2010-271 State Employees' Association of New Hampshire & a. v. The State of New Hampshire & a.

No. 2010-271

Merrimack

Getman, Stacey, Schulthess & Steere, P.A.

Michael A. Delaney

System and Dr. Lisa Shapiro. Molan Milner and Krupski, PLLC Schulman on the brief and orally), for defendants New Hampshire Retirement

Hampshire. attorney general, on the brief and orally), for defendant State of New

orally), for the plaintiffs. THE SUPREME COURT OF NEW HAMPSHIRE Pennsylvania (William T. Payne & a. on the brief, and Stephen M. Pincus brief), and Stember Feinstein Doyle Payne & Cordes, LLC, of Pittsburgh,

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by E-mail at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as p. 2 21-I:30, the premium contribution amounts of $65 per month for

receiving medical and surgical benefits provided pursuant to RSA

allowance of retired state employees under the age of 65 years The retirement system shall deduct from the monthly retirement

RSA 100-A:54, III, which provides in pertinent part: retirees’ health care premium. However, in July 2009, the legislature enacted following this amendment, the State continued to pay the entire cost of the “[t]he state shall pay a premium.” RSA 21-I:30, I (Supp. 1991). Nonetheless, 2 (Supp. 1990). In 1991, the legislature amended the statute to provide that through a separate program and statutory scheme. See retired state employees, subject to funding by the legislature. RSA 21-I:30 and their spouses and dependents, and eligible retirees and their spouses Prior to 1992, the State paid the full health care premium for eligible The State also provides medical and surgical benefits to state employees

are to be used solely to pay the retirement allowances of NHRS members. See final compensation.” RSA 100-A:5, I(b) (2001). The funds held by the NHRS contributions and a state annuity determined in part by the member’s “average 2010). Upon retirement, retirees receive a member annuity based upon their contribute to the NHRS through wage deductions. RSA 100-A:16, I(a) (Supp. eligible retired state employees through the NHRS. Active state employees The record supports the following facts. The State provides pensions to

department of administrative services (DAS). RSA 21-I:30-e (Supp. 2010). Risk Management Fund holds these funds, and they are administered by the funds used to pay for these benefits. Instead, the Employee and Retiree Benefit RSA 21-I:30, II, III (Supp. 2009) (amended 2010). The NHRS does not hold the meet certain eligibility criteria (Group I) and certain vested deferred retirees. state law enforcement personnel (Group II), other retired state employees who Div. of Personnel, 158 N.H. 338, 340 (2009). Eligible retirees include retired (Supp. 2009) (amended 2010); see also State Employees Assoc. of N.H. v. N.H.

N.H. CONST. pt. I, art. 36-a.

employees, appeal an order of the Superior Court (McNamara Hampshire (SEA), SEIU, Local 1984 and four individual retired state DUGGAN, J. The plaintiffs, the State Employees’ Association of New

capacity as chair of the NHRS Board of Trustees. We affirm. Retirement System (NHRS) and Dr. Lisa Shapiro, individually and in her granting summary judgment for the defendants, the State, the New Hampshire request to declare RSA 100-A:54, III (Supp. 2010) unconstitutional and

Government Center, as amicus curiae. David R. Connell, of Concord, on the brief, for the New Hampshire Local accordingly, the impairment does not violate the Federal or State Contract p. 3 However, the court determined that the impairment is not substantial, and, receive their full pensions and that RSA 100-A:54, III impairs that right. motion. The court ruled that the plaintiffs have a vested contractual right to The trial court granted the defendants’ motions and denied the plaintiffs’ The parties subsequently filed cross-motions for summary judgment.

the trial court never ruled. benefits. The plaintiffs also filed a motion for class certification, upon which enjoin the NHRS from deducting the health care premiums from their pension Part I, Article 36-a of the New Hampshire Constitution, and to permanently Contract Clauses of the New Hampshire and United States Constitutions and sought a declaration that RSA 100-A:54, III is unconstitutional under the those similarly situated against the State, the NHRS, and Shapiro. They declaratory judgment action in superior court on behalf of themselves and In response to this statute’s enactment, the plaintiffs brought a

eight had a monthly allowance insufficient to cover the premium contribution. under the age of sixty-five received health coverage. Of these retirees, only As of April 2009, an estimated 3,258 retired state employees and spouses

contributions from pension benefits beginning July 31, 2009. The New Hampshire Retirement System will begin taking premium

each covered retiree and covered spouse.

$65 per person each month from the retiree’s pension account for The law directs the New Hampshire Retirement System to deduct

contribution toward the cost of their health care coverage. New Hampshire retirees and their spouses . . . to make a monthly Effective July 1, 2009 legislation was enacted that requires State of

stated: retired state employees who received benefits pursuant to RSA 21-I:30, which Shortly after the statute’s enactment, the State distributed a notice to all

collect from the retiree the remaining contribution amount.

department of administrative services, which shall invoice and contribution amount, the retirement system shall so notify the the retiree’s monthly allowance is insufficient to cover the certified

employee and retiree benefit risk management fund. In the event

per month. Deducted amounts . . . shall be deposited in the provided that the charge to each household shall not exceed $130

each such retiree and $65 per month for each applicable spouse; matter of law.” N.H. Assoc. of Counties v. State of N.H. p. 4 exists, we determine whether the moving party is entitled to judgment as a 4 its capacity as the nonmoving party and, if no genuine issue of material fact judgment, “we consider the evidence in the light most favorable to each party in not declare it invalid except upon inescapable grounds.” Baines v. N.H. Senate “In reviewing a legislative act, we presume it to be constitutional and will In reviewing the trial court’s rulings on cross-motions for summary (quotations omitted). already past.” Opinion of the Justices (Furlough), 135 N.H. 625, 630 (1992) or attaches a new disability, in respect to transactions or considerations acquired under existing laws, or creates a new obligation, imposes a new duty, “retrospective law” as “every statute, which takes away or impairs vested rights, made . . . for the decision of civil causes . . . .” We have previously defined highly injurious, oppressive, and unjust. No such laws, therefore, should be 23 of the New Hampshire Constitution, which provides: “Retrospective laws are The plaintiffs first contend that RSA 100-A:54, III violates Part I, Article

Trustees, N.H. Judicial Ret. Plan v. Sec’y of State, 161 N.H. 49, 53 (2010). statute, those doubts must be resolved in favor of its constitutionality.” Bd. of N.H. 69, 77-78 (1983). “When doubts exist as to the constitutionality of a susceptible to a construction rendering it constitutional. White v. Lee, 124 such, a statute will not be construed to be unconstitutional when it is conflict exists between it and the constitution.” Id. (quotation omitted). As will not hold a statute to be unconstitutional unless a clear and substantial President, 152 N.H. 124, 133 (2005) (quotation omitted). “In other words, we

627, 640 (2010) (quotation omitted). reduce the State’s cost of providing medical insurance. proof.” Tuttle v. N.H. Med. Malpractice Joint Underwriting Assoc. obligated to send to retirees and instead send them directly to the State to, 159 N.H. 288. “The party challenging a statute’s constitutionality bears the burden of Part I, Article 36-a because it requires the NHRS to deduct funds that it was RSA 100-A:54, III. We review the constitutionality of a statute de contractual rights conferred by RSA 100-A:26-a. They contend that it violates novo. Id. at (2009) (quotation omitted). The sole issue on appeal is the constitutionality of right to receive the full amount of their pension benefits; and (2) their vested contend that it violates Part I, Article 23 because it impairs: (1) their vested, 158 N.H. 284, 287-88 I, Article 23 and Part I, Article 36-a of the New Hampshire Constitution. They On appeal, the plaintiffs assert that RSA 100-A:54, III violates both Part

100-A:26-a (2001) or Part I, Article 36-a. This appeal followed. Clauses. The court further found that RSA 100-A:54, III does not violate RSA court that any alleged impairment is not substantial. p. 5 we find it unnecessary to resolve this issue because we agree with the trial not substantial. The State contests whether there is any impairment at all, but receive the full amount of his retirement allowance, but that the impairment is healthcare premium from his retirement allowance impairs a retiree’s right to The trial court determined that automatically deducting a retiree’s

are equivalent to contractual obligations. See only,” that the retirees have a vested right to certain retirement benefits, which The plaintiffs contend, and the State concedes “for purposes of this case

their full pension benefits. only whether RSA 100-A:54, III substantially impairs the retirees from receiving commencement of permanent employee status.”). Accordingly, we must resolve substantial part of an employee’s compensation and become vested upon the Belknap County, 122 N.H. 614, 621 (1982) (“[Retirement] benefits constitute a

police power.” Id. protected contract rights and the State’s legitimate exercise of its reserved Id. at 642. Our core task is to “strik[e] a balance between constitutionally We do not perform this analysis mechanically because no two cases are alike. impairment of either governmental or private contractual obligations.” Parker purpose.” Tuttle We do not interpret the State Contract Clause “as an absolute bar on the, 159 N.H. at 641 (quotation, brackets and ellipses omitted). muster only if it is reasonable and necessary to serve an important public the contract clauses must be performed, and the law may pass constitutional impairs a contract, “a balancing of the police power and the rights protected by at 631 (quotation omitted). If we determine that the legislation substantially that contractual relationship, and whether the impairment is substantial.” Id. whether there is a contractual relationship, whether a change in law impairs altered. Furlough, 135 N.H. at 630-31. “This inquiry has three components: Clause violation unless it is first shown that a contract has been substantially v. Wakelin, 123 F.3d 1, 4 (1st Cir. 1997). Rather, there is no State Contract

the Federal and State Contract Clauses, respectively. Id. is itself a contract. Id. at 641. We will refer to their equivalent protections as where a law impairs a contract, or where a law abrogates an earlier statute that and Part I, Article 23 of the State Constitution to afford equivalent protections 640-41. Accordingly, we understand Section 10 of the Federal Constitution impairment, and not simply retroactive application of a law, was alleged. Id. at Clause cases to resolve issues raised under Part I, Article 23 when contract protection than its federal counterpart, we have relied upon federal Contract (quotation omitted). Although our retrospective law provision provides greater the contract clause of the United States Constitution.” Tuttle, 159 N.H. at 640 However, we have held that its proscription duplicates the protections found in “Part I, Article 23 does not expressly reference existing contracts. are voluntary and the plaintiffs do not contend that retirees are unaware that p. 6 We also note that the medical and surgical benefits under RSA 21-I:30

Moreover, the cases the plaintiffs rely upon all consider whether the reduction previously stated, RSA 100-A:54, III does not reduce the retirees’ pensions. impairs the retirees’ right to receive their full pensions. In this case, as net worth, rather than whether the chosen method of collection substantially upon whether the premium deduction substantially impairs the retirees’ overall The plaintiffs also contend that the trial court erred because it focused

as mortgages, loans and credit card payments). week period could prevent an employee from meeting financial obligations such withholding an amount equal to ten percent of an employee’s pay over a ten- separately bill them for the amount due, they still must pay the premium. financial situation here. See statutorily authorized healthcare premium from the retirees’ pension or Ass’n of Surrogates, 940 F.2d at 772 (holding that conclude that the trial court did not err in considering the retirees’ overall to charge the premium. Thus, regardless of whether the defendants deduct the in pay would substantially impair the employees’ overall financial situation; we decrease the retirees’ pensions. The plaintiffs do not dispute the State’s ability guaranteed salary, the automatic deduction of healthcare premiums does not deduction for health insurance does not reduce an employee’s contractually RSA 100-A:54, III does not reduce the retirees’ pension. Just as a payroll Here, unlike the salary reductions in the cases cited by the plaintiffs,

Furlough any way reduced its payment obligations to the retirees. For example, in Unlike the cases relied upon by the plaintiffs, the State here has not in

only be considered substantial.” Id. at 634. likely wreak havoc on the finances of many of the affected workers and can contract: the promise of certain work for certain income. Its impact would determined that the proposal “impair[ed] the very heart of an employment employees to take unpaid leave. Furlough, 135 N.H. at 628-29. We

, we considered a proposal by the legislature to require state

Community College Council v. Com., 649 N.E.2d 708, 712 (Mass. 1995). Surrogates v. State of N.Y., 940 F.2d 766, 772 (2d Cir. 1991); Mass. Cir. 1999); Condell v. Bress, 983 F.2d 415, 419 (2d Cir. 1993); Ass’n of Univ. of Hawaii Professional Assembly v. Cayetano, 183 F.3d 1096, 1106 (9th substantially impair the employment contracts of state employees. See, e.g., several other cases that have held that payroll lags and mandatory furloughs the retirees’ pensions into the State’s coffers. They rely upon Furlough and which they are entitled because it diverts either $65 or $130 per month from 100-A:54, III substantially impairs their rights to receive the full pension to specified by law became binding upon hire. Thus, they contend that RSA The plaintiffs argue that the retirees’ right to a pension in the amount review de p. 7 interpretation. The interpretation of a statute is a question of law, which we

Resolution of this issue requires that we engage in statutory

is therefore consistent with RSA 100-A:26 and 100-A:26-a. retirees’ benefits may be subject to assignment, attachment and execution, and RSA 100-A:54, III merely provides an additional circumstance under which the subject to assignment, attachment and execution. The defendants argue that 7 by providing specific circumstances under which the retirees’ benefits may be statute, but rather a statute intended as an exception to RSA 100-A:26 (2001) statutory interpretation, we are the final arbiter of the intent of the legislature The defendants contend that RSA 100-A:26-a is not an anti-alienation

novo. Zorn v. Demetri, 158 N.H. 437, 438 (2009). In matters of

that statute impermissibly impairs their contract with the NHRS. because ERISA does not permit the alienation authorized by RSA 100-A:54, III, A:26-a was incorporated as a term of the retirees’ contract with the NHRS, and Retirement Income Security Act (ERISA). The plaintiffs argue that RSA 100execution of the retirees’ benefits to the extent allowed under the Employee alienation statute that only allows for the assignment, attachment and 100-A:26-a. The plaintiffs contend that RSA 100-A:26-a acts as an antiimpairs the retirees’ right to the anti-alienation protections provided by RSA Clauses of the New Hampshire and United States Constitutions because it The plaintiffs next argue that RSA 100-A:54, III violates the Contract

an important public purpose. need not consider whether the deduction is reasonable and necessary to serve does not substantially impair the retirees’ vested rights to a full pension, we benefit.”). Because we have determined that the automatic premium deduction retiree has less to spend, but there has been no change in his retirement the price of eggs at the supermarket or in a retiree’s apartment rent. The this is no more a change in retirement benefits than would be an increase in premium paid . . . is that a retiree will receive a smaller retirement check, but (N.Y. 1985) (“The result of a reduction in the proportion of the health insurance pension. See Lippman v. Board of Educ. of Sewanhaka, 487 N.E.2d 897, 900 deduction does not substantially impair their vested right to receive a full because the calculation of each retiree’s pension remains unchanged, the a substantial impairment has occurred (quotation omitted)). Accordingly, “[m]inimal alteration of contractual obligations may end the inquiry” of whether is anything other than minimal. See Tuttle, 159 N.H. at 649 (explaining that or another, we cannot say that any alleged alteration of contractual obligations Given that the retirees who are covered must pay the premium in one manner premium toward their healthcare, but how the State can collect that premium. the crux of this dispute is not whether the State may charge retirees a they may decline coverage. The plaintiffs acknowledged at oral argument that private retirement systems.

p. 8 except as herein specifically provided

attachment and execution to the same extent as such rights under

100-A:26 prohibits any alienation of the retirees’ benefits. In Fowler v. Fowler Thus, unless the legislature specifically provides for an exception, RSA

process whatsoever, legal or equitable, and shall be unassignable

the funds created hereby shall be subject to assignment, any person under the provisions of this chapter, and the monies in person to any benefit or to any other right accrued or accruing to Notwithstanding any provision of law to the contrary, the right of a

subject to execution, trustee process, attachment or any other any state, county or municipal tax in the state, and shall not be

Policemen’s Retirement Systems.”). RSA 100-A:26-a provides: (Emphasis added.) attachment and execution of benefits under the New Hampshire and statute. See Laws 1977, ch. 465 (“An act . . . relative to the assignment, A:26-a in order to specifically provide certain exceptions to the anti-alienation legislature. Id. at 449. In the wake of Fowler, the legislature passed RSA 100out exceptions to the anti-alienation statute not specifically provided for by the because the plain language of RSA 100-A:26 did not allow the court to carve retirement benefits for the support of his minor children by court order the monies in the funds created hereby, shall be exempted from 116 N.H. 446 (1976), we rejected a wife’s attempt to attach the husband’s accruing to any person under the provisions of this chapter, and The right of a person to any benefit or to any other right accrued or,

RSA 100-A:26 provides: statute, which the plaintiffs claim was effectively replaced by RSA 100-A:26-a. We begin by examining the language of RSA 100-A:26, the anti-alienation .

statutory scheme. Id. language in light of the policy or purpose sought to be advanced by the enables us to better discern the legislature's intent and to interpret statutory isolation, but rather within the context of the statute as a whole. Id. This or unjust result. Id. Moreover, we do not consider words and phrases in parts of a statute together to effectuate its overall purpose and avoid an absurd add language that the legislature did not see fit to include. Id. We construe all statute as written and will not consider what the legislature might have said or Wolfeboro, 159 N.H. 734, 736 (2010). We interpret legislative intent from the language according to its plain and ordinary meaning. LLK Trust v. Town of look to the language of the statute itself, and, if possible, construe that as expressed in the words of the statute considered as a whole. Id. We first retirement system] to provide for retirement and related benefits shall be held, p. 9 part that “all contributions and payments made to [the New Hampshire Article 36-a of the New Hampshire Constitution, which provides in pertinent Finally, the plaintiffs argue that RSA 100-A:54, III contravenes Part I,

Clauses of the State and Federal Constitutions. right to the anti-alienation protections and thus does not violate the Contract is consistent with the anti-alienation statute, it does not impair the plaintiffs’ 100-A:54, III demonstrates no conflict among them. Because RSA 100-A:54, III legislature. The plain language of RSA 100-A:26, RSA 100-A:26-a, and RSA exception to the anti-alienation statute specifically provided for by the and thus that statute is inapplicable here. RSA 100-A:54, III is simply another None of the exceptions provided in RSA 100-A:26-a are implicated in this case, alienation statute and ties these exceptions to those permitted under ERISA. legislature. RSA 100-A:26-a specifically provides for exceptions to the antito assignment, attachment or execution except as specifically provided by the the retirement benefits of retirees in this state. These benefits are not subject In sum, RSA 100-A:26 stands as an anti-alienation statute with regard to

between the State and Retirees.” resolve the plaintiffs’ contention that RSA 100-A:26-a is “a term of the contract not impair or conflict with any rights provided by RSA 100-A:26-a, we need not Additionally, because we have determined that RSA 100-A:54, III does

that statute. the legislature to provide for exceptions, RSA 100-A:54, III is consistent with receiving state health benefits. Because RSA 100-A:26 specifically authorizes employees under the age of sixty-five a premium contribution for those retirees system to deduct from the monthly retirement allowance of retired state specifically provided for by the legislature. The statute directs the retirement RSA 100-A:54, III is another exception to the anti-alienation statute

additional exceptions to RSA 100-A:26. plain language of RSA 100-A:26-a that prohibits the legislature from adding statute which was meant to replace RSA 100-A:26. There is nothing in the reject the plaintiffs’ contention that RSA 100-A:26-a is an anti-alienation specific exceptions to the anti-alienation provisions of RSA 100-A:26. Thus, we and execution under New Hampshire law. RSA 100-A:26-a simply provides for execution under ERISA, those benefits are subject to assignment, attachment a, if a retiree’s benefits would be subject to assignment, attachment or 1461 (2006 & Supp. 2008). According to the plain language of RSA 100-A:26- Private retirement systems are governed by ERISA. 29 U.S.C. §§ 1001- p. 10 Affirmed

In Judicial Retirement Plan

DALIANIS, C.J.