They’ve been fighting over a $10,000-plus annual pension for 15 years.
No kidding.
Michael Daley served as Plymouth’s finance director in the 1980s and early 1990s. When he retired in 2006, Daley began collecting a pension of roughly $9,696 a year. (With cost-of-living increases the amount would be close to $17,000 now).
In 2010 the Plymouth Retirement Board, which operates the pension plan for town employees, began to question whether Daley was making too much outside income to keep receiving benefits.
Daley ran a Buzzards Bay consulting firm called Financial Advisory Associates, which was pulling in hundreds of thousands of dollars a year providing services to communities, school systems, and retirement boards, according to court documents.
His case became a test of so-called pension double dipping — whether public employees could skirt state pension rules by creating a corporation whose earnings wouldn’t be counted toward the state limit on post-retirement earnings.
Daley, who could not be reached for comment, refused to provide financial records, ignoring a subpoena and arguing that the state law limiting post-retirement employment did not apply to him, according to court documents.
The law, which capped employment to 960 hours a year at a salary that couldn’t exceed that paid for the position he retired from, did not apply to consultants or independent contractors like Daley, he claimed. That law changed in 2009 — making it clear that all income is counted.
His lawyer, Nicholas Poser, argued at the time that the board was harassing his client.
The two sides have been battling ever since.
They have appealed to courts, administrative magistrates, and agencies that oversee public pensions. There have been rulings and reversals and appeal after appeal.
Both sides have won — and lost.
In 2010, the Public Employees Retirement Administration Commission, or PERAC, the state watchdog agency charged with overseeing public pension funds, ruled in Daley’s favor. It said income from the consulting business should not count in determining if Daley was entitled to keep receiving monthly benefits.
But the retirement board persisted, taking steps to obtain records from the public clients listed on the FAA website, calculating that Daley had earned $350,927 more than was permitted between January 1, 2007, and December 31, 2010.
When the board asked Daley for his records, he filed an appeal which went before a magistrate at the state’s Division of Administrative Law Appeals. It handles legal challenges of state agency decisions.
In June 2013, a DALA magistrate reversed PERAC’s decision, ruling that Daley’s consulting income should have been counted in deciding whether he was making too much to keep collecting his pension.
Since that decision, the retirement board has stopped issuing pension checks to Daley. So far It has withheld $135,670.93.
For more than a decade now, the sides have been wrangling over how much, if anything, the board is legally entitled to keep.
In October of 2013, DALA ruled that the retirement board could withhold only the total pension benefits Daley received between 2007 and 2010 — which would have been less than $50,000.
Both sides appealed again. Seven years later, in August 2020, DALA came up with a different number: It was no longer the amount of pension payments Daley had received, but an estimate of his excess earnings, based on limited pay records.
The Plymouth Retirement Board, the magistrate ruled, could legally withhold only $64,040.
Both sides challenged that decision, but both were rebuffed.
Which, more or less, brings us to today. There were other appeals and court cases, but no final resolution.
On June 27, the board’s lawyers – Michael Sacco, Christopher Collins, and Joseph Kenyon – asked a judge to let the board recover the full amount the board alleges Daley earned beyond what he was allowed, a total of $350,927.
DALA’s “arbitrary and capricious” decision to count only $64,010 in excess wages “is unsupported by substantial evidence and erroneous as a matter of law,” the lawyers wrote in the case filed in Plymouth Superior Court.
“The evidence …was unequivocal and uncontroverted with respect to FAA’s gross earnings for those periods,” the lawyers wrote.
Daley first withheld and then destroyed financial records necessary to calculate his actual earnings, the board’s lawyers wrote. He should be punished, not rewarded, for “this outrageous conduct” by being required to forfeit the entire $350,927.
If the board wins, it can continue to withhold Daley’s pension, which would now be $1,399 a month. It would take more than a decade to recover all of it.
Or the board could go to court to enforce the judgment and compel immediate payment, according to Sacco.
But if the board loses, it will have to pay Daley $71,631. That number represents the amount the retirement has already recouped — $135,671 — less the $64,040 DALA said the board was allowed to keep.
Daley’s pension payment could also resume since he dissolved his consulting firm in 2017 and may no longer be earning too much to qualify for the benefit.
No matter who wins, was the case even worth pursuing?
The board did not say how much it has spent on lawyers since the case began in 2010, or whether the expense and the effort were justified.
Sacco said the board “does not track that number,” but has a “fiduciary obligation to comply with the retirement law.” He said the board “does not have the ability to undertake a cost-benefit analysis with respect to such enforcement.”
Reached by phone, Poser, Daley’s lawyer, declined comment. He has not yet responded to the complaint.
Andrea Estes can be reached at andrea@plymouthindependent.org.