Tiernan v. Magaziner

          For Plaintiff: Gregory L. Boyer, Esq.

          For Defendant Michael P. Robinson, Esq.

          DECISION

          KEOUGH, J.

         Before the Court is a Petition for Declaratory Judgment that was filed by Petitioner Sandra M. Tiernan (Petitioner or Ms. Tiernan). Respondents, Seth Magaziner^[1], in his capacity as General Treasurer of the State of Rhode Island, and Frank J. Karpinski, in his capacity as Executive Director of the Employees' Retirement System of the State of Rhode Island (collectively, Respondents or ERSRI), have filed the instant Motion for Partial Summary Judgment.^[2] Jurisdiction is pursuant to chapter 35 of title 42, the Administrative Procedures Act.

         I

         Facts and Travel

         The facts in this case, which are not in dispute, are detailed in Tiernan I. On April 25, 2002, Petitioner sustained a work-related injury. Tiernan I, at *1. She thereafter applied for, and was granted, workers' compensation benefits through the Rhode Island Division of Workers' Compensation (DWC). Ms. Tiernan began receiving those benefits on April 26, 2002. Id. Subsequently, Petitioner applied to ERSRI for accidental disability benefits, which application was approved on March 9, 2005.^[3] Id. On the following day, the DWC informed ERSRI that Ms. Tiernan was receiving benefits and because the total amount of her workers' compensation benefits exceeded the disability benefits awarded to her, ERSRI initially did not pay any disability benefits to Ms. Tiernan. Id.

         Thereafter, DWC notified Petitioner that it intended to discontinue her supplemental benefits. In response, she filed a petition for continuation of benefits, and later a petition for coordination of benefits pursuant to G.L. 1956 § 28-33-45(a). Id. In February of 2009, the Workers' Compensation Court (WCC) entered a Pre-Trial Order coordinating Ms. Tiernan's workers' compensation benefits with her disability benefits, the purpose of which was to ensure that Petitioner would receive "compensation and retirement benefits equal to the greater of the compensation or retirement benefits for which [she] was otherwise eligible . . . ." Based upon certain agreed upon calculations, the Court, which had originally ordered DWC to supplement Ms. Tiernan's benefits in the amount of $21.27 per week, amended the Order to provide for supplemental benefits in the amount of $76.80 per week, beginning March 1, 2009.

         Once ERSRI learned about the Suspension Agreement, it began paying Ms. Tiernan her disability retirement benefits retroactive to March 2, 2009. Tiernan I, at *2. When ERSRI was informed subsequently about the monthly supplement that DWC would be giving to Petitioner pursuant to the original February 25, 2009 WCC Order, it began deducting those benefits from the awarded disability pension. Id. As a result, counsel for Petitioner requested a clarification from ERSRI with respect to its position regarding the supplemental benefits and also filed a declaratory judgment action, pursuant to § 42-35-7. Id.

         Thereafter, ERSRI received notice of the increase in benefits being paid to Ms. Tiernan and as a result, it notified her that effective immediately, it was going to offset her workers' compensation payments retroactive to March 1, 2009. Id. ERSRI offered to provide a hearing in the event that Petitioner 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 Petitioner had exhausted her administrative remedies. Id.

         Thereafter, ERSRI issued a formal administrative denial of Ms. Tiernan's request to reconsider the decision to offset her workers' compensation benefits from her disability retirement benefits, but agreed to schedule a hearing on the matter. Id. At that hearing, counsel submitted a stipulation of facts, with attached exhibits, and 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. Id. After hearing arguments of counsel and reviewing their post-hearing memoranda, the hearing officer issued a final decision affirming the administrative denial of Petitioner's request to reconsider the decision to offset her workers' compensation payments. Id.

         After the hearing but prior to the final decision, the executive director of ERSRI also informed Petitioner that the agency intended to recover overpayments made to her retroactive to March 1, 2009. Id. Specifically, because Petitioner 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 Petitioner had been overpaid by a total of $24, 396.24 and indicated it would recover the overpayments in deductions from her disability allowance. Id. Furthermore, because she was still receiving the weekly workers' compensation supplement to her disability retirement benefits, ERSRI indicated that it intended to continue to offset her weekly payment of $76.80. Id. The combined effect of these actions would leave the Petitioner with a monthly disability pension benefit in the amount of $49.01 per month until such time as the overpayments were recouped. Id.

         Thereafter, Petitioner filed an Amended Complaint adding an administrative appeal to the already existing declaratory judgment action. She then filed a Second Amended Complaint adding an estoppel claim. It is the Second Amended Complaint that is the operative pleading in this matter. Respondents moved for summary judgment as to Counts I and ...