Court Opinion

ID: 4015553
Source: CourtListenerOpinion
Date Created: 2016-07-14 04:03:10.916259+00
Date Added: 2024-06-11T14:30:58.423541
License: Public Domain

District of Columbia
                                Court of Appeals
No. 15-CV-1068
                                                                       JUL 14 2016
DONNA MARSDEN,
                                                 Appellant,

     v.                                          CAB-2744-14

DISTRICT OF COLUMBIA,
                                                 Appellee.

              On Appeal from the Superior Court of the District of Columbia
                                    Civil Division

         BEFORE: THOMPSON and MCLEESE, Associate Judges; and FARRELL, Senior
Judge.

                                    JUDGMENT

               This case came to be heard on the transcript of record and the briefs filed,
and was argued by counsel. On consideration whereof, and as set forth in the opinion
filed this date, it is now hereby

             ORDERED and ADJUDGED that the judgment on appeal is reversed and
remanded for further proceedings

                                          For the Court:

Dated: July 14, 2016.

Opinion by Associate Judge Roy W. McLeese.

Concurring opinion by Senior Judge Michael W. Farrell.
Notice: This opinion is subject to formal revision before publication in the
Atlantic and Maryland Reporters. Users are requested to notify the Clerk of the
Court of any formal errors so that corrections may be made before the bound
volumes go to press.

            DISTRICT OF COLUMBIA COURT OF APPEALS

                                  No. 15-CV-1068
                                                                      7/14/16
                           DONNA MARSDEN, APPELLANT,

                                         V.

                         DISTRICT OF COLUMBIA, APPELLEE.

                          Appeal from the Superior Court
                           of the District of Columbia
                                 (CAB-2744-14)

                         (Hon. Maurice A. Ross, Trial Judge)

(Argued April 19, 2016                                     Decided July 14, 2016)

      Bernadette Sargeant for appellant.

      Richard S. Love, Senior Assistant Attorney General, with whom Karl A.
Racine, Attorney General for the District of Columbia, Todd S. Kim, Solicitor
General, and Loren L. AliKhan, Deputy Solicitor General, were on the brief, for
appellee.

      Before THOMPSON and MCLEESE, Associate Judges, and FARRELL, Senior
Judge.

      Opinion for the court by Associate Judge MCLEESE.

      Concurring opinion by Senior Judge FARRELL, at page 13.
                                         2

      MCLEESE, Associate Judge:       Appellee the District of Columbia sued

appellant Donna Marsden, seeking to recover over $100,000 that the District had

paid Ms. Marsden in connection with a disability-compensation claim that was

ultimately denied. The trial court granted summary judgment to the District on the

District’s claim of unjust enrichment.       We reverse and remand for further

proceedings.

                                        I.

      Ms. Marsden filed a claim for disability compensation with the District of

Columbia Office of Risk Management (ORM) in connection with an injury that Ms.

Marsden sustained while working as an employee of the District of Columbia

Public Schools. Marsden v. District of Columbia Dep’t of Emp’t Servs., 58 A.3d
472, 473 (D.C. 2013).     The ORM denied the initial claim in 2009, and Ms.

Marsden appealed. Id. After an Administrative Law Judge (ALJ) awarded Ms.

Marsden disability compensation, the District appealed to the Compensation

Review Board (CRB).      Id.   While the appeal was pending, the District sent

payments to Ms. Marsden in compliance with the ALJ’s decision. In June 2011,

the CRB reversed the ALJ’s decision, on the ground that Ms. Marsden had not

timely sought review of the ORM’s denial. Id. The District stopped sending
                                           3

payments to Ms. Marsden in September 2011. This court affirmed the CRB’s

decision in January 2013. Id. at 472-75.

      In September 2013, the ORM sent Ms. Marsden written notice that she had

received a $143,789.89 overpayment between November 2008 and September

2011. The notice included a preliminary determination that, although Ms. Marsden

was not at fault for the overpayment, the ORM would be taking action under D.C.

Code § 1-623.29 (2006 Repl.) to recover the full amount.             The notice also

explained that Ms. Marsden had “the right to request a waiver of the . . . recovery.”

Finally, the notice stated that if information supporting a waiver request was not

provided within thirty days, the waiver request would be denied. Ms. Marsden did

not file a waiver request.

      In May 2014, the District filed a complaint against Ms. Marsden in Superior

Court, among other things seeking recovery under the doctrine of unjust

enrichment. The trial court orally granted summary judgment to the District on its

unjust-enrichment claim.1

  1
     The District also raised a conversion claim, as to which the trial court granted
summary judgment to Ms. Marsden. Although the District objects to that ruling in
a conclusory footnote, we generally do not consider arguments presented in that
fashion. Wagner v. Georgetown Univ. Med. Ctr., 768 A.2d 546, 554 n.9 (D.C.
                                                                      (continued . . .)
                                         4

                                        II.

      We review de novo orders granting summary judgment. Steele v. Salb, 93
A.3d 1277, 1281 (D.C. 2014).         We also review de novo a trial court’s

determination whether unjust enrichment occurred on a given set of facts. Kramer

Assocs., Inc. v. Ikam, Ltd., 888 A.2d 247, 254 (D.C. 2005).

      “Unjust enrichment occurs when: (1) the plaintiff conferred a benefit on the

defendant; (2) the defendant retains the benefit; and (3) under the circumstances,

the defendant’s retention of the benefit is unjust.” Euclid St., LLC v. District of

Columbia Water & Sewer Auth., 41 A.3d 453, 463 n.10 (D.C. 2012) (internal

quotation marks omitted). The District brought its claim of unjust enrichment

against Ms. Marsden pursuant to D.C. Code § 1-623.29, which permits the District

in some cases to recover overpayments made to recipients of disability

compensation. D.C. Code § 1-623.29 (a). Recovery under that provision “shall be

waived,” however, if (1) “incorrect payment has been made to an individual who is

without fault,” id. at § 1-623.29 (b)(1); and (2) recovery would “defeat the

(continued . . .)
2001). Adhering to that practice, we do not consider the District’s conversion
claim.
                                          5

purposes of” the statute, meaning that the recipient “needs substantially all of his

or her current income, including compensation[,] to meet current ordinary and

necessary living expenses,” id. at § 1-623.29 (b)(1), (2)(A)(iii); or (3) recovery

would “be against equity and good conscience,” meaning that recovery would

“cause severe financial hardship” to the recipient, id. at § 1-623.29 (b)(1),

(2)(A)(iv).

      Recipients from whom the government is trying recover overpayments have

a right to present evidence or request a hearing in connection with a waiver request,

but they must do so within thirty days of receiving written notice of the District’s

intent to recover the overpayment, unless that time limit is waived for good cause,

including “mental or physical incapacity.” D.C. Code § 1-623.29 (b-1)(1). The

statute also provides that recipients seeking waiver of repayment must respond to

requests for information within thirty days and that failure to do so “shall result in

a denial of a request for a waiver and no further request for a waiver shall be

considered until the requested information is furnished.”                D.C. Code

§ 1-623.29 (b-1)(2).
                                          6

      The Mayor is authorized to promulgate regulations governing the recovery

of disability-compensation overpayments. D.C. Code § 1-623.29 (a). Under the

applicable regulation:

             Any request for a waiver . . . of overpayment must be
             submitted to ORM within thirty (30) days of the date of
             the overpayment notice issued by the Program. Failure
             to submit the waiver . . . within thirty (30) days shall
             result in denial of a waiver . . . . The Program may waive
             the thirty (30) day requirement for good cause, including
             a finding of mental or physical incapacity of the claimant,
             or lack of timely receipt of the notice of . . . recoupment.

7 DCMR § 142.3 (2016).        The regulations do not establish an administrative

procedure for the District to recover disability-compensation overpayments. Id. at

§§ 142.1-.6. The District therefore must bring a suit in order to recover such

overpayments.

                                        III.

      Ms. Marsden does not dispute that she received a benefit from the District.

She does dispute that she has retained the benefit, claiming that she has spent the

overpayment. We are not persuaded by this argument. In determining whether Ms.

Marsden has retained a benefit, for purposes of the second element of unjust
                                         7

enrichment, the issue is whether Ms. Marsden has returned the overpayment to the

District, not whether Ms. Marsden has otherwise spent the overpayment. Cf., e.g.,

Kramer Assocs., Inc., 888 A.2d at 254 (“plain” that recipient “retained a benefit”

where plaintiff transferred funds to defendant and defendant did not repay any of

funds to plaintiff). That Ms. Marsden may have spent the overpayment instead is

potentially relevant to the third element of unjust enrichment: whether it would be

unjust to permit Ms. Marsden to avoid repayment.            See generally, e.g., 2

Restatement (Third) of Restitution & Unjust Enrichment § 65 & cmt. c (Am. Law

Inst. 2011) (requiring repayment may be inequitable where innocent recipient

relied on benefit to make expenditures that recipient would not otherwise have

made).

      The principal issue on appeal is whether permitting Ms. Marsden to avoid

repayment would be unjust. In ruling for the District on that issue, the trial court

relied primarily on two circumstances: (1) Ms. Marsden failed to request a waiver

of repayment before the ORM despite receiving notice of her right to seek a

waiver; (2) the District’s appeal to the CRB put Ms. Marsden on notice that she

might not be entitled to keep the payments she received. The trial court also

expressed the view that it should not be inserting its judgment for that of the ORM.
                                         8

         Ms. Marsden argues that her failure to seek an administrative waiver is

irrelevant. In essence, Ms. Marsden argues that the administrative waiver process

is entirely optional and that Ms. Marsden’s failure to seek an administrative waiver

has no effect on whether it would be unjust to permit Ms. Marsden to avoid

repayment. Ms. Marsden further argues that, in determining whether it would be

unjust for her to avoid repayment, the trial court was obliged to enforce the

substantive standard reflected in section 1-623.29 (b)(1) (repayment shall be

waived if recipient is not at fault and requiring repayment would cause hardship).

In contrast, the District suggests that Ms. Marsden’s failure to seek an

administrative waiver essentially forecloses Ms. Marsden’s effort to avoid

repayment. The trial court appears largely to have agreed with the District on this

point.

         Our view falls between the views of Ms. Marsden and the District. The

procedures applicable to recovery of overpayment are an unusual hybrid.

Although there is an administrative process for recipients to obtain a waiver of

repayment, there is no administrative process for the District to obtain repayment.

Rather, repayment must be obtained by a separate legal action, in this case based

on a claim of unjust enrichment. The applicable statutes and regulations do not

explicitly indicate that the administrative waiver process is mandatory and that an
                                          9

individual who does not seek such a waiver is precluded from avoiding repayment

if the District brings suit in court. The District’s notice of intent to seek repayment

also did not provide Ms. Marsden with that information.

      There is a general doctrine that parties must exhaust available administrative

remedies. See, e.g., Stackhouse v. District of Columbia Dep’t of Emp’t Servs., 111
A.3d 636, 639 (D.C. 2015) (“Administrative and judicial efficiency require that all

claims be first raised at the agency level to allow appropriate development and

administrative response before judicial review. . . . Therefore, in the absence of

exceptional circumstances, we will not entertain a claim that was not raised before

the agency.”) (internal quotation marks omitted). “The exhaustion requirement is

not in general jurisdictional in nature, but rather must be applied in accord with its

purposes.” Northeast Neighbors for Responsible Growth, Inc. v. Appletree Inst.

for Educ. Innovation, Inc., 92 A.3d 1114, 1125 (D.C. 2014) (brackets and internal

quotation marks omitted). As we have explained, “The exhaustion rule . . . is not

carved in stone.     ...   This court has affirmed the principle that there are

circumstances in which a court of equity is justified in considering the merits of an

administrative action, notwithstanding the petitioner’s failure to exhaust

administrative remedies.” Barnett v. District of Columbia Dep’t of Emp’t Servs.,

491 A.2d 1156, 1160-61 (D.C. 1985). In Barnett, for example, this court declined
                                          10

to enforce an exhaustion requirement, in part because the case involved a claim for

unemployment compensation.           Id. at 1159-63.        As we explained, the

unemployment-compensation statutes are remedial in character and often involve

unrepresented claimants. Id. (“[R]esort to technicalities to foreclose recourse to

judicial processes is particularly inappropriate, especially in a statutory scheme like

this one in which laymen, unassisted by trained lawyers, initiate the process.”)

(brackets, ellipses, citations, and internal quotation marks omitted).

      A number of considerations combine to persuade us that, at least on the

current record, the exhaustion requirement should not by itself defeat Ms.

Marsden’s contention that permitting her to avoid repayment would not be unjust.

First, worker’s compensation and disability statutes, like unemployment-

compensation statutes, are remedial in character and are 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). Although we

recognize that Ms. Marsden’s disability claim was ultimately denied, on procedural

grounds, the District acknowledges that Ms. Marsden was not at fault for receiving

the overpayment. Moreover, the overpayment statute itself reflects a substantive

policy against recovery of overpayment where recovery would impose undue

hardship.   D.C. Code § 1-623.29 (b)(1), (2)(A)(iii), (2)(A)(iv).        Second, Ms.
                                         11

Marsden apparently was not represented at the time she received notice of the

District’s intent to seek overpayment and of the availability of an administrative

waiver process.     Third, as previously noted, the overpayment statute, the

regulations, and the District’s notice do not expressly state that the administrative

waiver process is an exclusive remedy and that failure to invoke that process would

preclude the recipient from contesting repayment in court.              Fourth, the

overpayment statute and regulations provide for waiver of the applicable time

limits on good cause shown. D.C. Code § 1-623.29 (b-1)(1), (2); 7 DCMR § 142.3.

Finally, although Ms. Marsden has not formally sought such a waiver from the

agency, she has in substance argued that there was good cause for her failure to

seek an administrative waiver. 2 Specifically, Ms. Marsden has argued that her

medical condition interfered with her ability to read, understand, and process mail,

apparently including the ORM’s notification of overpayment.

       We do not, however, go so far as to conclude that a recipient’s failure to

seek an administrative waiver is completely irrelevant in all suits brought by the

District under the overpayment statute. Whether permitting a recipient to avoid

   2
      The District has not argued that the good-cause and hardship determinations
must in all cases be made in the first instance by the agency. We therefore do not
address whether, upon proper request, the trial court could or should have held this
suit in abeyance to permit proceedings before the ORM to establish good cause or
hardship.
                                          12

repayment would be unjust requires a highly contextual balancing of all of the

equities. 4934, Inc. v. District of Columbia Dep’t of Emp’t Servs., 605 A.2d 50, 56

(D.C. 1992) (“[E]very unjust enrichment case is factually unique, for whether there

has been unjust enrichment must be determined by the nature of the dealings

between the recipient of the benefit and the party seeking restitution, and those

dealings will necessarily vary from one case to the next.”). In some circumstances,

a recipient’s failure to seek an administrative waiver could potentially bear on that

equitable balancing.    In this case, however, the trial court has not made any

findings concerning the circumstances of Ms. Marsden’s failure to seek an

administrative waiver. Cf. Kramer Assocs., Inc., 888 A.2d at 254 (noting that

whether unjust enrichment occurred may turn on factual determinations). We

therefore are not in a position to definitively resolve the case on the current record.

Rather, we remand the case to the trial court to further consider whether, given the

circumstances of this case and in light of the factors discussed in this opinion, it

would be unjust for Ms. Marsden to avoid repayment.

      In sum, we reverse the judgment and remand for further proceedings.

                                               So ordered.
                                           13

      FARRELL, Senior Judge, concurring: The District should consider pursuing

amending legislation or a regulatory initiative in this area. Overpayments of

disability compensation cannot be a rarity, witness the elaborate statutory

administrative process the court summarizes for deciding which should be

recouped and which forgiven. If the decision is to recoup, one would logically

expect that same process to lead to an administrative order of repayment, followed

by an appeal of right to the Office of Administrative Hearings by the aggrieved

payee.

      But the statute does not so provide, which means that if the District believes

funds are being unjustly retained, it must file suit in Superior Court to reclaim

them; and then a Superior Court judge must conduct “a highly contextual

balancing of all of the equities,” ante at 11-12, to decide whether an order of

repayment is just in the circumstances -- very much like the statutory balancing the

agency will have done already. The difference is that, in the court action, a

payee’s disregard of the statute’s carefully-wrought administrative process for

relief from repayment counts only as one among the factors to be balanced (though

a possibly weighty one in a given case).
                                         14

      It is in the District’s, and the public’s, interest to ask whether this “hybrid”

procedure, ante at 8, should not be replaced by a unified one within the framework

of administrative law. That would have obvious advantages: It would comport

with the way workers’ (and unemployment) compensation matters are all but

exclusively handled otherwise; it would remove an occasional burden from a busy

trial court; and, most significantly from the District’s standpoint, it would sharpen

the teeth of the statute’s waiver provision for failure to comply with the

administrative relief procedures.