E-Alert Case Updates

D.C. Court of Appeals reverses and remands finding of unjust enrichment for denied disability claim

Donna Marsden v. District of Columbia
No. 15-CV-1068 (July 14, 2016) District of Columbia Court of Appeals
by Marie Claire Langlois, Summer Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.dccourts.gov/internet/documents/15-CV-1068.pdf

The District of Columbia sued Donna Marsden in the Superior Court of the District of Columbia for unjust enrichment of a disability-compensation claim that was later denied. The overpayment was worth $143,789.89.

Ms. Marsden filed a disability compensation claim for the District of Columbia Office of Risk Management (“ORM”) for an injury received while she was working in the D.C. Public School System. In 2009, the ORM denied the claim and Ms. Marsden appealed. An Administrative Law Judge (“ALJ”) subsequently awarded Ms. Marsden the claim, and the District of Columbia appealed to the Compensation Review Board (“CRB”). The District of Columbia complied with the compensation award while awaiting appeal, and in June 2011, the CRB reversed the ALJ’s decision on the ground that Ms. Marsden has not sought timely review of the ORM decision.

The District of Columbia stopped disability payments to Ms. Marsden starting in September 2011, and in September of 2013 sought reimbursement for overpayments between November 2008 and September 2011. The District sent Ms. Marsden notice, stating that while Ms. Marsden was by no means at fault for the overpayment, the ORM would be taking action to recover payment under D.C. Code § 1-623.29 (2006 Repl.) The notice made clear that Ms. Marsden had a right to request a waiver of the recovery, but that if information supporting a waiver request was not provided within thirty (30) days, that such a request would be denied.

D.C. Code § 1-623.29(a) allows the District to recover overpayments made to recipients of disability compensation in some circumstances. Though section (b) of the statute provides that the provision shall be waived if (1) the incorrect payment was made to an individual who is without fault; and (2) recovery would defeat the purpose or the statute; or (3) recovery would be against equity and good conscience. For instance, if the recipient needs her current income to cover current necessary living expenses or if recovery would cause severe financial hardship, the recovery may be waived.

Ms. Marsden not only missed the thirty (30) day waiver request deadline, but she never filed a request for waiver, nor did she file any evidence or request a hearing in connection with in waiver request. The time limitation may only be vacated upon a showing of good cause for missing the deadline, such as a result of mental or physical incapacity. D.C. Code § 1-623.29(b-1)(1).

D.C. procedure for recovery of disability-compensation overpayments does not provide an administrative remedy. Therefore, the District of Columbia must bring suit in a court of equity to recover. In this case, the District filed a claim for unjust enrichment in the Superior Court.

“Unjust enrichment occurs when: (1) a plaintiff conferred a benefit on the defendant; (2) the defendant retains that benefit; and (3) under the circumstances, the defendant’s retention of the benefit is unjust.” Euclid St., LLC v. District of Columbia Water and Sewer Auth. 41 A.3d 453, 463 n.10 (D.C. 2012) (internal quotations omitted). Ms. Marsden did not dispute that she received the benefit, but instead claims that she had not retained the benefit because she had already spend the overpayment. The Court did not agree with her logic stating that the question is not whether or not Ms. Marsden still maintains the benefit, but instead whether the benefit was returned to the District of Columbia. Yet, the court did not ignore this argument all together. They applied Ms. Marsden’s spending to the third element and ultimate issue on appeal: whether or not the retention is unjust.

While the Court acknowledged that the applicable statutes required that a waiver request be filed within thirty (30) days, it found that none of those statutes explicitly mandated the administrative waiver process, and therefore, did not preclude Ms. Marsden from seeking waiver upon suit. The Court held that a highly-contextual balancing of all the factors is required to make a determination as to whether the retention was unjust. In Ms. Marsden’s case, it looked specifically to five (5) different factors when choosing to remand:

1. Disability statutes are remedial in character and generally construed liberally in favor of claimants. E.g., O’Rourke v. District of Columbia Police & Firefighters’ Ret. & Relief Bd., 46 A.3d 378, 389 (D.C. 2012).
2. The overpayment statute itself reflects a substantive policy against recovery of overpayment when causing undue hardship.
3. The overpayment statute, nor the regulations, nor the District’s notice explicitly state that administrative waiver is the exclusive remedy.
4. The overpayment statute and regulations provide for waiver of the thirty (30) day requirement upon good cause shown.
5. Ms. Marsden argued that her medical condition interfered with her ability to read and understand the ORM’s notification, which may potentially show good cause.

While the Court noted that they would not go as far as to say that recipient’s failure to seek administrative waiver was completely irrelevant, it did believe a balancing of all the factors was important. Because the Court opined that it was not in a proper position to weight those factors, the Court remanded the case for further proceedings.