Service Employees International Union, Local 509 v. Auditor of the Commonwealth
476 Mass. 80
| Mass. | 2016Background
- DMH proposed in 2016 to privatize emergency service programs (ESPs) in the Southeast region by amending a 2012 contract with MBHP so MBHP would procure local private ESP providers.
- DMH submitted the proposal to the State Auditor under the Pacheco Law (G. L. c. 7, §§ 52–55), asserting competitive procurement, no net cost increase, and maintained service quality; SEIU and other unions objected.
- The Auditor approved the proposal, finding the procurement, cost-savings, wage/benefit protections, and quality requirements satisfied; unions sought certiorari review in the county court, which was reported to the SJC.
- Plaintiffs challenged: (1) lack of public procurement for the 2015 amendment; (2) improper delegation of solicitation to MBHP; (3) insufficient duration of wage/benefit protections; (4) failure to account for bumping/seniority costs; and (5) likely reduction in service quality.
- Court reviewed under arbitrary-and-capricious standard for agency discretion and affirmed the Auditor, finding her interpretations reasonable and supported by record evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2015 amendment required public competitive procurement as an "essential" privatization contract | The amendment initiated privatization and thus had to be publicly procured under Pacheco Law | The 2015 amendment was part of the already publicly procured 2012 contract; only contracts that directly govern provision of services (MBHP–provider contracts) are "essential" | Auditor's interpretation reasonable; amendment not an "essential" agreement requiring separate procurement |
| Whether DMH improperly delegated solicitation duties to MBHP | Pacheco Law requires the agency itself to solicit and publicly designate bidders | DMH retained substantive control (criteria, process, final approval), so delegation to MBHP was permissible | Delegation was permissible here because DMH controlled the solicitation and outcome |
| Whether model contracts unlawfully limited Pacheco wage/benefit protections to June 30, 2017 | Protections must continue while corresponding State jobs exist; one-year term is an evasion of the statute | No statutory minimum term; limited term had rational basis tied to existing contract timeline and DMH represented it would extend protections if contract extended | Auditor reasonably accepted DMH's representation and found the term rational; no abuse of discretion |
| Whether Auditor failed to account for bumping/seniority and transition costs, and whether quality would decline | Auditor ignored retraining/bumping costs and understaffing/unlicensed clinician risks, so cost-savings and quality findings are flawed | Auditor considered worst-case transition costs, relied on contract standards, representations, and data showing parity of private providers | Even if some bumping costs were omitted, plaintiffs did not show they would negate ~$7M projected savings; Auditor reasonably found no decline in quality |
Key Cases Cited
- Massachusetts Bay Transp. Auth. v. Auditor of the Commonwealth, 430 Mass. 783 (2000) (discusses Auditor's review role under Pacheco Law)
- Figgs v. Boston Housing Auth., 469 Mass. 354 (2014) (certiorari used to remedy errors of law when no other relief available)
- MacLaurin v. Holyoke, 475 Mass. 231 (2016) (arbitrary-and-capricious review of agency discretion)
- Garrity v. Conservation Comm'n of Hingham, 462 Mass. 779 (2012) (standard for when a decision is arbitrary and capricious)
- Dowling v. Registrar of Motor Vehicles, 425 Mass. 523 (1997) (deference to reasonable agency statutory interpretation)
- Massachusetts Med. Soc'y v. Commissioner of Ins., 402 Mass. 44 (1988) (agency interpretations are upheld when reasonable)
- Forsyth Sch. for Dental Hygienists v. Board of Registration in Dentistry, 404 Mass. 211 (1989) (agency decisions may be disturbed only if legally untenable or unreasonable)