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STATE OF MICHIGAN 

COURT OF APPEALS 

SALLY STEELE-BROWN, 

 Petitioner-Appellee, 

UNPUBLISHED 

November 29, 2016 

v No. 328351 

Ingham Circuit Court 

PUBLIC SCHOOL EMPLOYEES RETIREMENT 

SYSTEM, 

LC No. 15-000146-AE 

 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1 Steele-Brown v Pub Sch Employees Retirement Sys, unpublished order of the Court of Appeals, 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). 
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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.” 
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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 employerprovided 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. 
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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 injuredworker 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 
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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