Opinion ID: 2634522
Heading Depth: 2
Heading Rank: 2

Heading: Reimbursement of Coverage Fees Must Include Statutory Interest

Text: After the Board informed respondents of its view that neither was eligible for chapter 41.24 RCW pensions, the Board indicated it would reimburse both respondents all coverage fees paid. At oral argument the Board affirmed this intent, stipulating it would be liable to respondents for all coverage fees erroneously paid. However the Board claimed it would not be required to pay the normal 12 percent prejudgment statutory interest in addition. However such a view undercuts RCW 19.52.010, which mandates 12 percent interest is required when no other rate was agreed between the parties for [e]very loan or forbearance of money, goods, or thing in action. Moreover the Board's approach is additionally inconsistent with both the Act's legislative scheme and basic logic. Pension eligibility is not forever barred by a participant's failure to pay all coverage fees. Rather RCW 41.24.040 provides a procedure for reinstatement upon such a contingency: Where a participant has forfeited his or her right to participate in the retirement provisions of this chapter that participant may be reinstated so as to participate to the same extent as if all fees had been paid by the payment of all back fees with interest at the rate of one percent per month provided he or she has at all times been otherwise eligible. Here we face the direct converse of the scenario described in RCW 41.24.040. Instead of the failure of a person to pay coverage fees who has been eligible all along to participate in the Act's pension system, we face two persons who have paid coverage fees despite their ineligibility to properly participate in the retirement system. If the former can opt into the pension system by paying all past due coverage fees plus a 12 percent annual interest rate, it logically follows the Board must reimburse the latter at the exact same rate. To conclude otherwise would lead to an inexplicably anomalous result, namely the Board receiving a windfall for inadvertently accepting coverage fees from someone who was entitled to the benefit of the present value of his or her money. As such, respondents are entitled to reimbursement of all coverage fees paid augmented by the 12 percent annual statutory rate of return. Cf. RCW 41.24.040.