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Tiernan v. Magaziner

Superior Court of Rhode Island, Providence

July 10, 2018


          For Plaintiff: Gregory L. Boyer, Esq.

          For Defendant: Michael P. Robinson, Esq.


          KEOUGH, J.

         Before this Court is the appeal of Sandra M. Tiernan (Appellant or Ms. Tiernan) from a final decision of the Retirement Board of the Employees' Retirement System of the State of Rhode Island (ERSRI).[1] Seth Magaziner (Magaziner), [2] in his capacity as General Treasurer of the State of Rhode Island, and Frank J. Karpinski (Karpinski or Director Karpinski), in his capacity as Executive Director of ERSRI (collectively Respondents), have opposed the instant appeal. Jurisdiction is pursuant to G.L. 1956 §§ 42-35-1, et seq. of the Administrative Procedures Act (APA).

         Facts and Travel

         The facts in this case are not in dispute.[3] On April 25, 2002, Appellant sustained a work-related injury, which injury caused her to suffer cervical strain, low back strain, and left shoulder strain. Stipulated Facts ¶ 1. She thereafter applied for, and was granted, workers' compensation benefits through the Rhode Island Division of Workers' Compensation (DWC). She began receiving those benefits on April 26, 2002. Id.

         Subsequently, Ms. Tiernan applied to ERSRI for accidental disability benefits, which application was approved on March 9, 2005.[4] Id. at ¶ 2. On the following day, the DWC informed ERSRI that Ms. Tiernan was receiving benefits in the amount of $266.04 per week. Id. at ¶ 3. Because the total amount of Ms. Tiernan's workers' compensation benefits exceeded the $688.13 monthly disability benefits awarded to her, ERSRI initially did not pay any disability benefits to Ms. Tiernan. Id. at ¶ 4. In other words, the entirety of Ms. Tiernan's disability pension benefits was offset from her workers' compensation benefits. See ERSRI Letter, Jan. 19, 2010.

         On November 28, 2007, DWC notified Appellant that it intended to discontinue her supplemental benefits as of May 28, 2008. Id. at ¶ 9. In response, Ms. Tiernan filed a petition for continuation of benefits pursuant to G.L. 1956 § 28-33-18(d), and later a petition for coordination of benefits pursuant to § 28-33-45(a). See Second Am. Compl. ¶ 6. In February of 2009, Appellant and DWC executed a Suspension Agreement stating that Ms. Tiernan's workers' compensation benefits would be terminated on March 1, 2009. Stipulated Facts ¶ 5. At or around the same time, the Workers' Compensation Court (WCC) entered a Pre-Trial Order coordinating Ms. Tiernan's workers' compensation benefits with her disability benefits pursuant to G.L. 1956 § 28-33-45(a). See WCC Pre-Trial Order 1, Feb. 25, 2009. The purpose of the Pre-Trial Order was to ensure that Appellant would receive "compensation and retirement benefits equal to the greater of the compensation or retirement benefits for which [she] was otherwise eligible . . . ." Id. at ¶ 6. Accordingly, based upon her receiving $1064.64 per month in workers' compensation benefits, the WCC ordered DWC to supplement Ms. Tiernan's weekly disability retirement benefits in the amount of $21.27 per week. Id. By mutual agreement of the parties, the Order was subsequently modified to correct a computation error, resulting in an increase of Ms. Tiernan's supplemental benefits from $21.27 per week to $76.80 per week, commencing March 1, 2009. Stipulated Facts ¶¶ 7, 11.

         On April 28, 2009, ERSRI learned about the Suspension Agreement and began paying Ms. Tiernan her disability retirement benefits retroactive to March 2, 2009. See ERSRI Letter, Jan. 19, 2010. Two days later, ERSRI was informed about the monthly supplement that DWC would be giving to Appellant pursuant to the February 25, 2009 WCC Order and began deducting those benefits from the awarded disability pension. Stipulated Facts ¶¶ 8, 12. Based upon this deduction, counsel for Appellant complained to ERSRI and requested a clarification of its position with respect to the matter. Id. at ¶ 12. In December 2009, counsel for Ms. Tiernan also filed a declaratory judgment action, pursuant to § 42-35-7. Id. at ¶ 13.

         Thereafter, ERSRI received notice of the mutual agreement between Ms. Tiernan and DWC regarding the February 25, 2009 WCC Order, which had increased Appellant's supplemental DWC benefits to $76.80. Id. at ¶ 14. As a result, ERSRI informed Ms. Tiernan that effective immediately, it was going to offset her workers' compensation payments retroactive to March 1, 2009. See ERSRI Letter 2, Jan. 19, 2010. ERSRI offered to provide a hearing in the event that Ms. Tiernan objected to the determination and indicated that she was required to exhaust her administrative remedies before pursuing an action in the Superior Court. Id. Subsequently, the parties entered into a stipulation indicating that the declaratory judgment action would be held in abeyance until Appellant had exhausted her administrative remedies. Stipulated Facts ¶ 16.

         In a letter dated January 22, 2010, Ms. Tiernan formally requested that ERSRI reconsider its position or, in the alternative, refer the matter to a hearing officer. See Karpinski Letter 1, Jan. 29, 2010. On January 29, 2010, ERSRI, through its executive director, issued a formal administrative denial of Ms. Tiernan's request. A subsequent hearing on the matter was conducted on April 29, 2010. Id.

         At that hearing, counsel for the parties submitted a stipulation of facts, with attached exhibits. Tr. 2:18-20, Apr. 29, 2010. Both sides agreed that the matter involved a narrow question of law; namely, whether the coordination of benefits provision of the Workers' Compensation Act is subject to the offset provisions contained in § 36-10-31, which allows for a deduction of amounts paid pursuant to the provisions of the workers' compensation law. Tr. 5:2-25-7:1-8, Apr. 29, 2010. After hearing arguments of counsel and reviewing their post-hearing memoranda, the hearing officer issued a decision affirming the administrative denial of Appellant's request to reconsider the decision to offset her workers' compensation benefits from her disability retirement benefits. See, Decision 5, Oct. 15, 2015. Thereafter, Director Karpinski notified Ms. Tiernan that the Retirement Board had affirmed the decision of the Hearing Officer, thereby constituting a final decision of ERSRI on this issue. See Karpinski Letter 1, Dec. 16, 2015.

         It is of note that after the hearing but prior to the final decision, Director Karpinski also informed Ms. Tiernan that ERSRI intended to recover overpayments retroactive to March 1, 2009. See Karpinski Letter 1, May 28, 2015. Specifically, Director Karpinski indicated that since Ms. Tiernan had been collecting her pension since March 2, 2009, with no offset of the $76.80 per week she had been receiving in workers' compensation benefits, ERSRI believed that Ms. Tiernan had been overpaid by a total of $24, 396.24. Id. He further indicated that "[s]ince the overpayments were made over the course of 75 pay periods, we will recoup the monies at $325.28 per month for 6 years and 3 months beginning in June 2015 . . ." Id. Furthermore, because Ms. Tiernan was still receiving the weekly workers' compensation supplement to her disability retirement benefits, Director Karpinski indicated that ERSRI intended to continue to offset her weekly payment of $76.80 for a total of $332.80 per month. Id. at 2. The combined effect of these actions would leave the Appellant with a monthly disability pension benefit in the amount of $49.01 per month until such time as the overpayments were recouped. Id.

         On December 14, 2016, Ms. Tiernan filed an Amended Complaint adding an Administrative Appeal to the already existing declaratory judgment action. Thereafter, she filed a Second Amended Complaint adding an estoppel claim. It is the Second Amended Complaint that is the operative pleading in this matter. The Second Amended Complaint contains three counts: a Declaratory Judgment action pursuant to § 42-35-7 (Count I); an Administrative Appeal pursuant to the APA (Count II); and, an Estoppel claim (Count III). On June 6, 2017, Respondents moved for summary judgment as to Counts I and III of the Second Amended Complaint and a hearing was scheduled for August, 29, 2017. By agreement of the parties, that hearing date was vacated and in the alternative the parties requested that the Administrative Appeal be decided first.

         In support of her appeal, Ms. Tiernan advances several arguments. As a threshold matter, Appellant maintains that it is inappropriate for ERSRI to overturn a determination of the WCC, which she maintains is what happened by virtue of the decision to offset the supplemental workers' compensation benefits she was receiving. Furthermore, Appellant argues that even if ERSRI's decision did not encroach upon the authority of the WCC, it is substantively defective in that the statutory provisions of § 28-33-45 are controlling in the instant matter. Specifically, Ms. Tiernan maintains that because § 28-33-45, which provides for the coordination and/or supplementation of benefits, was enacted subsequent to the offset provisions of § 36-10-31, it should be presumed that the Legislature intended for it to be applied in place of the offset provisions. The Respondents have replied by arguing that § 28-33-45 applies to a far broader range of recipients than state employees receiving a disability pension. Moreover, Respondents insist that § 36-10-31 explicitly requires ERSRI to offset any monies received by public sector employees pursuant to the provisions of the Workers' Compensation Act against sums payable under a disability retirement pension. Accordingly, ERSRI maintains the hearing officer's decision should be affirmed.

         Standard ...

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