Opinion
C. A. PC-2009-7242
07-10-2018
SANDRA M. TIERNAN v. SETH MAGAZINER, IN HIS CAPACITY AS GENERAL TREASURER OF THE STATE OF RHODE ISLAND and FRANK J. KARPINSKI, IN HIS CAPACITY AS EXECUTIVE DIRECTOR OF EMPLOYEES' RETIREMENT SYSTEM OF RHODE ISLAND
For Plaintiff: Gregory L. Boyer, Esq. For Defendant: Michael P. Robinson, Esq.
For Plaintiff: Gregory L. Boyer, Esq.
For Defendant: Michael P. Robinson, Esq.
DECISION
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). Seth Magaziner (Magaziner), 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).
The Second Amended Complaint mistakenly identifies ERSRI as the "Employees' Retirement System of Rhode Island."
Pursuant to Super. R. Civ. P. 25(d)(1), Seth Magaziner is automatically substituted for his predecessor, Frank Caprio, as a party to this litigation.
Facts and Travel
The facts in this case are not in dispute. 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.
On April 29, 2010, Tiernan and ERSRI agreed to a stipulation of facts. (Stipulated Facts.)
Subsequently, Ms. Tiernan applied to ERSRI for accidental disability benefits, which application was approved on March 9, 2005. 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.
Although the record is not clear, it appears as though the accidental disability benefits were conferred pursuant to G.L. 1956 § 36-10-14, "Retirement for Accidental Disability."
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 of Review
Pursuant to § 42-35-15 of the APA, any person who has exhausted all administrative remedies available at the agency level, and who is aggrieved by a final order in a contested case, is entitled to judicial review. Sec. 42-35-15(a). However, under the APA, the Court's review of an agency decision is limited. Section 42-35-15 provides, in pertinent part:
"The court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact. The court may affirm the decision of the agency or remand the case for further proceedings, or it may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:
(1) In violation of constitutional or statutory provisions;
(2) In excess of the statutory authority of the agency;
(3) Made upon unlawful procedure;
(4) Affected by other error or law;
(5) Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or
(6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion." Sec. 42-35-15(g).
When reviewing a decision under the APA, this Court may not substitute its judgment for that of the agency on questions of fact. Johnston Ambulatory Surgical Assocs., Ltd. v. Nolan, 755 A.2d 799, 805 (R.I. 2000). Accordingly, the Court is limited to "an examination of the certified record to determine if there is any legally competent evidence therein to support the agency's decision." Barrington Sch. Comm. v. R.I. State Labor Relations Bd., 608 A.2d 1126, 1138 (R.I. 1992). Legally competent or substantial evidence is "relevant evidence that a reasonable mind might accept as adequate to support a conclusion, and means [an] amount more than a scintilla but less than a preponderance." Caswell v. George Sherman Sand & Gravel Co., Inc., 424 A.2d 646, 647 (R.I. 1981).
Questions of law, however, are reviewed de novo and when conducting such an analysis, the court is required to give deference to an agency's interpretation of a statute that it has been "charged with administering and enforcing, provided that the agency's construction is neither clearly erroneous nor unauthorized." Town of Burrillville v. Pascoag Apartment Assocs., LLC, 950 A.2d 435, 445 (R.I. 2008) (internal citation and quotation marks omitted). Such deference is accorded even if an alternative, equally reasonable interpretation exists. Pawtucket Power Assocs. Ltd. P'ship v. City of Pawtucket, 622 A.2d 452, 456-57 (R.I. 1993). That said, a court will not apply a statute in a manner that will defeat its underlying purpose." Arnold v. R.I. Dep't of Labor & Training Bd. of Review, 822 A.2d 164, 169 (R.I. 2003). Ultimately, a court's deference to an agency's interpretation depends on the "'persuasiveness of the interpretation, given all the attendant circumstances."' Town of Burrillville, 950 A.2d at 446 (quoting Unistrut Corp. v. State Dep't of Labor & Training, 922 A.2d 93, 101 (R.I. 2007)).
Analysis
The core issue of the instant appeal involves the application to two competing statutory provisions; specifically, § 28-33-45, which provides for the coordination of workers' compensation benefits with retirement benefits so that the recipient receives the sum equal to the greater of the two benefits, and § 36-10-3, which allows the State to offset any workers' compensation benefits received by a state employee against any death or disability benefits to which he or she may be entitled. On their face, the two provisions appear to be contradictory such that any analysis must begin with a careful review of the pertinent statutory language as well as the legislative history of each provision.
Chapter 10 of title 36 of the Rhode Island General Laws addresses the Retirement System--Contributions and Benefits of Public Officers and Employees. Section 36-10-31, which was enacted in 1936 by P.L. 1936, ch. 2334, § 11 and is entitled "Deduction of amounts received from workers' compensation or as damages," mandates the offset of any workers' compensation monies paid to retirees who are also receiving disability pensions. In pertinent part, that statute provides:
"Any amount paid or payable under the provisions of any workers' compensation law exclusive of Medicare set-aside allocations, specific compensation benefits or any benefits authorized by the terms of a collective bargaining agreement * * * shall be offset against and payable in lieu of any benefits payable out of funds provided by the state under the provisions of this chapter on account of the death or disability of a member . . . If the value of the total commuted benefits under any workers' compensation law or action is less than the present value on an actuarial basis of the benefits otherwise payable under this chapter, the value of the commuted payments shall be deducted from the present value of the benefits and the balance thereof shall be payable under the provisions of this chapter." Id. (Emphasis added.)
In contrast, § 28-33-45, which was enacted in 1992 by P.L. 1992, ch. 31, § 9 and is entitled "Coordination of benefits," states that:
"The department of labor and training shall immediately promulgate rules and regulations concerning the offset of workers' compensation benefits and retirement benefits. It is the intention of the general assembly that at retirement a person receiving benefits under chapters 29 - 38 of this title shall receive compensation and retirement benefits in a sum equal to the greater of the compensation or retirement benefits for which that person was otherwise eligible, however, not including retirement benefits to the extent derived exclusively from employee contributions." Id. (Emphasis added).
With the inclusion of accidental disability benefits received pursuant to chapter 36 of the General Laws, it would appear as though § 28-33-45 applies to disability retirement benefits received by public officials and employees. Accordingly, this Court cannot state as a matter of law, as respondent suggests, that § 28-33-45 applies solely to personal retirement benefits or service-related public employee pensions. Intended or not, the contradiction is apparent and the Court must attempt to reconcile the competing provisions.
Although not raised by the parties, there is a question in this Court's mind whether the statute establishes certain rights or is instead enabling legislation which directs the Department of Labor and Training to promulgate rules and regulations to effectuate the legislative intent. Nothing in the record refers to any such rules nor does either party contest the authority of the WCC to coordinate benefits pursuant to the statute; accordingly, this Court will refrain from addressing this issue.
The Appellant maintains that because § 28-33-45 was enacted after § 36-10-31, it should take precedence and serve to prohibit the application of the statutory offset provisions of § 36-10-31. Moreover, Appellant asserts that this Court should presume that the Legislature knew of the offset provisions mandated in § 36-10-31 when it enacted § 28-33-45, which clearly expressed its desire to maximize the benefits available to qualified employees. The Appellant maintains that by doing so the Legislature effectively repealed the offset provisions applicable to public sector employees; or, in other words, had the Legislature intended to exempt public employee retirement benefits from the provisions of § 28-33-45, it could have indicated that when drafting the statute. Unfortunately for Appellant, this position is unavailing in several respects.
First and foremost, basic principles of statutory construction prohibit this Court from adopting Appellant's "implied revocation" approach to interpreting the two conflicting statutory provisions. "It is well settled that when the language of a statute is clear and unambiguous, this Court must interpret the statute literally and must give the words of the statute their plain and ordinary meanings." Such v. State, 950 A.2d 1150, 1156 (R.I. 2008) (internal citations omitted). It is equally well-settled that "statutes relating to the same subject matter should be considered together so that they will harmonize with each other and be consistent with their general objective scope." Id.
"This Court's method of statutory construction involves a 'practice of construing and applying apparently inconsistent statutory provisions in such a manner so as to avoid the inconsistency.' In such cases, 'courts should attempt to construe two statutes that are in apparent conflict so that, if at all reasonably possible, both statutes may stand and be operative.' We engage in this exercise to give effect 'to the apparent object and purpose of the Legislature.' As this Court has explained, 'repeals by implication are not favored by the law,' and '[o]nly when the two statutory provisions are irreconcilably repugnant will a repeal be implied and the last-enacted statute be preferred.'" Id. at 1156.
Moreover, Ms. Tiernan's argument fails to account for the fact that § 36-10-31 was amended as recently as 2014, long after the passage of § 28-33-45 such that between the two statutes, § 36-10-31 is apparently the more recently enacted. Indeed, the 2014 Amendment left the essence of § 36-10-31 untouched but added a number of exclusions including "Medicare set- aside allocations, specific compensation benefits or any benefits authorized by the terms of a collective bargaining agreement." What was not included was exclusion for payments received pursuant to § 28-33-45. Had the Legislature intended to exempt awards made pursuant to the Workers' Compensation Act from the offset provisions applicable to public sector employees, it could have included them with the 2014 Amendments. The failure to do so, in this Court's opinion, evinces the Legislature's intention to include these monies with those subject to the applicable offset provisions of § 36-10-31.
This conclusion seems to be further supported by our Supreme Court's holding in Waterman v. Caprio, 983 A.2d 841 (R.I. 2009). In that particular case, the Court considered whether a payment made in accordance with a workers' compensation settlement reached pursuant to § 28-33-25.1 constituted an amount paid for purposes of the offset provisions of § 36-10-31. Specifically, plaintiff alleged that he had been injured while employed as a correctional officer with the State. He thereafter applied for workers' compensation benefits, which application was contested, and also filed a claim for accidental disability retirement from the State. 983 A.2d at 843. While negotiating his workers' compensation claim, plaintiff inquired whether any workers' compensation settlement would be offset against his disability retirement payments. The plaintiff was told by the executive director of the State's Retirement System that as long as the settlement was not considered a workers' compensation payment or benefit, the offset provision set forth in § 36-10-31 did not apply. Id. The plaintiff thereafter negotiated a settlement of his workers' compensation claim but was subsequently informed that his retirement benefits would not begin until the entire amount was offset against his pension benefits. As a result, plaintiff filed suit alleging the State, through the Employees' Retirement System, had misapplied the offset provisions of § 36-10-31 to his workers' compensation settlement. Id.
Section 28-33-25.1 "Settlement of disputed cases," provides for court approval of negotiated settlements in cases where liability of the employer has not been finally established. The statute further provides that any payments by the employer or insurer shall not be deemed to be the payment of workers' compensation benefits, but rather are considered a compromise payment of a disputed claim.
In affirming the trial court's decision that the offset contemplated by § 36-10-31 would apply to money received from settlements negotiated pursuant to § 28-33-25.1, the Waterman court noted that "[t]he terms of § 36-10-31 are not only clear and unambiguous, but also very broad. Section 36-10-31 requires offsets to '[a]ny amount paid or payable under the provisions of any workers' compensation law.'" 983 A.2d at 845. In that § 28-33-25.1 is "part of this state's workers' compensation law," the court rejected plaintiff's argument that settlement proceeds were not covered by the applicable offset provisions. "[T]he offset required by § 36- 10-31 simply is not limited to traditional workers' compensation benefits. If the Legislature wanted to so limit the offsets, it could have done so when it enacted the statute; however, the broader terminology of the enactment embraces, 'any workers' compensation law.'" Id. Moreover, the court opined that this was done deliberately so that "money received under any workers' compensation claim is offset against disability retirement payments to prevent a state employee from recovering twice." Id. See also Sampson v. Employees' Ret. Bd., State of R.I., 651 A.2d 1238 (Mem.) (R.I. 1994) (§ 36-10-31 requires retirement board offset disability payments by any amounts received as workers' compensation benefits).
The Appellant insists, however, that the Waterman case is distinguishable in that it involved a separate statute which conferred certain benefits to State employees whereas § 28-33-45 seeks to coordinate retirement benefits with workers' compensation benefits. This argument, while certainly creative and not without merit, does not assist Ms. Tiernan in the instant matter. It is true that the workers' compensation benefits received in Waterman are different from those in the case at bar. It is also true that the workers' compensation benefits in this case are supplementing her disability retirement benefits and are not additional payments that would constitute double recovery for public employees. Nevertheless, it is also undeniable that both situations deal with an amount payable under the provisions of the Workers' Compensation Act. In that the broad terminology of § 36-10-31 embraces any amount paid or payable under the provisions of any workers' compensation law, this Court is constrained to conclude that benefits received pursuant to § 28-33-45 are subject to the offset provisions of § 36-10-31.
Despite this, Appellant argues that if the intent of § 28-33-45 is to ensure that a person receiving benefits gets compensated "in a sum equal to the greater of the compensation or retirement benefits for which that person was otherwise eligible," ERSRI's insistence on applying the offsets provided in § 36-10-31 would certainly frustrate that purpose. Specifically, Appellant's position is that by prescribing coordination of workers' compensation benefits with retirement benefits, the Legislature envisioned the combination of the two sources being paid to the employee equal to the greater of the two sums to which the employee would otherwise be entitled. While the Court agrees that the contradiction lends itself to more than one reasonable interpretation and is certainly an understandable source of frustration for the Appellant, this Court is required to defer to the agency charged with applying it "as long as that construction is not clearly erroneous or unauthorized." State v. Swindell, 895 A.2d 100, 105 (R.I. 2006) (internal quotation marks omitted); see also Town of Richmond v. R. I. Dept. of Envtl. Mgmt., 941 A.2d 151, 157 (R.I. 2008).
In this instance, the Legislature has charged the Retirement Board with the "general administration and the responsibility for the proper operation of the retirement system." Sec. 36-8-3. To that end, § 36-8-3 states that the retirement board shall, "from time to time, establish rules and regulations for the administration and transaction of the business of the retirement system." Id. Accordingly, the interpretation, application and enforcement of § 36-10-31 appears to fall squarely within its purview. As ERSRI's interpretation of that statute is entitled to great weight and deference and is not clearly erroneous or unauthorized, the Court cannot find the application of § 36-10-31's offset provisions in the instant matter to be in error.
Finally, this Court is not persuaded that ERSRI's decision to enforce the offset provisions of § 36-10-31 effectively and improperly overturns a determination of the WCC. The WCC's Pre-Trial Order mandated that "the respondent shall pay to the petitioner weekly compensation benefits in the amount of $21.27 above and beyond the employee's entitlement to her State disability pension benefits from March 1, 2009, and continuing until further order of the Workers' Compensation Court." See Ex. F to Stipulated Facts. It is clear that the WCC intended for Appellant to continue receiving additional workers' compensation benefits to which she was entitled pursuant to § 28-33-45, and it would appear that ERSRI's actions serve to frustrate that purpose. However, in electing to enforce the offset provisions of § 36-10-31, ERSRI did not order the State to cease making the weekly workers' compensation benefit payments to Ms. Tiernan; in fact, she continues to receive those payments at the adjusted rate. Instead, ERSRI's decision merely concluded that it was statutorily required to offset those amounts from Appellant's accidental disability pension benefits. Accordingly, this Court finds that the decision of the Respondents did not impermissibly constitute a reversal of the WCC's determination and therefore cannot serve as a basis for granting Appellant the requested relief.
Conclusion
In sum, after a thorough review of the record and considering the arguments of counsel, this Court finds that the decisions of the Hearing Officer and the Retirement Board were not clearly erroneous, made upon improper procedure, or in violation of statutory provisions. The Court further finds that the application of the offset provisions of § 36-10-31 was within ERSRI's authority, was not arbitrary or capricious or characterized by abuse of discretion, and was not affected by clear error or law. Accordingly, the Decision of the Retirement Board, upholding the decision of the Hearing Officer, is hereby affirmed. Counsel shall submit the appropriate judgment for entry.