                          STATE OF MICHIGAN

                           COURT OF APPEALS



SALLY STEELE-BROWN,                                                UNPUBLISHED
                                                                   November 29, 2016
              Petitioner-Appellee,

v                                                                  No. 328351
                                                                   Ingham Circuit Court
PUBLIC SCHOOL EMPLOYEES RETIREMENT                                 LC No. 15-000146-AE
SYSTEM,

              Respondent-Appellant.


Before: RONAYNE KRAUSE, P.J., and O’CONNELL and GLEICHER, JJ.

PER CURIAM.

        Respondent appeals by leave granted1 the circuit court’s decision reversing a
determination by the Public School Employees’ Retirement Board (the Board) that denied
petitioner’s request to revoke her election of retirement healthcare benefits. We reverse and
remand.

                        I. FACTUAL AND LEGAL BACKGROUND

       Petitioner retired from teaching in 2013, after 31 years of service. In attempting to sort
out her post-retirement healthcare, petitioner realized that she made “a terrifying mistake” in
2012, when she elected to change her retirement health care plan to a portable healthcare fund in
response to changes to legislation surrounding public school employee retirement benefits.

       Our Supreme Court has concisely summarized the history of the legislation involved:

               Facing a budget shortfall in the state public school system in 2010, the
       Legislature enacted Public Act 75, which modified retirement benefits for current
       public school employees. The statute supplemented and altered the Public School
       Employees Retirement Act (Retirement Act), MCL 38.1301 et seq., which
       governs the Michigan Public School Employees’ Retirement System (MPSERS).


1
 Steele-Brown v Pub Sch Employees Retirement Sys, unpublished order of the Court of Appeals,
entered October 7, 2015 (Docket No. 328351).


                                               -1-
       The most controversial provision of 2010 PA 75 was MCL 38.1343e, which
       required all current public school employees to contribute 3% of their salaries to
       the MPSERS to assist in funding retiree healthcare benefits for current and future
       public school retirees. Before the enactment of 2010 PA 75, public school
       employees had never been required to pay for these benefits. MCL 38.1343e
       directed school districts to withhold and remit this 3% amount to the state for
       deposit into a trust account from which current retirees’ healthcare benefits would
       be paid. [AFT Mich v Michigan, 497 Mich 197, 201-202; 866 NW2d 782 (2015).]

        In 2012, the Legislature further modified the Retirement Act by adding new provisions
regarding pensions and retiree healthcare. 2012 PA 300. Specifically, MCL 38.1391a(5) now
enables current public school employees to elect to opt out of retiree healthcare under section 912
to avoid paying the 3% retiree healthcare contribution. Employees who opt out may instead opt
into a Tier 2 account, under which the employee maintains his or her own “portable healthcare
fund,” with the employer matching the employee’s contributions of up to 2% of the employee’s
compensation. MCL 38.1391a(1).

        An employee who opts into the Tier 2 plan does not receive the premium subsidy he or
she would have under section 91. MCL 38.1391(15)(b). The statutes required employees to
elect their healthcare benefits before January 9, 2013. MCL 38.1391a(5).

         In early September 2012, petitioner received a letter from the Office of Retirement
Services (ORS) advising her of the upcoming statutory changes and stating that she would need
to make her elections before the deadline. Petitioner attended seminars and meetings regarding
retirement elections and met with a financial advisor, but the focus of the meetings was on
making the best choice regarding the retirement system, not the healthcare elections. Petitioner
testified that she did not understand the ramifications of the healthcare election choices, did not
understand what “premium subsidy benefit” meant, and believed she was making a decision
about her flexible spending account. Because of her misunderstanding, petitioner believed the
Tier 2 plan provided a “better benefit” for her and her husband, and she selected the Tier 2 plan
when she made her online selections for health benefits during the election period. ORS sent
petitioner a letter confirming her election, but petitioner testified that she did not receive it
because she was in the process of moving.

        Petitioner decided to retire on July 1, 2013. Petitioner did not realize that, in accordance
with the election she had made, she was ineligible for the employer-provided premium subsidy
and had been shifted to the Tier 2 plan as of February 1, 2013. In July 19, 2013, after
petitioner’s retirement paperwork was processed, she received a letter from ORS that
summarized her retirement benefits. With the short length of time between her change to a Tier
2 and her retirement, petitioner’s personal health care fund accrued only about $1,000. Petitioner


2
 Section 91 of the Public School Employees Retirement Act, MCL 38.1301 et seq. (“Retirement
Act”) requires respondent to pay 80% of a retiree’s healthcare insurance premiums for
employees who retire after January 1, 2013. MCL 39.1391. The Office of Retirement Services
called this option the “premium subsidy.”


                                                -2-
testified that it was at this point that she realized for the first time that her election of the personal
healthcare fund meant that, in her retirement, she and her husband were without employer-
provided health insurance.

        Petitioner attempted to rectify her mistake. After ORS advised petitioner that it could not
make any changes to petitioner’s election, petitioner requested an administrative hearing.
Following the hearing, the magistrate issued a nine-page proposal for decision, which concluded
that the relevant statutes did not permit petitioner to change her healthcare election. The
magistrate recognized that there was no dispute that the information and websites that ORS
provided during the election period were “very confusing,” but found that “Petitioner made her
election during [the statutory] window, either on October 23, 2012 or in early January 2013” and
“did not attempt to revoke her election during this window.” Because MCL 38.1391(1)
mandates that a person who made the election under subsection (5) “shall not” receive health
insurance coverage from the retirement system, the magistrate concluded that this “simply does
not provide the Retirement System with any discretion to change Petitioner’s election after the
statutory window closed.” The decision further concluded that the tribunal could not use equity
to rewrite the statute. The Board adopted the magistrate’s decision in November 2014.

       Following the Board’s decision, petitioner filed a claim of appeal in the Ingham Circuit
Court, asserting that the decision contained errors of law. Specifically, petitioner argued that
respondent acted without authorization when it forced petitioner to choose between the premium
subsidy and portable healthcare fund because the statute authorized respondent only to provide
employees the option to opt out of their traditional retiree health insurance coverage in favor of
Tier 2 account provision. She asserted that respondent’s use of jargon created unnecessary
confusion and that petitioner did not make an “election” because she did not knowingly and
voluntarily choose to give up her retiree health insurance. Accordingly, petitioner sought
equitable relief.

        The trial court ruled from the bench, stating:

                When one looks at the transcript in its entirety, it is very clear
        petitioner/appellant was confused, did not make an informed decision as she
        should be allowed to do in regard to her retirement, and, right or wrong, the
        administrative law judge made a decision on this record and said, well, ma’am,
        you’re stuck with this, essentially is the outcome.

               This court finds that that decision of the administrative law judge was not
        based on competent, substantial, material evidence. That the evidence is, in fact,
        the opposite. That although the petitioner was given resources, she was clearly
        confused based on this record, and that this record speaks, despite all the
        resources that the state did give her, to the fact that she hit the wrong button.
        With all that information, there was an oversight and the [magistrate], despite the
        information in this record, ruled the wrong way.

Accordingly, the court ordered respondent to reinstate petitioner’s retiree healthcare benefits
subsidy. Respondent now appeals.


                                                   -3-
                                 II. STANDARD OF REVIEW

       We review a lower court’s review of an administrative decision to determine “whether
the lower court applied correct legal principles and whether it misapprehended or misapplied the
substantial evidence test to the agency’s factual findings, which is essentially a clearly erroneous
standard of review.” VanZandt v State Employees’ Retirement Sys, 266 Mich App 579, 585; 701
NW2d 214 (2005). Substantial evidence is evidence that a reasonable mind would accept as
adequate to accept a decision, and it may be less than a preponderance of the evidence. Id. at
584 “[T]he circuit court may not substitute its judgment for that of the agency, even if the court
might have reached a different result.” Id.

        We review de novo the proper interpretation and application of statutes. Bandeen v Pub
Sch Employees Retirement Bd, 282 Mich App 509, 515; 766 NW2d 10, 14 (2009). When doing
so, we give undefined terms their plain meanings and may consult a dictionary definition for the
meaning of such terms. Id. at 517. An agency’s interpretation of a statute is entitled to
respectful consideration and courts should not overturn such interpretations unless they conflict
with the plain meaning of the statute. In re Rovas Complaint, 482 Mich 90, 117-118; 754 NW2d
259 (2008).

                                         III. ANALYSIS

         We agree with respondent that the circuit court misapplied the substantial evidence test in
this case. Petitioner testified that she did select the personal healthcare fund option during the
elections period, though she did so mistakenly. Her testimony provided more than a scintilla of
evidence that she did, in fact, opt out of the premium subsidy option by opting into the Tier 2
personal healthcare fund option. The Board’s decision recognized that petitioner misunderstood
the consequences of her choice but concluded that the statute did not allow it to grant petitioner
an equitable remedy. Petitioner’s error was not in checking a box she did not mean to check, but
in failing to educate herself regarding the practical effects of her selection.

        An analogous situation arose in the context of worker’s compensation, when the enacting
legislation, 1912 PA 10, was still new. At that time, if an employer chose to be subject to the
act, each of its employees would also be subject to the act unless he or she had given “ ‘notice in
writing that he elects not to be subject to the provisions of this act.’ ” Mackin v Detroit-Timkin
Axle Co, 187 Mich 8, 15-16; 153 NW 49 (1915), quoting 1912 PA 10, part 1, § 8. The injured-
worker plaintiff in Mackin claimed in part that the act was unconstitutional, he received no actual
notice of the act, was unable to elect not to be subject to its provisions, and “there can be no
waiver of constitutional rights without knowledge of the facts upon which it is based.” Id. at 12,
15. The Michigan Supreme Court disagreed, concluding that “[t]he employee is not required to
act without inquiry as to the fact of insurance by the employer. He has only to ask for
information. That is nothing more than is required in most of the affairs of life in order that one
may act intelligently.” Id. at 17 (quotation marks and citation omitted).

        2012 PA 300 does not include an express notice provision. But individuals are not
entitled to notice of new laws unless the enacting statute specifically requires notification. Saxon
v Dep’t of Social Servs, 191 Mich App 689, 701-702; 479 NW2d 361 (1991). In this case, the
efforts of the ORS to educate employees is analogous to the exercise of free will discussed in

                                                -4-
Mackin—petitioner was not required to act without knowledge, and the responsibility was on her
to make an informed choice.

        We reject petitioner’s insistence that the word “elect” requires a knowing and intelligent
selection. While dictionary definitions point toward a preference for an informed choice, they do
not require understanding: “2. To pick out; select: elect an art course. 3. To decide, especially
by preference: elected to take the summer off,” American Heritage Dictionary of the English
Language (5th ed); “opt for or choose to do something,” New Oxford American Dictionary (3d
ed); “to choose; select [we elected to stay],” Webster’s New World College Dictionary (5th ed);
“2 : to make a selection of <will ~ an academic program> 3 : to choose (as a course of action)
esp. by preference <might ~ to sell the business>,” Merriam-Webster’s Collegiate Dictionary
(11th ed).

       To elect a course of action without an understanding of the consequences does not make
the choice less of a choice. Mackin indicates that even a failure to act can be treated as making a
choice; under that view, petitioner’s active selection of the wrong box would certainly be
evidence of her electing it, no matter how much she regretted it later. Accordingly, the Board’s
decision was not contrary to the plain statutory language.

       Because the Board’s decision was based on substantial evidence and not contrary to the
law, the circuit court should have affirmed that decision rather than substituting its own
judgement.

        We reverse and remand for the circuit court to reinstate the Board’s decision. We do not
retain jurisdiction.

                                                            /s/ Peter D. O’Connell
                                                            /s/ Elizabeth L. Gleicher




                                                -5-
