunk (S.A.D.D.) when in fact, there 
was no relationship. C.A.D.D. also claimed it sponsored educational programs 
on drunk driving for young people when it had, in fact, offered no such 
programs. 

Under the terms of a court judgment entered on May 24, 1989 which settled 
both cases, the defendants agreed to pay civil penalties of SI 5,000 to the 
Commonwealth and a total of S7,000 (SI, 000 each) to public school systems in 
seven communities, Arlington, Brookline, Cambridge, Newton, Watertown, 
Belmont, and Somerville, in which the defendants had heavily solicited. The 
court judgment further also imposes comprehensive injunctive relief. 

3.) Attorney General v. Boston Society of Young 
Professionals (BSYPj, et al. 

The defendants in this case hosted large dances at various hotels around 
Boston, ostensibly to benefit various charities. Money was raised through the 
sale of tickets at the door and through Ticketron. 

On January 18, 1989, the Pine Street Inn learned that a BSYP-sponsored 
"Superbowl Party" was being held at the Quality Inn on January 21. Invitations 
which were widely disseminated claimed that "a portion of the proceeds to benefit 
Pine Street Inn." However, the Pine Street Inn had not previously been aware of 
this event and had not authorized the use of its name. Further investigation by 
this division revealed earlier events in which charities' names were used without 
authorization and the charities received little or no money. 

On January, 20, 1989, the division obtained a temporary restraining order 
against further deception and an attachment and escrow of all proceeds of the 
"Superbowl Party ". Under a stipulated preliminary injunction, the defendants 



P.D. 12 51 

must: 

(1) notify the Attorney General 10 days in advance of the ticket 
sales to any event which will use a charity's name or purpose; 

(2) provide the Attorney General with the charity's written authorization 
to use its name; 

(3) secure from the charity its permission to distribute any 
complimentary or reduced price tickets for an event; 

(4) provide accountings for all events which they have sponsored in 
connection with a charity's name. 

4.) Attorney General v. Watson & Hughey et al. 

The division filed suit on February 1, 1989 against the Watson & Hughey 
Company, a Virginia-based fund-raiser; Attorney Robert R. Stone of 
Washington, D.C.; three national charities and a for-profit organization which 
used a deceptive sweepstakes solicitation campaign. 

The case arose out of sweepstakes letters signed by Attorney Stone which 
were sent throughout Massachusetts by Watson & Hughey on behalf of the 
Cancer Fund of America, the Walker Cancer Research Institute, the Pacific West 
Cancer Fund, and the Social Security Protection Bureau. The complaint alleges 
that the S5,000 sweepstakes letters were deceptive, among other reasons, because 
recipients believed they had won either the S5,000 prize or another prize of 
significant value. In fact, the top prize never exceeded SI 00 and most winners 
received the minimum prize of only 10 cents. 

The defendants agreed in February to a stipulation under which they would 
refrain from mailing any further sweepstakes solicitation materials into 
Massachusetts until a preliminary injunction took effect. The ban on 
sweepstakes mailings into Massachusetts remained in effect as the fiscal year 
ended. We continued to coordinate our efforts with those of the Attorney 
General's offices in the approximately 15 other states which have also sued these 
defendants. 

5.) Attorney General v. National Awareness Foundation Robert 
Lancaster, et al. 

In a complaint filed on February 3, 1989, Creative Communications and its 
president, Robert Lancaster, were charged with violating Massachusetts law 
while soliciting on behalf of the National Awareness Foundation, a Washington 
D.C. -based charitable organization. In a judgment by consent filed 
simultaneously with the complaint, the National Awareness Foundation agreed 
to comply with all provisions of M.G.L. c. 68, including all registration and 
disclosure requirements, in any future solicitations in Massachusetts, and to 
account to the division for all funds previously raised. 

The solicitors had telephoned businesses and asked them to purchase 
advertisements in the National Awareness Foundation's ''All Hugs. No Drugs" 
workbooks, which donors were told would be distributed to children in local 
schools. However, no specific arrangements had been made with any local school 
systems to distribute these workbooks. The solicitors also failed to make 
mandator)' required disclosures such as the fact that they were professional 
solicitors, and misrepresented to donors that the callers were members of the 
National Awareness Foundation. 

On February 24, 1989, the defendant solicitor agreed to a preliminary 
injunction prohibiting further solicitation in Massachusetts until he complies 



52 P.D. 12 

with all the requirements of Massachusetts law, and to account for all money 
collected in Massachusetts in the name of the National Awareness Foundation. 

6.) Shannon v. A Child's Wish Come True, Inc.. et al. 

On March 27, 1989, the division filed a suit against A Child's Wish Come 
True, plus a professional fundraising company, for violations of the charitable 
solicitation statute and the annual financial reporting requirements. The 
fundraising campaign sold trash bags, Christmas wreaths and ad book space, and 
claimed that proceeds would be used to grant the last wishes of terminally ill 
children. 

The complaint alleged that Child's Wish failed to file annual financial reports 
with the division and failed to obtain a certificate of registration for fundraising. 
The complaint also alleged that the fundraisers misrepresented themselves as 
calling from Child's Wish and as benefitting the National Kidney Foundation. 

On March 27, 1989, the court approved a stipulated preliminary injunction 
against the solicitor prohibiting future statutory violations and requiring its 
compliance with the reporting and disclosure requirements of c. 68. On April 6, 
1989, the judge entered a preliminary injunction against Child's Wish and its 
president which prohibits them from soliciting in Massachusetts until they 
comply with G.L. c. 68 and with the consumer protection statute, G.L. c. 93A. 
The order also requires Child's Wish to provide full financial accountings of all 
their charitable and fundraising activities in Massachusetts. 

7.) Sonya English dlbla South Shore Funding 

On April 18, 1989, the Criminal Bureau obtained an indictment by a 
Plymouth County grand jury against Sonya English d/b/a/ South Shore Funding 
on three counts of larceny by false pretenses for fraudulently obtaining charitable 
contributions by misrepresenting that the money was for the American Kidney 
Fund, the National Kidney Foundation, and A Child's Wish Come True. English 
was arrested and arraigned the next day in Plymouth County Superior Court and 
incarcerated at MCI Framingham. The case was identified by and developed in 
conjunction with the Public Charities Division. 

After English was released on bail, the Public Charities Division filed a civil 
action against her in Suffolk Superior Court. On May 17, 1989, the Division 
obtained a stipulated preliminary injunction which prohibits English from 
soliciting charitable contributions and from representing that she is in any way 
affiliated with a charity. The order also prohibits English from spending any 
funds which she has solicited and from destroying her fundraising records. 

8.) Attorney General v. Obie Knox Elks Lodge, et al. 

On June 8, 1989, the Attorney General obtained an injunction against the 
sponsors of two circuses held in Western Massachusetts, as well as the 
professional solicitor who sold tickets to the events. The defendants were sued on 
May 17, 1989 for failing to register with the Attorney General's office and 
misleading the public about the beneficiaries of the ticket purchases. 

At the hearing in Suffolk Superior Court, the Obie Knox Elks Lodge #1568 
of Holyoke and the Holyoke American Legion Post 25 agreed to an order which 
enjoins them from conducting any further solicitations in the Commonwealth 
until each has complied with the registration requirements of Massachusetts law. 
Each organization also agreed to account for all charitable funds raised in 
Massachusetts from 1987 through 1989. 

At the same time, a temporary restraining order (which became a preliminary 
injunction) was issued against the solicitor Eastern Productions, similarly 
stopping it from further solicitations in Massachusetts until the company 



P.D. 12 53 

registers with the Public Charities Division, and ordering it to make all required 
disclosures and to refrain from misrepresentations. The solicitors failed to fully 
disclose that they were professional fundraisers, and led some donors to believe 
that the callers were either volunteers or members of the Elks or the American 
Legion. In addition, the solicitors told donors that specific charitable institutions 
such as Jericho House or the Belchertown State School would benefit from 
purchases of tickets to this circus, when these institutions had not authorized the 
use of their names in connection with this fund-raising, and had not agreed to 
receive any proceeds raised at these circuses. 

9.) Attorney General v. Heaven's Children, Inc., et al. 

On June 8, 1989, the Attorney General obtained an injunction against further 
solicitation by a Canton-based charitable organization, Heaven's Children, Inc., 
and its president, Kenneth Singer, until they comply with the financial reporting 
requirements under Massachusetts law. The defendants were ordered to file an 
annual financial report for 1988 and audits for both 1987 and 1988 with the 
Division of Public Charities, and to keep adequate books and records of their 
financial activities in the future. The defendants were also ordered to refrain from 
collecting money through Heaven's Children canisters displayed in public 
locations until the organization has accounted to the Attorney General for the 
money which it has already raised from the public. 



UTILITIES DIVISION 

By statute, the Attorney General is the designated representative of 
Massachusetts ratepayers in utility rate matters. The Utilities Division, staffed 
by lawyers, financial analysts and an economist, is the primary, and in most 
instances, the only representative of the consumer interest in gas, electric, and 
telephone rate cases and related matters within Massachusetts. 

The rate cases in which the Attorney General appears are heard and decided by 
the Department of Public Utilities (DPU). The division also appears in cases on 
behalf of Massachusetts ratepayers before the Federal Energy Regulatory 
Commission (FERC). This federal intervention is essential since FERC 
establishes nearly all of the purchase power rates charged to four of the eight 
retail electric companies serving customers in the Commonwealth. FERC also 
has wholesale rate jurisdiction over all of the Massachusetts utility investment 
in Seabrook, with the exception of the Massachusetts Municipal Wholesale 
Electric Companies (MMWEC). 

During Fiscal Year 1989 the Utilities Division was involved in a wide 
variety of cases affecting the rates of Massachusetts electric, telephone, and gas 
ratepayers. The division was heavily involved in litigation involving the impact 
of Boston Edison Company's management of the Pilgrim Nuclear Power Plant 
upon its rates. Pilgrim was shut down on April 12, 1986 and Boston Edison 
Company was not authorized by the Nuclear Regulatory Agency (NRC) to even 
begin the process of restarting the unit until December 21, 1989. During this 
period, Boston Edison Company incurred hundreds of millions of dollars of 
replacement power expenses and invested more than an additional $200 million 
in the plant. The DPU rejected the division's 1988 settlement with New England 



54 P.D. 12 

Telephone Company which would have lowered residential customers' basic 
phone rates and prevented a rate increase for the next three years. Instead, the 
DPU issued an order which left NETs current rates in effect, pending further 
proceedings. A number of motions for reconsideration were pending at the close 
of Fiscal Year 1989 and it was not then clear what, if any, portion of the $159 
million rate reduction that the Attorney General had advocated would ultimately 
be adopted by the DPU. The division also continued the Attorney General's 
policy of intervention in the general base rate cases of every gas, telephone, and 
electric company, intervening on behalf of ratepayers in 18 cases where 
companies were seeking rate increases. The Attorney General also continued 
affirmative litigation efforts. The division took positions in a variety of cases 
advocating alternatives to baseload power plants construction, focusing on the 
integration of conservation, cogeneration, and independent power producers in a 
least cost power planning scheme. The following description of certain cases 
provides a closer look at the work of the division in Fiscal Year 1989. 

UTILITIES DIVISION LITIGATION AND OTHER 
ADVOCACY IN FISCAL YEAR 1989 

As a result of the Attorney General's participation in rate cases decided by the 
DPU in Fiscal Year 1989, Massachusetts ratepayers saved approximately $20.6 
million in electric rates and $12.4 million in gas rates. As a result of the 
Attorney General's participation in the New England Power Company case 
before the FERC, Massachusetts Electric Company ratepayers saved an 
additional $24 million. The specific cases in which the Attorney General was 
involved in Fiscal Year 1989 are described below. 

A. Litigation Before the Department of Public Utilities (DPU) 

1 . Electric Rates 

a. Boston Edison Company (Pilgrim Replacement 

Power Costs) 

Boston Edison Company has collected in excess of $200 million from its 
retail customers for replacement power expenses it has incurred as a result of its 
Pilgrim Nuclear Power Plant being shut down during the period from April 12, 
1986 through January 1989 and operating at less than 100 percent of its rated 
capacity in the period from January through June 1989. The evidentiary phase of 
a three year investigation into the cause(s) of the Pilgrim outage began in 
September 1988 when Boston Edison Company filed testimony and information 
which it claimed supported a finding that it should be allowed to retain all but 
$7.6 million of the monies it has collected because all but 41 days of the outage 
were caused by prudent management actions. The Attorney General filed the 
testimony of nationally recognized experts in the field of nuclear power plant 
operations and NRC regulation in November 1988. The Attorney General's 
experts concluded that the principal cause of the outage was Boston Edison 
imprudence in the operation of Pilgrim which resulted in the NRC requiring that 
the plant remain closed until Edison had demonstrated that it had remedied its 
chronic management failings at the plant. These experts recommended that the 
DPU order Boston Edison to refund replacement power charges in the range of 
S135 to S168 million. More than 30 days of evidentiary hearings were held 
between January and March 1989 and hundreds of thousands of pages of 



P.D. 12 55 

documents were examined. Briefs were filed in May and July 1989 and the matter 
was pending before the DPU at the close of Fiscal Year 1989. 
b. Boston Edison Company (Fossil Unit Performance) 
In the annual review of how effectively Boston Edison Company operated its 
other power plants, the Attorney General urged the DPU to order the company to 
refund monies it had collected for replacement power expenses necessitated by 
certain outages at its New Boston and Mystic stations that were caused by 
imprudent practices concerning the monitoring of the cleanliness of turbine 
lubrication oil. At the close of Fiscal Year 1989, this case was still pending. 

c. Commonwealth Electric Company (Base Rates) 
Commonwealth Electric Company filed a rate case on June 16, 1988 seeking 

to increase its base rates by $23.2 million or about 8.5 percent and to recover a 
greater proportion of its revenues from its residential electric space heating 
customers. The Attorney General opposed the company's proposals, arguing: (1) 
that Commonwealth's revenues should not be increased by more than $13.8 
million; (2) that the department should reduce the amount by which 
Commonwealth proposed to shift revenue responsibility to residential electric 
space heating customers; and (3) that the department should penalize 
Commonwealth for its lack of effort in advancing its least cost power options 
such as cost effective customer conservation measures. On January 31, 1989, the 
DPU issued its decision in which it allowed Commonwealth to increase its 
revenues by approximately $18 million or 6.7 percent, rejected the Attorney 
General's arguments concerning the protection of the company's electric space 
heating customers, and criticized but did not penalize Commonwealth for not 
advancing its least cost power options. 

As a result of a tremendous public outcry, the DPil initiated an investigation 
into the impact that its decision had on the company's residential electric space 
heating customers. Four public hearings were held in Commonwealth's service 
territory during May 1989 and evidentiary hearings were ongoing at the close of 
Fiscal Year 1989. The Attorney General has participated actively in these 
hearings and has presented evidence concerning Commonwealth's failure to 
advise its customers of the possibility that the DPU would phase out its 
promotional electric space heating rate. 

d. Eastern Edison Company 

Eastern Edison Company filed a rate case on June 14, 1988 seeking to 
increase its base revenues by approximately $11.9 million or 6.2 percent and to 
recover a greater proportion of its revenues from its residential customers. After 
15 days of hearings, the Attorney General reached a stipulated settlement 
agreement with Eastern under which the company would be allowed to increase 
its base revenues by $7.5 million or about 4.6 percent. On December 30, 1989, 
the DPU issued its decision in which it approved the Attorney General's 
settlement stipulation and accepted some of the Attorney General's arguments 
concerning the company's proposal to shift revenue responsibility to its 
residential customers. 

e. Nantucket Electric Company 

Nantucket Electric Company filed two rate cases on August 17, 1988 seeking 
to increase its revenues by approximately $1.8 million or 22.8 percent and to 
recover a greater proportion of its revenues from its residential customers. The 
Attorney General intervened in this proceeding on behalf of the company's 



56 r -v. i* 

residential ratepayer and presented the testimony of one of his in-house financial 
analysts. The Attorney General raised a number of issues concerning the 
company's power planning process and costs associated therewith, its proposal to 
shift revenue responsibility to its residential customers, and its failure to pursue 
conservation as a least cost means to address its power supply deficiencies. These 
and other issues were addressed in briefs filed by the Attorney General in which 
he argued that Nantucket's revenues should be decreased by $68,000. On 
February 28, 1989 the DPU issued its decision in which it allowed the company 
to increase its revenues by approximately $1.2 million or 15.2 percent after 
rejecting most of the Attorney General's arguments concerning the costs that 
Nantucket should be allowed to recover from its ratepayers. The DPU also 
rejected the Attorney General's argument that it should protect the company's 
residential ratepayers from the sharp increases proposed by the company. In 
particular, the DPU rejected the Attorney General's arguments regarding the need 
to recognize the significant post-test year sales growth if the company's post-test 
year addition of generating equipment was to be reflected in rates and the 
inappropriateness of forcing Nantucket's ratepayers to pay for the $756,000 
expended by the company in the litigation of this case. On March 20, 1989, the 
Attorney General filed a motion seeking reconsideration of the DPU's decision 
on these two issues. That motion was still pending at the close of Fiscal Year 
1989. 

f. Western Massachusetts Electric Company (Base Rates) 

Western Massachusetts Electric Company filed a rate case on December 16, 
1988 seeking to increase its base revenues by approximately $28.4 million or 
9.8 percent. Approximately one-half of the requested increase was associated with 
the fourth step of the five step phase into rates of its more than $350 million 
investment in the Millstone Nuclear Power Station, Unit No. 3 which was 
ordered by the DPU in 1986. In briefs filed in April and May, 1989, the 
Attorney General argued that the company should not be allowed to increase its 
base revenues by more than $11.5 million. On June 30, 1989, the DPU issued 
its decision in which it accepted many of the Attorney General's revenue 
requirement arguments and reduced the company's proposed increase by 37 
percent, from $28.4 million to $18 million. 

g. Boston Edison Company (Base Rates) 

Boston Edison Company filed a rate case on April 14, 1989 seeking to 
increase its rates by approximately $86 million or about 8.4 percent. More than 
one-half of the proposed increase is attributable to expenditures and investments 
made at Boston Edison's Pilgrim Nuclear Power Plant during the more than three 
year outage at that plant. Hearings began in June 1989 and were not concluded at 
the end of the fiscal year. Important issues had already been raised concerning the 
prudence of Boston Edison's decision to invest additional monies in Pilgrim 
given its past performance and the resulting economics of its operation as well 
as the company's least cost supply efforts that were the subject of pointed 
criticism by the DPU in its last decision on the company's base rates, 
h. Cambridge Electric Light/Commonwealth 
Electric Companies 

In their quarter fuel clause filings dated March 5 and June 5, 1989, Cambridge 
Electric Light Company and Commonwealth Electric Company both sought to 
recover from their ratepayers the $4.8 million and $11.2 million payments that 
the respective companies are required to make to their affiliate, Canal Electric 
Company, in 1989 pursuant to a January 1989 FERC decision allowing Canal 



P.D. 12 57 

to recover carrying charges on one-half of its more than $225 million investment 
in Seabrook Unit 1. The Attorney General intervened in these proceedings and 
argued that the DPU should not allow the companies to pass these charges 
through to their ratepayers because they had not made any showing that incurring 
these charges would reduce the cost to ratepayers for Seabrook power if and when 
power is ever generated from that plant. In a decision issued on April 13, 1989, 
the DPU allowed the companies to recover these sums subject to refund at some 
later date after FERC had ruled on the prudence of their entering into the contract 
that provided for such charges. In the proceedings related to the June 5 filing, the 
Attorney General again opposed the recovery of monies to offset these charges, 
noting that FERC would not be making the determinations that the DPU had 
decided to await. That motion was pending at the close of Fiscal Year 1989. 
i. Cambridge Electric Light Company 
Cambridge Electric Light Company filed a rate case on May 17, 1989 
seeking to increase its base revenues by approximately $6.1 million or 7.6 
percent and to recover a greater proportion of its revenues from its residential 
customers. The Attorney General intervened on behalf of the company's 
residential ratepayers. Hearings had not yet begun at the close of Fiscal Year 
1989. 

j. Least Cost Planning 

On November 30, 1988, as part of its ongoing rulemaking proceeding 
concerning future power supplies, the DPU issued proposed new regulations 
setting forth an integrated power supply planning process which would require 
bidding for the satisfaction of future power supply requirements and would 
require explicit consideration of demand side alternatives (conservation and load 
management). The Attorney General filed comments on the proposed regulations 
on February 15, 1989 and appeared for questioning at hearings held by the DPU. 
At the close of Fiscal Year 1989, the DPU had not yet issued its decision 
concerning the proposed regulations. 

k. Conservation Collaborative 

On July 19, 1988, the Attorney General, together with the Conservation Law 
Foundation, the Massachusetts Public Interest Research Group, the 
Massachusetts Executive Office of Energy Resources and all but one of the 
state's private electric utilities, agreed to participate in a collaborative process to 
design and implement cost effective conservation and load management 
programs. A formal agreement was filed with the DPU and on December 23, 
1988, the parties submitted to the DPU a "Phase I" report identifying programs 
that would be considered for adoption and implementation at prescribed levels by 
each of the individual electric utilities in Phase II of the process. The DPU 
expressed general satisfaction with the programs identified in the Phase I report 
and negotiations with individual utilities over the design and funding of 
particular programs continued through the balance of Fiscal Year 1989. 
2.) Gas Rates 

a. Boston Gas Company 

Boston Gas Company filed a rate case on March 16, 1988 seeking to increase 
its base revenues by approximately $15.6 million or about 3.4 percent. This 
filing was made after the city of Boston filed a petition seeking a decrease in the 
company's rates. The city of Boston subsequently withdrew from the case. The 
Attorney General presented the testimony of a financial analyst to address many 



58 r.u. iz 

cost of service issues and cross-examined the company's witnesses. The Attorney 
General filed his briefs in July and August 1989 in which he argued that Boston 
Gas Company's rates should be reduced by approximately $15 million. On 
September 30, 1989, the DPU issued its decision in which it allowed the 
company to increase its revenues by approximately $3.2 million. The DPU did, 
however, accept the Attorney General's argument that Boston Gas Company 
should not be allowed to recover from its ratepayers any of the $344,000 of 
charitable contributions it had made during the test year. Boston Gas Company 
appealed the DPU's decision on its charitable contributions to the Supreme 
Judicial Court which affirmed the DPU in a decision reported at 405 Mass. 115. 

b. Bay State Gas Company 

Bay State Gas Company filed a rate case on April 14, 1989 seeking to 
increase its base revenues by approximately $18.9 million or 9.1 percent and to 
recover a greater proportion of its revenues from its residential customers. The 
Attorney General intervened on behalf of the company's residential ratepayers. 
This is the first base rate filing by Bay State since 1982. Hearings were not over 
and the case had not yet been briefed at the close of Fiscal Year 1989. 

c. Berkshire Gas Company 

Berkshire Gas Company filed a rate case on May 17, 1989 seeking to increase 
its base revenues by approximately $5.8 million or 16 percent and to recover a 
greater proportion of its revenues from its residential non-heating customers. The 
Attorney General intervened on behalf of the company s residential ratepayers. 
Hearing had not yet begun at the close of Fiscal Year 1989. 

d. Essex Countv Gas Company 

Essex County Gas Company filed a rate case on May 17, 1989 seeking to 
increase its base revenues by approximately $2.2 million or 6.8 percent and to 
recover a greater proportion of its revenues from its residential non-heating 
customers. The Attorney General intervened on behalf of the company's 
residential ratepayers. Hearing had not yet begun at the close of Fiscal Year 
1989. 

3 .) Telephone Rates and Services 

a. New England Telephone Company Revenue 
Requirements 

In a decision issued on March 21, 1989, the DPU rejected a 1988 stipulated 
settlement which the Attorney General had reached with New England Telephone 
Company and other parties which would have reduced NET's basic monthly 
charge for residential customers by 50 cents per month and then frozen NETs 
rates for three years. NET joined in the stipulated settlement and then later tried 
to withdraw its assent to and support for this agreement. In its order, the DPU 
accepted some and rejected some of the Attorney General's arguments in support 
of his call for a $159 million reduction in NET's revenues. In particular, the 
DPU agreed with the Attorney General's arguments that NETs ratepayers should 
not be forced to pay for its charitable contributions and its promotional 
advertisements. However, although the DPU agreed with the Attorney General 
that NET had failed to demonstrate the reasonableness of the charges it incurred 
in transactions with its affiliated companies, it only ordered NET to fund a full 
audit of those transactions, but did not deny NET recovery of the $59 million of 
these transactions as argued by the Attorney General. The DPU's order did not 
specify the dollar amount of NET's revenue requirement and numerous issues 
have been raised with the DPU in motions for reconsideration that were still 
pending at the close of Fiscal Year 1989. 



P.D. 12 59 

b. New England Telephone Company IDS 
New England Telephone Company filed new tariffs with the DPU on October 
18, 1988 to govern the provision of a new "Information Delivery Service" 
hrough which vendors of prerecorded information could offer to Massachusetts 
'atepayers on an intrastate basis access to that information on a pay-per-call 
jasis. NET proposed to reserve the discretion to deny billing and collection 
>ervices to those vendors of information whom it did not approve and offer some 
)f its residential and business customers for a one time fee of S5 and S10, 
espectively, the option of blocking access to all such services from their 
elephones. A public hearing was held on January 11, 1989, at which many 
nembers of the public opposed the offering of so-called "adult" information 
;ervices. Seven days of evidentiary hearings were held during which the Attorney 
General cross-examined the company's witnesses. The Attorney General filed his 
mefs late in Fiscal Year 1989 and on July 31, 1989, the DPU issued its 
lecision in which it adopted most of the Attorney General's recommendations. In 
>articular, the DPU ordered: (1) that NET offer billing and collection services to 
ill information vendors; (2) that NET offer all of its residential and many of its 
)ther customers multiple options by which they can free of charge block access 
o some or all of these services and the group bridging ("talk lines") services; (3) 
hat NET provide access to adult services only to those ratepayers who make a 
ormal request for access; (4) that NET not charge ratepayers for blocking and 
hat IDS services not be offered in those communities where NET's equipment 
loes have the capability of providing blocking service; (5) that NET impose 
:onsumer protection requirements on information vendors, including introductory 
nessages and delayed billing to protect against unwanted charges as well as 
:ertain restrictions on advertising directed at children. 

B. Litigation Before The Federal Energy Regulatory Commission (FERC) 

1.) Canal Electric Company 

On three different occasions in Fiscal Year 1989, the Utilities Division 
>pposed the filing at the FERC by Canal Electric Company of contracts with its 
wo affiliated Massachusetts retail electric companies, Commonwealth Electric 
Zompany and Cambridge Electric Light Company, setting forth rates to be 
:harged to these two affiliates to recover its more than $200 million investment 
n Seabrook Unit 1 if and when that plant goes on line. The division argued 
;uccessfully in the first two instances that these filings were premature in light 
)f the substantial uncertainty that Seabrook would ever go on line. 

In decisions issued in August 1988 and January 1989, the FERC rejected the 
)roposed filings by Canal. The third filing was pending before the FERC at the 
:lose of Fiscal Year 1989. 

As part of Canal's filing that was the subject of the August 1988 decision by 
he FERC, it had sought approval of contract terms relating to its billing of its 
iffiliates for costs associated with its investment in transmission lines and 
educational facilities for the Seabrook Nuclear Power Station. The Attorney 
3eneral reached stipulated settlements with Canal Electric Company as well as 
ts two affiliated Massachusetts retail electric companies, Commonwealth 
ilectric Company and Cambridge Electric Light Company, with regard to these 
:harges. Commonwealth Electric Company serves retail ratepayers on the Cape 
ind in portions of southeastern Massachusetts. Cambridge Electric Light serves 



retail ratepayers in Cambridge. The stipulated settlements were entered in cases 
before the FERC and DPU. 

In its January 1989 decision, over the Attorney General's objection, the 
FERC allowed Canal to begin collecting carrying charges (CWIP charges) on 
one-half of its more than $225 million investment in Seabrook Unit 1. 

2.) New England Power Company 

New England Power Company, the wholesale supplier of electric power to 
Massachusetts Electric Company, filed a rate case on September 30, 1988 
seeking to increase its rates by $96.5 million ($64 million for Massachusetts 
Electric Company) and to redesign its rates to more accurately reflect marginal 
costs. On March 13, 1989, the Attorney General and other parlies in the case 
reached a stipulated settlement agreement with the company concerning the 
redesign of rates. On May 18, 1989, the parties reached a stipulated settlement 
agreement under which the proposed increase was reduced by $36 million ($24 
million for Massachusetts Electric Company) and the company agreed that 
Massachusetts Electric Company would, as soon as permitted by the DPU, 
implement and then seek recovery from the DPU for the approximately $40 
million annual expenditures New England Power Company had proposed to 
make to implement non-dispatchable conservation and load management 
programs in Massachusetts Electric Company's service territory. 

C. LEGISLATION 

The Attorney General opposed legislation which would have permitted New 
England Telephone Company to impose a charge on residential ratepayers for 
directory assistance calls and to use the funds collected through such charges to 
fund the costs of providing special services to public safety offices. 



ANTITRUST DIVISION 

The Antitrust Division investigates and prosecutes cases under federal and 
state antitrust laws. The division's primary goal is to protect and promote 
competition so that consumers are offered goods and services of higher quality at 
lower prices. The following are summaries of significant activities undertaken by 
the division in Fiscal Year 1989. 

Multistate Insurance Antitrust Litigation 

In the spring of 1988, the Commonwealth and seven other states filed 
antitrust actions in the United States District Court for the Northern District of 
California against a total of more than 30 insurance companies, reinsurers, 
intermediary brokers, and trade associations. Several months later, 10 additional 
states filed virtually identical actions. The Massachusetts suit is a class action 
with the towns of Milford and Hanover named as class representatives. The suits 
are the result of a two-year investigation led by Massachusetts, California, New 
York and Minnesota. In the case, treble damages for injuries to public entities 
are sought, as well as extensive injunctive relief. 

The complaints allege that defendants manipulated the market for commercial 
general liability (CGL) insurance. This is the insurance purchased by most 
businesses, public agencies, and nonprofit organizations. CGL policies cover 
liability to third parties for personal injuries and property damage arising from 
the actions or inactions of the policyholders. 



P.D. 12 61 

During this fiscal year, extensive pretrial activities have been underway in the 
case. This activity included a July 28, 1988 hearing before the Multidistrict 
Litigation Panel sitting in Portland, Maine. Massachusetts was designated to 
represent all 18 plaintiff states at the hearing. The hearing addressed a motion by 
certain defendants for (i) consolidation for pretrial purposes of the state cases and 
the "tag along" suits filed by various private plaintiffs and (ii) assignment of all 
cases after consolidation to Judge William W. Schwarzer who is the California 
federal judge already assigned to the state cases. Other pretrial activities 
undertaken include the negotiation of drafts of several pretrial orders requested by 
Judge Schwarzer. One such draft submitted to the Court resulted in a September 
8, 1988 order that, among other things, stayed all class certifcation proceedings, 
set a detailed briefing schedule for FRCP 12 and 56 dispositive motions, and 
prohibited discovery except narrowly drawn discovery designed to aid in the 
resolution of the dispositive motions. 

In mid-December 1988, various Federal Rule 12 or 56 motions were filed by 
the defendants. Among other things, the motions seek dismissal or summary 
judgment on five different grounds: 1) the state action doctrine; 2) standing; 3) 
subject matter jurisdiction; 4) an alleged absence of any conspiracy; and 5) the 
McCarran-Ferguson Act which provides a limited exemption from the antitrust 
laws for certain activities by certain insurers. Judge Schwarzer promptly issued 
an order indicating he would not permit the "no conspiracy" motions to be 
submitted at this time. 

On April 27, 1989, the plaintiff states filed their one hundred plus page brief 
in response to defendants' motions and cross filed a motion for summary 
judgment on state action grounds. In addition, reply briefs were submitted 
shortly thereafter. A hearing on the motions is set for September 15, 1989. 

Other developments in the case include Louisiana's recent joining of the 
lawsuit bringing the total number of plaintiff states to 19. Furthermore, a 
defendant in the case, the Insurance Services Office (ISO) announced various 
changes in its operating policies. ISO specifically has indicated it will no longer 
issue advisory rates and that it will add public interest representatives to its board 
of directors. Among the types of relief Massachusetts and other states seek in the 
case is an order requiring ISO to maintain on its board a majority of public 
interest members appointed by the court. 

Commonwealth v. Cahill, et at. 
In this action, filed in August 1988, the Commonwealth alleges that 24 
Springfield obstetrician/gynecologists conspired to boycott Blue Shield of 
Massachusetts in violation of state and federal antitrust laws. The 
Commonwealth specifically alleges that, between late November 1985 and late 
January 1986, the 24 doctors sent letters resigning from Blue Shield programs in 
an effort to pressure Blue Shield into raising its doctor reimbursement rates. In 
the suit, injunctive relief and imposition of civil penalties is sought against each 
defendant. Though the case was filed originally in federal court in Springfield, 
the matter has been reassigned to a federal judge in Boston. 

The initial stages of the litigation have entailed the filing of numerous 
motions by the parties including a motion to dismiss, a motion for a more 
definite statement, a motion to compel discovery, a motion to certify certain 
questions to the Supreme Judicial Court, and a motion challenging the 
Commonwealth's authority to issue nonparty Civil Investigative Demands 



(CIDs). Various of these motions were resolved at a status conference held on 
March 22, 1989, and at a lengthy hearing held on May 24, 1989. 

In addition, on March 22, 1989, the court approved the first settlement in the 
case. Pursuant to the terms of the settlement, an injunction issued enjoining the 
settling defendant from violating the antitrust laws, the settling defendant made a 
payment to the Commonwealth of $12,500, he agreed to withdraw his letter of 
resignation from Blue Shield, and he agreed to notify the Commonwealth prior 
to submission of any future letter of withdrawal. In April and May of 1989, 
virtually identical settlements were reached with four more defendants. This 
brings the total recovery in the case to date to $62,500. 

As to the remaining defendants, the case continues. The parties currently are 
pursuing discovery. 

Commonwealth v. Stop & Shop Companies, Inc., et al. 

On November 23, 1988, Judge Robert E. Keeton issued a final judgment and 
order approving a settlement agreement between Stop & Shop and the 
Commonwealth. The order included an injunction against Stop & Shop. The 
settlement with Stop & Shop resolves the Commonwealth's claims against a 
second of three defendant supermarket chains. Earlier, the Commonwealth had 
settled with Waldbaum, Inc. The litigation continues against First National 
Supermarkets, Inc. In the suit, the Commonwealth alleges that defendants fixed 
prices by conspiring to eliminate double coupon payments. 

The terms of the Stop & Shop settlement agreement required Stop & Shop to 
distribute $3 million in coupons to western Massachusetts households during 
January, February, and March of 1989. Consumers were able to redeem the $2 
coupons at Stop & Shops or at other participating stores in western 
Massachusetts. Stop & Shop was also required to issue $1.6 million in $1 
coupons redeemable at eastern Massachusetts Stop & Shops. 

In addition, the settlement agreement required Stop & Shop to donate 
$100,000 worth of high protein food to the Western Massachusetts Food Bank. 
Stop & Shop also paid the Commonwealth $200,000 in attorneys' fees. 

In the continuing case against First National Supermarkets, Inc., the court, 
following a conference on June 6, 1989, issued an order requiring all discovery to 
be completed by mid-January, 1990. 

Commonwealth v. Matsushita (Panasonic) 

On March 15, 1989, Massachusetts joined with the Attorneys General of 49 
states in a nationwide antitrust suit against the Panasonic Company. 
Contemporaneously, the Commonwealth agreed to a nationwide settlement 
negotiated by the New York Attorney General's office. The proposed setdement 
will provide consumer refunds ranging from $17 to $45 for various Panasonic 
and Technics brand products including VCRs, camcorders, telecommunication 
and other equipment. A total of up to $16 million in refunds will be available 
nationwide. Of this amount, up to $553,554 in refunds could be claimed by 
consumers for purchases of these products made at stores in Massachusetts. 

On June 5, 1989, the United States District Court gave preliminary approval 
to the proposed settlement. Under the terms of the preliminary approval, 
consumers will be notified of the process for applying for a refund in newspaper 
advertisements to be published in the fall of 1989. A toll free number will be 
established to process refund requests. The deadline for submitting a refund claim 
will be November 2, 1989. In early 1990, a motion will be filed seeking final 
approval of the settlement. Refunds will be distributed in the spring of 1989 
assuming the settlement is finally approved. 



P.D. 12 63 

Bottle Law Case 

On September 26, 1988, the Antitrust Division filed summary judgment 
capers in its action against 22 soft drink and malt beverage distributors for 
illeged violations of the Mandatory Beverage Container Deposit Act. In the 
iction, the division alleges that the distributors have failed to segregate bottle 
leposits in a separate fund held in trust for consumers and instead have 
comingled deposit funds with their own revenues in violation of the statute. The 
lefendants also filed summary judgment motions. Summary judgment arguments 
;vere held on September 27, 1988 before Judge Rouse. At the time of the 
irgument, Judge Barbara J. Rouse requested a list of the proposed questions to 
eport to the Appeals Court. 

On June 29, 1989, Judge Rouse granted in part the motions of both sides, 
contemporaneously reported the issues to the Appeals Court and stayed all 
urther proceedings in the case until the Appeals Court determined the reported 
natters. 

Commonwealth v. Campeau Corporation 

Pursuant to a consent decree which was signed by this department and the 
Campeau Corporation in March of 1988, Campeau agreed that if it acquired 
federated Department Stores, it would divest both the Filene's Department Store 
ind Filene's Basement divisions in their entirety. By the terms of the agreement, 
Campeau was obligated to notify the Commonwealth in advance as to the 
dentity of the proposed purchasers and the department had to approve the sale 
before it could be consummated. After an extended bidding war with Macy's, 
Campeau did finally acquire Federated in April of 1988, and in June it notified 
he department of its intention to sell Filene's Basement to the FBA 
Corporation, a management group consisting of the President and CEO of the 
^ilene's Basement Division and several equity investors (i.e. a "leveraged buy- 
out"). Prior to approving the sale, with the assistance of a financial analyst from 
lie Antitrust Division of the Department of Justice, we undertook a review of 
lie terms of the buy-out with particular concern for the amount of debt taken on 
3y the new company, the terms of repayment, and the soundness of their 
financial projections. We determined that the sale should be approved and notified 
Campeau of our approval on July 27, 1988. 

Commonwealth v. J.F., Inc., et al. 

The Commonwealth filed an action under the Massachusetts Antitrust Act in 
he Hampden Superior Court against seven liquor and convenience stores 
charging them with price fixing. The action charges the defendants with jointly 
advertising the prices of alcoholic and grocery products. The complaint alleges 
;hat the joint advertising of prices on these items constitutes a per se violation 
3f the state antitrust act. 

During this fiscal year, the parties have engaged actively in all forms of 
iiscovery. 
Amicus participation 

During Fiscal Year 1989, the Antitrust Division was actively involved in the 
department's participation in a very significant amicus curiae brief to the United 
States Supreme Court. In 1977, in the case of Illinois Brick Co. v. Illinois, 431 
U.S. 720 (1977), the Supreme Court had decided that indirect purchasers could 
not use federal antitrust law to sue indirect sellers for illegal, passed on 
avercharges. California and other states allow such suits under their state 



64 F.D. 12 

antitrust laws. In California v. ARC America Corp., 109 S. CL 1661 (1989), 
the Supreme Court faced the issue of whether these state statutes were preempted 
by federal law. 

In an amicus curiae brief filed on November 30, 1988, the department joined 
with the attorneys general of 34 other states in supporting the position taken by 
California and three other states that states are free to provide greater consumer 
remedies than are allowed by federal law. The Antitrust Division actively 
participated in the preparation of this brief. On April 18, 1989, in a unanimous 
decision, the Supreme Court agreed with the position taken by the department. 
The decision recognizes that states have great freedom in devising their antitrust 
laws. It affirms that federal antitrust laws were intended "to supplement, not 
displace, state antitrust statutes." 



LEGISLATION 

The department actively has supported legislation to strengthen the antitrust 
laws. Efforts in Congress to repeal the McCarran-Ferguson Act have been 
supported by the department The McCarran-Ferguson Act exempts the business 
of insurance from the antitrust laws to the extent such business is regulated by 
the state and does not involve acts or agreements of "boycott, coercion or 
intimidation." 

In the summer of 1988, Attorney General Shannon testified before the 
Subcommittee on Antitrust, Monopolies, and Business Rights of the United 
States Senate's Committee on the Judiciary. The Senate Subcommittee had 
convened hearings on McCarran-Ferguson repeal. In his testimony, Attorney 
General Shannon provided an extensive description of the collusive activity by 
the insurance industry alleged in the Insurance Antitrust litigation (see above). 

In the summer of 1989, Attorney General Shannon presented extensive 
written testimony on H.R. 1663 which would modify the McCarran exemption 
substantially. This testimony was submitted to the Subcommittee on Economic 
and Commercial Law of the Committee on the Judiciary of the U.S. House of 
Representatives. In his testimony, Attorney General Shannon emphasized that 
the antitrust laws would permit any joint activity by insurers that legitimately 
produces substantial procompetitive effects and that, therefore, the McCarran 
exemption for certain joint activities is totally unnecessary. He also emphasized 
that the McCarran Act produces very little, if any, public benefits to offset the 
private benefits enjoyed by the insurance industry as a result of the Act's 
sanctioning of collective activities. 



INSURANCE DIVISION 

The Insurance Division represents the interests of Massachusetts insurance 
purchasers in insurance rate setting hearings, consumer protection litigation, and 
rulemaking proceedings. 

The division intervenes on behalf of insurance consumers in complex rate 
setting hearings before the Commissioner of Insurance. At these hearings 
automobile insurance rates are established for all insureds in Massachusetts and 



P.D. 12 65 

non-group and Medicare supplement health insurance rates proposed by Blue 
Cross and Blue Shield are reviewed. 

The division litigates against insurance companies and insurance agents to 
protect insurance consumers from unfair and deceptive practices relating to all 
types of insurance products. This year, a significant focus has been the 
enforcement of mandated health insurance benefits and actions to protect 
employees whose employer-provided health insurance plans have failed to pay 
benefits to which employees are entitled. 

The division participates in rulemaking hearings concerning insurance 
products and insurance markets. This year the Insurance Division participated 
extensively in hearings on the implementation of the automobile insurance 
reform law and the restructuring of the auto insurance residual market as well as 
hearings concerning the introduction of new health care delivery systems. The 
division also routinely participates in legislative hearings concerning proposed 
laws affecting the interests of insurance consumers. 

The actions of the division saved Massachusetts consumers $590 million this 
year. 

A. RATE SETTING HEARINGS 

Auto Insurance Remand Decision Appeal 

The Insurance Division filed an appeal in the Supreme Judicial Court from 
the Insurance Commissioner's 1988 auto insurance rate remand decision, arising 
from the Supreme Judicial Court's earlier remand of the Commissioner's initial 
order setting 1987 and 1988 auto insurance rates. The remand decision increased 
auto insurance rates for 1987 and 1988 by an aggregate of 17 percent for the two 
years. The appeal alleged that numerous procedural errors at the hearings, as well 
as substantive error in the remand decision itself, produced a substantial denial of 
justice and exceeded the Commissioner's authority. The appeal was argued in 
September 1988, and in November 1988, the SJC affirmed the Commissioner's 
remand decision. 

1989 Auto Insurance Rates 

The Insurance Division's efforts during the summer and fall on behalf of 
consumers regarding 1989 auto insurance rates have saved consumers 
approximately $550 million in premiums. 

\.)Cost Containment 

The extent of insurer compliance with the mandate of Chapter 622 (the cost 
containment law) was a major focus of the 1989 rate hearings. The Insurance 
Division presented evidence that Massachusetts insurers failed to control 
numerous aspects of the costs of auto damage repairs. The Commissioner's 
decision on 1989 rates blasted the industry position. Relying heavily on the 
arguments presented by the Attorney General and the testimony of his witnesses, 
the Commissioner awarded a body shop adjustment of -10 percent of physical 
damage losses and a fraudulent claim adjustment of -5 percent of bodily injury 
losses and -1 percent of comprehensive losses. These adjustments represent 
premium savings to consumers of approximately $145 million. 

2.)Estimation of Losses 

The loss projection issue in the 1989 hearing concerned the choice of 
methodology for trending losses. The insurance industry proposed a new trending 
methodology which it claimed was "inherently unbiased" but which happened to 



66 P.D. 12 

produce considerably higher trends than the methodology used by past 
commissioners. The Attorney General opposed the industry's position and 
recommended that the Commissioner preserve the existing methodology with 
some refinements. The Commissioner's decision rejected virtually all of the 
industry's trending proposals. The savings to consumers on these trending issues 
are $170 million. 

3.)Profit Allowance 

The industry's rate filing would have produced an excessive profit allowance 
approximately 7.6 percent higher than recommended by the Attorney General. 
The industry eventually stipulated to a profit allowance using the methodology 
advocated by the Attorney General. The stipulation produced savings to 
consumers of about $125 million. 

4.)Safe Driver Insurance Plan 

The Attorney General recommended significant increases in the SDIP credits 
and surcharges in order to reduce the subsidy of bad drivers by good drivers. The 
Commissioner agreed that the Attorney General's recommendations were 
actuarially reasonable and adopted most of the Attorney General's surcharge 
recommendations. The increased credit levels will lower rates for safe drivers by 
nearly $50 million in 1989. 

5.) Automobile Insurance Act of 1988 

The coverage change enacted in Chapter 273 of the Acts of 1986 (the new tort 
threshold, new minimum deductibles for collision and comprehensive, and 
changes in uninsured and underinsured coverages) produced a rate savings for 
1989 of approximately 7 percent or $156 million, which all parties agreed to by 
stipulation. 

1988 Medex Rate Hearing 

Blue Cross/Blue Shield originally requested a composite increase of 19 
percent in its rates for Medex, its Medicare supplementary insurance product. The 
Insurance Division was able to successfully negotiate a composite increase of 
only 6.7 percent for Medex subscribers for 1989. This rate reflected the savings 
from the Medicare Catastrophic Care law. The total savings to Medex consumers 
from the division's advocacy were $18 million. 

Blue Cross/Blue Shield 1989 Nongroup Request 

Blue Cross/Blue Shield filed a request for a 49.4 percent composite rate 
increase. If allowed by the Commissioner, family premiums would have 
increased 56.9 percent or $1,250 a year, and individual premiums would have 
increased 45.6 percent or $424 a year, for a total increase in nongroup premiums 
of $55 million. The division engaged in extensive discovery and, following 
commencement of the hearing before the Commissioner of Insurance, reached a 
settlement for a 38 percent increase in family rates and a 30 percent increase in 
individual rates, for a composite rate increase of 33 percent effective May 1, 
1989. 

Almost 24 percentage points of the composite 33 percent rate increase was 
attributable to legislatively mandated increased hospital and physicial 
reimbursement, new insurance benefits, and a court decision requiring that 
married couples be permitted to purchase less expensive individual policies rather 
than family coverage. 

The stipulation resulted in savings to consumers of $19 million. 



P.D. 12 67 

Automobile Insurance Competition Hearing 

In testimony at the annual c. 175E "competition" hearing, the division 
recommended that the Insurance Commissioner institute a plan for the carefully 
phased-in introduction of competitive rating to automobile private passenger 
insurance market. The Attorney General recommended the implementation of 
"flex" rating bands within which insurers would be permitted to set their own 
rates for collision and comprehensive coverage, and called for establishing a 
centralized information exchange to enable consumers to obtain up-to-date 
information on the lowest available rates. 

The Insurance Commissioner did not adopt the Attorney General's 
recommendation for 1990 auto rates due to the implementation of the many law 
changes mandated by the auto reform act of 1988. However, the competition 
decision announced a competition hearing commencing in January 1990 to 
consider seriously the implementation of competitive rating in 1991. 

Safe Driver Insurance Plan 

The Attorney General, in conjunction with the Massachusetts Automobile 
Rating Bureau and the State Rating Bureau, developed a major restructuring of 
the Safe Driver Insurance Plan (SDIP), the surcharge and credit system which 
modifies insureds' auto premiums based on individual driving records. The 
Attorney General has long recommended the adoption of a rate structure which 
bases rates more on driving experience and less on geography and driver class. 

The new SDIP provides a larger credit for each additional year of safe driving. 
For 1990, the maximum credit of $250 or more will be earned by drivers who 
have not been at fault in an accident or guilty of a moving violation in the past 
six years. In future years, the period for which good drivers will receive credits 
will be expanded. Drivers with poor driving records will pay higher premiums, 
comensurate with their higher risk. 

B. AFFIRMATIVE LITIGATION 

Mandated Benefits 

City of Cambridge, et al. v. Attorney General 

Blue Cross/Blue Shield and six municipalities filed a declaratory judgment 
action asserting that municipalities are exempted from compliance with 
Massachusetts mandated health insurance benefit laws pursuant to Article CXV 
of the Massachusetts Constitution (Proposition 2 1/2). We have filed an answer 
and counter claim seeking restitution for employees who have been denied 
mandated benefits and civil penalties. 

Failure to Provide Extension of Health Insurance 

The Insurance Division received numerous complaints from members of 
group health insurance plans concerning failure to extend continuation of 
coverage as mandated by law. Complaints included failure to provide coverage to 
divorced spouses and/or dependents of group members, laid-off members, and 
members whose plan has been terminated by the employer. After the division 
intervened, the group policy holders and the insurers extended retroactive 
coverage as required by state and federal law. Medical claims incurred during the 
period of alleged non-coverage were paid. 

Failure to Provide Mandated Health Insurance Coverage 

The Insurance Division intervened on behalf of student purchasers of health 
insurance from an insurer. Claims for mandated benefits and other covered 



68 P.D. 12 

expenses had remained unpaid for almost one year. Pre-existing condition and 
coordination of benefits issues were resolved in favor of the students and 
approximately $55,000 was recovered. 

The Insurance Division also intervened on behalf of members of a 
professional association who had purchased health insurance policies which 
excluded certain mandates. After interventions of the Attorney General, the 
Master Policies were amended to reflect the inclusion of all mandated benefits 
retroactively to the original effective date of the policy or the mandate, whichever 
is later. As a result, the policy holders' incurred but unreported claims for 
mandated benefits during the period will be covered. 

Employee Health Insurance 
The Insurance Division receives numerous complaints concerning failure to 
pay claims under employee health benefits plans. The Insurance Division has 
intervened on behalf of employees where employers have failed to remit 
insurance to various insurers, after withholding premium contributions from 
employees paychecks; where employers, and the third party administrators 
retained by them, have failed to pay claims; and where plants have closed in 
Massachusetts. The Insurance Division has entered into settlements with insurers 
resulting in the recovery of $2,952,975 in overdue premiums and unpaid medical 
bills. The Insurance Division also secured employees rights under federal 
COBRA and state insurance coverage conversion law. 

Annuities 
Commonwealth v. Paine Webber 
Commonwealth v. ShearsonlAmex 

The Commonwealth's liability theory and theory of damages was presented to 
the judge in this case involving the sale of Baldwin single premium deferred 
annuities (SPDA's) by defendant stockbrokers. The Attorney General argues that 
the defendants breached their duty as group policy holders, insurance agents and 
stockbrokers in failing to inform SPDA holders of the impending financial 
collapse of Baldwin United. In addition, final computer records were obtained 
from Metropolitan Life Insurance Company on the Baldwin-United SPDA 
purchasers which were used for final revision of the LOTUS 1-2-3 damages 
spreadsheet which were also provided to the court and defendants. 
Misrepresentation in the Sale of Annuities 

The division resolved two cases in a series where the consumers were sold 
annuities into which their entire life savings were placed. The consumers had 
been promised a monthly benefit after a certain date but instead continued to 
receive premium bills. In each case the policies were cancelled as of the date of 
issue and refunds totaling $68,000 were received. 

C. REGULATORY HEARINGS 

Exclusive Care 

The Commissioner of Insurance held a hearing on a proposed agreement 
between Blue Cross of Massachusetts, Inc. and Medical West Community 
Health Plan, Inc., under the terms of which Blue Cross subscribers in the 
Medical East region of Medical West Community Health Plan, Inc., would 
receive all medical services from or at the direction of an exclusive provider, in 



P.D. 12 69 

this case Medical West Community Health Plan, Inc. Medical West declared that 
under the terms of the agreement it would not be operating as an HMO. 

The division presented testimony that Medical West was operating as an 
HMO under the proposed agreement and was therefore subject to all of the 
requirements of the HMO laws. We also gave extensive evidence of the 
discriminatory pricing effects of the agreement and testified to the agreement's 
anti-consumer effect. Adopting the division's position, the Commissioner of 
Insurance rejected the proposal. 

Long Term Care Regulations 

Medicare does not provide coverage for most of the long term care needs of 
the elderly. Thus, many insurance companies have stepped into the breach and 
have been selling products of varying, and sometime dubious, quality that are 
supposed to cover nursing home stays and home care. The division participated 
in a hearing that was held at the division of Insurance on proposed Long Term 
Care Insurance Regulations. These regulations were proposed in order to 
guarantee that private long term care insurance products that are offered for sale 
in Massachusetts provide genuine benefits and do not contain unnecessarily 
restrictive provisions. 

Preferred Provider Arrangements Regulations 

In October, the Insurance Division presented testimony to the Insurance 
Commissioner on proposed regulations governing Preferred Provider 
Arrangements (PPA's). PPA's are arrangements in which an insurer or other 
entity contracts with preferred providers of medical services and offers incentives 
to insureds to use the services of the preferred providers. 

At the hearing, the division urged the Commissioner to make the protection 
of group health insurance members a primary concern in licensing PPA's. The 
division recommended the addition of provisions in the regulations to assure 
access to affordable health care, and proposed express protections for insureds in 
the event of non-payment of the premiums by the employer or group policy 
holder or of insolvency of the PPA. The final regulation adopted many of the 
division's recommendations, including requirements that PPA's demonstrate 
financial resources to guarantee benefits. 

Auto Insurance Reform Law Implementation Regulation Hearings 

The Insurance Division presented testimony at rulemaking hearings 
implementing the auto reform law, Chapter 273 of the Acts of 1988. These 
regulations concerned direct payment to bodyshops, air bag and passive restraint 
discounts, and pre-inspection of vehicles to deter fraudulent claims on "paper" 
cars. 

As a result of the recommendations in our testimony, the Commissioner's 
final regulations on direct payment plans included additional consumer 
protections. In addition, the availability of passive restraint discounts was 
significantly expanded to apply to automatic seatbelts, and the proposed 
exceptions to the pre-inspection regulations were tightened to eliminate potential 
loopholes and thereby be a more effective deterrent to fraudulent behavior. 

Minimum Standards of Disclosure for Health Insurance Contracts 

The division presented testimony before the Insurance Commissioner in 
support of an amendment of 21 1 CMR 42.00 which will eliminate a confusing 
provision in health insurance policies and prohibit insurers from denying claims 
under pre-existing condition. 



70 P.D. 12 

Pregnancy Disability Hearing 

The Division of Insurance presented testimony at a hearing held by the 
Commissioner of Insurance to determine whether the August 10, 1988 
Interpretive Bulletin which requires disability insurers to cover normal 
pregnancies as well as complications of pregnancy should be modified. The 
division filed testimony which argued that failure to cover normal pregnancy 
would be contrary to the Non-Discrimination-in-Insurance Regulation and 
inconsistent with the public policy of the Commonwealth expressed in the Equal 
Rights Amendment. The division also argued that the costs of providing 
disability coverage would not be burdensome since most disability policies have 
waiting periods (the period of disability before benefits can be received is 
typically 60 or 90 days) which are longer than most normal pregnancy 
disabilities. 

AIDS Testing Regulations 

The Insurance Division staff worked with the Attorney General's AIDS Task 
Force and the Executive Bureau to analyze proposed regulations issued by the 
Insurance Commissioner regulating the procedures and disclosure requirements 
associated with insurer HIV testing of consumers. Testimony was presented 
which supported the Insurance Commissioner's proposed regulations while 
offering detailed and specific constructive suggestions to strengthen the 
provisions regarding informed consent and to secure the confidentiality of test 
results. 

Variable Life Insurance Regulations 

The division presented testimony on regulations proposed by the Division of 
Insurance relating to the sale of variable life insurance products in the 
Commonwealth. The division recommended that the proposed variable life 
insurance regulations, which would authorize the sale of "flexible premium 
variable life insurance" contain strict guidelines on (1) qualification of a 
company for a license to sell variable life insurance products; (2) extensive pre- 
purchase disclosure to consumers who purchase variable life products; (3) 
limitation of sales of "flexible premium variable life" only to those individuals 
who meet certain predetermined indices of suitability; and (4) the operation of so 
called "separate accounts" where variable life premiums will be invested on 
behalf of policy holders. The final regulations promulgated by the 
Commissioner of Insurance contained the consumer protections advocated by the 
Attorney General. 

Automobile Insurance Residual Market Reform Hearings 

The division presented testimony at two public hearings before the Insurance 
Commissioner regarding the proposed reform of Commonwealth Automobile 
Insurers (CAR), the residual market for auto insurance in Massachusetts. The 
Attorney General proposed that (1) the current "loss sharing" system be replaced 
by an assigned risk plan; (2) financial incentives, including revised commission 
rates, be established to encourage placement of "good risks" in the voluntary 
market; (3) the implicit class/territory subsidies imbedded in the current rate 
structure be reformed; (4) the Commissioner adopt objective cession criteria; and 
(5) the current inequities amount insurers in the allocation of the CAR deficit be 
abolished. The division opposed the industry sponsored request for introduction 
of a retrospective rating plan, or "rolling reconciliation," which would permit 
charging consumers with the cost of future CAR deficits. 



P.D. 12 71 

In the Commissioner's final report to the legislature, he incorporated several 
of the recommendations supported by the division, and rejected the industry 
request for "rolling reconcilliation". In particular, the Commissioner relied on 
evidence the Attorney General had presented in past rate hearings as to the extent 
of the inefficiencies in the existing CAR structure, and conclude that the reforms 
he was adopting would save consumers $150 million dollars or more in the 
future. 

D. LEGISLATION 

A record volume of insurance related legislation was filed this year. The 
division attorneys analyzed 138 bills. We submitted to the legislature testimony 
or letters on legislation concerning the insurance industry assessment which 
funds the Attorney General's insurance division, mass marketed insurance, 
privacy of medical information in the possession of insurance companies, mental 
health and alcoholism benefits, sex discriminatory insurance rates, the liability 
of employers who fail to remit employees' health insurance premiums to 
insurers, health insurance advocacy funding and contracting by HMO's with 
pharmacies. 

E. CONSUMER COMPLAINTS 

The resolutions of individual consumer complaints resulted in savings of 
approximately $150,000. 



PUBLIC PROTECTION BUREAU 

The Public Protection Bureau consists of seven divisions: Complaints, Local 
Consumer Services, Consumer Protection, Civil Rights, Environmental 
Protection, Nuclear Safety, and Special Litigation. In May, 1989, the Chief of 
the Public Protection Bureau became part of the steering committee of the newly 
formed Environmental Crimes Strike Force. A larger definition of this new unit 
can be found in the introduction to the Criminal Bureau. 



CONSUMER COMPLAINTS 

During Fiscal Year 1989, the Consumer Complaint Division opened 4,097 
new cases and closed 2,680 cases. As a result of our mediation efforts, we 
recovered $328,472.03 in direct refunds and obtained settlements where 
consumers received goods or services valued at approximately $212,174.00. The 
total savings for consumers was $653,375.20. 

In addition, our clerical staff referred 3,973 written complaints to other state 
agencies or departments, and local consumer programs. We also returned 1,187 
complaints to consumers with letters of explanation. 

The Attorney General's information line received approximately 109,002 calls 
during the past year. Of these, 9,613 complaint/inquiry forms were sent to 
citizens, 19,049 citizens were given information, and 80,340 consumers were 
referred to other federal, state or local agencies or departments. 

In addition to the normal investigating and litigation-generating functions, 



72 f.U. il 

the Complaint Division assisted the Architectural Access Board in processing 
complaints generated by the handicapped community. These complaints involved 
sidewalks without curb cuts, parking lots without adequate handicapped parking 
spaces, inaccessible public telephones and buildings not accessible to the 
handicapped. Our volunteer mediators assisted the board in obtaining the 
information to complete these complaints and in making site visits to confirm 
the violation of law. 



LOCAL CONSUMER SERVICES 

The Local Consumer Services Unit of the Public Protection Bureau is 
responsible for the administration of the Local Consumer Aid Fund and awards 
grants to a network of local consumer and face-to-face mediation programs. 
These community agencies assist citizens throughout Massachusetts in the 
resolution of consumer problems. The local programs work in cooperation with 
the Department of the Attorney General in this capacity and also function as a 
resource to identify repeat offenders of consumer law. 

Monies for the operation of these programs are allocated by the General Court 
to the Local Consumer Aid Fund (G.L. c. 12, §11G). 

§IIG. Local Consumer Aid Fund: Eligibility for assistance 

There shall be established within the department of the attorney general a 
local consumer aid fund, which may receive and expend monies as may be 
appropriated to said fund by the general court, as well as additional monies which 
may be made available from sources other than the General Fund. The purpose of 
said fund shall be to provide financial assistance to eligible, local or regional 
agencies which deal with the resolution of consumer problems. The Attorney 
General shall determine the standards for eligibility in order for such agencies to 
receive financial assistance. No more than ten per cent of said fund may be 
expended for administrative purposes. 

Added by St. 1977, c. 363A, §51. 

In Fiscal Year 1989 a total of $777,000 was used for grants to 27 local 
consumer and seven face-to-face mediation programs. During Fiscal Year 1989 
$732,595 was appropriated by the legislature to the Local Consumer Aid Fund. 
Ten percent, $73,260, was retained for administrative purposes. An additional 
$1 17,665, earmarked for the LCAF in the settlement of consumer related cases, 
was used to supplement the legislature's allocation. 

FY v 89 LCAF $732,595 

less 10% 73.260 

FY'89 available for grants 659,335 

+ 

$ from CPD case settlement 117.665 

Total FY ^90-grant allocation $777,000 



P.D. 12 



73 



Local Consumer Programs 

In Fiscal Year 1989 there were 27 Local Consumer Programs working in 
cooperation with the Attorney General's office (see list below). These local 
programs, usually found in community action programs or city halls handled 
over 15,395 consumer complaints in Fiscal Year 1989. Through an informal 
process of telephone mediation the community agencies were able to save 
consumers about $4.7 million. Complaints typically involved automobile 
repairs and sales, home improvement transactions, landlord/tenant disputes and 
timeshare issues. In addition to their mediation service, the programs also serve 
as a valuable source for general consumer information and advice. 

A breakdown by program of the grant amount, the total number of 
complaints and amount of savings for consumers is as follows: 





GRANT 


CASE 






AWARD 


LOAD 


SAVINGS 


LCP 








Agawam 


$5,200 


101 


$ 37,470 


Agawam Consumer Advisory 








Commission 








Arlington 


$18,144 


268 


$ 43,970 


Office of Consumer Affairs 








Berkshire 


$30,922 


357 


$218,861 


Berkshire County 








Consumer Advocates 








Boston 


$31,200 


1,213 


$491,926 


Mayor's Office of 








Consumer Affairs & Licensing 









Brockton 

Brockton Consumer 
Advisory Commission 
Advisory Commission 



$23,816 



715 



$205,301 



Cambridge 

Cambridge Consumers' 
Council 



$20,280 



705 



$189,297 



Cape Cod 

Consumer Assistance 
Council, Inc. 



$24,960 



940 



$115,015 



Fall River 

Consumer Service Office 



$17,160 



506 



$101,828 



74 P.D. 12 

969 $392,942 

389 $ 92,744 
440 $405,357 
646 $ 72,993 

245 $170,481 

432 $97,510 

241 $ 11,983 

618 $ 99,169 

669 $352,648 

306 $ 54,992 

390 n/a 



Hampshire/Franklin 
Hampshire/Franklin 
Consumer Protection 
Office 


$20,800 


Haverhill 

Consumer Protection 
Program 


$21,840 


Lawrence 
Greater Lawrence 
Community Action, Inc. 


$20,800 


Lowell 

Community Teamwork, Inc. 

Consumer Protection 

Program 


$20,280 


Lynn 

Lynn Economic 

Opportunity, Inc. 


$19,240 


MassPIRG/New Bedford 
Consumer Action Center 


$20,800 


MassPIRG/N. Weymouth 
Consumer Protection 
Program 


$26,000 


MassPIRG/Taunton 
Consumer Action Center 


$20,800 


Medford 

Medford Consumer 

Advisory Commission 


$27,456 


Newton 

Newton-Brookline 

Office of Consumer Affairs 


$22,360 


Norfolk 

Norfolk County District 

Attorney's Office 

Consumer Protection 

Division 


$20,800 



North Shore $24,336 610 $52,122 

North Shore Community 
Action Program, Inc. 



P.D. 12 75 



Revere 

Office of Consumer Affairs 


$27,352 


1,167 


$278,247 


Somerville 
Somerville Multi 
Service Center 


$20,072 


376 


$105,118 


South Middlesex 
Consumer Protection 
Office 


$32,165 


884 


$ 88,799 


South Shore 

South Shore Community 

Action Council 


$22,880 


749 


$144,465 


Springfield 

Consumer Action Center 


$32,240 


517 


$324,911 


Worcester 

Worcester Community 
Action Council, Inc. 
TOTALS 


$47,840 
$619,743 


942 
15,395 


$586,073 
$4,734,222 



Face-to-Face Mediation Program 

In Fiscal Year 1989 there were seven full-time Face-to-Face Mediation 
programs, each operating with one paid staff person and 25-30 trained 
community volunteer mediators. Mediations involved landlord/tenant or 
consumer disputes. Referrals came from local consumer programs, small claims 
courts, landlord or tenant advocacy programs or other community agencies. 

In Fiscal Year 1989 the Department of the Attorney General trained 71 new 
citizen volunteers to provide mediation services through the Face-to-Face 
Mediation programs. In that year a total of 825 face-to-face mediation sessions 
were held; 85 percent resulted in written agreements and 96 percent of the 
agreements reached were upheld. In addition to settlements through face-to-face 
mediation, 232 cases were resolved over the telephone by face-to-face staff. 



/o 



JT.JLV. 1Z, 



FY'89 










The breakdown is as follows: 










FTF 

Mediation 

Sessions 


Agreements 
Reached 


Agreements 

not 

Upheld 


Telephone 
Settlements 


Boston 


88 


75 


1 


125 


Haverhill 


112 


77 


1 


5 


Lowell 


109 


90 





24 


Somerville 


122 


111 


2 


22 


Worcester 


99 


76 





24 


Cape 


220 


202 


1 


11 


Brockton 


-25 


J6 


_6 


21 


TOTALS 


825 


687 


11 


232 



CONSUMER PROTECTION 



The Consumer Protection Division brings enforcement actions against 
individuals and companies which use unfair and deceptive practices in their 
business operations resulting in injury to consumers. Concentrating on cases in 
which consumers cannot reasonably obtain relief through their own efforts, the 
division's caseload consists primarily of large-scale class actions brought on 
behalf of consumers affected in similar ways by the illegal activities of these 
businesses. 

The division has an aggressive litigation program in several subject areas, 
including housing, advertising, financial services, nursing homes, automobiles, 
and retail sales practices. Court decisions are obtained which establish important 
precedents in the consumer protection area, as new legal theories are developed 
and advanced by the division. At the same time, the division maximizes the 
effect of its work with a number of special enforcement and education programs. 

The Consumer Protection Division designs its work to achieve the maximum 
amount of effect with its enforcement resources. The division aggressively 
pursues its broad program of enforcement litigation, with special emphasis on 
cases with the following attributes: 

(a) the affected consumers are elderly, low income, disabled, or persons who 
experience cultural and language barriers, i.e., persons who are most vulnerable 
to unfair and deceptive practices and who find it difficult if not impossible to 
obtain redress on their own; 

(b) the defendant's alleged unlawful practice causes significant harm to 
essential interests such as health, safety, and housing; and 

(c) a large number of consumers are affected by the practice, or else the case 
will have a major impact on the industry as a whole. 



P.D. 12 77 

Responsiveness to case handling needs identified by the Complaint Division, 
the Investigation Division, and the Local Consumer Programs has been 
emphasized. 

The major substantive areas of concentration include: 

A. HOUSING 

\.)Poor or Unsanitary Housing Conditions Cases 

Commonwealth v. Joseph Eldridge 

The Consumer Protection Division obtained an order from the Boston 
Housing Court placing approximately 20 apartments owned by South Boston 
landlord Joseph Eldridge into receivership in order to ensure that numerous state 
sanitary code violations would be corrected. The receiver was responsible for 
making sure that Eldridge paid for repairs to fallen ceilings, broken windows, 
faulty wiring and inadequate heating systems. In addition, the division obtained 
an injunction against Eldridge requiring him to maintain all of his other 
residential properties in compliance with the Sanitary Code. 

Commonwealth v. Universal Property Associates., Inc. 

In another poor housing conditions case, Attorney General Shannon entered 
into a consent judgment with Universal Property Associates, Inc. (UPA) of 
Lowell which required the company to repair and maintain its 150 apartments in 
accordance with the state sanitary code and to pay a civil penalty of $5,000. UPA 
rented its apartments which contained serious violations of the sanitary code. 

2.)Lead Paint-Related Litigation 

The Attorney General, through his Consumer Protection and Civil Rights 
Divisions has begun legal action against three North Shore realtors for 
discriminating against prospective tenants with children on the basis of the 
actual or believed presence of lead paint in rental units. Under the Massachusetts 
Lead Paint Law, landlords are required to delead their properties if they are 
inhabited by children under age six. Landlords and realtors are believed to engage 
in widespread discrimination against families with children to avoid the effect of 
this law. 

3.)Land Sales 

Commonwealth, et al. v. Patten Corporation 

Attorney General Shannon and Attorneys General from Maine, New 
Hampshire, Vermont and New York obtained consent judgments against Patten 
Corporation, a Fortune 500 land sales company which buys large tracts of land, 
subdivides the property and then quickly sells the small parcels to urban 
consumers. The states alleged that Patten misrepresented or failed to disclose 
material facts to numerous consumers concerning accessibility to their land, 
land-use restrictions, the availability of utilities, and the ability of the land to 
support legal sewage disposal systems. Patten agreed to injunctive relief 
prohibiting it from using bait and switch advertising, high pressure sales 
techniques, and misrepresenting facts about the land it sells. Patten was also 
required to establish a consumer complaint resolution system. The company paid 
$100,000 in costs to each of the states 

4.) Time-Share Cases 

Commonwealth v. Ocean Club on Smuggler's Beach 

The division obtained a consent judgment against the Ocean Club on 



78 r.U. VI 

Smuggler's Beach, a time-share development in Yarmouth. The judgment 
prohibits the development from mailing to consumers solicitations in envelopes 
with a return address purporting to be the "Barnstable County Sheriffs Office, 
Drug Abuse Information Bureau, County Police Service Center." The judgment 
also prohibits the time-share company from making any false or misleading 
representations and required it to pay a $2,500 civil penalty. 

5.) Home Improvement Contractor Cases 

Commonwealth v. Girouard 

Attorney General Shannon obtained a preliminary injunction against two 
Fitchburg home improvement contractors who accepted substantial deposits for 
work and then failed to provide the promised services. The injunction prohibited 
them from failing to perform work under their contracts, from performing 
services without proper licenses, and required them to return deposits if work is 
not commenced within five business days of the date scheduled. 

Commonwealth v. East Coast Exteriors Inc. ,et al. 

The Attorney General obtained a judgment against East Coast Exteriors, Inc., 
Massachusetts Window Systems and their owner prohibiting them from failing 
to honor contractual obligations to install replacement storm windows or to 
refund consumer deposits. The owner, Edmund J. Byrne, is also prohibited from 
engaging in the home improvement business until he has paid $50,000 in 
restitution to consumers. The judgment imposes a $50,000 penalty against the 
defendants. 

6.) HUD Housing Cooperatives 

The Attorney General received complaints regarding the practices of certain 
HUD-owned or insured housing cooperatives in assessing a fee against tenants 
who pay their carrying charges after the 11th of the month and charging 
"transfer" and "painting" fees to tenants who move within the complex or leave 
it entirely. Such charges are illegal under the Attorney General's landlord-tenant 
regulations. Sixteen HUD cooperatives in Massachusetts were notified of the 
restrictions on such practices and, where necessary, have eliminated the charges. 

l)Water Heater Enforcement Proiect 

The Consumer Protection Division conducted an investigation to determine 
whether some landlords were requiring their tenants to rent water heaters from 
utility companies, in violation of the sanitary code which requires landlords to 
provide their tenants with water heaters. More than 80 landlords signed 
agreements to transfer the rental accounts to their own names or buy the water 
heaters their tenants use. 

B. HEALTH CARE 

1 .) Nursing Homes 

Attorney General, et al. v. H.EA. of Massachusetts Inc., dlbla Jamaica 

Towers Nursing Home; and Attorney General, et al. v. H.E.A. of 

Massachusetts, Inc. dlbla Anlaw Nursing Home 

Attorney General Shannon obtained consent judgments against H.E.A. of 
Massachusetts, Inc., an out-of-state nursing home operator of seven nursing 
homes in Massachusetts, which requires the company to cease its operations of 
two of its homes, Jamaica Towers and Anlaw. The Consumer Protection 
Division had found gross patient neglect and deplorable patient care at these 



P.D. 12 79 

facilities. In addition, the judgments require H.E.A. to transfer its licenses and 
interests in all seven homes, to refrain from conducting day long-term patient 
care in Massachusetts until 1999, and to pay 5146,000 to the Commonwealth as 
civil penalties and costs. 

Shannon v. Associated Group Homes. Inc., et al. 

The Attorney General obtained appointment of a patient receiver to assume 
the operation and management of three intermediate care facilities for the 
mentally retarded which are owned by Associated Group Homes, Inc. of Danvers. 
Receivership was necessary because the company was facing insolvency and had 
begun neglecting patients. 

Attorney General, et al v. Warren LaBorde and Shirley LaBorde d/b/a 

Evergreen Place Rest Home 

Attorney General Shannon obtained an emergency appointment of a patient- 
protector receiver for the Evergreen Place Rest Home after learning that the 
owner/operator of the home had sexually abused a number of the facility's elderly 
or mentally retarded residents. The receivership divested the LaBordes of control 

I of the home and enjoined them from communicating with the home's patients. 
Shannon v. Kristen Beth Nursing Home, Inc. 
As a result of the Attorney General's intervention, the Bankruptcy Court 
dismissed Nursing Home bankruptcy proceedings. State court receivers were then 
appointed to operate these long term care facilities and provide care for its 
patients. 

2.) Deceptive Advertising of Health Claims 

In The Matter of Campbell Soup Company 

The Attorney General, along with the Attorneys General from eight other 
states, obtained an assurance of discontinuance from Campbell Soup Company 
prohibiting it from publishing or airing misleading advertisements concerning 
the health benefits of its soups. The states alleged that Campbell made false 
:laims that some of its soups were high in fiber and good sources of calcium; 
they also believed that Campbell generally exaggerated the health benefits of its 
soups. Campbell paid the states a total of $315,000. 

In the Matter of Nes tie's Carnation Company 

Massachusetts and eight other states also obtained an assurance of 
discontinuance from Nestle's Carnation Company to stop making unwarranted 
claims for its new infant formula, Good Start. Nestle's was promoting Good 
Start as a "hypoallergenic" formula that "effectively resolves symptoms in 
infants suffering from formula intolerance or milk allergy". In fact, any infant 
formula, including Good Start, can cause an allergic reaction. Nestle's agreed to 
pay 590,000 to the states for their costs in conducting the case. 

3.) Deceptive Advertising of Health Products/Product Safety 

In the Matter of Golden Hearing Aid Center 

In the Matter of American Aid Service Company 

The Consumer Protection Division entered into two consent judgments 
against Golden Hearing Aid Center of Worcester and American Aid Service 
Company of Marlborough prohibiting each of them from misrepresenting 
themselves as audiologists and from falsifying audiological exam results. The 
companies had been falsifying exam results in order to induce elderly consumers 
to purchase unnecessary and overpriced hearing aids. 



5U r.u. iz 

In the Matter of American Suzuki Motor Corp. 

Attorney General Shannon and the Attorneys General of Minnesota, Texas, 
New York, California, Missouri and Washington entered into an agreement for 
voluntary compliance in which Suzuki agreed to change its advertising with 
respect to its multi-purpose passenger vehicle, the Suzuki Samurai. Suzuki 
marketed the Samurai, especially to the young inexperienced driver, to be 
interchangeable with a passenger car. The states alleged that Suzuki's 
advertisements were deceptive because the Samurai is not as safe as a passenger 
car due to its high propensity to roll over and its failure to meet some important 
federal safety standards for passenger cars. 

Suzuki paid the states S200,000 in costs and fees to resolve the case. 

C. FINANCIAL SERVICES 

1.) Mortgage Brokers 

Commonwealth v. William Wolff 

The Consumer protection Division obtained a civil judgment against William 
Wolff who acted unfairly and deceptively while posing as a mortgage broker. The 
civil judgment followed Wolffs criminal conviction obtained by the Attorney 
General's Criminal Bureau on 39 counts of larceny for fraudulently inducing 
consumers to pay fees for nonexistent financing and apartments. Under the 
criminal conviction and the civil judgment, Wolff paid S26.0OO in restitution to 
49 defrauded consumers. 

2.) Credit Cards 

Citibank v. Iowa 

Massachusetts filed a brief amicus curiae in Citibank v. Iowa, which raises 
important federal preemption issues. Massachusetts' amicus brief argued that the 
National Bank Act does not allow out-of-state credit card issuers, such as 
Citibank, to ignore the consumer protection laws of the states in which they do 
business. 

Commonweath v. SMI Partnership of Worcester, dlbla Worcester Centrum 

Attorney General Shannon obtained a consent judgment against SMI 
Partnership, doing business as the Worcester Centrum, for illegally adding a 
surcharge to credit card transactions. The judgment calls for the Centrum to give 
900 free tickets to various Centrum events to inner-city youth, senior citizens, 
and children with disabilities or chronic illness. 

D. AUTOMOBILES 

1 .) Commonwealth v. Wilmington Ford et al. 

The Consumer Protection Division sued Wilmington Ford and its principals 
for systematically violating a 1986 consent judgment. Through the use of testers 
and consumer complainants, CPD determined that Wilmington violated the 
judgment provisions relating to: 

( '^advertising by advertising cars which were not available, failing to disclose 
material conditions (e.g. instant delivery) imposed upon the sales, and engaging 
in bait and switch; 

(b)sales practices by using high pressure sales tactics (not giving consumers 
enough time to review documents before signing, insisting on instant delivery, 



P.D. 12 81 

and failing to disclose or abide by the consumers' right to cancel within 24 
hours); 

(c)financing practices by "pre-screening" potential customers (by obtaining 
their credit reports before a sale had been made) and by poor disclosure of 
credit/finance terms; and 

(d)repair practices by failing to repair cars within a reasonable number of 
attempts. 

The division is seeking more than SI, 000,000 in penalties and the closing of 
Wilmington for 30 days. 

2.) Commonwealth v. Wellesley Tovota Co. et al. 

After nearly five years of litigation, this auto option-packing case came to a 
conclusion with the entry of a permanent injunction and payment of S36,700 in 
restitution. The restitution figure adds to nearly S2,200 paid by the defendants 
following the trial of the first phase of the case in February', 1988. One 
significant feature of the decision is the court's clear shifting of the burden of 
proof in future complaints to the dealer to show that customers were given the 
chance to buy cars without unwanted options. 

^^Commonwealth v. Fall River Motor Sales. Inc. 

The Attorney General filed suit against Fall River Motor Sales, Inc., d/b/a 
Lynngate Motor Sales for violating a 1985 consent judgment prohibiting 
violations of the Attorney General's invoice price regulation. The Court entered 
summary judgment for the Commonwealth in the amount of S20,000, and 
ordered the defendant to pay the Commonwealth's costs and attorneys' fees 
incurred in prosecuting the action. The case is currendy on appeal. 

AAAbrams v. The Hertz Corporation 

A final judgment was entered in the New York State Supreme Court between 
the attorneys general of Massachusetts, New York, Iowa, Missouri and Texas, 
and the Hertz Corporation. The action arose after the United States Attorney in 
Brooklyn indicted Hertz for systemically defrauding auto renters and their third 
party insurers over a 10-year period in connection with the repair of vehicles 
damaged while rented. Under the judgment, consumers and insurers will receive 
restitution for damages sustained. The Commonwealth received SI 5,000 for 
costs of investigation and litigation of this matter. 

^^Commonwealth v. Rick Starr Pontiac - Cadillac, Inc. 

A consent judgment was entered enjoining the auto dealer from failing to 
affix all legally required window stickers including the Manufacturer's Suggested 
Retail Price sticker, the Massachusetts New Car Lemon Law stickers for new 
cars, and the Federal Trade Commission's Used Car Buyers Guide. 

6.)National Car Rental System, Inc. - Assurance of Discontinuance 

The Attorney General obtained an Assurance of Discontinuance against 
National Car Rental System, Inc., doing business as National Car Sales, 
requiring it to fully disclose that the vehicles it sells are former rental vehicles 
and used cars. 

E. RETAIL ADVERTISING SALES AND SERVICES 

1 ^Retail Advertising Monitoring Project 

The Consumer Protection Division has continued its enforcement of unfair 
and deceptive advertising practices by monitoring retailers' compliance with the 



82 r.D. 12 

Attorney General's retail advertising regulations. The division has obtained 
approximately 1,000 Assurances of Discontinuance and letter agreements over 
the past few years, for violations relating to the retailers' use of manufacturer's 
suggested retail price comparisons, range of price comparisons, and wholesale 
price comparisons and other violations. In addition, the division notified 
businesses that run jewelry advertisements in Massachusetts of its enforcement 
guidelines with respect to price comparison jewelry advertising. As a result 
many questionable price comparison claims for diamonds and other precious 
gems were eliminated in time for the holiday shopping season. 

2.)Commonwealth v. IFR Furniture Rentals of Massachusetts 

The Suffolk Superior Court entered a consent judgment ordering the 
defendant, a large furniture rental company, to comply with advertising 
requirements of the federal Consumer Leasing Act, to reduce by 40 percent its 
fees for "insurance waivers," and to implement a more reasonable policy 
regarding loss of security deposits for early termination of furniture leases. 

3 ^Commonwealth v. Furniture Outlet Inc.. et al. 

The Attorney General obtained a consent judgment against Furniture Outlet, 
Inc. and its president which requires them to pay over $9,000 to consumers for 
restitution of unrefunded deposits. 

The Attorney General's complaint alleged that Furniture Outlet ran numerous 
one-day furniture sales at various hotels, motels and civic halls throughout New 
England, but frequently failed to deliver the merchandise, delivered improper or 
defective merchandise. The complaint further alleged the opening of another 
furniture business in Massachusetts without (1) disclosing the exact nature of the 
company's pick-up and delivery, refund, return, repair, cancellation and complaint 
resolution policies, (2) delivering goods that conform to the samples from which 
the sale was consummated, and (3) repairing or replacing damaged furniture. 

4 ^Commonwealth of Mass. v. Holiday Health Spas 

The Attorney General obtained a consent judgment barring Holiday Health 
Spas from misrepresenting the opening dates of its health clubs to consumers 
and from engaging in deceptive pricing and unfair debt collection practices. The 
judgment also required Holiday to offer consumers various options for 
restitution. 216 consumers chose to cancel their memberships, resulting in cash 
payments of $160,000 and cancellation of $21,000 in future payments, for a 
total restitution of $181,000. An additional 7,495 consumers received six-month 
extensions of their memberships, with 974 of those consumers also receiving 
$10,000 in cash and $15,000 in credits. Holiday also paid the Commonwealth 
$20,000 for the costs of investigation and prosecution of this matter. 

5.)State of Alaska et al. v. U.S. Department of Transportation 

Massachusetts and 26 other states filed suit against the U.S. Department of 
Transportation (DOT) in the U.S. Court of Appeals, D.C. Circuit. The suit 
alleges that DOT impermissibly amended an existing regulation so as to permit 
airlines to advertise airfares without including substantial mandatory taxes, fees 
and surcharges in the advertised fare. The suit argues that the existing regulation, 
which requires the additional charge to be included in the advertised fare, is 
effectively gutted by this amendment allowing the unbundling of the charges. It 
also argues that the amendment was adopted in violation of the Administrative 
Procedure Act because no opportunity for notice or comment was afforded the 
public. 



P.D. 12 83 

6 ^Commonwealth v. American Business Institute, Inc. et al. The Attorney 
General filed a final judgment against this vocational (business) school which 
had engaged in a series of unfair and deceptive practices, including admitting 
unqualified students, misrepresenting course offerings, failing to provide teachers 
for classes, and failing to handle financial aid appropriately (including failing to 
turn over to students balances due them under their loans). The judgment, which 
embodies the elements of a stipulation reached earlier in the case, was negotiated 
after Suffolk Superior Court Judge Murphy referred the case to mediation. 

l)In Re: Peter Pan Lines 

The Department of Public Utilities and the Consumer Protection Division 
obtained from Peter Pan Bus lines an agreement whereby the company would 
rollback its rates totalling $42,000 in savings. Peter Pan agreed to the fare 
rollback after this office alleged that the bus line increased its various tariffs 
without the necessary DPU or Interstate Commerce Commission (ICC) 
approval. 

S.)In Re: Original Gunite Aquatech Pools 

The Attorney General obtained an Assurance of Discontinuance against 
Original Gunite Aquatech Pools of Chelmsford ("Aquatech"). The Assurance 
requires Aquatech to provide detailed disclosures of hourly excavation and 
backfiling costs not covered by the standard conn-act and to honor contract and 
warranty work in a timely manner. 

F. CHAPTER 93A AMENDMENT RE: 
CIVIL INVESTIGATIVE DEMAND 

The Massachusetts Legislature passed a bill sponsored by Attorney General 
Shannon which strengthens and clarifies the Attorney General's powers under the 
Civil Investigative Demand (CID) provisions of Chapter 93A, the Consumer 
Protection Act. Targets of CIDs will no longer be permitted to refuse to produce 
information on grounds that the information constitutes a trade secret. CID 
targets may only avail themselves of the Rules of Civil Procedure regarding 
protective orders for any information which they wish to decline to produce. In 
addition, the amendment clarifies the Attorney General's right to use material 
obtained through a CID in court pleadings or papers. 



CIVIL RIGHTS 

The primary focus of the Civil Rights Division in the 1989 fiscal year was 
enforcement of the Massachusetts Civil Rights Act (MCRA) through 
injunctions obtained in superior court against acts of racial, religious, ethnic, or 
homophobic harassment, violence or intimidation. Division attorneys obtained 
14 injunctions against 26 individuals, in the municipalities of Boston, 
Worcester, Somerville, and Quincy, and secured one guilty verdict in a case of 
criminal contempt of an MCRA order. 

The division was also active in discrimination cases involving housing, 
employment, education, voting, public accommodations and police misconduct. 
Moreover, division attorneys conducted training sessions, spoke on civil rights 
at public events, and testified in favor of civil rights legislation. 



84 P.D. 12 



MAJOR CASE AREAS 

XJlacial, Religious. Ethnic, or Homophobic Harassment, Violence, or 
Intimidation 

Working in many instances in cooperation with local police departments, 
division attorneys handled the following matters in fiscal 1989: 

Commonwealth v. Wahlberg: A guilty plea was secured from the defendant 
in a criminal contempt action (anti-Vietnamese violence). The defendant was 
sentenced to 90 days in Deer Island House of Correction. 

Commonwealth v. Walker: A preliminary injunction was obtained in 
Middlesex Superior Court against a white Somerville man who attacked a black 
Somerville man outside the Sullivan Square MBTA station. The injunction 
prohibits Walker from going near the victim or his home and from engaging in 
any further harassment of Massachusetts residents on the basis of race, color or 
national origin. 

Commonwealth v. Locklear: An MCRA injunction was obtained against a 
Sudbury woman prohibiting further racial harassment. 

Commonwealth v. Jeanetti: Working with the Boston Police Department's 
Community Disorders Unit, a preliminary injunction was obtained against a 
Hyde Park man who carried out a continuing campaign of harassment against an 
Hispanic family in a Boston Housing Authority development. The injunction 
keeps the defendant away from the victims. The BHA has taken action to evict 
the defendant. 

Commonwealth v. Faretra: A preliminary injunction was obtained against 
two East Boston men who had chased and beaten an Hispanic man as he and his 
companions were heading home on the morning of October 2, 1988. The 
injunction prohibits the two defendants from having contact with the victim and 
from harassing other people based upon their ethnic background. 
Commonwealth v. Desautel: We obtained a preliminary injunction in February 
1989 against a Boston man who claims to be a member of the neo-Nazi 
"skinhead movement." The man attacked and brutally kicked a black Boston 
resident who was walking in the area near Kenmore Square. 

Commonwealth v. Perkins: A temporary restraining order was obtained on 
March 16, 1989 against a man engaged in a racially motivated assault against 
two black women who recently moved into the previously all-white Mary Ellen 
McCormick development in South Boston. The Court issued a preliminary 
injunction against further harassment or intimidation on May 20, 1989. 

Commonwealth v. White: A preliminary injunction was obtained against 
two black men who engaged in a racially motivated assault against a white 
resident of the South End. 

Commonwealth v. Murphy: On June 27, 1989, a preliminary injunction 
was obtained against a white male prohibiting further racial harassment of 
minority tenants at Old Colony Development, South Boston. 

Commonwealth v. Hernandez: On June 20, 1989, we obtained a preliminary 
injunction against one adult and three juveniles who had assaulted a gay man in 
the Fens. 



P.D. 12 85 

rhe court enjoined the four young men from intimidating or threatening the 
victim or any other person based upon their sexual orientation. 

Commonwealth v. Be nato, Furtado, and Gallant: On June 29, 1989, we 
3btained a preliminary injunction against two juveniles and one adult who 
Jireatened and harassed a Somerville woman because of her race and national 
origin. On one particular occasion the defendants were part of a group, members 
3f which sat and stood on the victim's car, stuck numerous wads of gum all over 
lie vehicle, called the victim a "nigger" and threatened to beat her. The victim 
subsequently moved from her residence but the injunction protects her at her new 
lome as well as protecting all residents of the Commonwealth from similar acts 
3y these defendants. 

Commonwealth v. Foley: In January 1989 we proceeded to trial in the 
;riminal contempt prosecution of a former police officer who was charged with 
violating the terms of a preliminary injunction. The jury found the defendant not 
'uilty. 

Commonwealth v. Just: A permanent injunction was obtained against a 
Somerville woman accused of shouting anti-Semitic epithets and throwing 
objects at another tenant residing at the Somerville Housing Development. A 
permanent injunction was issued on April 11, 1989. 

Commonwealth v. Forrest: We obtained a preliminary injunction in Norfolk 
Superior Court against an MBTA employee who had shouted racial epithets and 
assaulted a Chinese youth at the Braintree MBTA station. The injunction, dated 
\pril 21, 1989, prohibits the defendant from further harassment or intimidation 
)f the young man and his family. 

Commonwealth v. Difonzo, Marconowski and Salvato: In February 1989 we 
obtained a preliminary injunction against three Somerville men who participated 
n the racially motivated harassment and beating of members of a Haitian family 
n a Somerville park. The injunction prohibits the defendants from knowingly 
ipproaching within 100 feet of the victims of their home. 

Commonwealth v. Neal: Working with the Worcester Police Department, 
•ve obtained a preliminary injunction on July 5, 1988 against two men charged 
ivith threatening an Asian couple and destroying their property. 

Northeastern University Police Civil Rights Enforcement Training: We 
aught a section on the use of the civil injunctive relief provisions of the 
vlassachusetts Civil Rights Act at Northeastern's three-day course on civil rights 
enforcement. The course was attended by senior police officers from numerous 
vlassachusetts police departments and will be offered on a regular basis by 
Northeastern. 

2. Discrimination in Housing 

Attorney General v. Harold Brown: Discovery is ongoing in this suit against 
i private landlord, Harold Brown, alleging that Brown's refusal to rent to 
■ecipients of federal housing subsidies ("section 8" certificates) violated G.L. c. 
151B and also discriminated on the basis of race. The suit was originally filed in 
October 1983, and in 1987 the Supreme Judicial Court reversed a judgment in 
3ur favor and remanded for a determination of whether Brown's reasons for 
•efusing to accept section 8 tenants were legitimate business reasons which may 
institute a defense to liability. 

Simard v. Residential Care Consortium: An action was brought in the Bristol 
County Superior Court by the neighbors of a Fall River residential and 



86 P.O. 12 

educational facility for homeless families, challenging the Fall River Zoning 
Board's determination that the facility is exempt from zoning regulation because 
of its educational purpose and its operation by a non-profit educational 
corporation. We successfully moved to intervene on behalf of the Department of 
Public Welfare, which funds the facility and others like it throughout the 
Commonwealth. This was the first case considering the application of the 
education use exemption to a DPW-funded facility for homeless families. 
Following our intervention, the neighbors agreed to dismiss the case. 

Attorney General v. Havoutunian: We entered into a consent judgment with a 
Watertown landlord and real estate agency we had sued for racial discrimination in 
rental housing. The case arose out of a testing program conducted by the 
Attorney General. Under the terms of the consent judgment, the landlord and 
agency agreed to conduct an affirmative advertising campaign to reach a goal of 
renting 30 percent of their units to minority tenants, and to comply with various 
record-keeping requirements. 

Comments on New HUD Housing Regulations: The Attorney General filed 
comments on the proposed regulations implementing the Fair Housing 
Amendments Act of 1988, which went into effect in March of 1989. The Act 
provides new substantive protections against housing discrimination based upon 
handicap and familial status (families with young children). It also established an 
extensive administrative enforcement mechanism. Our comments critized HUD's 
attempt to water down a number of the Act's important provisions. 

^^Discrimination in Education 

Lynn Public Schools: In January 1989, the Commissioner of Education 
informed the Attorney General that action might be necessary to protect the 
rights of minority students in Lynn to equal educational opportunity. In 
conjunction with the Department of Education we helped facilitate the adoption 
of an amended school assignment plan which better promotes racial balance in 
the Lynn Public Schools. We continue to monitor the situation in Lynn. 

New Life Bantist Church v. Town of East Longmeadow: During Fiscal Year 
1987 the Commonwealth participated in a 14-day federal trial as a defendant 
intervenor in this case brought by a church challenging the state educational 
certification process for private schools. After the district court ruled for the 
plaintiffs, the Commonwealth and the Town appealed, and the U.S. Court of 
Appeals for the First Circuit reversed on September 7, 1989. 

Morgan v. O'Reilly: The division continued to participate in the remedial 
stages of the Boston school desegregation case and in particular the process by 
which the Boston School Committee may modify its student assignment plans. 

A. discrimination in Employment 

Doe v. Office of Job Corps: We filed suit in April 1989 against the U.S. 
Department of Labor, challenging the Job Corps' rule of mandatory HIV testing 
and its exclusion of HIV positive persons from its program. The Job Corps is a 
residential vocational education program for disadvantaged youths with campus- 
like centers throughout the United States. Jane Doe entered the Grafton, 
Massachusetts center and was required to submit to an HIV antibody test. Two 
weeks into the program she was informed that she had tested positive and within 
25 minutes was sent home from the center. We allege that mandatory HIV 
testing and exclusion of HIV positive individuals discriminates against Job 
Corps students on the basis of disability and infringes upon their fourth and fifth 
amendment privacy rights. In addition, the rule, which alters the students' 



P.D. 12 87 

substantive rights, was implemented without adherence to the notice and 
comment requirements of the Administrative Procedure Act. 

5. discrimination in Voting 

Commonwealth v. City of Everett: After extensive but unsuccessful efforts 
by the Secretary of State's elections division to secure compliance by Everett 
with state and federal law requiring that voting places be accessible to persons 
with disabilities, we filed suit in July 1988. On the day before our Motion for 
Summary Judgment was to be heard, Everett agreed to bring all of its polling 
places into compliance with the law. Assisted by the State Office of Handicapped 
Affairs and the Secretary of State's office, we monitored Everett's construction of 
ramps and relocation of voting places in compliance with the agreement. When 
no problems were reported on election day, the action was dismissed. 

Similar inaccessibility problems in approximately 15 other cities and towns 
have been resolved short of litigation. 

^Discrimination in Public Accommodations 

Hull Town Meeting: In March 1989 we were contacted by the Office of 
Handicapped Affairs on behalf of the Hull Handicapped Commission concerning 
the inaccessibility to people with disabilities of town meetings in Hull. After an 
access survey of the present inaccessible town meeting location and the proposed 
accessible location, we informed the Town that the meeting should be moved as 
a reasonable accommodation of the needs of the Town's citizens with disabilities. 
The Town responded by agreeing to move this year's general town meeting and 
all future town meetings to an accessible location. 

In re SERTA: The State Office of Handicapped Affairs asked us to evaluate 
whether we could prevent the purchase of inaccessible buses by the Southeast 
Regional Transit Authority. Supporting the efforts of the Executive Office of 
Transit and Construction, we were able to resolve the dispute when SERTA 
agreed to modify its bus purchase so that all the new buses were equipped with 
wheelchair lifts. 

l.)Police Misconduct 

Commonwealth v. Adams: In January 1989 we filed suit against 13 Boston 
police officers for either using excessive force or failing to intervene in the use 
of excessive force in connection with the arrest of a Boston man after an 
automobile chase. Our complaint alleges that the man was beaten to the ground 
by police officers, handcuffed, intermittently beaten over a 10-minute period as 
he lay on the ground, and beaten again outside the police station. Discovery in 
progress. 

Commonwealth v. Bailey: On September 1, 1988 the division sued three 
Massachusetts Senate Court Officers who used excessive force, anti-gay and 
racial harassment, and other illegal procedures to police a political demonstration 
that took place at the Massachusetts Senate Gallery on January 4, 1988. The 
case was settled in the fall of 1989. 

S.)Privacy 

Bally v. Northeastern University: In the fall of 1988, the Division filed an 
amicus curiae brief in the Supreme Judicial Court in support of the Superior 
Court's decision that Northeastern's policy of mandatory drug testing of athletes 
violates the MCRA by interfering coercively with constitutional and statutory 
privacy rights. 

Massachusetts Citizens for Life v. Department of Public Welfare: The 



88 P.D. 12 

Division is representing the Department of Public Welfare in resisting a request 
for identifying information regarding physicians who receive Medicaid 
reimbursement for abortion services. We are arguing that this information is not 
public record and if released would lead to harassment and intimidation of 
physicians and resulting interference with the privacy rights of women seeking 
abortion services. 

9.)Testimony 

Division attorneys testified before the state legislature urging enactment of: 
House 3014, "An Act Further Regulating Damages in Housing Discrimination 
Cases"; House No. 4654, "An Act Relative to Equal Rights Under Law," the so- 
called "Runyon" bill; and Senate 1583/House 1990, "An Act Establishing the 
Transportation Access Board." The first two of these bills were enacted into law. 
The "Runyon" bill (now G.L. c. 90, §102) prohibits discrimination in private 
contract and real property transactions on the basis of race, sex, national origin, 
color or creed. It further provides for a "totality of the circumstances" standard of 
proof, a right to jury trial, punitive damages, and attorneys' fees. 

\0.)Trainings, Meetings, and Speaking Engagements 

The division participated in many speaking engagements in Fiscal Year 1989, 
including: a class on civil rights consisting of Somerville and Cambridge 
elementary and secondary public school teachers; a series of regional conferences 
on the civil rights of persons with disabilities, sponsored by the State Office of 
Handicapped Affairs; a presentation before Zonta International in Springfield, a 
women's organization, entitled "Fundamental Freedoms"; and participation in the 
Greater Boston Civil Rights Coalition and the Governor's Civil Rights Task 
Force. 



ENVIRONMENTAL PROTECTION 

General Laws c.12, §1ID establishes the Environmental Protection Division 
in the Department of the Attorney General. The division is litigation counsel on 
environmental issues for all of the agencies of the Commonwealth, principally 
those within the Executive Office of Environmental Affairs. In this role the 
division handles all of the Commonwealth's civil litigation to enforce 
environmental protection programs established by state laws and regulations. 
The division brings suits to enforce the Commonwealth's regulatory programs 
governing air pollution, water pollution, wetlands, hazardous waste, hazardous 
materials, solid waste, water supply, pesticides, waterways and billboards, and it 
defends administrative decisions made by state agencies that administer 
environmental programs. In addition, based on the Attorney General's broad 
authority to protect the environment of the Commonwealth, the division 
initiates and intervenes in state and federal litigation, and participates in 
administrative hearings before federal agencies, on issues of significance to the 
environment. 

As a result of its role in environmental enforcement the division receives 
grant money from the United States Environmental Protection Agency. 

During the year, the division recovered through litigation $2,248,000 in 
penalties and other payments. In addition, many of the division's cases have 
resulted in court judgments requiring private parties to undertake cleanups, at 



P.D. 12 89 

substantial cost, which the Commonwealth would otherwise have had to 
perform. 

AIR POLLUTION 

Commonwealth v. Environmental Protection Agency 

On February 22, 1989, the Commonwealth filed suit against the United 
States Environmental Protection Agency (EPA) for failure to approve a state 
regulation requiring that gasoline sold in Massachusetts in the summer months 
be less volatile and therefore less polluting. 

On June 19, 1989, the Commonwealth, along with New York, Connecticut, 
and New Hampshire, moved to intervene in a Petition for Review filed by 
Pennsylvania against the Environmental Protection Agency concerning EPA's 
promulgation of regulations concerning the volatility of gasoline. EPA's 
regulations, published in the Federal Register as final agency action on March 
22, 1989, rejected a more stringent standard limiting the volatility of gasoline 
than the one it finally adopted. 

Gasoline vapors are a major cause of violations of the national ambient air 
quality standards for the pollutant ozone. Violations are common throughout the 
Eastern and Midwestern states during the summer season. Air pollutants, 
particularly hydrocarbons and nitrogen oxide, and the resulting ozone 
concentrations are transported long distances from the points of emission. Many 
of the violations of ambient air quality standards are attributable to emissions of 
hydrocarbons in upwind states. 

Massachusetts, New York, New Jersey, and some other Northeastern states 
have adopted the stricter gasoline volatility standards rejected by EPA. However, 
these states' regulations are ineffective against gasoline vapor emissions in 
upwind states subject to EPA's less stringent standard. 

Commonwealth v. Globe Manufacturing Company 

In March 1989, a settlement of an enforcement action was filed against Globe 
Manufacturing Company of Fall River. Globe had paid $250,000 in July 1988 
as a penalty for excess emissions of volatile organic compounds, a major 
contributor to ozone formation. The March settlement imposed emission 
limitations for certain chemicals, pending a full plan review by DEQE, which 
will result in a new permit, and long-term limitations. 

Commonwealth v. Packaging Industries, Inc. 

In September 1988, a judgment was filed requiring Packaging Industries, Inc., 
of Hyannis to phase out all use of chloro-fluorocarbons by the end of December 
1989 and to pay a $700,000 penalty under the state Clean Air Act. The company 
was charged in the complaint with emitting hundreds of tons of the chemicals 
that deplete the stratospheric ozone layer, without a permit from the Department 
of Environmental Protection. 

Commonwealth v. Scott, et al. 

This complaint alleges that the defendants failed to remove friable asbestos 
from pipes and other locations within an abandoned manufacturing complex in 
Turners Falls before demolishing a portion of it and failed to notify the 
Department of Environmental Protection (DEP) of the release of friable asbestos 
into the surrounding air at the site. The Commonwealth sought civil penalties as 
well as preliminary injunctive relief. On November 14, 1988, a consent order 



90 P.D. 12 

was entered on the preliminary injunctive relief. The defendants have agreed to 
conduct an asbestos abatement project at the site and to remove all asbestos 
present. 



HAZARDOUS WASTE 

Commonwealth v. AVX Corporation, et al., (New Bedford Harbor) 

The federal district court has issued several decisions in this complex 
litigation regarding cleaning up contamination of New Bedford Harbor with 
polychlorinated biphenyls ("PCB's"). The first of three opinions was issued on 
February 27, 1989 as to whether defendant Belleville Industries, Inc. has a right 
to a jury trial. The court ruled that the Commonwealth's and the United States' 
claim for natural resource damages are all triable to a jury as a right under the 
Seventh Amendment. The second opinion, issued on March 28, 1989, ruled that 
defendant Aerovox Corporation is liable as defendant Belleville Industries, Inc.'s 
corporate successor. 

The third opinion, issued on April 27, 1989, approved a partial consent decree 
between the United States and the Commonwealth with defendant AVX 
Corporation regarding claims for natural resource damages in all respects but 
two: it required further evidence regarding the covenant not to sue contained in 
the decree, and it required inclusion in the decree of a provision allowing the 
plaintiffs to reopen the lawsuit. 

Commonwealth v. Battaglia. et al. 

On March 21, 1989, Judge Murphy sitting in Suffolk Superior Court issued 
an order finding the owner and operator of a small tank farm liable for 
environmental damage caused by leaking underground tanks at 84 Pleasant Street 
in Attleboro. The Attorney General brought the action in 1985 to close an 
inactive waste storage facility. The court ordered the defendants to submit a full 
site assessment by June 9. 

Commonwealth v. Cannons Engineering Corporation, (Bridgewater and 
Plymouth) 

On August 3, 1988, the Attorney General along with the Department of 
Justice filed a Consent Decree in which 42 parties agreed to implement the 
cleanup remedy at the two sites and to reimburse the Commonwealth for past 
costs incurred in cleaning up the sites. The value of the cleanup to the 
Commonwealth is approximately $600,000. As a result of prior settlements the 
Commonwealth has already received a total of approximately $725,000 from 
responsible parties. A complaint was also filed on August 3, 1988 against the 
23 parties who did not settle. 

Commonwealth v. Charles George Trucking Co., Inc. 

On February 8, 1989, Federal District Court Judge Woodlock granted partial 
summary judgment to the Commonwealth and the United States, holding the 
Charles George Trucking Co., Inc., Charles George Sr., and Dorothy George 
liable for costs incurred by the governments for cleanup of the Charles George 
Superfund site in Tyngsboro. The court held these defendants liable under the 
federal Comprehensive Environmental Response, Compensation and Liability 
Act and the Massachusetts Oil and Hazardous Material Release Prevention and 
Response Act. The defendants owned or operated the Charles George landfill at 
the site. It is estimated that more than $50 million will be spent to complete 



P.D. 12 91 

required cleanup of the site. 

Commonwealth v. Clean Industry, Inc. 

On April 12, 1989, the Attorney General filed a consent judgment against 
Clean Industry, Inc., a hazardous waste transporter in East Boston. Under this 
judgment, Clean Industry must surrender its transporter license and is 
permanently enjoined from transporting hazardous waste within the 
Commonwealth. The judgment also requires the company to pay a penalty of 
$27,250. The judgment settles a case in which the Commonwealth alleged 
repeated violations of the regulations governing the handling of hazardous waste. 

Commonwealth v. Department of the Interior 

The Commonwealth and nine other states, as well as the National Wildlife 
Federation, Public Citizen, and the Environmental Defense Fund, joined in this 
action, designated by the court as complex, challenging regulations promulgated 
by the Department of the Interior establishing procedures for the assessment of 
natural resources damages in hazardous waste cleanup cases. The petitioning 
states filed a Joint Opening Brief and a Joint Reply Brief on November 18, 
1988. Briefing now has been completed and the case was argued on February 22, 
1989. 

Commonwealth v. Hood Industries, Inc. 

In May 1989, Hood Industries paid a civil penalty of $45,000 for violations 
of the Massachusetts Hazardous Waste Management Act and the Massachusetts 
Clean Air Act at its former plant in Wakefield. Hood failed to use air pollution 
devices to reduce emissions of CFC's and had improperly stored hazardous waste 
at the plant. 

Commonwealth v. Karam, et al. 

On April 13, 1989, the Attorney General filed a complaint against owners 
and operators of a Sunoco station in Weymouth seeking costs incurred by the 
Commonwealth to clean up gasoline released from underground tanks. The 
Department of Environmental Protection has already spent $266,000 and expects 
to spend another $250,000. The complaint alleges that a neighboring church has 
been closed since 1986 because of the high concentration of gasoline and 
gasoline vapors entering the basement through the groundwater. The complaint 
also seeks injunctive relief and civil penalties. This case was one of a number of 
actions taken by the office this year with respect to underground storage tanks. 
Environmental officials estimate that up to one third of the 75,000 to 100,000 
underground tanks in Massachusetts are leaking. 

Commonwealth v. Microfab 

This case involves an application for administrative expense reimbursement 
in bankruptcy court for the Commonwealth's costs of cleaning up a hazardous 
waste site located in Amesbury. In addition to the application, a motion to 
compel the trustee to perform the cleanup was also filed. An evidentiary hearing 
was held in February 1989 on the motion to compel at which the 
Commonwealth presented expert testimony demonstrating that an imminent 
harm to the public health exists at the site. 

Commonwealth v. Peabody International Corp. 

On April 3, 1983, the Attorney General settled a case involving an abandoned 
hazardous waste storage facility in Stoneham. In a previous agreement reached in 
1985, Peabody International Corp. and two other parties agreed to close this 



92 P.D. 12 

facility and to pay a penalty of $150,000. Since 1985, Peabody International 
Corp. spent over 1 1/2 million dollars closing the facility, including removing 
PCB -contaminated oils. In the April 3, 1989 settlement, the Department of 
Environmental Protection officially certified that the facility has been properly 
closed, and Peabody agreed to pay an additional $30,000 penalty to settle the 
Department's claims that the closure was not timely. 

Commonwealth v. ReSolve. Inc. 

In this case, a consent judgment with 223 companies that sent hazardous 
waste to the ReSolve site has been filed in federal court jointly with the EPA. 
The companies will reimburse DEP for all of its past costs incurred to clean up 
the site -- $475,900. In addition, the companies will implement the cleanup 
remedy for the site, which is expected to cost about $19 million. 

Commonwealth v. Stauffer Chemical, et al. 

In January 1989, the Commonwealth, together with the EPA, filed in federal 
court a settlement with virtually all the parties responsible for the contamination 
at the Industriplex Superfund site in Woburn. Under the terms of the settlement, 
the responsible parties ~ including Monsanto Co., Stauffer Chemical Co. and 
the Mark Phillip Trust - agreed to pay for and perform all the work required to 
clean up the site. This work includes the placement of a cap over the 
contaminated soils at the site, the treatment of the plumes of benzene and 
toluene contamination found in the groundwater and a further groundwater study 
to determine whether an additional groundwater remedy is needed. Cost of the 
work is estimated to be $25,000,000. 

MASSACHUSETTS ENVIRONMENTAL POLICY ACT 

Commonwealth v. Weymouth S.C. Associates 

In this action against a shopping center developer, the Superior Court took 
oversight to ensure belated compliance with the Massachusetts Environmental 
protection Act (MEPA) and with state curb-cut laws. Agency approval was 
granted to the developer for its environmental review and traffic mitigation 
proposals in the late fall. In November 1988, the defendants installed 
approximately $200,000 worth of traffic improvements for which the Attorney 
General had contended they were liable. 

Merchant's Island Trust v. Commonwealth 

This action by a private real estate trust sought to enjoin the implementation 
of an important sewer project in Gloucester. The Attorney General successfully 
defended against Plaintiffs Motion for a Preliminary Injunction in superior 
court, and in July 1988 successfully defended the appeal of that ruling before a 
single justice of the Appeals Court allowing the sewer project to move forward. 

Edward H. Linde, et al. v. Commonwealth (Concord Office Park) 

This case involves a proposed office complex on Route 2 in Concord, near 
Walden Pond. In December 1988, the Secretary of Environmental Affairs 
determined pursuant to MEPA that an environmental impact report had to be 
done in order to study the traffic impacts of the project. 

The developers moved for a preliminary injunction in February claiming that 
there was no MEPA jurisdiction over the project, because the project does not 
need any state permit and is being privately funded and undertaken. After a 
hearing and extensive briefing by both parties, the court ruled in our favor in late 
March 1989. 



RD. 12 93 

Walpole v. Commonwealth and MWRA (Boston Harbor) 

The Supreme Judicial Court upheld a superior court order dismissing this 
challenge to the MWRA's listing of three Walpole sites as possibilities for a 
residual solid waste landfill. This decision allows cleanup of Boston Harbor to 
move ahead. 

SOLID WASTE 

Commonwealth v. Frank Grasso 

On October 26, 1988, the Attorney General filed a consent judgment in 
Suffolk Superior Court against Frank Grasso of Agawam. Grasso owns a parcel 
of land located on Main Street that was formerly used as the town's landfill. 
Despite the fact that the landfill was closed by the town in 1975, Grasso 
continued to dump construction debris at the site, including a floodplain area at 
the site. The Attorney General sued Grasso and won a preliminary injunction 
against him in January 1986. 

The judgment requires Grasso: to remove fill material from the floodplain 
area in order to restore the flood storage capacity lost since 1975; to close and 
cap the remainder of the site; and to remove exposed refuse for off-site disposal. 
Grasso is also permanently enjoined from disposing of any refuse at the site. 

Ringbolt Farms Homeowners Association v. Hull and the Commonwealth 

In this case, plaintiffs are suing the Town of Hull regarding operation of its 
landfill. Plaintiffs also sued the Department of Environmental Protection under 
various federal statutes (including the Resource Conservation and Recovery Act, 
Subtitle D), for alleged failure to enforce the solid waste law and regulations 
against the town. The Attorney General filed a Motion to Dismiss and argued 
that the various federal statutes were never intended to allow private parties to 
direct state agencies on how to use their limited enforcement resources. On 
March 2, 1989, U.S. Magistrate Saris issued a 45 page opinion in our favor. Her 
report and recommendation was adopted by the District Court on March 2, 1989. 

WATER POLLUTION 

Commonwealth v. Fairhaven 

In March 1989, a consent judgment was filed settling this case arising out of 
violations of the Clean Water Act at Fairhaven's sewage treatment plant. 
Fairhaven has paid a civil penalty of $12,000, agreed to expand its treatment 
plant and to resolve its infiltration and inflow problems. 

Commonwealth v. Greater Lawrence Sanitary District 

The Commonwealth sued the Greater Lawrence Sanitary District ("GLSD") 
for violating the Massachusetts Clean Water Act and the Clean Air Act at its 
treatment plant in North Andover. Between September 1987 and December 31, 
1988, there were over 1,300 separate water pollution violations at the plant. In 
addition, the plant was responsible for objectionable odors. Causes for these 
violations include the following: GLSD's receipt of excess septage while a 
fourth aeration basin was under construction and alteration of its method for 
handling septage and sludge without the prior approval of DEP. On numerous 
occasions, GLSD has also allowed raw sewage to be discharged unnecessarily 
into the Merrimack River. 



94 P.D. 12 

Independence Park. Inc. v. Board of Health of Barnstable 

On December 7, 1988, the Supreme Judicial Court decided an important 
environmental case holding that local boards of health have broad authority to 
condition development projects so as to protect the public health. The Attorney 
General filed a brief as amicus curiae arguing in support of the authority of 
boards of health to impose stricter requirements in a given case if necessary to 
protect the groundwater and public health. The SJC agreed that the grandfathering 
provision at issue did not preclude boards of health from imposing subdivision 
plan approval conditions that went beyond existing state and local regulations. In 
so doing, the court overturned a decision issued by the Massachusetts Appeals 
Court in April of 1988. 

Commonwealth v. Lowell 

In December 1988, the Attorney General filed a consent decree in federal court 
settling our litigation against Lowell for violations at its municipal sewage 
plant and for pollution of the Merrimack River. The city agreed to payment of 
$180,000 in civil penalties and also to expedited renovation of its treatment 
facility. Violation of the remedial schedule or future pollution will subject 
Lowell to stipulated penalties. 

Commonwealth v. Swamps cott 

In March 1989, the Commonwealth filed a consent decree settling its case 
against Swampscott for water pollution violations at its sewage treatment 
works. Under the terms of the consent decree, Swampscott agreed to build a new 
secondary treatment plant and sludge disposal facility or to connect with the 
Lynn secondary treatment plant. Swampscott also agreed to pay the 
Commonwealth a civil penalty of $13,500. 

Commonwealth v. Warren 

In a consent decree filed on November 17, 1988 the town of Warren agreed to 
pay a civil penalty of $20,000 for violating the Massachusetts Clean Water Act 
by polluting the Quaboag River. The Town also agreed to build a new secondary 
treatment plant, to properly staff, maintain and operate the existing plant and to 
implement a pretreatment program to prevent local industries from discharging 
wastewater into the new plant that would interfere with its operation. 

WETLANDS PROTECTION 

Commonwealth v. Cumberland Farms 

In July 1988, the Attorney General filed suit against the well-known 
convenience store chain, alleging illegal alteration of state protected wetlands. 
The superior court first granted the Attorney General's request for a temporary 
restraining order, then a preliminary injunction barring the defendant from 
undertaking or permitting any further filling or clear cutting on its Westborough 
bakery site. 

Commonwealth v. Hillside Associates 

This case was filed in 1981, alleging violations of the Wetlands Protection 
Act. The Attorney General alleged that the property owner had filled or allowed 
filling of restricted wetlands on its property in Waltham. In May 1989, the 
superior court approved the entry of a final judgment whereby the defendant will 
remove a number of piles of solid waste, regrade and replant, and will pay 
$139,500 to the Trustees of Reservations to be used for the purchase of 
otherwise unprotected wetlands. 



P.D. 12 95 

Commonwealth v. Pyramid Companies 

In July 1989, after months of negotiation, the Attorney General filed a 
complaint and consent judgment in this enforcement action against a national 
mall developer. The complaint alleged numerous violations of wetlands 
protection laws and further violations of laws requiring preconstruction approval 
of sewage and water supply systems. In settling the case, the developer paid 
$150,000 in civil penalties and bound itself to delay the opening of its Berkshire 
Mall site until DEP agreed that it had obtained all necessary agency approvals. 

Commonwealth v. Russo. el al. 

On February 6, 1989, the Attorney General filed a complaint seeking to 
enjoin filling of a wetlands near the ocean in Revere. The complaint also asked 
for an order that the defendants restore the wetland and pay civil penalties. On 
February 14, the defendants agreed to the entry of a preliminary injunction that 
prohibits further work in the wetlands and requires the placement of erosion 
controls. 

Commonwealth v. Van Wyck 

On October 21, 1988, the Attorney General brought suit against Peter Van 
Wyck, an Essex developer. The complaint, filed in Suffolk Superior Court, 
alleged repeated violations of the Wetlands Protection Act. The court granted a 
temporary restraining order on October 24, 1988, and a preliminary injunction 
on November 2, 1988. The preliminary injunction prohibits Van Wyck from 
doing any land alteration on a parcel he owns in Essex unless and until he gains 
state approval for a comprehensive mapping of the wetlands there, and then only 
in accordance with any final wetlands permits. 

Wilczewski, et al. v. Commonwealth 

On May 2, 1989, the Supreme Judicial Court upheld the Superior Court's 
dismissal of an action against the Department of Environmental Protection 
because the plaintiffs, citizens of Stoughton did not exhaust their administrative 
remedies available to them under the Wetlands Protection Act. Plaintiffs had 
claimed that DEP did not have jurisdiction to consider an appeal of a local order 
of conditions because the developer had submitted amended plans that differed 
significantly from the plans reviewed and rejected by the Stoughton 
Conservation Commission. The SJC upheld the lower court's order on summary 
judgment and found that the jurisdictional challenge by the plaintiffs did not 
come within the narrow exception to the requirement of exhaustion of 
administrative remedies previously outlined by the court. 

Commonwealth v. Wordell, et al. 

On January 23, 1989, the Attorney General filed a consent judgment in 
Suffolk Superior Court requiring two South Chatham landowners to pay civil 
penalties of $25,000 and to bring their seawall into conformity with state law. 
The Attorney General filed suit against Jon and Nathaniel Wordell on behalf of 
the Department of Environmental Protection in 1985. The complaint alleged that 
in 1981, DEP approved the Wordells' proposal to build a seawall to protect his 
property, but that the Wordells built the seawall in a way that violated the DEP 
approval, and the Wetlands Protection Act. The consent judgment requires the 
Wordells to bring the seawall into compliance by constructing a sloping stone 
revetment in front of it. It also requires the Wordells to secure a license for the 
seawall under the state Waterways Act. 



96 P.D. 12 



NUCLEAR SAFETY UNIT 

The fiscal year that began July 1, 1988 was an extremely busy one for the 
Nuclear Safety Unit. Hearings before the Nuclear Regulatory Commission's 
Licensing Board continued during July and August 1988 on the adequacy of the 
emergency plan submitted by the state of New Hampshire for the New 
Hampshire portions of the Seabrook Emergency Planning Zone (the New 
Hampshire Radiological Response Plan or "NHRERP"). At their conclusion in 
August, proposed findings were filed. At the same time, the unit was preparing 
for the next round of hearings examining the adequacy of the Seabrook owners' 
substitute utility plan, the Seabrook Plan for Massachusetts Communities 
("SPMC") and the performance during the full -participation EPZ-wide emergency 
exercise held at the end of June 1988. In addition, in September 1988 the 
Attorney General challenged the onsite preparedness of the Seabrook staff, a 
regulatory prerequisite for the issuance of a low power license. 

In December 1988, the Licensing Board issued its decision, later reversed, 
approving the adequacy of the NHRERP. The unit appealed that decision within 
the NRC to the Appeal Board, filing an extended brief in March 1989. After an 
expedited discovery period, hearings on the SPMC and the June 1988 exercise 
also began in March 1989 and continued without interruption to the end of June 
1989. Also in May 1989, the unit in a proceeding held before a separate 
licensing board challenged the adequacy of the utility's substitute siren system 
for Massachusetts. 

In May 1989, the Commission finally issued Seabrook a low power license 
and the unit sought to enjoin low power operation in the Court of Appeals for 
the District of Columbia Circuit. Failing to enjoin low power operation, the 
unit monitored that operation in June 1989 and then sought to litigate 
operational issues when poor staff performance forced the NRC to suspend 
further low power operations. 



SPECIAL LITIGATION UNIT 

John Manville - Asbestos Property Damage Claim 

In this Chapter 11 bankruptcy proceeding, the Commonwealth filed a $122 
million dollar claim in 1983 against Manville for the cost of removing, 
repairing and otherwise managing the asbestos-containing products manufactured 
by them which are present in a large number of the Commonwealth's over 5000 
state buildings. 

The Department of the Attorney General not only represents the 
Commonwealth's claim, but also serves as Chair and Chief Negotiator for the 
State Government Creditors Committee, a group of 35 Attorneys General whose 
states filed claims in excess of $5 billion dollars. The Department played a key 
role in negotiations with Manville, other property damage creditors, other 
creditors, and the representative of future health claimants. The department 
negotiated, along with others, the establishment of a property damage settlement 
trust and prepared a draft of the standards to be used by the trust for payment of 
property damage claims. After a trial before a panel of three distinguished jurists, 



P.D. 12 97 

the panelists issued standards very much like those originally proposed by the 
property damage claimants. The standards will govern the payment of all 
property damage claims filed against Manville in the Chapter 11. 

The department continues to participate in the bankruptcy proceeding and 
meets regularly with the Property Damage Settlement Trusts trustees and 
executive director. The Department has assisted in the development of claims 
proceeding procedures and claim forms, monitored the insurance settlements, and 
participated in the appeals of the order confirming the Plan of Reorganization. 
The department worked with the Division of Capital Planning and Operations in 
field testing the claim forms. In May 1989, the department organized and assisted 
in the presentation of training for 36 states on the claims process. Plans were 
made to conduct similar training in Massachusetts for all public entities that 
filed claims in the procedure. It is anticipated that Manville will have in excess 
of $100 million for distribution for claims filed between May 1 and October 31, 
1989. 

UNR Bankruptcy Claim 

On December 30, 1986, the Commonwealth filed a claim in the UNR Inc. 
Chapter 1 1 bankruptcy proceeding in the United States Bankruptcy Court for the 
Northern District of Illinois, Eastern Division. UNR was a former manufacturer 
of asbestos products which were used in building construction. The 
Commonwealth's claim is for expenses actually incurred and expenses expected 
to be incurred in the abatement, including removal, repair and replacement, of all 
asbestos products in the Commonwealth's public buildings. The claim sought 
the portion of $396,000,000, the Commonwealth's total asbestos related claim, 
which is determined to be UNR's actual liability. 

The court bifurcated the trial, and the liability portion was held in October- 
November 1988. The court found the defendant liable as to the Gaebler State 
Hospital, and the damages portion of the trial was held the following spring. The 
Commonwealth awaits the court's determination as to the amount of damages. 



GOVERNMENT BUREAU 

The Government Bureau has three functions (1) defense of lawsuits against 
state officials and agencies concerning the legality of governmental operations; 
(2) initiation of litigation on behalf of state agencies and the Commonwealth; 
and (3) legal review of all newly-enacted municipal by-laws, pursuant to G.L. c. 
40, § 32. 

A report of significant activity during Fiscal Year 1989 follows. 

Litigation. The Government Bureau defends the Commnonwealth and its 
officials and agencies in litigation in state and federal court, and, in certain cases, 
before federal administrative agencies. These proceedings typically involve 
challenges to the validity of governmental decisions, initiatives, regulations, or 
statutes, and raise important issues of administrative and constitutional law in 
diverse subject-matter areas. 

During Fiscal Year 1989 the Bureau opened 568 new cases and closed 830 
cases. The unusually high number of closures resulted, in part, from an effort to 
obtain dismissals of the bureau's inactive cases. 



98 P.D. 12 

In the United States Supreme Court,, the Government Bureau successfully 
represented the Commonwealth in Massachusetts v. Morash which unanimously 
upheld the Massachusetts payment-of-wages against a claim of federal 
preemption. 

Upon the bureau's petition, the court vacated an unfavorable ruling of the 
United States Court of Appeals for the First Circuit in a case involving the 
Commonwealth's right to obtain interest on state taxes for the period after the 
filing of a bankruptcy petition. Massachusetts v. Gray. The Government Bureau 
also filed amicus curiae briefs in two cases. Martin v. Wilks and Webster v. 
Reproductive Health Services. 

In Fiscal Year 1989, the Supreme Judicial Court decided 72 cases in which 
Government Bureau attorneys represented the Commonwealth. Professional 
discipline cases continued to be a significant portion of the SJC caseload, and, 
during the year, the SJC issued several impoirtant decisions upholding 
disciplinary sanctions imposed because of professional misconduct Alsbati v. 
Board of Registration in Medicine (plagiarism and falsely authenticating 
scientific data); Wang v. Board of Registration in Medicine, (conduct calling 
medical competence into question); Ishak v. Board of Registration in Medicine, 
(sexual misconduct) (Single Justice session); Cherubino v. Board of 
Chiropractors (overutilization of services). See also Morris v. Board of 
Registration in Medicine (remanding sexual misconduct charge for further 
proceedings); Hellman v. Board of Registration in Medicine (vacating discipline 
for breach of patient confidentiality which the court held to be non-flagrant). 

The SJC affirmed a decision of the Department of Public Utilities that certain 
advertising and charitable contribution expenses can he included in utility rates 
only if ratepayers receive some direct benefit. Boston Gas Co. v. Department of 
Public Utilities. In Newspapers of New England v. Bloom, it upheld 
impoundment of a search warrant prior to trial. It affirmed the authority of the 
Architectural Access Board to require handicapped access if a substantial benefit 
would result. Pyramid Co. of Hadley v. Architectural Access Board. The SJC 
upheld the statute governing election of the Clerk for the SJC for Suffolk 
County in Donahue v. Secretary of the Commonwealth. The court also upheld 
the Attorney General's action on certification of an initiative petition and a ballot 
question. Yankee Atomic Electric Co. v. Secretary of the Commonwealth and 
New England Christian Action Council v. Attorney General. 

The United States Court of Appeals for the First Circuit decided 13 cases in 
which the Commonwealth or one of its agencies was a party. Noteworthy 
decisions included Commonwealth v. Bowen, in which the First Circuit 
invalidated the abortion counselling regulations promulgated by the U.S. 
Department of Health and Human Services. In Lane v. Commonwealth, the 
court affirmed dismissal of copyright violation claims against the 
Commonwealth. The court upheld the portion of the Massachusetts statute 
requiring sealing grand jury returns of no bills and struck the statutory 
provisions sealing proceedings that occur in open court. Globe Newspapers Co. 
v. Pokaski. 

The United States District Court for the District of Massachusetts decided 55 
cases in which the Government Bureau participated. Significant decisions 
included United States v. Commonwealth (upholding the Commonwealth's 
remedial plan for the Worcester state hospital), and two cases rejecting 
complaints of discrimination brought against members of the executive and 



P.D. 12 99 

legislative branches. Among the many matters litigated by the Government 
Bureau in the Commonwealth's trial courts were two cases obtaining settlements 
or judgments totalling $8.3 million in back taxes, cases involving the 
constitutionality of G.L. c. 29, § 9C (governing the withholding of allotments) 
and matters involving prison overcrowding or construction. 

By-laws. Town by-laws, home rule charters, and amendments thereto are 
reviewed and must receive approval of the Attorney General prior to becoming 
effective. The review function is performed by attorneys in the Government 
Bureau. During the fiscal year ending June 30, the By-Laws Division reviewed 
2,192 by-laws and 16 home rule charter actions from 309 towns. There were 95 
disapprovals making an error rate of 4.3 percent for the submittals involved. 

The by-laws received this year consisted of 918 general by-laws and 1,274 
zoning by-laws. General by-laws pertain to town government and the exercise of 
municipal power. The zoning by-laws are a continuing exercise of the police 
power over the use of land. Zoning by-laws generate the most local controversy 
since they affect what the landowner considers as his constitutional right, i.e., to 
own, use and enjoy property. 

This year saw continued attempts to control or regulate growth, including 
imposition of development restrictions, overlay districts to protect groundwater 
sources and sewage or septic tank restrictions. 



EXECUTIVE BUREAU 

The Executive Bureau is charged with the overall administration and policy of 
the Attorney's office. In addition, the bureau handles a number of specialized 
functions, including constituent relations, legislative affairs, and opinions. 



ELECTIONS DIVISION 

The Elections Division provides legal representation to the Secretary of State 
and State Ballot Law Commission regarding election related issues, and 
undertakes civil enforcement of Massachusetts campaign finance laws. 

In a letter dated August 4, 1988, the Secretary of State transmitted 14 
proposed ballot questions and requested the Attorney General's opinion whether 
these questions were ones of public policy within the meaning of G.L.c. 53 
Section 19. The Attorney General ruled that 13 of these questions were properly 
considered public policy questions, and drafted each of these into simple, 
unequivocal and adequate form. The text of the Attorney's opinion is contained 
supra. 

Suit was filed challenging the Attorney General's determination that one 
proposed question was unsuitable for the ballot. The Supreme Judicial Court 
upheld the Attorney General's determination, ruling that the Attorney General's 
evaluation of proposed questions is not subject to judicial review absent a 
showing of bad faith. New England Christian Action Council, Inc. v. Secretary 
of the Commonwealth and Attorney of the Commonwealth, 403 Mass. 671 
(1989). 



100 P.D. 12 

In another case, 11 voters challenged G.L. c. 54 section 155, which 
establishes that only Suffolk County voters may vote in the election of the clerk 
for the Supreme Judicial Court for Suffolk County. Appearing on behalf of the 
Secretary of the Commonwealth, the Elections Division successfully defended 
the statutory scheme. Donahue v. Secretary of the Commonwealth, 403 Mass. 
363 (1988). 

Connolly v. Secretary of the Commonwealth, 404 Mass. 556 (1989) 
involved the counting of absentee and paper ballots in the Democratic primary 
election for the office of Governor's Councillor of the Third District of the 
Commonwealth. The Supreme Judicial Court upheld the result of a ballot 
recount, thereby making Robert B. Kennedy the democratic nominee. 

The Elections Division is responsible for enforcing compliance with the 
state's campaign finance law, including taking administrative or legal action 
against political action committees and candidates who fail to meet 
Massachusetts' campaign finance report filing requirements. Within the 1989 
fiscal year, the Elections Division handled 276 referrals from the Office of 
Campaign and Political Finance of failures to file campaign finance reports. 



WESTERN MASSACHUSETTS 

The Western Massachusetts Division of the Department of the Attorney 
General is responsible for legal matters in the four western counties of Berkshire, 
Franklin, Hampden and Hampshire. The Western Division, located in 
Springfield, is staffed by attorneys, investigators and support personnel. 

The division litigates a wide range of cases, including tort, contract, eminent 
domain, worker's compensation, environmental, consumer protection, civil 
rights, administrative appeals, and victims of violent crimes. The division also 
prosecutes fraud cases for the Division of Employment Security. The caseload of 
the division is usually in excess of 1,000 cases. 

Similarly, the investigators are responsible for a number of cases. In addition 
to investigating consumer fraud, investigators work closely with attorneys in 
developing their cases by interviewing witnesses, reviewing documents and 
accumulating and compiling potential evidence. 

The division also handles consumer complaints and attempts to resolve them 
short of court action. 



OPINIONS 

The Attorney General is authorized by M.G.L. c.12, §3, 6, and 9 to render 
legal advice and opinions to constitutional officers, agencies and departments, 
district attorneys, and branches of the Legislature. Opinions are given primarily 
to the heads of state agencies and departments. 

The questions considered in legal opinions must have an immediate, concrete 
relation to the official duties of the state agency or officers requesting the 
opinion. In other words, hypothetical or abstract questions, or questions which 
ask generally about the meaning of a particular statute, lacking a factual 
underpinning, are not answered. 



P.D. 12 101 

Opinions are not offered on questions raising legal issues which are the 
subject of litigation or that concern collective bargaining. Questions relating to 
the wisdom of legislation or administrative or executive policies are not 
adddressed. Generally, federal statutes are not considered and the constitutionality 
of state or federal legislation is not determined. 

Opinion requests from state agencies which report to a cabinet or executive 
office must first be sent to the appropriate executive secretary for his/her 
consideration. If the secretary believes the question raised is one which requires 
resolution by the Attorney General, the secretary then requests the opinion. 

There are two reasons for this rule. The first concerns efficiency. Opinions of 
the Attorney General, because of their precedential effect, are thoroughly 
researched and prepared. If a question can be satisfactorily resolved more quickly 
within the agency or executive office-by agency legal counsel or otherwise- 
everyone is better served. The second reason relates to the internal workings of 
the requesting agency and its executive office. It would be inappropriate for this 
department to be placed in the midst of an administrative or legal dispute 
between these two entities. These rules help to ensure that the agency and its 
executive office speak with one voice insofar as Opinions of the Attorney 
General are concerned. 

If the agency or executive office requesting an opinion has a legal counsel, 
counsel should prepare a written memorandum explaining the agency's position 
on the legal question presented and the basis for it. The memorandum should 
accompany the request. When an agency request raises questions of direct concern 
to other agencies, governmental entities, or private individuals or organizations, 
the Opinion Division solicits the views of such interested parties before 
rendering an opinion. 

The issuance of informal opinions is strongly discouraged. Informal Opinions 
of the Attorney General are often relied upon as if they were formal Opinions. In 
a number of instances, this reliance has been seriously misplaced. As a result, 
the issuance of informal opinions is strictly limited to situations of absolute 
necessity. It is made explicit that the informal opinions cannot be relied upon as 
if they were formal Opinions. 

Between July 1, 1988 aid June 30, 1989, six formal Opinions of the 
Attorney General were issued with an additional 75 requests considered, 
evaluated, and declined. 

The formal Opinions follow. 



102 P.D. 12 

September 2, 1988 
Number 1 

The Honorable Michael Joseph Connolly 
Secretary of the Commonwealth 
State House 
Boston, Massachusetts 02133 

Dear Secretary Connolly: 

In a letter dated August 1, 1988, you transmitted a series of proposed ballot 
questions * to me and requested my opinion whether these questions are ones of 
public policy within the meaning of G.L. c. 53, § 19. and, if, so, what simple, 
unequivocal and adequate form is best suited for presentation of these questions 
on the November, 1988 ballot. I have analyzed each proposed question in 
accordance with the Massachusetts Constitution and the General Laws, judicial 
decisions, and prior Opinions of the Attorney General. For the reasons set forth 
below, this analysis leads me to conclude that thirteen of the fourteen proposed 
questions are properly public policy questions appropriate to appear in the form 
provided herein, on the November ballot. 

The right of Massachusetts voters to place questions of public policy on the 
ballot is based upon article 19 of the Massachusetts Constitution. Article 19 
provides in part that "[t]he people have a right . . . [to] . . . give instructions to 
their representatives ..." Statutory requirements for the process of submitting 
to voters questions of public policy are set forth in G.L.c. 53, § 19 through § 
22. 

Traditionally, a broad view has been taken of what constitutes an appropriate 
question of public policy. See 1982/83 Op. Att'y Gen. No. 3, Rep. A.G., Pub. 

Doc. No. 12 at 84 (1982). This established view is fully appropriate to the 
public policy question process. At the same time, however, it must not interfere 
with the Attorney General's statutory duty to review each question for its 
conformity to the standards established for public policy questions. ^ The 
discharge of this statutory duty has in the past required the rejection of proposed 
questions. See, e^, 1984/85 Op. Att'y Gen. No. 2, Rep. A.G., Pub. Doc. No. 
12 at 76 (1984) (rejecting question directing Department of Environmental 
Quality Engineering to rescind certain licenses for storage and transportation of 
hazardous waste); 1978/79 Op. Att'y Gen. No. 8, Rep. A.G., Pub. Doc. No. 12 
at 114 (1978) (rejecting question asking Legislature to reject changes proposed 
by a local charter commission). 

Prior Opinions of the Attorney General and case law have not precisely 
defined what constitutes "public policy" and the nature of the concept does not 

1 A total of fourteen questions were submitted, several of which are proposed 
to appear on the ballot in more than one district. 

2 In addition to assuring that only proper questions of public policy are 
placed on the ballot, this careful review is essential to protect places on the 
ballot for proper questions. This arises because of the statutory limit allowing 
three questions on the ballot in each district. G.L c. 53, § 21 



P.D. 12 103 

readily lend itself to an exact definition. See 1966/67 Op. Att'y Gen. No. 33. 
Rep. A.G., Pub. Doc. No. 12 at 76 (1966) (public policy includes matters of 
"community common sense and common conscience applied to matters of public 
morals, public health, public safety, public welfare, and the like"). Generally, it 
can be said that matters of public policy involve determnations of what 
governmental action is desirable or necessary for the public interest, as opposed 
to individual concerns, and as contrasted to statements of fact. Cf. Borden. Inc. " 
Commissioner of Public Health, 388 Mass. 707,721 (1983) (distinguishing 
between facts, regulations and public policy), appeal dismissed, 464 U.S. 923 
(1983), cert denied, 464 U.S. 936 (1983). 3 

It has been determined repeatedly that a proposed public policy question must 
be of interest to every citizen in the Commonwealth and not be simply a matter 
of local concern. See, e.g., 1984/85 Op. Att'y Gen. No. 2, Rep. A.G., Pub. 
Doc. No. 12 at 75 (1984). Even when a question appears to affect a small 
geographic area, if the problem it addresses is one of concern to the 
Commonwealth in general, the question may be considered one of public policy. 
See, 1982/83 Op. Att'y Gen. No. 3, Rep. A.G., Pub. Doc. No. 12 at 84 
(1982). It has rarely been concluded that a matter is solely of local concern. See, 
e.g., 1974/75 Op. Att'y Gen. No. 11, Rep. A.G.. Pub. Doc. No. 12 at 54 
(1974) (approving a question concerning the construction of a rapid transit 
station in a particular town). But see 1978/79 Op. Att'y Gen. No. 8, Rep. 
A.G., Pub. Doc. No. 12 at 114 (1978) (disapproving on grounds of purely local 
concern a question asking the Legislature to reject changes proposed by a local 
charter commission). 

In addition, the proposed question must be fit for legislative action/* 1978/79 
Op. Att'y Gen. No. 8, Rep. A.G., Pub. Doc. No. 12 at 114 (1978). The 
instruction contained in each public policy question must be consistent with the 
powers of the Legislature and subject to legislative action or attention. 1984/85 
Op. Att'y Gen. Ho. 2, Rep. A.G., Pub. Doc. No. 12 at 76 (1984). Unless the 
petition concerns a matter appropriately subject to legislative attention or action, 
it is not properly a public policy question under Massachusetts law. Id. 

The requirement that the proposed question concern matters fit for legislative 
action derives directly from the constitutional provision authorizing public 
policy questions. Article 19, supra. See also, Thompson v. Secretary of the 
Commonwealth, 265 Mass. 16, 19 (1928). Indeed, a review of prior public 
policy questions placed on the ballot reveals that such questions consistently 



3 See generally, Griffin v. United States, 500 F.2d 1059. 1066 n.16 (3rd 
Cir. 1974) (decision to approve polio vaccine did not involve public policy 
determination but a scientific judgment); McClanahan v. Breedino, 172 Ind. 457. 
88 N.E. 695. 697 (1909) (public policy is a question of law, not of fact). 

*See generally, Mass. Const, pt. 2. c.l. and Mass. Const, pt. 2, c.l. § 1. art. 
4 (Legislature may "make, ordain, and establish all manner of wholesome and 
reasonable orders, laws, statutes, and ordinances, directions and instructions" as 
long as the matter is not repugnant or contrary to the Massachusetts 
Constitution). 



104 KD. 12 

have proposed specific legislation or resolutions contemplating a particular 
governmental action. See e.g., 1974/75 Op. Att'y Gen. No. 9, Rep. A.G.. Pub. 
Doc. No. 12 at 53 (1974) (question asking whether representative should vote for 
a resolution calling on the United States Congress to grant amnesty to Vietnam- 
era draft resisters); 1974/75 Op. Att'y Gen. No. 16, Rep. A.G.. Pub. Doc. No. 
12 at 58 (question asking whether representative should vote for bill which would 
prohibit smoking in public places); 1976/77 Op. Att'y Gen. No. 7, Rep. A.G., 
Pub. Doc. No. 12 at 90 (1976) (question asking whether representative should 
vote to support and ratify an amendment to the United States Constitution 
permitting states to prohibit abortions and affirm the right to life of the unborn). 

As stated above, an application of these principles leads me to conclude that 
thirteen of the submitted questions are public policy questions properly included 
on the November ballot. Several of these questions have required analysis 
whether their subject matter is one of local concern or important to all citizens 
of the Commonwealth. For example, two proposed questions explicitly affect 
Cape Cod: one proposes a regional planning commission and the other proposes 
a temporary moratorium on development. Although these questions present 
matters with a specific geographic scope, they are important to all citizens of the 
Commonwealth. Both implicate the broad subject of controlling growth and 
establishing a comprehensive environmental policy for the Massachusetts 
coastline. See 1974/75 Op. Att'y Gen. No. 14, Rep. A.G., Pub. Doc. No. 12 at 
57 (1974) (approval of question requesting resolution asking Congress to vote in 
favor of federal land use controls for Nantucket Sound Islands). Cape Cod's 
unique value to all persons was recognized in 1961 by the establishment of the 
Cape Cod National Seashore. 16 U.S.C. § 459b. In addition, many residents of 
other Massachusetts communities utilize the natural resources of Cape Cod by 
vacationing or visiting Cape Cod communities. See 1968/69 Op. Att'y Gen. 
No. 5. Rep. A.G.. Pub. Doc. No. 12 at 38 (1968) (in determination of public 
policy. Attorney General may draw inferences from question and rely upon facts 
of common knowledge, actual or presumed if reasonable). When the broader view 
is adopted, as has been done in many past Opinions, it is clear that issues 
affecting the environment of Cape Cod are not simply of local concern, but 
rather are of interest to every citizen in the Commonwealth. See 1974/75 
Op.Gen. No. 11. Rep. A.G.. Pub. Doc. No. 12 at 55 (1974). 5 

I have determined that one of the proposed questions transmitted by you is 
not properly an "instruction []. . . [by the people] ... to their representative[]." 
Massachusetts Constitution, Part 1, art. 19. This proposed question would 
inquire of the voter: "In biological terms, when does an individual human life 
begin?" (emphasis in original); and would instruct the voter to answer by 
selecting one of three choices: "conception," "viability" or birth," or by writing 
in a "different biological term." Both the form and the content of this question 

^Certain other submitted questions similarly address matters that affect 
specific geographic areas. See e.g., questions on Milford War Memorial, 
commuter rail lines on the South Shore, the toll-free operation of a portion of 
the Massachusetts Turnpike, and the establishment of a new city in Boston. 
None of these questions are of "purely local concern" as that term has been 
repeatedly construed by past Attorneys General. See e.g. 1974/75 Op. Atty. Gen. 
No. 1 1, Rep. A.G., Pub. Doc. No. 12 at 55 (1974). 



P.D. 12 105 

are unprecedented and fatally deficient." Accordingly, it is my opinion that it 
would be inappropriate for the submitted question to appear on the November 
ballot as a public policy question. 

On its face, the beginning of life question does not provide a representative 
with any instruction or direction regarding governmental action. Indeed, it does 
not indicate whether any governmental action at all is contemplated by the 
proposed question. In addition, the proposed question fails to notify voters what 
public policy, if any, would be changed or established by a representative 
seeking to follow their instruction. Providing instruction to a representative is 
fundamental to properly posing a "question of public policy" under 
Massachusetts law. See discussion, supra. The proposed question fails to do this. 
This purely abstract, descriptive question conflicts with the long legacy of past 
public policy questions and the unambiguous intent of article 19 and chapter 53. 
which is to provide instructions to the Legislature. 7 

These failings also destroy the ability of voters to provide instruction through 
this question. Voters facing this question are not told that they are instructing 
their legislator, and cannot be certain what public policy, if any, will be affected 
by their vote. Moreover, voters are instructed to respond through a set of choices 
that does not allow for affirmatively voting that no instruction on this issue 
should be given. The question's failure to allow voters to reject entirely any 
instruction to their legislator on the subject of the question appears to be 



6 The text of the proposed question is susceptible to two readings: one 
requesting the voter to determine a scientific fact, the other requesting that the 
voter answer the question utilizing scientific terms. It is not necessary to the 
analysis here to determine which of these meanings is consistent with the intent 
of the question or is more likely to be understood by the voter. Under either 
reading the proposed question is not appropriate for placement as a public policy 
question on the ballot for the reasons discussed infra. 

7 While the Attorney General and Secretary of State have the responsibility to 
draft an approved question in "simple, unequivocal and adequate form" suited to 
the ballot, this drafting authority necessarily has limits. G.L. c.53, § 19. 
Implicit in the requirement to draft \heform of a question is the obligation that 
the Attorney General and Secretary of State retain the substance of the question, 
thereby preserving the intent of the proponents and voters who signed the 
particular petition. To materially alter the substance of the question when 
drafting it would be contrary to section 19 and would interfere with proponents' 
right to put an instruction before the Legislature. In addition, revisions that 
materially change a proposed question would raise serious doubt whether the 
signature requirements of G.L. c.53, § 19 have been satisfied, since the question 
is no longer substantially the same as what was originally presented by petition 
to the voters. 

In the case of the proposed beginning of life question, problems with the 
question cannot be cured by mere draftsmanship. The legal deficiencies cannot be 
remedied without materially altering the substance of the proposed question, 
thereby subverting the intent of the proponents and violating G.L. c.53. §19. 



1U6 r.v. vl 

unprecedented in the history of public policy questions. 8 

It is my opinion, after careful review, that the proposed beginning of life 
question does not provide instruction to a legislator on a matter of public policy 
within the meaning of article 19 and G.L. c. 53. Accordingly, this question is 
not approved as appropriate for submission to the voters on the November 

ballot. 9 

For those thirteen questions I have determined to be ones of public policy, it 
is my responsibility, in conjunction with you, to prepare the questions in a 
"simple, unequivocal and adequate form" for the ballot. G.L. c. 53, §19. The 
form that I conclude is proper for each of these questions appears at the 
conclusion of this Opinion. 

It should be remembered that this Opinion does not encompass the additional 
requirements which must be satisfied before a public policy question may appear 
on the ballot. Those requirements, as contained in G.L. c. 53, §§19, 20, and 21, 
involve determinations of fact. As have my predecessors. I note that you, as 
Secretary of the Commonwealth, are in a better position than I to make the 
necessary factual determinations. 1984/85 Op. Att'y Gen. No. 2, Rep. A.G., 
Pub. Doc. No. 12 at 77-78 (1984) (Secretary of State maintains past election 
ballots from each of the relevant districts). Consequently, and in accordance with 
prior practice, I have made no independent inquiry to determine whether the 
proposed questions are statutorily defective for any reason other than a failure to 
qualify as a public policy question in proper form for presentation on the ballot. 



8 A review of past questions reveals no Massachusetts ballot question that 
offered multiple choices with no opportunity for a voter to reject the entire 
proposition, except for a question regarding the Vietnam War that was placed on 
the ballot in 1970 by a Special Act of the General Court. Chapter 588 of the 
Acts of 1970. This 1970 question is inapposite here because it was not placed on 
the ballot as a public policy question under article 19 and G.L. c. 53. In 
analyzing public policy questions, it bears noting that the applicable statutes 
assume that a question may be "negatived". G.L. c. 53, § 22, and militate 
against multiple choices by requiring that a response receive a majority of all 
votes cast to be deemed to constitute an instruction. G.L. c. 53, § 22. 

9 It bears noting that the deficiencies of this question are not necessarily fatal 
to posing a public policy question that involves a theory of when life begins. 
The consequences of such a theory could conceivably affect public policy on 
many important issues, including laws governing abortion, tort liability, 
homicide, and prenatal care programs. This Opinion does not bar the placement 
on the ballot of future questions on any of these issues, provided that the 
question is properly posed to provide instruction to a legislator on a matter of 
public policy within the meaning of article 19 and G.L. c. 53, § 19. 



P.D. 12 107 

With the aforementioned considerations in mind, it is my opinion that the 
questions I have determined to be properly ones of public policy should appear 
on the ballot in the following form: 

Representative Districts: 5th Essex and 
three other Representative Districts 1 ° 

Shall the Representative from this district be instructed to vote in favor of a 
resolution calling upon the United States Congress to adopt rules prohibiting 
members of Congress from accepting speaking fees from business and special 
interest groups? 

Representative District: 7th Worcester 

Shall the Representative from this district be instructed to vote in favor of 
legislation that would transfer the operation of that portion of the Massachusetts 
Turnpike, between the New York State line and its junction with Route 495 in 
Westborough, from the Massachusetts Turnpike Authority to the Department of 
Public Works, and also make that portion toll-free? 

Representative District: 10th Worcester 

Shall the Representative from this district be instructed to vote in favor of 
legislation authorizing a war memorial to be located in Draper Park in the Town 
of Milford, Massachusetts? 

Representative District: 2nd Suffolk 

Shall the Representative from this district be instructed to vote in favor of 
legislation that would establish a state holiday in honor of the late President 
John F. Kennedy to be observed on the day of the state election held in 
November in every even-numbered year? 

Representative Districts: 1st Barnstable and 
four other Representative Districts 1 1 

Shall the Representative from this district be instructed to vote in favor of 
legislation establishing the Cape Cod Commission, a regional land use planning 
agency and regulatory body with authority to: prepare a regional policy plan; 
regulate developments of regional impact; designate districts of critical planning 
concern, including fragile environmental areas; regulate, in conjunction with the 
towns, developments within such districts; and foster the preparation, adoption, 
and implementation of local comprehensive plans consistent with the regional 
policy plan? 



10 6th and 9th Essex; 22nd Middlesex District. 

1 * 2nd, 3rd, and 4th Barnstable; Barnstable, Dukes, and Nantucket District 



1U8 r.u. 1Z 

Representative Districts: 1st Barnstable and 
four other Representative Districts 12 

Shall the Representative from this district be instructed to vote in favor of 
legislation that would impose a temporary moratorium on development on Cape 
Cod, suspending the approval, endorsement, or recording of land division plans 
creating additional lots, and suspending the issuance of building permits for 
construction or reconstruction, with exemptions for construction or 
improvement of owner-occupied single-family dwellings on single approved lots 
and other exemptions to be determined by municipal regulatory authorities for 
public projects and affordable housing; this moratorium to continue for a period 
of one year or until municipal, county, or state legislation and regulations have 
been adopted for controlling development and preserving Cape Cod's 
environment? 

Representative District: 5th Suffolk and 
five other Representative Districts 1 ■* 

Shall the Representative from this district be instructed to vote in favor of 
legislation forming the following wards and precincts of the City of Boston into 
a new city of the Commonwealth: 



Ward 


4 


Precincts 8,9 


Ward 13 


Precincts 1,2,3,5 


Ward 


8 


All Precincts 


Ward 14 


All Precincts 


Ward 


9 


All Precincts 


Ward 15 


Precinctsl,2,3,5,7 


Ward 


10 


Precincts 5,6,7 


Ward 17 


Precincts 1,2,3,4,5,6,7,10 


Ward 


11 


All Precincts 


Ward 18 


Precincts 1,2,3,4, 5,6,21 


Ward 


12 


All Precincts 


Ward 19 


Precinct 7 



Representative District: 11th Middlesex 

Shall the Representative from this distiict be instructed to vote in favor of a 
resolution calling upon the United States government to support: the principles 
of self-determination for the Israeli and Palestinian people; the creation of a 
Palestinian state in the West Bank and Gaza Strip next to Israel; and security for 
Israel and the Palestinian state? 

Representative Districts: 27th 

Middlesex District and two 

other Representative Districts 14 

Shall the Representative from this district be instructed to vote in favor of a 
resolution calling upon Congress and the President of the United States to 
achieve peace in the Middle East by: demanding that Israel end its violations of 
Palestinian human rights and its occupation of the West Bank and Gaza; 



12 2nd, 3rd, and 4th Barnstable; Barnstable, Dukes, and Nantucket District. 

13 6th, 7th, 9th, 12th and 13th Suffolk District. 

14 28th and 29th Middlesex District. 



P.D. 12 109 

stopping all expenditure of U.S. taxpayers' money for Israel's occupation of the 
West Bank and Gaza; and favoring the establishment of an independent 
Palestinian state in the West Bank and Gaza with peace for all states in the 
region including Israel? 

Representative District: 1st Norfolk 

Shall the Representative from this district be instructed to vote in favor of 
legislation to restore commuter railroad service from Boston to the South Shore 
on the so-called "Old Colony" railroad right of way running adjacent to existing 
Massachusetts Bay Transportation Authority (MBTA) Red Line tracks? 

Representative District: 5th Norfolk 

Shall the Representative from this district be instructed to vote in favor of 
legislation to reactivate the Middleborough, Plymouth and Greenbush Old 
Colony Commuter Railroad Lines which run through Braintree? 

Representative District: 5th Norfolk 

Shall the Representative from this district be instructed to vote in favor of 
authorizing the construction of a temporary or permanent transfer station in 
Braintree for commuter railroad passengers to board the Massachusetts Bay 
Transportation Authority (MBTA) trains from the proposed Old Colony 
commuter railroad? 

Senatorial District: Franklin and Hampshire 
nine Representative Districts 15 

Shall the Senator (or Representative) from this district be instructed to vote 
in favor of a resolution calling upon the United States Congress and the 
President of the United States to adopt a policy of: preserving outer space as an 
arena for peaceful, cooperative exploration and scientific discovery among all 
nations; halting the militarization of outer space and the development, testing 
and deployment of the Strategic Defense Initiative (so-called "S.D.I." or "Star 
Wars"); and reinvesting taxpayers' money to support such needs as housing, 
education, health care and environmental protection? 

Very truly yours, 



JAMES M. SHANNON 
ATTORNEY GENERAL 



15 3rd and 4th Berkshire; 1st and 2nd Franklin; 1st, 2nd and 3rd Hampshire; 5th 
Hampden; and 8th Plymouth Representative District§ 



110 r.u. iz 

October 24, 1988 
Number 2 

Honorable Frank T. Keefe, Secretary 

Executive Office for Administration 

and Finance 

State House 

Boston, Massachusetts 02133 

John E. Kearney, Chairman 
Teachers' Retirement Board 
One Ashburton Place 
Boston, Massachusetts 02108 

Dear Secretary Keefe and Chairman Kearney: 

You have requested my opinion as to whether G.L. c. 30, § 25B, which 
regulates out of state travel at public expense by officers and employees of the 
Commonwealth, applies to members and employees of the Massachusetts 
Teachers' Retirement Board (the "Board"). For the reasons set forth below, I 
conclude that G.L. c. 30, § 25B does apply to the Board. 

The statute at issue provides in pertinent part that: 

No officer or employee of the Commonwealth may travel 
out of state at public expense except in accordance with rules 
and regulations established by the commissioner of 
administration for the expenditure of funds for travel out of 
state by employees of the Commonwealth, and except with 
the prior written approval of his appointing authority, and, 
in the case of a department, office, commission, board, or 
institution within any of the executive offices established by 
chapters six A and seven upon the prior written approval of 
the secretary having charge of such executive office. G.L. 
c. 30, § 25B. (Emphasis added.) 

"A statute is to be interpreted according to the plain and ordinary meaning of its 
words and their ordinary and approved usage." Commonwealth v. Colon-Cruz, 
393 Mass. 150, 167 (1984). The plain language of the first clause of § 25B 
would seem to require that if members and employees of the Board are 
Commonwealth employees, members of the Board and staff may travel out of 
state at public expense only in accordance with rules and regulations established 
by the commissioner of administration. 1 Furthermore, the Executive Office for 
Administration and Finance ("EOAF") is an executive office established by 
chapter seven of the Massachusetts General Laws. See G.L. c. 7, § 2. The 

1 I take no position on the advisability or necessity of out of state travel by 
members of the Massachusetts Teachers Retirement Board or any other 
department, office, board, commission, or institution. 



P.D. 12 111 

Teachers' Retirement Board appears to be a board "within" EOAF. 2 See G.L. c. 
7, § 4G. 

That section declares certain agencies, including the Teachers' Retirement 
Board, "to be within the executive office for administration and finance." 
(Emphasis added.) Accordingly, if Board members and staff are Commonwealth 
officers or employees, the last clause of G.L. c. 30, § 25B would seem to 
impose the additional statutory requirement that members and employees of the 
Board receive the prior written approval of the secretary having charge of EOAF 
before travelling out of state at public expense. 

Various statutes, judicial decisions, and Opinions of the Attorney General, 
however, which affirm the autonomy of the Board in many respects raise some 
question as to whether members and employees of the Board are plainly within 
the purview of G.L. c. 30, § 25B. Nevertheless, based upon my analysis of these 
authorities, it is my opinion that members and employees of the Board are 
officers or employees of the Commonwealth for the purposes of G.L. c. 30, § 
25B and that the Board is not exempted from the operation of that statute. 

I begin with the proposition that the Board, established by G.L. c. 15, § 16 
and located within EOAF and the Office of Human Resource Administration, is a 
state agency. Section 47 of Chapter 199 of the Acts of 1987, which places the 
Teachers' Retirement Board within the latter office, refers to the Board as an 
"agenc[y]." Moreover, the Board's status as a state agency is confirmed by the 
multitude of contacts between the Board and the Commonwealth. The Board is 
the appointing authority for its staff for the purposes of the civil service law. 
See 1978/79 Op. Att'y Gen. No. 29, Rep. A.G., Pub. Doc. No. 12 at 161 
(1979). The Board is represented in litigation by the Attorney General, e.g., 
School Committee of Brockton v. Teachers' Retirement Board, 393 Mass. 256 
(1984). The Board has from time to time, as it is doing in the present case, 
requested the formal legal opinion of the Attorney General pursuant to the 
Attorney General's authority under G.L. c. 12, § 3 to render legal advice and 
opinions to state officers, agencies, and departments on matters relating to their 
official duties. See, e.g., 1980/81 Op. Att'y Gen. No. 7, Rep. A.G., Pub. Doc. 
No. 12 at 113 (1980); 1979/1980 Op. Att'y Gen. No. 5, Rep. A.G., Pub. Doc. 
No. 12 at 104 (1979). One such opinion assumes, without discussion, that the 
Board is a state agency. See 1978/79 Op. Att'y Gen. No. 29, Rep. A.G., Pub. 
Doc. No. 12 at 161 (1979). 

It can similarly be deduced that members and employees of the Board are 
officers or employees of the Commonwealth. The Board's enabling statute refers 
to membership on the Board as an "office." See G.L. c. 15, § 16. Massachusetts 
cases which have attempted to define the nature of public office or employment 
have generally focused upon the nature of the duties involved. See e.g., 
Arlington v. Board of Conciliation & Arbitration, 370 Mass. 769, 777 (1976) 
["a person may be deemed a public official where he is fulfilling duties which are 
public in nature, involving in their performance the exercise of some portion of 
the sovereign power, whether great or small.'" (citation omitted)]. See also 
Attorney General v. Tillinghast, 203 Mass. 539 (1909). Although members of 

2 The Board is also an agency within the Office of Human Resource 
Administration, which is an office established within EOAF. See St. 1987, c. 
199, §47, made effective July 1, 1987 by St. 1987, c. 199, §156. 



HZ r.u. vl 

the Board serve without compensation,^ this factor is not determinative of their 
status or lack thereof as officers or employees of the Commonwealth. See, e.g., 
Kaplan v. Sullivan, 290 Mass. 67, 69 (1935) ['The nature and importance of the 
duties imposed on the [Boston Finance Commission] denote that all its members 
are public officers. The circumstance that the chairman receives a fixed annual 
salary does not place him on any different footing from his [uncompensated] 
associates in this respect, although in other conditions it might be entitled to 
weight." (citations omitted)]. See also G.L. c. 268A, § 1 [defining "state 
employee" for the purposes of the Massachusetts Conflict of Interest Law as "a 
person performing services for or holding an office, position, employment or 
membership in a state agency, whether by election, appointment, contract of hire 
or engagement, whether serving with or without compensation . . ." (emphasis 
added)]; G.L. c. 258, § 1 [defining "public employee" for the purposes of the 
Massachusetts Torts Claim Act as "elected or appointed, officers or employees of 
any public employer, whether serving full or part-time, temporary or permanent, 
compensated or uncompensated ..." (emphasis added)]. 

The Board utilizes the commonwealth's payroll procedure and insurance 
programs for its staff and "with the exception of the Board's executive secretary, 
the staff of the Board is within the civil service system." 1978/79 Op. Att'y 

3 See G.L. c. 15, §17. Members are, however, reimbursed "for any expense 
or loss of salary or wages which they may incur through service on the board." 
Id. 

An argument in favor of the non -reviewability of the Board's out of state 
travel expenses can be derived from this provision, which reads in pertinent part: 
The members of the teachers' retirement board shall serve 
without compensation, but they shall be reimbursed from the 
expense fund of the teachers' retirement system for any expense 
or loss of salary or wages which they may incur through 
service on the board. All claims for reimbursement on this 
account shall be subject to the approval of the governor and 
council. G.L. c. 15, §17. (Emphasis added.) 
However, on its face, reimbursement for expenses pursuant to §17 is subject 
to the review and approval of the governor. (For repeal of certain statutory duties 
of the executive council, see G.L. c. 6 App., §§1-1 et seg..] The provision in 
§17 for reimbursement of expenses is not logically inconsistent with the 
requirement that the Board obtain authorization from the secretary of EO AF prior 
to expending funds for out of state travel. 

Furthermore, even if one assumes that G.L. c. 15, §17 vested exclusive 
authority in the governor and council to review expenses of the Board, that 
general provision is superseded by the more specific statute relating to expenses 
for out of state travel subsequently enacted by the legislature. "If a general statute 
and a specific statute cannot be reconciled, the general statute must yield to the 
specific statute. This is particularly true where, as here, the specific statute was 
enacted after the general statute." Pereira v. New England LNG Co. . Inc., 364 
Mass. 109, 118 (1973). When enacting G.L. c. 30, §25B, the legislature is 
presumed to have known of the existence of G.L. c. 15, §17 and to have intended 
that the Board be subject to the specific provisions relating to out of state travel. 



P.D. 12 113 

Gen. No. 29, Rep. A.G., Pub. Doc. No. 12 at 161 (1979). 4 In addition, G.L. c. 

29, § 27, which, among other things, limits the incurring of expenses by any 
"department, office, commission and institution" of the Commonwealth to 
amounts appropriated therefor by the general court, applies to the Board. See 
1978/79 Op. Atfy Gen. No. 29, Rep. A.G., Pub. Doc. No. 12 at 161 (1979). 
The administration of the Board is funded by an appropriation of the 
Commonwealth. See St. 1987, c. 199, § 2, Item 1108-4010. Cf. Gallagher v. 
Metropolitan District Commission, 371 Mass. 691, 698 (1977) [referring to 
Mitchell v. Metropolitan District Commission, 4 Mass. App. Ct. 484 (1976) in 
which the Appeals Court concluded that MDC employees are state employees 
because, among other things, "[t]he MDC is subject to the laws regulating the 
administration of Commonwealth agencies. G.L. c. 29, § 1. G.L. c. 30, § 1. It 
makes its expenditures not with funds of its own but with Commonwealth funds 
made available to it from the State treasury by periodic appropriations..." 
(footnote and citations omitted)]. 

In light of the foregoing involvement with state government and the Board's 
status as a state agency, I conclude that members and employees of the Board are 
state officers or employees for the purposes of G.L. c. 30, § 25B. Therefore, 
unless the Board is exempted by other statutes or case law, its members and staff 
must comply with the provisions of the out of state travel statute. 

In determining whether the Board is exempted from the operation of G.L. c. 

30, § 25B despite the status of its members and staff as officers or employees of 
the Commonwealth, I first consider that portion of G.L. c. 7, § 4G which states: 

Nothing in this section shall be construed as conferring any 
powers or imposing any duties upon the commissioner [of 
administration] with respect to the foregoing agencies except as 
expressly provided by law G.L.c. 7, § 4G. (Emphasis added.) 
The question is whether this proviso insulates the Board from the fiscal 
control of EOAF with respect to expenditures for out of state travel.^ I conclude 



4 Compare Opinion Letter from John J. McGlynn, Commissioner, Division of 
Public Employee Retirement Administration, to Joseph Stacey, Chairman, City 
of Worcester Retirement System (October 22, 1987) (opining that the Worcester 
Retirement Board is independent of the personnel policies and civil service 
requirements of the City of Worcester). 

5 It might be argued that the state agency which does have fiscal and 
administrative authority over the Board is the Division of Public Employee 
Retirement Administration ("PERA"). See G.L. c. 7, §50 ("[t]he commissioner 
of public employee retirement . . . shall have general responsibility for the 
efficient administration of the public employee retirement systems, under chapter 
thirty-two"). See also Everett Retirement Board v. Board of Assessors of Everett . 
19 Mass.App.Ct. 305, 309 (1985) (observing that although municipal 
retirement boards are not subject to municipal or judicial control, PERA 
possesses the statutory authority "to discipline an errant board, perhaps through 
the regulatory power conferred by G.L. c. 32, §21(4)"). Even assuming that 
PERA's oversight authority extends to fiscal matters, vesting in PERA general 
responsibility for the efficient administration of the public employee retirement 



114 P.D. 12 

that it does not. In order to qualify under the "expressly provided by law" 
exception to G.L. c. 7, § 4G, a statute conferring a power or imposing a duty 
upon the commissioner with respect to the Teachers' Retirement Board need not 
mention the Board by name. 6 Cf. Mitchum v. Foster, 407 U.S. 225, 237 (1972) 
("in order to qualify under the 'expressly authorized' exception of the [federal] 
anti-injunction statute [28 U.S.C. § 22831, a federal law need not contain an 
express reference to that statute"). Rather, express authority can also be conferred 
pursuant to G.L. c. 7, § 4G by a statute which applies to a class of entities of 
which the Board is a member. In this case, G.L. c. 30, § 25B applies in 
pertinent part to a "board . . . within any of the executive offices established by 
chapters six A or seven . . ."As noted previously, the Teachers' Retirement Board 
is plainly a board within an executive office created by chapter seven. See G.L. 

c. 7, §§2, 4G. 7 

I do not question that the Board has a large degree of autonomy over its 
administration of the teachers' retirement system. See 1978/79 Op. Att'y Gen. 
No. 29, Rep. A.G., Pub. Doc. No. 12 at 161 (1979). However, this does not by 
itself exempt the Board or its staff from the requirements of G.L. c. 30, § 25B. 
A plain reading of G.L. c. 30, § 25B, in conjunction with the other statutes 
discussed herein, manifests the legislature's intent that members and employees 



systems does not preclude the vesting of oversight responsibility with respect to 
particular activities of the Board in other state agencies. See e. g. . G.L. c. 15, 
§17 (reimbursement for expenses of members of the Board is subject to the 
approval of the governor); G.L. c. 7, §4G (commissioner of administration has 
those powers and duties with respect to the Board which are expressly provided 
by law). PERA itself apparently does not take the position that the Board is 
exempted from the operation of G.L. c. 30, §25B. 

See Letter from Joseph I. Martin, Deputy Commissioner, Division of Public 
Employee Retirement Administration, to Frank T. Keefe, Secretary, Executive 
Office for Administration and Finance (May 6, 1988). 

I also note in passing that PERA is subject to the commissioner's direction, 
control and supervision as an agency under EOAF and that EOAF is responsible 
for the exercise of all powers and the performance of all duties assigned by law to 
PERA. See G.L. c. 7, §§4, 4A. 

" Indeed, it appears that the only explicit references to the Teachers' 
Retirement Board in the Massachusetts General Laws are contained in the Board's 
enabling statute, G.L. c. 15, §§16-18, and the Public Pension Law, G.L. c. 32. 

7 Significantly, G.L. c. 30, §25B by its terms applies "in the case of a 
department, office, commission, board, or institution within any of the executive 
offices established by chapters six A and seven ...." Thus, in contrast to G.L. c. 
7, §4 (discussed infra) . §25B does not distinguish between agencies which are 
within an executive office and subject to the supervision and control of that 
executive office on the one hand and agencies which are within an executive 
office but not subject to the supervision or control of that executive office on the 
other. 



P.D. 12 115 

of the Teachers' Retirement Board be subject to the terms of § 25B. 

For example, the statute which governs the relationship between EOAF and 

its component agencies reads in pertinent part: 

The governor shall appoint a commissioner of administration . . 
Except in the cases of the agencies named in section four G, he 
shall be responsible for the exercise of all powers and the 
performance of all duties assigned by law to the executive office for 
administration and finance to any division, bureau or other 
administrative unit or agency under said office. He shall be the 
executive and administrative head of said office, and every division, 
bureau, section and other administrative unit and agency within said 
office, other than the agencies named in section four G shall be 
under his direction, control and supervision. G.L. c. 7, § 4. 
(Emphasis added.) 

Construed together in the most plausible manner, G.L. c. 7, §§4 and 4G 
provide that the commissioner is responsible for all powers and duties assigned 
by law to any agency within EOAF, except for those powers and duties assigned 
by law to the agencies listed in § 4G. With respect to § 4G agencies, the 
commissioner may exercise only those powers and duties which are specifically 
assigned to the commissioner and by law made applicable to the agencies listed 
in § 4G. See, e.g., G.L. c. 30, § 25B. 

This interpretation is reinforced by St. 1987, c. 199, § 47, which declares 
various agencies "to be within and under the supervision and control of the office 
of human resource administration ..." while other agencies, including the 
Teachers' Retirement Board, the Civil Service Commission, and the 
Contributory Retirement Appeals Board, are declared "to be within the office of 
human resource administration but not under its supervision or control..." 
Notwithstanding this language, the enactment proceeds to bestow certain powers 
and duties upon the undersecretary for human resource administration with 
respect to "the departments, commissions, offices, boards, divisions, institutions 
and other agencies within the office of human resource administration . . ." [ id. 
(emphasis added)], including, for example, "the prior review of any contract, 
agreement or other financial arrangement having a value of five thousand dollars 
or more entered into by any of said departments,. . . boards . . . and other 
agencies . . ." St. 1987, c. 199, § 47(iii) (emphasis added). In contrast, some 
other specified powers and duties of the undersecretary expressly apply to "any 
such department, . . . board . . .or agency other than the civil service 
commission" or to any such department, . . . board ... or other agency other 
than the contributory retirement appeals board . . . ." St. 1987, c. 199, § 47(iv) 
(emphasis added). As noted above, both the Civil Service Commission and the 
Contributory Retirement Appeals Board, like the Teachers' Retirement Board, are 
within the Office of Human Resource Administration but not subject to its 
supervision and control. It is thus apparent that the legislature intended general 
references to "departments ... boards ... and other agencies within the office of 
human resource administration" (emphasis added) in St. 1987, c. 199, § 47 to 
include the agencies not subject to the undersecretary's supervision and control. 
Where another result was intended, the legislature has made this distinction clear. 
For example, the last paragraph of § 47 provides, among other things, that the 



116 P.D. 12 

undersecretary "may request and shall receive the assistance of any personnel 
within any agency within and subject to the supervision and control of the office 
of human resource administration." 

Also consistent with this reading of §.4 and § 4G is the Opinion of the 
Attorney General which affirmed the Board's authority to appoint its own staff. 
See 1978/79 Op. Atfy Gen. No. 29, Rep. A.G., Pub. Doc. No. 12 at 161 
(1979). As that opinion noted: 

It would be anomalous for the Legislature to have ordained that 
the Board's executive secretary ... be appointed by precisely the 
same agency [EOAF] from whose direction and control the Board is 
exempted. Such a suggestion contradicts the clear legislative intent 
to preserve the Board's automony and cannot be accepted. Id. at 
162-63. (Footnote omitted.) 

The autonomy of the Board with respect to personnel decisions has no 
bearing, however, upon the question presented here. The legislature could 
legitimately decide that the day to day operation of the Board, including the 
authority to hire and fire its own staff, was not within the purview of EOAF. To 
expressly confer upon EOAF the power to regulate out of state travel by the 
Board is not inconsistent with the legislative intent to have a Board which 
independently administers the teachers' retirement system. 

I conclude that the power to regulate out of state travel at public expense is a 
power conferred upon the commissioner with respect to the Board that is 
"expressly provided by law" within the meaning of G.L. c. 7, § 4G. 

Arguably, the applicability of G.L. c. 30, § 25B to out of state travel by the 
Board is drawn into question by the Massachusetts Appeals Court's decision in 
Everett Retirement Board v. Board of Assessors of Everett, 19 Mass.App.Ct. 
305 (1985). Upon inspection, however, the Everett case reveals key distinctions 
between municipal and state retirement systems. The statutory provision at issue 
in Everett 8 stated that amounts certified by a municipal retirement board to a 
mayor or board of selectmen, as the case may be, " 'shall be appropriated and 
paid ... to the treasurer-custodian' of the retirement system."^ Id., at 306-307. 
(Emphasis added.) The court in Everett concluded that because "a retirement board 



8 G.L. c. 32, §22(7)(c)(iii). 

9 Relevant for the purposes of this opinion, of course, is the analogous 
provision applicable to the Board, G.L. c. 32, §22(7)(b), which states that: 

... the board shall certify forthwith to the commissioner of 
education the amounts necessary to be appropriated and paid for such 
fiscal year by the commonwealth for the three aforesaid funds 
[including the expense fund] of the teachers' retirement system, and ... 
such amounts shall be included in the appropriations for such fiscal 
year for the department of education . . . G.L. c. 32, §22(7)(b). 
(Emphasis added.) 



RD. 12 117 

established under G.L. c. 32 is independent of the city or town whose employees 
it serves" (id., at 308), the City of Everett did not have the authority under either 
G.L. c. 59, § 20A (a "Proposition 2 1/2" measure) or G.L. c. 44, §§ 31, 31A 
and 32 (provisions of the "Municipal Finance Law") to refuse to appropriate 
funds for expenses duly certified by the Everett Retirement Board. 

The court's reasoning in Everett, however, does not support a finding that the 
Board is independent of the Commonwealth in the same way that local 
retirement boards are independent of their host municipalities.^ As the court 
noted in that case: "[t]hat the retirement system is independent of the host 
municipality is underscored by a provision in G.L. c. 32, § 28(3)(b), that for 
towns with a population of under 10,000, the employees are part of the county 
retirement system. Id. at 308-309. This provision is unique to municipal 
retirement systems and does not affect the nature of the relationship between the 
Teachers' Retirement Board and the Commonwealth. "While the statutes creating 
the four retirement systems have a general resemblance, they differ from one 
another in various respects." Davis v. School Committee of Somerville, 307 
Mass. 354, 357 (1940). The court's holding in Everett makes clear that 
municipal retirement boards are not municipal agencies and that employees of 
municipal retirement boards are not municipal employees. As previously 
discussed, however, the Teachers' Retirement Board is a state agency and 
employees of the Board are state employees.* * In addition to the differences 
between the retirement systems mandated by G.L. c. 32, the Board is subject to a 
variety of controls not applicable to municipal retirement systems. See e.g., St. 
1987, c. 199, § 47(xi) (requiring the undersecretary of human resource 
administration to "ensur[e] the dissemination by the board of the teachers' 
retirement system and the board of the state employees' retirement system to the 
members and beneficiaries of members thereof of information concerning the 
actuarial status of [those two systems] and of the members' or beneficiaries' 
rights and obligations under the provisions of [G.L. c. 32]"); St. 1987, c. 199, § 
47(xii) (requiring the undersecretary to "ensur[e] the maintenance by the board of 
the teachers' retirement system and the board of the state employees' retirement 



10 in so ruling, I acknowledge the statement of the Supreme Judicial Court 
in O'Connor v. County of Bristol . 329 Mass. 741, 746 (1953) that "[e]ach of 
the several retirement systems, state, county, city or town, is in general an 
independent unit, having its own separate assets and liabilities and is under the 
jurisdiction of its own separate board." Nothing in this opinion suggests, 
however, that the Teachers' Retirement Board, as a state agency within EOAF, 
should not be subject to the provisions of G.L. c. 30, §25B with regard to out of 
state travel. At the time of the O'Connor decision, of course, EOAF did not exist 
and the Board was contained within the Department of Education. See St. 1945, 
c. 658, §4. 

1 * It may be that the Board's status as a state agency results in differences 
between the teachers' retirement system and the municipal retirement systems 
which are anomalous from the point of view of sound public pension law and 
administration. However, the resolution of any such anomalies is, of course, the 
prerogative of the legislature rather than the executive branch. 



118 P.D. 12 

system of programs of pre-retirement counselling services for the members 

thereof). 

For the foregoing reasons, I conclude that G.L. c. 30, § 25B applies to the 

Massachusetts Teachers' Retirement Board. 

Very truly yours, 



JAMES M. SHANNON 
ATTORNEY GENERAL 



P.D. 12 119 

March 2, 1989 
Number 3 

Honorable Arthur M. Mason 

Chief Administrative Justice of the Trial Court 

New Court House 

Pemberton Square 

Boston, MA 02108 

Dear Justice Mason: 

You have requested my opinion as to whether an amendment to G.L.c. 32, S. 
65C as set forth in St. 1987, c. 697, S. 100 applies to the pension or retirement 
allowanceof a Trial Court Justice who retired before the effective date of the 
amendment and is presently sitting as a Recall Justice under G.L.c 211BS. 14. * 

For the reasons set forth below, it is my opinion that the so-called "pop-up" 
provision provided by the amended statute, G.L.c. 32, S. 65C, does not apply to 
judges who retired before the effective date of the amendment, January 12, 1988, 
regardless of whether they have subsequently been recalled. 

Chapter 697 of the Acts of 1987 (the "Act") changed a number of the 
provisions of the retirement laws applicable to public employees. Those 
changes which are relevant to the subject matter of this opinion concern pension 
options available to retiring state employees. 

Under the prior statutory scheme, judges could elect to receive a reduced 
pension with the provision that their surviving spouse would receive two-thirds 
of that reduced pension. If the spouse predeceased the judge, however, the judge 
would continue to receive the reduced pension allowance. St. 1978, c. 393, S. 
15. Section 100 of the Act altered this scheme by providing a "pop-up" 
provision. Basically, this provision provides that if a judge elects a reduced 
pension allowance with a survivor benefit for his or her spouse, but the spouse 
predeceases the judge, the judge will be entitled to a full pension allowance. 
Two other sections of the Act, S. 42 and S. 99 provide similar "pop-up" options 
for public employees and veterans, respectively. 

Although S. 135 of the Act provided that S. 42 and S. 99 were to apply as of 
the effective date of the Act, there is no specific provision in the Act regarding 
an effective date for S. 100. Three interpretations of S. 65C as amended by S. 
100 of the Act have been proposed. The first suggestion is that the pop-up 
provision is not limited to judges retiring after the statute's effective date. Under 
this view, any retired judge qualifies to elect the pop-up provision at any time. 
Alternatively, it has been suggested that judges serving under the recall 
provisions who step down subsequent to the Act's effective date are entitled tp 
the benefits of the "pop-up" provision because this act constitutes a 
"reapplication" for retirement. Finally, the Division of Public Employee 
Retirement Administration has taken the position that S. 100 of the Act should 
be applied only to judges who retire on or after the effective date of the Act, 



1 Chapter 21 1 A, S. 16 is the comparable recall provision for appellate justice. 
With regard to the question presented, this opinion applies to justices recalled 
under either provision. 



120 P.D. 12 

regardless of whether they have been recalled. For the reasons which follow, I 
conclude that any judge, whether on recall or not, who retired before the effective 
date of the Act is precluded from electing the "pop-up" provision. 

I begin with the controlling proposition that in interpreting the statute we 
must determine intent primarily from the "natural import in common and 
approved usage" of the words, considered in reference to conditions at the time of 
enactment and the objective to be fulfilled; and should give meaning to every 
word, assuming none to be superfluous. International Organization of Masters, 
etc. v. Woods Hole, M.V. & N. SS. Authority, 392 Mass 811, 813, (1984). 
The relevant statutory language reads: 

A chief justice, [or] justice hereinafter in this section called judged, 

who is retired or resigns and who is entitled to a pension or retirement 

allowance may elect to receive, in lieu thereof, a pension or reitrement 

allowance for life at a lesser annual rate with provision that upon his death, 

leaving as a survivor a surviving spouse, two-thirds of such pension, 

shall be paid to such surviving spouse; provided, however, that if such surviving 
spouse dies on or after the date such lesser retirement allowance becomes 
effective and before the death of such member, such member thereafter shall be 

paid a full retirement allowance Such election shall be in writing on a 

prescribed form and filed with the appropriate retiring authority at the time of 
retirement or resignation or within thirty days thereafter. G.L.c S. 65C 
(emphasis added). 

While a cursory reading of this provision might suggest that judges who have 
already retired, whether on recall or not, can elect the new pop-up provision, the 
first sentence read in conjunction with the entire first paragraph compels the 
opposite result. 

As an initial matter, use of the words "who is entitled to a pension" would 
appear to contemplate those judges who are not yet receiving their pension. Had 
the Legislature intended to allow previously retired judges to take advantage of 
the pop-up provision, language such as "and who is receiving a pension" or "and 
receives a pension" would have been incorporated to indicate the legislative 
intent to include those judges currently retired. The fourth sentence requires 
judges to elect an option "at the time of retirement or resignation or within 
thirty days thereafter". Judges who have retired prior to the enactment of the 
amendments cannot possibly meet this requirement of the statute. Having 
already retired they cannot submit their written election under this amended 
statory provision "at the time of retirement or resignation or within thirty days 
thereafter" since that time period has already passed .^ 

My construction of the "pop-up" clause as available only to those judges who 



2 The general statutory scheme of Chapter 32 mirrors the immutability of 
electing an option before retiring under S. 65C. G.L.c. 32, S. 12(1) allows a 
retiree to change his or her elected option in three ways; anytime before the State 
Board of Retirement receives the retiree's written application for reitrement; 
within the fifteen day period after receipt of the application; or before the date the 
retiree's alowance becomes effective. Under this scheme, the selection of an 
option is a condition precedent to retiring and cannot be changed after the 
retirement date. 



P.D. 12 121 

retire subsuquent to the date of its enactment is also buttressed by the canons of 
statutory construction. Ordinarily, statutes should be construed as having a 
prospective operation only, unless the statute plainly indicates an intent to 
operate retroactively. Nantucket Conservation Foundation, Inc. v. Russell 
Management, Inc., 380 Mass 212, 214 (1980); Spooner v. General Accident & 
Fire Assurance Corp., Ltd., 379 Mass 377, 379 (1979); see also Forbes V. 
United States, All F. Supp. 840, 843 (D. Mass. 1979). Similarly, it is a 
wellestablished principle of statutory construction that statutes affecting 
substantive rights, such as the pension rights of justices, are presumed to be 
prospective unless a contrary intent is clearly expressed. See Goldstein Oil CO., 
v. C.K. Smith Co., 20 Mass. App. Ct. 243 (1985) (statute repealing interstate 
commerce exemption under c. 93A was substantive and should not be applied 
retroactively). 

As noted above, § 135 of the Act provided an effective date for various 
provisions including §§42 and 99, but not § 100. In the absence of any specific 
indication that the Legislature intended that § 100 be applied retroactively, these 
traditional principles of statutory construction dictate that the provision should 
be interpreted prospectively.^ 

That the Legislature intended prospective application of the amendment is 
substantiated by the fact that the statute mandates that each option be self- 
financing. Section 65C requires that on the date of retirement or resignation the 
value of benefits under each option (65 A, 65B, 65C and 65D) be actuarially the 
same. ^ Thus, each option must be self-contained and self-financing. Under the 
prior scheme, a retiree who chose option 65C received a lesser pension than the 
full pension allowance in order to provide for his or her beneficiary. Of course, 
this lesser pension amount did not take into account the potential cost of the 
"pop-up" provision. Under the amended scheme, all other variables remaining 



3 Previous interpretations by both the Attorney General and the Legislature 
support the argument that § 65C should be applied prospectively. St. 1968, c. 
699, which replaced the pre-existing version of G.L. c. 32, § 65C, was passed to 
broaden the class of widows covered by the section to include the widows of 

special justices. Language containe in that statute, "A chief justice or 

special justice, who is retired or who resigns and who is entitled to a pension for 
life", remains in force today. The 1968 act is similar to the 1987 amendment to 
§ 65C in that there was no effective date mentioned in the 1968 act. In the 
absence of any effective date for the statute, the Attorney General interpreted its 
provisions as prospective only and placed the effective date of the act ninety days 
following the approval date. 1970/71 Op. Att'y Gen. No. 16, Rep. A.G., Pub. 
Doc No. 12 at 58 (1970). Id. 

4 The pertinent language of the statute reads: "The yearly amount of such lesser 
retirement allowance shall be determined so that the value, on the date such 
allowance becomes effective, of the prospective payments to such member and to 
such surviving spouse shall be the actuarial equivalent of the value on such date 
of the full retirement allowance; provided, however, that the yearly amount of 
such lesser retirement allowance shall be decreased to reflect the costs to the 
system of providing full retirement allowances in accordance with the first 
sentance of this paragraph." G.L. c. 32, § 65C. 



122 P.D. 12 

constant, a retiree would receive a lesser amount in choosing option 65C, 
because the option 65C pension is actuarially determined taking into account 
the possible higher cost of the "pop-up". Thus, the cost of the "pop-up" is 
borne by the employees who select the option and in this sense is self-contained 
and self-financing.* 

In order to maintain the self-financing aspect of the statute, a retroactive 
application of the "pop-up" provision to previously retired judges would require a 
redetermination of their pension allowances. Such a redetermination would be 
virtually impossible and could lead to cost overruns and violate the self-financing 
provision, as the entire system is predicated on the immutability of choosing 
one or another of the particular options. 

Calculation of a retiree's pension involves a complicated balancing of many 
factors including the salary of the retiree, length of service and age of the judge 
and his or her spouse, if applicable. All of these variables, as well as factors 
such as interest accumulation and mortality rates, are time-sensitive. It is 
simply impossible to redetermine a pension in light of a new system where, 
under a pre-existing determination, part of the accrued pension has been paid out. 
What appears to be a minor readjustment in the pension calculation could 
actually affect the stability of the system as a whole and violate the statutorily 
mandated self-financing provision." 

Moreover, the pension system currently supports a large portion of unfunded 
liability that the Legislature has mandated must be reduced. See St. 1987, C. 
697. Any additional cost incurred due to the application of the pop-up provision 
to already retired judges would be inconsistent with that goal. 
For all of these reasons I conclude that § 100 of the Act shouldbe construed 



5 A hypothetical example is illustrative: A male judge retired before the 1987 
amendment might receive a full pension allowance (option 65A) of 100. This 
same retiree would receive 80 under option 65C and his spouse upon his death 
would receive two-thirds of 80. If his spouse predeceased him then he would 
still only receive a pension allowance of 80. His pension would not "pop-up" to 
the full 100. Under the new "pop-up" scheme the same retiree would receive 100 
as his full pension allowance but would now receive 77 under option 65C, 
taking into account the additional possible "pop-up" cost. If he predeceased his 
spouse, she would receive two-thirds of 77. If his spouse predeceases him, his 
pension would "pop-up" and he would receive the full 100. The extra cost of 
providing this contingency is reflected in a lower pension allowance under the 
"pop-up" provision. 

6 Other sections of chapter 32 make clear both the very limited opportunities 
for re-entering the state retirement system, opportunities which are spelled out in 
detail through clear and specific legislation, and the means for doing so. For 
example, under G.L. c. 32, § 5(l)(g) a retiree elected to public office or 
appointed to office for a term of years may become an "active member" of the 
retirement system if the retiree pays back the "total amount of any such 
allowance received from the date of his retirement to the date of his again 
becoming a member in service". The other statutory avenue for return to active 
service is found under G.L. c 32, § 8(2), which provides for members retired on 
disability to be reinstated once physically able. 



P.D. 12 123 

prospectively. An act with an emergency preamble is effective as of the 
signature date, in this case, January 12, 1988. See Opinion of the Justices to 
the Governor, 368 Mass. 889 (1975). Therefore, any justices reitred on or after 
the effective date would be able to take advantage of the pop-up provision. Any 
justices retired prior to that date would be precluded from electing the pop-up 
provision. 

The only question remaining concerns the availability of the pop-up clause to 
retired justices presently serving on recall under either G.L. c. 21 IB, § 14 or 
21 1 A, § 16. It has been suggested that because a retired justice must notify the 
Massachusetts Board of Retirement after completing recall, this notification 
serves as a "re-application for retirement" .allowing the retired recall justice to 
elect the pop-up provision. This interpretation, however, both mischaracterizes 
the status of a recall justice who completes his or her service and would lead to 
an unreasonable construction where a more sensible one already exists. See 
Manning v. Boston Redevelopment Authority, 400 Mass. 444, 453 (1987); see 
also Green v. Board of Appeal of Norwood, 358 Mass. 253, 258 (1970). 

As is noted above, when a judge retires, his or her pension is calculated taking 
into account a number of variable factors relating to the retirement date including 
age, options available, and highest average salary for a three year period. When a 
judge goes on recall status under G.L. c. 21 1 A, § 16, or c. 21 IB, § 14, the judge 
waives his or her right to pension benefits in accordance with G.L. c. 32, § 91 
and § 90B. The waiver, however, only acts as a temporary suspension of that 
judge's pension. ' 

The view that a judge's pension status remains static once determined is 
supported by decisions of the Supreme Judicial Court. Klapacs v. Contributory 
Reitrement Appeal Board, 340 Mass. 732 (1960), see Nippe v. Commissioner 
of Revenue, 380 Mass. 431, 433 (1980) ("Once the irrevocable election was 
made, he had no control over the pension in any way. He could not change the 
beneficiary, surrender or cancel the pension, assign it, or borrow funds against 
it."); see also 1961/62 Op. Att'y Gen., Rep. A.G., Pub. Doc No. 12 at 163 
(1962). There is nothing about recall status which modifies the immutability of 
a judge's pension once determined. He or she cannot elect another option under 
which to retire, change beneficiaries or pick a new retirement date after 
completing the recall term. Nor are pension benefits readjusted because of a 
higher age or other determining factor such as salary.^ 



7 Chapter 32, § 90B allows waiver "for such period as he may specify " 

The justice may "include a provision that shall remain in effect until further 
notice." Since the terms of recall cannot exceed ninety days, c. 21 1 A, § 16 and 
c. 21 IB, § 14, a recall justice could inform the Retirement Board of his or her 
initiation and completion date at the same time. In any case, the Retirement 
Board requires official notification from the Chief Administrative Justice of the 
Trial Court's office before reinstating a justice's retirement allowance. 

8 In addition, the language of the relevant provisions regarding recall justices 
echo this interpretation. G.L. c. 211 A, § 16 reads "A retired chief justice or 



124 F.D. 12 

As a final matter, G.L.c 211 A, § 16 requires that recall justices receive all 
other benefits which a regular incumbent receives. It has been suggested that the 
new pop-up option is one such benefits. This view is not persuasive. 
ALthough recall justices are entitled to comparable salary, vacation time, sick 
leave, and health insurance, they are not in the identical position of a regular 
incumbent vis-a-vis retirement benefits. Most significantly, recall justices, 
unlike regular incumbents have no pension deductions taken from their salary 
and are not considered active members in the retirement system, as noted above. 

For all of the above reasons, I conclude that recall judges and non-recall judges 
who retired prior to January 12, 1988 cannot avail themselves of the newly 
amended pop-up provision contained in St. 1987, c. 697, § 100. 

Very truly yours, 

JAMES M. SHANNON 
ATTORNEY GENERAL 



associate justice " (Emphasis added.) Similarly G.L.c. 21 IB, § 14 reads "A 

retired justice of the trial court " waiver of retirement allowance by public 

employees as passed by the Legislature was entitled "An Act authorizing certain 
retired persons and those claiming under them to waive their rights to any 
portion of their retirement allowance." (Emphasis added.) St. 1955, c. 590, § 1. 
The plain meaning of this language indicates that only those justices already 
retired are affected by this section. 



P.D. 12 125 

April 4, 1989 
Number 4 

Paula Gold, Secretary 

Executive Office of Consumer Affairs 

and Business Regulation 

One Ashburton Place 

Boston, Massachusetts 02108 

Roger M. Singer 
Commissioner of Insurance 
Commonwealth of Massachusetts 
280 Friend Street 
Boston, Massachusetts 021 14 

Dear Secretary Gold and Commissioner Singer: 

You have requested my opinion pursuant to G.L. c. 12, § 9 whether a used- 
home warranty product offered by Home Security of America, Inc. ("HSA") 
constitutes a contract for insurance which may be regulated by the 
Commissioner of Insurance.* 
Your question is: 

Does the contract between Home Security of America, Inc. 
(HSA) and either the seller or the buyer of a home, under which 
HSA warrants specified items in the house against "operational 
failure," constitute a contract of insurance within the meaning of 
G.L. c.175, § 2? 
HSA takes the position that the Plan is nothing more than a warranty and 



1 The Home Security Plan ("the Plan") offered by HSA is a contract which 
provides coverage on residential real estate for repair or replacement of a list of 
enumerated items when such items suffer an "operational failure" due to 
"mechanical breakdown." The Plan is purchased by the seller of the residential 
real estate, protecting the seller in renewable six month increments until the 
home is sold, and then covering the purchaser for thirteen months after the sale. 
When "operational failure" of a covered item occurs, HSA provides 
indemnification for the cost of repair or replacement, within the specific per item 
dollar limits and the overall $10,000 limit of the Plan. Covered items range 
from the roof to internal wiring, and from appliances such as dishwasher, 
disposal and furnace, to plumbing. However, if specific builders', sellers' or 
manufacturers' warranties on covered items still apply, or if the items are covered 
by insurance policies, then the Plan only provides coverage after these warranties 
or insurance policies have been exhausted. "Operational failures" caused by lack 
of maintenance, inspections, cleaning, adjustment or lubrication services are 
excluded from coverage. Some items over a certain age are excluded from 
coverage as well. 



126 P.D. 12 



should not be regulated as insurance.^ You have advised me that the Insurance 
division in the past has characterized similar plans as insurance. For the reasons 
stated below, it is my opinion that the used-home warranty contract offered by 
HSA falls within the statutory definition of insurance, set forth at G.L. c. 175, § 
2. 

I. Current Definition of Insurance 

Insurance is defined in the Commonwealth of Massachusetts as follows: 
A contract of insurance is an agreement by which one party for a 
consideration promises to pay money or its equivalent, or to do an 
act valuable to the insured, upon the destruction, loss or injury of 
something in which the other party has an interest. G.L. c.175, § 
2. 
This definition is wide in scope and potentially encompasses a broad range of 

products. A 1959 Opinion of the Attorney General recites five elements which 

define contracts of insurance: 

1. The insured possesses an interest of some kind susceptible of pecuniary 
estimation, known as an insurable interest; 

2. The insured is subject to a risk of loss through the destruction or 
impairment of that interest by the happening of designated perils; 

3 . The insurer assumes the risk of loss; 



2 In a memorandum submitted by HSA in conjunction with your request, HSA 
suggests that a determination that the Plan is insurance would conflict with the 
position of twenty-three states where it currently markets the Plan. While these 
statistics are interesting, regulation of insurance is left to the individual states, 
and we are not compelled to adopt this view. According to HSA's memorandum 
and copies of correspondence supplied by HSA from various state insurance 
departments, four states (Arkansas, Connecticut, Kentucky, and Vermont) 
regulate used-home warranties as insurance and Oregon directed HSA to apply for 
a certificate to do business as a "home protection insurer" pursuant to ORS 
731.164. Also, Maine and Texas regulate used-home warranties as insurance 
when they are sold by insurance companies. Finally, in New York, used home 
warranties are subject to regulation as insurance whenever the company selling 
them is "in the business of insurance," and is offering warranties as a vocation, 
not merely incidental to another business or activity. Electronic Realty 
Associates v. Lennon, 94 Misc.2d 249, 404 N.Y.S.2d 283, 287—288, off 'd as 
mod., 67 A.D.2d 997, 413 N.Y.S.2d 728, /v. to appeal den., 47 N.Y.2d 705, 
417 N.Y.S.2d 1026 (1979). N.Y. Ins. Law § 1101 (b)(1)(B) (McKinney) 
[recodification of former N.Y. Ins. Law § 41(3)(b)]. 



P.D. 12 127 

4. Such assumption is part of a general scheme to distribute actual losses 
among a large group of persons bearing similar risks; 

5. As consideration for the insurer's promise, the insured makes a ratable 
contribution to a general insurance fund, called a premium. 3 

1959 Op. Att'y Gen., Rep. A.G., Pub. Doc. No. 12, at 72 (1959). 

The Opinion further states that if a contract contains only the first three 
elements, it is simply a risk-shifting device, and therefore not a contract of 
insurance. If it contains the last two elements as well, the contract then 
becomes a risk-distributing device, and would therefore be a contract of 
insurance.^ Although the presence of "risk" is an essential element^, it is not 

3 This formulation thereby defines a "premium" as a "ratable contribution to a 
general insurance fund." The term "ratable" is defined as "proportional." Black's 
Law Dictionary (5th ed.). The premium (or "proportional" contribution) 
measures each insured's distributive share of the risk of all similarly situated 
insureds plus a proportional share of the expenses of the insurance company, and 
is paid into a general insurance fund maintained by the insurer. The losses of the 
policyholders and the expenses of the business are paid from this general 
insurance fund. W. Vance, Handbook on the Law of Insurance § 1 at 4 — 6 (3d ed. 
1951) . In Massachusetts, it is not necessary that the contribution be itemized 
separately from the overall charge of a retail contract. Attorney General v. C. E. 
Osgood Co., 249 Mass. 473, 476 (1924). 

4 This Opinion concluded that an independent corporation which marketed used- 
car warranties to auto dealers, which were in turn given to used-car purchasers by 
the dealers, was selling insurance in the Commonwealth of Massachusetts. The 
contracts promised indemnification for pre-approved repairs. The General Court 
apparently agreed with this analysis and conclusion as it has explicitly added 
"mechanical breakdown" or "mechanical failure" of automobiles as a peril which 
can be insured. St. 1980, c.386, § 1, amending G.L. c.175, §54C. 

* A concern has been raised that the 1959 Opinion is in conflict with prior 
Opinions. While the 1959 Opinion does not cite prior Opinions of the Attorney 
General discussing the definition of insurance, it is in fact fully consistent with 
them. The 1959 Opinion, as did prior Opinions, identifies contracts as insurance 
where: the covered peril and consequential loss are not "inevitable," but pose 
only a "risk" of occurrence within the life of the contract; a "premium" is 
charged in some fashion for the coverage; the insurer does not provide services 
itself but rather pays indemnification when the insured suffers a loss; the 
"insurer" is not an actual seller or manufacturer of goods who is warranting them 
to be of such quality as to survive wear and tear for a specified period of time; 
and the "insurer" is not really just providing ongoing (therefore inevitable) 
inspection and maintenance for equipment. 

By way of illustration of these principles, a year-long contract for automobile 



128 P.D. 12 



alone sufficient to establish a contract as insurance.^ Other types of contracts 



repairs necessitated by either wear and tear, or from accident, collision or 
negligence, was considered insurance, 8 Op. Att'y Gen. 40, 41-42 (1926), while 
a contract of insurance was not created where a seller of apparently new tires 
warranted the tires would survive ordinary wear and tear for a specified period of 
time, but specifically excluded accidental damage and made no additional charge 
or premium for the warranty beyond the cost of the tires. 1940 Op. Att'y Gen., 
Rep. A.G., Pub. Doc. No. 12 at 39 (1940). 

The 1959 Opinion is also consistent with prior opinions which distinguish 
between insurance contracts and service contracts. For example, when the need 
for maintenance, service and repairs is an inevitable result of the operation of 
electrical equipment, a contract which provides for complete and ongoing 
inspection, maintenance and repair services by the contractor is a service 
contract, and not insurance. 1 Op. Att'y Gen. 544 (1898). 

Finally, the 1959 Opinion also concluded that an independent inspection 
company's promise to indemnify covered purchasers of automobiles on the 
occurrence of a designated peril causing a loss, rather than directly perform 
repairs, would create an insurance contract. This was consistent with a 1918 
Opinion which concluded that where an Automobile Association provided 
indemnification to members who hired their own attorneys, an insurance contract 
was created, while the direct provision of legal services to members by the 
association's own attorneys, was not insurance. 5. Op. Att'y Gen. 206 (1918). 

" If the contemplated contingency which is required to create a contract of 
insurance is certain of occurring within the term of the contract, or if the 
"insurer" can fully control and thereby completely avert the contemplated 
contingency, the "risk" that the contingency will occur during the life of the 
contract is eliminated insofar as its occurrence is converted to either a certainty or 
an impossibility. If all risk is thus eliminated, an insurance contract cannot 
exist. 

7 HSA asserts that insurance protects against "hazards." The term "risk" has 
historically been used interchangeably with the term "hazard." "Hazard" has been 
defined as "risk," or, "the likelihood or probability of loss." See e.g., 
Ballentine's Law Dictionary (3d ed. 1969). See also, Black's Law Dictionary (5th 
ed.). Past Opinions have stated that an essential element of a contract of 
insurance is "hazard." See, e.g., 8 Op. Att'y Gen. 40, 41 (1926). However, 
recent formulations define hazard more narrowly as "anything that increases the 
likelihood of a loss or the possible severity of a loss." B. Smith, J. 
Trieschmann, & E. Wiening, Property and Liability Insurance Principles 21 
(1987). In other words, a "hazard" is now defined as anything that enhances the 
possible risk of a loss or the possible severity of a loss. Consequently, insurance 
is now seen to protect against "risks." 



P.D. 12 129 

may protect against "risk" as well, such as a warranty. Where an insurer assumes 
a "risk" of loss from the occurrence of a designated peril during the life of the 
insurance contract, a warrantor similarly assumes a risk that a warranted item 
will fail during the life of the warranty.** However, while both insurance and 
warranties are "risk-shifting" devices, only insurance also contains the element of 
"risk distribution." Under the five-part analysis of the 1959 Opinion, the 
combination of "risk-distribution" with a plan of "risk-assumption" serves to 
create an insurance contract, assuming the other enumerated factors are also 
present.^ 



° It has been suggested that an insurer can exercise meaningful control over the 
"risk" of the contingency that repairs will be needed by performing a precoverage 
inspection of the insured item or premises. However, the extent of control 
exercised by the insurer is relevant only insofar as the risk can be totally 
eliminated. The 1959 Opinion rejected pre-contract inspections as conclusively 
demonstrating any meaningful indicia of control, likening such assertions to the 
equally fallacious statement that a medical examination of a person could 
eliminate the fortuitous event of physical impairment or death. Such inspections 
only uncover existing conditions, and do not serve as reliable predictors of future 
failure, even more so where the covered items are imbedded in walls, such as 
wiring and plumbing, or otherwise hidden from view, such as the motor of a 
dishwasher. Precoverage inspections will not therefore eliminate the risk of 
failure during the life of the contract. If a precoverage inspection was deemed 
sufficient to remove a contract from the definition of insurance, then title- 
insurance, wherein a title company engages in a full precoverage title search, 
would also fail to meet the definition of insurance. 

" HSA argues that insurance can only protect against "external forces" because 
"internal forces" are subject to the control of the insurer. Presumably, the point 
HSA makes is that an insurer can exercise total control over "internal forces" 
which can potentially cause a loss, thereby eliminating the element of "risk." 
However, as stated above, even a warrantor assumes a risk of failure during the 
life of the warranty. HSA cites Claflin v. United States Credit System Co., 165 
Mass. 501, 502 (1896) for the proposition that a contract of insurance involves 
the application of an external force to create a "hazard." The conclusion HSA 
draws is that the term "hazards" implies the presence only of "external forces." 
The Claflin decision does not support this interpretation. The Claflin court 
neither discusses a distinction between "external" and "internal" force, nor does it 
conclude that insurance can only exist when an "external force" is involved in 
creating a hazard [risk]. As discussed in n. 6, supra, the term "hazard" neither was 
formerly nor is presently defined as "external force." Neither does the statutory 
definition of insurance distinguish between the application of "external" or 
"internal" force. G.L. c. 175, §2. Such a distinction has explicitly been rejected 
insofar as "mechanical breakdown" and "mechanical failure" of automobiles, 
regardless of cause, is a peril which may now be insured against in 
Massachusetts. G.L. c. 175, §54C. Furthermore, in an analogous situation, life 



130 P.D. 12 



II. The Plan is a Contract of Insurance 

The provisions of the Plan make it clear that it is a contract of insurance. ^ 
The Plan falls within the statutory definition set forth in G.L. c. 175, § 2: The 
Plan is an agreement by which the HSA for the consideration of the purchase 
price, promises to pay money to the seller or buyer of residential real estate, 
upon the destruction, loss or injury to something in which the purchaser has an 
interest. 

The Plan also falls squarely within the five-point test enumerated in the 1959 
Opinion. First, the seller, and subsequently the buyer, of the residential real 
estate own equity in the property and its components, thus creating an insurable 
interest. Second, the seller and the buyer are both subject to risk of loss through 
the occurrence of the designated peril: "operational failure" of covered 
components. 11 Upon such operational failure, the seller or buyer will be 
subject to a monetary loss. Third, HSA agrees to assume the risk of loss. HSA 
promises upon the occurrence of a covered "operational failure" to indemnify the 
seller or buyer for all or part of the cost of repairs or replacement. Fourth, the 
assumption of this risk by HSA is part of a general scheme to distribute actual 

insurance insures against death from any cause, whether external or internal. 
Commonwealth v. Wetherbee, 105 Mass. 149 (1870). 

10 It has been suggested that the Commissioner follow the contrary conclusion 
in the New York decision in Electronic Realty Associates v. Lennon, which 
discusses the narrow New York statutory definition of insurance, and finds the 
home repair contract being reviewed to be a warranty rather than insurance. See 
n. 2, supra . In contrast, the 1959 Opinion observes that insurance is defined 
broadly in Massachusetts. Furthermore, Massachusetts case law has rejected one 
of the principal premises relied on by the Electronic Realty Associates court, i.e. 
: Massachusetts deems it irrelevant whether a particular activity is the chief 
business of a company or whether it is merely ancillary in determining if the 
activity falls within the statutory definition of insurance. Attorney General v. C. 
E. Osgood Co., 249 Mass at 477. 

11 HSA claims that there is no "risk" inherent in the Plan because the need for 
repairs will be inevitable. This argument is contradicted by HSA's own 
memorandum which states that "since the components are in various states of 
aging, no one can know with certainty the remaining life of these components." 
HSA also claims that the required precoverage inspection eliminates the required 
"risk" that repairs will be needed. However, this inspection is unlike the 
inspections included in a service contract which trigger necessary maintenance 
and repairs. As noted above, this inspection serves only as a baseline to exclude 
pre-existing conditions from coverage, thereby eliminating the inevitability of 
the need for repairs. In truth, the need for home repairs during the life of the Plan 
while possible, is entirely fortuitous, thereby creating the "risk" to the insured. 



P.D. 12 131 

losses upon a group of persons bearing somewhat similar risks: i.e., sellers, and 
subsequent purchasers of residential real estate to the extent their property and 
components meet certain age and inspection requirements. Fifth, the insured, 
here either the seller or buyer, pays a premium to a general insurance fund, 
insofar as they pay a fee to HSA which presumably retains at least part of the 
premium to cover future losses and expenses.^ 
III. The Plan is Neither a Warranty Nor a Service Contract 

HSA is not a warrantor. The 1959 Opinion defines a warranty as an 
affirmation, or collateral obligation, made by a seller, accompanying a contract 
of sale, which relates to the character, quality or fitness of the goods. 1959 Op. 
Att'y Gen., Rep. A.G., Pub. Doc. No. 12 at 74 (1959). 13 HSA is not the seller 
of the home and therefore cannot be said to be making a promise in connection 
with the sale of its goods. It therefore cannot assert that it acts in the shoes of a 
seller who warrants a home to a buyer. HSA neither built, manufactured nor 
owned the used home or the covered components, and therefore is in no position 
to attest to the quality of the materials or workmanship used in manufacturing or 
building them. 14 In addition, for the reasons discussed in n. 8, supra, HSA's 
precoverage inspection does not enable it to attest to the quality, character or 

12 While HSA did not explicitly state that it retains part of the premium in a 
reserve fund to cover future claims from policy holders, it must be presumed it 
does so under ordinary accounting practices. Otherwise, akin to a pyramid 
scheme, future claims would only be funded out of future sales of new policies, 
and if such future sales were insufficient, the company would be unable to meet 
its obligation to pay claims. Regulation of such contracts as insurance by the 
insurance commissioner can protect the public, in part, by serving to insure that 
companies such as HSA retain sufficient reserves to cover future losses. 

13 The 1959 Opinion recites a number of different, but similar formulations of 
the definition of a warranty. An express warranty is defined in G. L. c. 106, §2- 
313 (.1) (a) as: "Any affirmation of fact or promise made by the seller to the 
buyer which relates to the goods and becomes part of the basis of the bargain 
creates an express warranty that the goods shall conform to the affirmation or 
promise." Black's Law Dictionary (4th ed.) is cited as defining a warranty as: "A 
statement or representation made by the seller of goods, contemporaneously with 
and as a part of the contract of sale, though collateral to the express object of it, 
having reference to the character, quality, or title of the goods, by which he 
promises or undertakes that certain facts are or shall be as he then represents 
them. 

14 The home builders' and covered component manufacturers' or sellers' 
warranties will have most often expired at the time of sale by the homeowner. In 
those instances where the warranties have not expired, or where other insurance 
exists, the Plan provides only secondary coverage, placing primary reliance on 
the existing warranties or insurance. This is remarkably similar to the 
"coordination of benefits" clause common to insurance contracts. 



132 P.D. 12 



fitness of the premises. 

HSA is also not in a position analogous to a service contractor. HSA does 
not contract to provide regular inspections or to perform full maintenance of 
components. HSA performs no repairs itself, but merely authorizes the insured 
to contract for repairs or replacement, for which it will often provide 
indemnification (often only partial), or require the insured to exhaust other 
warranty or insurance coverage. Also, ordinary maintenance is explicitly excluded 
from coverage. The Plan is therefore not a service contract. 
IV. Conclusion 

The Plan falls within the statutory definition of insurance and the five-part 
test in the 1959 Opinion. As insurance, the Plan is subject to the regulation and 
supervision of the Commissioner of Insurance. * Such regulation may serve to 
protect the public from the purchase of worthless insurance from financially 
unsound companies or from purchasing actuarially unsound or otherwise 
questionable insurance products. The Commissioner of Insurance has the 
expertise and experience to regulate these products. In sum, the Plan constitutes 
a contract of insurance under Massachusetts law. 

Very truly yours, 



JAMES M. SHANNON 
ATTORNEY GENERAL 



15 The regulation of the insurance industry is in the public interest. Attorney 
General v. Prudential Insurance Company of America, 310 Mass. 762, 765 
(1942). 



P.D. 12 133 



May 1, 1989 
Number 5 

John DeVillars, Secretary of Environmental Affairs 

Chairman, Massachusetts Water Resources Authority 

Charlestown Navy Yard 

100 First Avenue 

Boston, Massachusetts 02129 

Dear Secretary DeVillars: 

The Massachusetts Water Resources Authority ("the Authority") has requested 
my opinion as to whether a real property transfer to the Authority from the 
Commonwealth of Massachusetts through its Armory Commission ("the 
Commission") is governed by sections 40F and 40F1/2 of Chapter 7 of the 
General Laws or whether these provisions have been superseded by the 
Authority's Enabling Act, specifically section 26(b) of Chapter 372 of the Acts 
of 1984 ("the Act"). For the reasons set forth below, I conclude that sections 
40F and 40F1/2 of Chapter 7 are controlling, and that section 26(b) of Chapter 
372 acts to trigger the procedures contained in these provisions. My view, 
therefore, is that the Act does not empower state agencies to transfer real 
property from the Commonwealth to the Authority without following the 
disposition procedures contained in sections 40E-L of Chapter 7. 

There can be no doubt that important public policy objectives are embodied 
in the Act which established the Authority. The creation of the Authority came 
as a joint response by the Governor and the General Court to the growing legal, 
fiscal, and environmental crisis caused by the pollution of Boston Harbor and the 
Metropolitan District Commission's inability to address the problem 
adequately.* 

The Authority has argued quite eloquently that its ability to carry out its 
pressing public mandate may be impeded if it must comply with the 
requirements of Chapter 7. It contends that section 26(b) of the Act constitutes 
an exception to the requirements of Chapter 7. I recognize that this may be a 
desirable construction in light of the Authority's desire to proceed as 
expeditiously as possible, and I personally concur with the necessity of 

1 The Act, which was passed on an emergency basis, was widely seen as 
necessary to avoid the imposition of court-ordered remedies and injunctions to 
comply with federal and state environmental law. As Governor Dukakis noted in 
his letter of April 19, 1984 to both houses of the Legislature urging passage of 
House No. 5915: "underlying the deep concern felt by the Commonwealth, its 
citizens, and its businesses is the very real possibility that if we fail to act in a 
timely and responsible fashion, a court of law will take action for us." 
Governor's Message, April 19, 1984, House Report No. 5915. 



134 F.D. 12 



immediate action to resolve the environmental problems of Boston Harbor. 
Nevertheless, while the Legislature is free to exempt the Authority specifically 
from having to comply with the procedures of Chapter 7, I cannot remain 
faithful to the essential principles of statutory construction and find that it has 
already done so with the extremely vague and ambiguous language contained in 
section 26(b). I note also that while the public policy concerns underlying the 
mission of the Authority are evident, there are other powerful public policy 
considerations which support a legislative judgment that the Authority must 
follow the guidelines of the Ward Commission guarding against fraud and 

abuse. 

A statute, especially where its meaning is unclear, must be read in view of 
the preexisting legislative scheme governing the same field or subject matter. 
See, e.g., Saccone v. State Ethics Commisssion, 395 Mass. 326, 334 (1985). A 
prior statute will not be repealed by subsequent legislative act unless by express 
words or clear or necessary implication. Registrar of Motor Vehicles v. Board of 
Appeal on Motor Vehicle Liability Policies and Bonds, 382 Mass. 592 (1981); 
Mayor of Haverhill v. Water Commissioners of Haverhill, 320 Mass. 63 (1946). 
Furthermore, "strong terms" in the subsequent statute are necessary to 
demonstrate the Legislature's intent to repeal or supersede. Dudley v. City of 
Cambridge, 347 Mass. 543 (1964). 

Repeal by implication, which is greatly disfavored, will only be recognized 
where the repugnance or opposition of the later statute to the former is too plain 
and clear to be avoided. See e.g., Boston Housing Authority v. Labor Relations 
Commission, 398 Mass. 715 (1986); City of Boston v. Board of Education, 392 
Mass. 788 (1984). 

The comprehensive legislative scheme for conveyance of state property is 
contained in G.L. c. 7, § 39A et seq Chapter 7, § 39B provides that the Division 
of Capitol Planning and Operations ("DCPO") shall be responsible for 
acquisition, allocation, and disposition of real property.^ The Legislature's 
concentration of exclusive and complete authority in DCPO for the management 
of the Commonwealth's real property followed a period of intense public concern 
about the mismanagement of state-owned property which culminated in the 
formation of the Special Commission Concerning State and County Buildings, 
popularly known as "the Ward Commission." The Ward Commission's final 
report, in turn, led to the Legislature's passage of Chapter 579 of the Acts of 
1980, which created the new Division of Capital Planning and Operations in 



2 See discussion, infra at 4-5. 

3 Section 39B of Chapter 7 states in relevant part that: "Except as otherwise 
provided in this chapter or any other statute or appropriation act, the deputy 
commissioner of capital planning and acquisition shall be responsible for the 
acquisition, allocation, and disposition of the real property . . . ." The 
Legislature thus plainly anticipated occasions where it might implement other 
schemes for property disposition and acquisition. Here, the Legislature has 
simply not demonstrated sufficiently its intent to accomplish such a result. 



P.D. 12 135 



order to centralize and improve the management of the state's real property.^ The 
powers of DCPO's Deputy Commissioner and the state's intricate mandatory 
procedures for property acquisition and disposition are found in sections 40E-L of 
Chapter 7. 

The Authority's Enabling Act provides generally that all local bodies and 
state agencies, including "commissions," are authorized to convey "any interest" 
they may have in non- Article 97 property "to the Authority upon such terms and 
conditions as the proper authorities of such" bodies and agencies "may deem 
appropriate and without the necessity of any action or formality other than the 
regular and formal action of said public bodies, agencies, instrumentalities, 
commissions . . ." (emphasis supplied). 

This language-* does not contain a necessary implication, much less manifest 
a specific intention, that the meaning of the Act is to displace and bypass the 
mandatory procedures embodied in Chapter 7 and establish an alternative system 
of property acquisition for the Authority." 

4 In the Final Report to the General Court of the Social Commission 
Concerning State and County Buildings (December 31, 1980), the Ward 
Commission urged that the existing "disorganized statutory and administrative 
framework" of real property management be replaced by "a central authority that 
possesses both expertise and adequate resources and that operates within the 
framework of clear legal structure and systematic guidelines, to manage the 
allocation, acquisition and disposition of the Commonwealth's real property . . . 
Id. at 102, 1 19. These "recommendations . . . [were] embodied in Chapter 579 of 
the Acts of 1980." Id. at 119. 

5 Section 26(b) of the Act states in its entirety: 

Except with respect to real property acquired or held for purposes 
described in Article XCVII of the Amendments to the Constitution, all local 
bodies and all public agencies, instrumentalities, commissions and 
authorities of the commonwealth, are hereby authorized and empowered to 
lease, lend, grant or convey to the Authority upon such terms and conditions 
as the proper authorities of such public bodies, public agencies, 
instrumentalities, commissions and authorities of the commonwealth may 
deem appropriate and without the necessity of any action or formality other 
than the regular and formal action of said public bodies, agencies, 
instrumentalities, commissions and authorities of the commonwealth any 
interest in any real or personal property which may be necessary or 
convenient to effect the purposes of the sewer and waterworks of the 
Authority. 

" Statutes are not to be interpreted so as to declare a radical change in 
established public policy unless the statutory language manifests a specific 
intent that such a change be effected. See Commonwealth v. Germano, 379 
Mass. 268 (1979); Roberge's Case, 330 Mass. 506 (1953); Dexter v. Comm. of 
Corporations and Taxation, 316 Mass. 31 (1944). This is especially the case 
where the prior statute is "of uniform application . . . and designed to safeguard 



136 r.v. 12 



On the contrary, section 26(b) appears to be a catch-all provision^ reserving 
the power to convey real property interests to "the proper authorities" of a 
variety of local bodies and state agencies. In the case of property transfers 
involving state agencies, the Division of Capital Planning and Operations is, by 
statute, the sole and proper authority for the purpose of disposing of any interest 
in the Commonwealth's real property. G.L. c. 7, § 39B. There is simply no 
other "proper authority" to convey interests in the real property of the 
Common wealth. 8 Thus, when section 26(b) is read in conjunction with sections 
40F and 40F1/2 of Chapter 7, it is clear that "the proper authority]" of the 



public funds." See Mayor of Haverhill, 320 Mass. at 68 (1946). Far from 
manifesting any clear intent to break from established public policy here, the 
statutory language tends toward the adoption of the preexisting "regular and 
formal" procedures for the disposition of state-owned property. 

7 The apparent model for section 26(b) is a somewhat parallel provision of 
the Enabling Act of the Turnpike Authority, section 15 of Chapter 354 of the 
Acts of 1952. This section states in its entirety: 

All counties, cities, towns and other political subdivisions and all public 
agencies and commissions of the commonwealth, notwithstanding any 
contrary provision of law, are hereby authorized and empowered to lease, 
lend, grant or convey to the Authority at its request upon such terms and 
conditions as the proper authorities of such counties, cities, towns, political 
subdivisions, agencies or commissions of the commonwealth may deem 
reasonable and fair and without the necessity for any advertisement, order of 
court or other action or formality, other than the regular and formal action of 
the authorities concerned, any real property which may be necessary or 
convenient to the effectuation of the authorized purposes of the Authority, 
including public roads and other real property already devoted to public use. 

The fact that the enactment of this statutory provision predates the existence 
of Chapter 7 by some 28 years makes it unlikely that, by adopting this 
provision's extremely general language, the Legislature intended specifically to 
supersede Chapter 7. 

8 Whatever independent powers the Armory Commission or any other state 
agency once possessed to convey land were transferred to DCPO by the 
enactment of Chapter 7. Section 40E of Chapter 7 states that the Deputy 
Commissioner of DCPO "shall exercise [Chapter 7] powers . . . notwithstanding 
the delegations which the general court has made pertaining to the acquisition, 

control, and disposition of real property Chapter 7 thus categorically 

transferred to DCPO all existing delegations of authority over the 
Commonwealth's real property. Individual state agencies do not have the 
independent power to acquire or dispose of property they occupy. 



P.D. 12 137 



Commonwealth for purposes of transferring the land^ in custody of the Armory 
Commission is DCPO. 10 

Section 26(b)'s specification that local bodies and state agencies may transfer 
land to the Authority based on their "regular and formal action" further evinces a 
legislative intention to require conformance to the mandatory procedures of 
Chapter 7 in the conveyance of state property to the Authority. The "regular and 
formal action" of state agencies and commissions intending to convey land by 
definition refers to those formal procedures contained in sections 40F and 40F1/2 
of Chapter 7. 

My interpretation of the statute is reinforced by the fact that Chapter 7, § 40E 
removed from state agencies all title to real property and vested such title in the 
Commonwealth, giving DCPO the powers of acquisition, disposition, and 
management over the Commonwealth's land. See G.L. c. 7, § 40E. Thus, when 
the Legislature conferred power upon the "proper authorities" of local and state 
agencies to convey "any interest in any real or personal property" to the 
Authority, it could not logically have been referring to state agencies themselves 
as state agencies, absent specific statutory authority, do not possess the power to 
transfer any interest in the state's real property. 

For all these reasons, my view is that, for real property transfers from the 
Commonwealth through state agencies to the Authority, section 26(b) triggers 
the regular procedures of Chapter 7. Given this interpretation, DCPO must 
comply with the procedures set forth in sections 40F and 40F1/2 of Chapter 7 to 
accomplish conveyance of real property to the Authority. ^ These procedures 



y It should be noted here that the word "armory" in section 126 of Chapter 
33 includes the land upon which it is built. "There can be no distinction between 
the armory building and the land to which it belongs. The term 'building' 
includes the real estate on which it is situated, unless the general meaning is 
modified by the language of the context. Accordingly, the same rule must be 
applied to the 'armory land' adjoining the armory as pertains to the structure 
itself." 1926/27 Op. Att'y Gen., Rep. A.G., Pub. Doc. No. 12 at 139, July 28, 
1926. See also 1946/47 Op. Atty. Gen., Rep. A.G., Pub. Doc. No. 12 at 101, 
June 19, 1947 ("the use of armories ... by necessary implication includes land 
devoted to armory purposes...") 

10 Where two statutes relate to the same subject matter, they are to be 
interpreted in harmony with one another so as to constitute a consistent and 
intelligible body of law. See e.g., Registrar of Motor Vehicles v. Board of 
Appeal on Motor Vehicle Liability Policies and Bonds, 382 Mass. 592 (1981); 
Labor Relations Commission v. Board of Selectmen of Dracut, 374 Mass. 619 
(1978); Town of Hadley v. Town of Amherst, 372 Mass. 46 (1977). In 
determining legislative intent, statutes are not considered in isolation but in 
relation to each other, and courts must consider the origins, historical 
development, and language of the statutes. Pereira v. New England LNG Co., 
Inc. 364 Mass. 109 (1973). 

* * While under sections 40F and 40F1/2, DCPO must consider the needs of 



138 F.U. 12 



include the requirement that the Deputy Commissioner notify the House and 
Senate Committees on Ways and Means and the Joint Committee on State 
Administration if the disposition of property is for less than five years or submit 
a request to the General Court for authority to make a conveyance of longer than 
five years. Id. Section 40F1/2 also requires the addition of a reversionary clause 
and a certification of compliance with Chapter 7 to any instrument conveying 
real property from the Commonwealth to a public agency for a public use. 1 ^ 

Finally, I must direct your attention to section 4(c) (ii) of the Act, which 
states that "[u]nder this Act ... no lands devoted to the public use shall be 
diverted to another inconsistent public use, except in all instances in accordance 
with the laws and the Constitution of the Commonwealth." This provision 
manifests a plain and specific intention by the Legislature to require conformance 
to the "prior public use" doctrine in the conveyance of land to the Authority.^ 

The essence of this doctrine is that "public lands devoted to one public use 
cannot be diverted to another inconsistent public use without plain and explicit 
legislation authorizing the diversion..." Robbins v. Department of Public 
Works, 355 Mass. 328, 330 (1969). Thus, if and when DCPO (or the Authority, 



other state and public agencies, the Act may be read by DCPO to place the 
Authority ahead of other potential candidates since it expresses a legislative 
policy recognizing the importance of the Authority's responsibilities. 

12 The reversionary clause transfers property back to the Commonwealth in 
the event that the state agency is not using it for the express public purpose for 
which it was granted. The Deputy Commissioner's certification, signed under the 
pains and penalties of perjury, states that he or she has fully complied with the 
requirements of Chapter 7. Section 40F1/2 states that "no [disposition 
agreement] . . . [or] deed, executed by or on behalf of the Commonwealth shall 
be valid unless such agreement or deed contains" the Deputy Commissioner's 
certification of compliance. 

13 Likewise, section 9(c) of the Act explicitly conditions all disposition of 
property by the Authority upon, inter alia compliance with "doctrines of law 
concerned with diversions of lands devoted to public use to other inconsistent 
public use. . ." 

Even in the absence of these definitive statutory statements, conformance to 
the "prior public use" doctrine would be required since the Act contains no 
explicit statement of which land is being transferred and what public use is being 
changed. See Opinions of the Justices, 383 Mass. 895, 905 (1981) ("Where the 
Commonwealth has proposed the transfer of land from one public use to another, 
the legislature must be explicit concerning the land involved; it must 
acknowledge the interest being surrendered; and it must recognize the public use 
to which the land is to be put as a result of the transfer.") See also Board of 
Selectmen of Braintree v. County Commissioners of Norfolk, 399 Mass. 507, 
510 (1987); Bauer v. Mitchell, 247 Mass. 522, 528 (1924), and cases cited. 



P.D. 12 139 



acting independently) seeks legislative authorization for a permanent transfer of 
real property from the Commission to the Authority, it can also seek to obtain 
the specific legislative authorization to change the public use of the property if 
DCPO determines that such authorization is necessary. 

In short, section 26(b) of the Act does not empower state agencies and 
commissions to transfer real property directly to the Authority but instead 
triggers the formal procedures contained in Chapter 7. If the Legislature desires 
to expedite the Authority's acquisition of property by exempting the Authority 
from Chapter 7 procedures, the Legislature is of course free to do so. 

Sincerely, 



JAMES M. SHANNON 
ATTORNEY GENERAL 



140 fL>. IZ 

June 7, 1989 
Number 6 

L. Edward Lashman, Secretary 

Executive Office of Administration & Finance 

State House, Room 373 

Boston, Massachusetts 02133 

Dear Secretary Lashman: 

The Commissioner of the Division of Public Employee Retirement 
Administration and the Commissioner of Veterans Services have requested my 
opinion regarding the interpretation of the definition of "veteran" in 
Massachusetts General Laws c. 4, § 7, cl. 43 in light of recent federal action 
declaring certain individuals to be veterans for the purposes of federal Veterans 
Administration benefits. The question presented is: 

Whether recent federal legislation conferring veteran 
status on certain members of the American Merchant 
Marine for the purpose of all laws administered by the 
Veteran's Administration, results in Massachusetts 
recognizing these certain individuals as well, for purposes 
of the Commonwealth's Veterans Benefits Program? 

For the reasons which follow, I conclude that, as a result of this federal 
action, certain former merchant marines may be considered veterans for the 
purposes of the Commonwealth's Veterans Benefits Program. 

G.L. c. 32 provides certain benefits for veterans that are greater than those 
provided for other members of contributory retirement systems. See, e.g., G.L. 
c. 32 §§5(2)(b), 6(1), 56-60. G.L. c. 32, § 1 defines "veteran" in part by 
reference to G.L. c. 4, § 7, cl. 43. 1 This section provides in pertinent part that a 
"veteran" shall mean "any person... (a) whose last discharge or release from 
wartime service, as defined herein, was under honorable conditions and who (b) 
served in the army, navy, marine corps, coast guard or air force of the United 
States..." (Emphasis supplied.) 

It is apparent that clause 43 does not expressly include the merchant marines. 
However, pursuant to recent changes in federal law, 2 certain former merchant 
marines are being issued honorable discharges from the United States Coast 
Guard, Army, and Navy. A number of these individuals have applied for veterans' 
benefits through contributory retirement systems. The question is, thus, whether 
these honorable discharges are sufficient to bring a former merchant marine 
within the Commonwealth's definition of veteran. 

Pursuant to the G.I. Improvement Act, Pub. L. No. 95-202, § 401, 91 Stat. 
1449 (1977), the Secretary of Defense has vested authority to make 

1 G.L. c. 1 15 §1 which establishes the Commonwealth's Veteran's Benefits 
Program similarly defines "veteran" by reference to cl. 43. 

2 See discussion^ infra at 2-4. 



P.D. 12 141 

determinations as to whether civilian employment or contractual service rendered 
by groups to the Armed Forces of the United States shall be considered "active 
military service" for purposes of all laws administered by the Veteran's 
Administration. Id. at § 401(a)(1). Consistent with authority so provided, the 
Deputy Secretary of Defense issued a Directive on January 24, 1979 which 
delegated authority to the Secretary of the Air Force to determine if the service of 
any such group constituted "active military service." The Directive also 
authorized the Secretary of the Air Force to establish the "Department of Defense 
Civilian/Military Service Review Board." The Review Board is charged with 
researching the involvement of groups who request "active duty" status. The 
Secretary of the Air Force considers all recommendations from the Review Board 
and makes a final determination as to whether the service rendered by a group 
shall be considered "active military service" for purposes of all laws administered 
by the Veterans Administration. 3 

On January 19, 1988, the Secretary of the Air Force declared members of the 
U.S. Merchant Marines who served in active oceangoing service from December 
7, 1941 to August 15, 1945, to be veterans, eligible to receive federal Veterans 
Administration benefits. 4 

This recognition was based on merchant marines' significant record of service 
delivering cargo to American Armed Forces throughout the world during the 
Second World War. Six thousand U.S. merchant seamen died and 733 ships were 
lost as a result of German U-boat attacks. This is a rate that proportionately 



3 In making such determinations, consideration will be granted to judicial 
and other appropriate precedent and "the extent to which (A) such group received 
military training and acquired a military capability or the service performed by 
such group was critical to the success of a military mission, B) the members of 
such group were subject to military justice, discipline, and control, C) the 
members of such group were permitted to resign, D) the members of such group 
were susceptible to assignment for duty in a combat zone, and E) the members 
of such group had reasonable expectations that their service would be considered 
to be active military service." G.I. Improvement Act, Pub. L. No. 95-202 
§401(a)(l)(A). 

4 The group of members of the Merchant Marine granted approved "active 
duty" status is comprised of crew members who served satisfactorily during the 
period of armed conflict, December 7, 1941 and August 15, 1945, as (1) 
merchant seamen documented by the U.S. Coast Guard or Department of 
Commerce aboard vessels operated by the Warshipping Administration or the 
Office of Defense Transportation or their agents in oceangoing service of the 
United States on foreign, near foreign, intercoastal or coastwide voyages, or as 
(2) Civil Service crew members of the United States Army Transportation 
Service in oceangoing service or foreign waters. 



142 P.D. 12 

exceeded all branches of our armed services, with the single exception of the 
U.S. Marine Corps. 5 

Merchant marines contracted with three departments within the military 
during this specific wartime period - the U.S. Coast Guard, Army and Navy 
respectively. In order to be considered for active duty status, each interested 
member of the Merchant Marine must make application to one of the above 
military departments. Upon verification of creditable service, an Honorable 
Service Certificate/Report of Casualty is provided to each qualifying member of 
the Merchant Marine. 6 These discharges are issued by the U.S. Coast Guard, 
Army or Navy, which are among those branches of the armed services 
specifically enumerated in clause 43 of G.L. c. 4, § 7. For this reason, this 
special group of former merchant marines should be viewed as coming within 
the Commonwealth's definition of "veteran." In order to obtain any veterans 
benefits available under state law, a merchant marine who has received the 
Honorable Service/Report of Casualty and accompanying Form DD 214 must 
document that he has met the further criteria set forth in Clause 43 in the same 
manner as do other veterans. 7 

In summary, members of the American Merchant Marine who served in 
armed conflict between December 7, 1941 and August 15, 1945, and who have 
received honorable discharges from the U.S. Coast Guard, Army, or Navy, are 
entitled to legitimate veteran status and are eligible to demonstrate their 
entitlement to any veterans benefits provided by state law. 

Very truly yours, 



JAMES M. SHANNON 
ATTORNEY GENERAL 



5 President of the United States, 1988 National Maritime Day Proclamation 
as cited in letter from John Gaughan, Maritime Administrator, U.S. Department 
of Transportation, Maritime Administration to Merchant Marine Veterans. 

6 The Merchant Marine veteran is also issued a Form DD 214 at the time 
the Honorable Service Certificate/Report of Casualty is issued. Inclusive dates of 
each creditable voyage are reflected on this Form. The total "active duty" service 
shall be the summation of each foreign, near foreign intercoastal or coastwise 
voyage within the period of armed conflict during World War II. Upon receiving 
a service certificate, the veteran, in order to obtain any federal benefits, must 
submit the Form to the Veterans Administration. 

7 Clause 43 requires, for example, that the recipient of an honorable discharge 
from wartime service show that he or she served for "not less than ninety days 
active service at least one day of which was for wartime service" or met other 
enumerated conditions. 



P.D. 12 



143 



TOPICS 



INDEX OF OPINIONS 
OPINION 



Employees, Public 
Regulation of out-of-state travel at 
public expense of employees of the 
Teachers' Retirement Board 

Definition of Commonwealth officers 
and employees for purposes 
ofG.L.c. 30, § 25B 

Insurance 
Used home- warranty constitutes a contract 
for insurance under G.L. c. 175 § 2 

Real Property 
Application of G.L. c. 7 §§ 40E-L, to 
disposition of real property by 
Commonwealth to Massachusetts Water 
Resources Authority 

Retirement and Pension Benefits 
Application of "pop-up" provision of 
G.L. c. 32, § 65C, to recall justices 

Entitlement of certain Merchant Marines 
to benefits for "veterans" provided by 
G.L. c. 32 

Salaries 
Regulation of out-of-state travel at 
public expense of employees of the 
Teachers' Retirement Board 

"Public Policy" questions 
Proper form and texts 



Statutes 
Retroactivity of "pop-up" 
provision of G.L. c. 32, § 



65C 



Veterans 
Entitlement of certain Merchant Marines 
to benefits for "veterans" provided by 
G.L. c. 32 



PAGE 



110 



110 



125 



133 
119 
140 

110 
102 

119 

140 



144 



F.D. 12 



INDEX OF REQUESTING AGENCIES OR 
STATE OFFICIALS 



AGENCY 

Administration and Finance, Secretary of 

Consumer Affairs and Business Regulation, 
Secretary of 

Environmental Affairs, Secretary of 

Insurance, Commissioner of 

Massachusetts Water Resources Authority, 
Chairman of the 

Secretary of the Commonwealth 

Teachers' Retirement Board, Chairman 

Trial Court, Chief Administrative Justice 



OPINION 


PAQE 


2,6 


110, 140 


4 


125 


5 


133 


4 


125 


5 


133 


1 


102 


2 


110 


3 


119