Post-Retirement Conduct Can Result In Pension Forfeiture

Written on 11/05/2022
Will Aitchison

Paul Mahan was a correction of­ficer for the Suffolk County sheriff’s department in Massachusetts. On August 15, 2000, while attempting to restrain an inmate who was involved in a fight, Mahan severely injured his knee. Mahan’s application for accidental disability retirement was approved by the board for the Boston retirement system.

Between January 1, 2006, and January 1, 2013, Mahan received a combination of workers’ compen­sation benefits, “assault pay,” and a disability retirement allowance. To demonstrate his ongoing eligibility for workers’ compensation benefits during that period, Mahan certified every six months, under the penalties of perjury, that he was not working or deriving any income from work.

In 2005, Mahan’s wife opened a used car dealership in Winchendon. Between January 1, 2006, and January 1, 2013, Mahan worked at the dealer­ship. He was present during business hours, sold cars at the dealership, was involved in the hiring of employees, and bid on cars for resale at used car auctions. Although his wife was the listed owner of the dealership, he represented himself to the general public as the business owner.

Following an investigation in 2013, Mahan was indicted by a grand jury, on one count of workers’ compensation fraud and one count of larceny. He pleaded guilty to both offenses. In so doing, Mahan agreed that he was capable of working and, in fact, had worked while receiving workers’ compensation benefits. As a result of his fraud, Mahan received overpayments of $205,618.25 in workers’ compensation benefits, $181,825.59 in assault pay benefits, and $49,841.18 in retirement benefits.

When the Boston retirement system unanimously voted to revoke Mahan’s pension, he appealed to the Massachusetts Supreme Judicial Court. The Court upheld the forfei­ture of Mahan’s pension.

The Court began with a descrip­tion of the pension forfeiture statute. The statute provides that “in no event shall any member” after conviction of an offense involving the funds or property of his or her current or former government employer, or of a retirement system to which the mem­ber belongs, “be entitled to receive a retirement allowance or a return of his accumulated total deductions.” The Court noted that “direct factual links have been found to exist where a member’s public job somehow fa­cilitated the crime, by allowing either access to or the use of resources, or by putting the member in a position to commit the crime. Direct factual connections also have been identified where a government employer was the victim of the criminal offense.

“The plain language of the statute indicates that its application is not limited to individuals who commit the criminal offense at issue while they are serving as public employees. Nowhere in that section does the statutory language state that a ‘member’ must be a ‘member in service,’ and thus an active employee, at the time that he or she misappropriates government funds, violates laws applicable to his or her office or position, or commits any of the offenses specified in the statute. We will not add words to a statute that the Legislature did not put there, either by inadvertent omission or by design.

“Mahan’s argument that ‘no reported case has ever forfeited the pension of a member of the retirement system who has been convicted of a crime committed after he left public employment’ is unavailing. Certainly, in prior cases involving the application of the statute, the individual was still actively employed when he or she engaged in the relevant offense. Yet, according to the clear and unam­biguous statutory language, all that matters is that the individual subject to forfeiture is a ‘member’ within the meaning of the statute at the time that he or she engages in the relevant criminal activity.”

Mahan v. Boston Retirement Board, 2022 WL 4073845 (Mass. 2022).

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