0H|E (Uotmnanuiealtl) of MasBUttyuszttB
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.
JAMES M. SHANNON
T. David Raftery
Jamin Raskin 70
Robert Ritchie 21
Samuel Zurier 7
Assistant Attorneys General Assigned To
Division of Employment Security
Neal Steingold *•
Patrick J. Moynihan
Edward J. White
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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
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
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
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.
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
Incapacity Compensauon $34,416,025.00
Medical Payments 7,754,018.00
Attorney Fees 549,592.78
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
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.
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
B.) Advice and counsel to state agencies concerning contract matters; and
C.) Review of contracts for approval as to form.
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
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
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
P.D. 12 21
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
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
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 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.
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
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
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
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
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
A bookkeeper was indicted for embezzling state funds from a Plymouth-based
non-profit corporation that provided treatment services to mentally retarded men
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
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.
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
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
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.
STATISTICS - FY 1989
The division opened 504 claims for compensation, as follows:
ASSAULTS HOMICIDE SEXUAL QUI OTHER
The division closed 706 claims for compensation, as follows;
ASSAULTS HOMICIDE SEXUAL QUI OTHER
MALE FEMALE AGE 0-17 18-64 65+ UNKNOWN
225 481 60 615 29 2
DISPOSITION OF CLOSED CASES:
Compensation awarded: 504
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
to service/care providers.
PAYMENTS BY COUNTY
# of Judgments Total Paid Compensation
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
Fiscal Year of claims
Expenditure VOCA State
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
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
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
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
FISCAL YEAR ENDING JUNE 30. 1989
Cases On Hand July 1,1988
Employer tax cases - 1,152
Employee fraudulent claims cases - 612
(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
(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
Employer tax cases - 1 87
Employee fraudulent claims cases - 65
(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
(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
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
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
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
In the federal district court the division defended more than 60 federal habeas
corpus petitions challenging the constitutionality of state court criminal
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
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
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
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
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
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
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;
(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
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
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
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
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
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
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
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
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
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
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
B. ESTATES AND TRUSTS IN WHICH THERE IS A
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
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
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
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.
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
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
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
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
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
(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
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
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.
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
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
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
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
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
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
3 .) Telephone Rates and Services
a. New England Telephone Company Revenue
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.
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.
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
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
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
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."
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
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.
The Insurance Division represents the interests of Massachusetts insurance
purchasers in insurance rate setting hearings, consumer protection litigation, and
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
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
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.
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.
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
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,
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
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.
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
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
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"
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
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
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
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
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
E. CONSUMER COMPLAINTS
The resolutions of individual consumer complaints resulted in savings of
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.
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
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:
Agawam Consumer Advisory
Office of Consumer Affairs
Mayor's Office of
Consumer Affairs & Licensing
Consumer Service Office
74 P.D. 12
389 $ 92,744
646 $ 72,993
241 $ 11,983
618 $ 99,169
306 $ 54,992
Community Action, Inc.
Community Teamwork, Inc.
Consumer Action Center
Consumer Action Center
Office of Consumer Affairs
Norfolk County District
North Shore $24,336 610 $52,122
North Shore Community
Action Program, Inc.
P.D. 12 75
Office of Consumer Affairs
South Shore Community
Consumer Action Center
Action Council, Inc.
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.
The breakdown is as follows:
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
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
The major substantive areas of concentration include:
\.)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
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
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
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
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.
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
(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
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
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)
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.
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
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
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
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
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
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
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
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
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
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.
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
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
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
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
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
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
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
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
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,
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
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
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.
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.
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
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
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
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
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,
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.
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
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.
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.
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.
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
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
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.
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.
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.
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
The Honorable Michael Joseph Connolly
Secretary of the Commonwealth
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 §
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
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
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
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
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
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
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:
Precincts 1,2,3,4, 5,6,21
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
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
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
Honorable Frank T. Keefe, Secretary
Executive Office for Administration
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."
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
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.
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).
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
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
P.D. 12 119
March 2, 1989
Honorable Arthur M. Mason
Chief Administrative Justice of the Trial Court
New Court House
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
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
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
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
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
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
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
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
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
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, §
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, §
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
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
° 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
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
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.
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
15 The regulation of the insurance industry is in the public interest. Attorney
General v. Prudential Insurance Company of America, 310 Mass. 762, 765
P.D. 12 133
May 1, 1989
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
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
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
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
" 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.
JAMES M. SHANNON
140 fL>. IZ
June 7, 1989
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
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
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
INDEX OF OPINIONS
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
Used home- warranty constitutes a contract
for insurance under G.L. c. 175 § 2
Application of G.L. c. 7 §§ 40E-L, to
disposition of real property by
Commonwealth to Massachusetts Water
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
Regulation of out-of-state travel at
public expense of employees of the
Teachers' Retirement Board
"Public Policy" questions
Proper form and texts
Retroactivity of "pop-up"
provision of G.L. c. 32, §
Entitlement of certain Merchant Marines
to benefits for "veterans" provided by
G.L. c. 32
INDEX OF REQUESTING AGENCIES OR
Administration and Finance, Secretary of
Consumer Affairs and Business Regulation,
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