Court Opinion

ID: 9573138
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:48:20.262982+00
Date Added: 2024-06-11T12:37:33.720717
License: Public Domain

Johnson, J.
(dissenting)—The majority holds that when the Department of Labor and Industries decides whether to compromise its lien for reimbursement, the Department may consider the fact that the injured worker and the third party have finalized a settlement. This holding grants the Department a windfall recovery at the expense of the injured worker. This result is contrary to the policies behind the Industrial Insurance Act, RCW Title 51.1 would hold that the Department abused its discretion in relying *908on the fact that settlement had occurred in evaluating Robert Hadley's request to compromise its lien.
When an injured worker claims workers' compensation benefits, the Department retains a lien on any money the worker recovers against the third party tortfeasor. RCW 51.24.060(2). The lien allows the Department to be reimbursed for the benefits and compensation it pays to the injured worker. RCW 51.24.060(1)(c). The Department is authorized to compromise its lien after the mandatory consideration of three factors:
The department or self-insurer has sole discretion to compromise the amount of its lien. In deciding whether or to what extent to compromise its lien, the department or self-insurer shall consider at least the following:
(a) The likelihood of collection of the award or settlement as may be affected by insurance coverage, solvency, or other factors relating to the third person;
(b) Factual and legal issues of liability as between the injured worker or beneficiary and the third person. Such issues include but are not limited to possible contributory negligence and novel theories of liability; and
(c) Problems of proof faced in obtaining the award or settlement.
(Italics ours.) RCW 51.24.060(3).
This statute also gives the Department some discretion to consider other factors. This discretion, however, is not unbounded. The Department may consider other factors only if those factors are consistent with the policies of the Industrial Insurance Act. See majority, at 904-05.
The policies of the Industrial Insurance Act do not support allowing the Department to consider the fact that the parties finalized a settlement. The majority errs in concluding otherwise. The majority analyzes this issue as follows:
It is consistent with the statute, and with the underlying purposes of the third party chapter, for the Department to consider the effect of settlement on the compensation funds. This court recently reaffirmed the Department's interest in protecting the fund in Maxey v. Department of Labor & Indus., 114 Wn.2d 542, 547, 789 P.2d 75 (1990) (entire scheme of RCW 51.24 evidences the Department's interest in recovery from responsible third party). The Court of Appeals stated this *909interest is "not unreasonable", but then failed to recognize that Washington courts have a long history of protecting it.
Majority, at 904-05.
The majority ignores the essential difference between this case and Maxey. The Department may have an interest in zealously protecting the fund when dealing with tortfeasor/third parties. However, the Department does not have the same adversarial interest in protecting the fund from the legitimate claims of injured workers. At the very foundation of the Industrial Insurance Act is the policy that the Department will provide a remedy to injured workers. RCW 51.04.010; 51.04.020. Moreover, this act is to be liberally construed in favor of compensating the injured worker, not in favor of reimbursing the State. RCW 51.12-.010; Seattle Sch. Dist. 1 v. Department of Labor & Indus., 116 Wn.2d 352, 359-60, 804 P.2d 621 (1991).
The majority cites neither statutes nor cases which can justify treating a compromise request differently when the parties have finalized a settlement. When the delay in seeking the Department's compromise arose through no fault of the worker, the Department should be required to treat compromise requests without regard to the status of the settlement negotiations. Here, Hadley's "delay" in seeking the Department's compromise resulted from the third party's time limit for accepting the settlement offer. The third party gave Hadley one weekend to decide whether to accept the offer. Also, Hadley reasonably, although erroneously, thought the Department would only accept compromise requests in writing.
The circumstances of this case are not unusual. Offers are often made on the eve of trial and they frequently remain open for only a limited period of time. Under these circumstances, the worker's attorney does not have the time to seek the Department's compromise before deciding whether to accept the offer. To hold that the worker does not receive his proportionate share of the attorney's labors will unfortunately discourage the pursuit of future third party claims.
*910In responding to Hadley's request, the Department placed great emphasis on the fact that settlement had occurred. The official who handled the matter for the Department testified that the Department would have increased the extent of its compromise if the parties had not already settled. She testified that the Department "may" have even compromised 80 percent of the lien, rather than the approximate 9 percent compromise ($5,280) that the Department actually granted here. She said Hadley would have had "serious" difficulties proving the third party was liable. Also, she said Hadley would have had problems overcoming the issue of his own comparative fault. Both of these difficulties are "prime" factors that the Department uses in determining the extent to which it should compromise its lien. Thus, the fact of settlement obviously played a major role in the Department's decisionmaking.
I would hold that the Department's reliance on the previous settlement was improper under the Industrial Insurance Act. Under this holding, the Department abused its discretion by relying on an untenable ground in responding to Hadley's request. See Allard v. First Interstate Bank of Wash., 112 Wn.2d 145, 148, 768 P.2d 998, 773 P.2d 420 ,(1989) (reliance on untenable grounds constitutes abuse of discretion). The Board of Industrial Insurance Appeals similarly erred in affirming the Department's decision. See RCW 51.52.115.
Accordingly, I would affirm the Superior Court's summary judgment in Hadley's favor, although on different grounds than those relied on by the Court of Appeals. I would remand the case for the Department to reconsider its decision using proper criteria.
After modification, further reconsideration denied August 20, 1991.