Court Opinion

ID: 4712301
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:38:02.725939+00
Date Added: 2024-06-11T08:04:00.602263
License: Public Domain

Sanders, J.
(dissenting) — This dispute arose when WR Enterprises, Inc., learned the Department of Labor and Industries (L&I) levied industrial insurance premiums which were excessive and grossly disproportionate to the risk experienced in its class of industry.
The parties agree L&I’s current rate-setting structure makes employers in comparatively low-risk industries pay disproportionately high premiums to cover losses incurred by higher-risk industries. Although such rate-setting violates the statute as construed in prior decisions of this court, the majority nevertheless approves L&I’s practice.
Washington State School Directors Association v. Department of Labor & Industries, 82 Wn.2d 367, 380, 510 P.2d 818 (1973) held 1971 amendments to the Industrial Insurance Act maintained the long-standing requirement that employers pay their own way, and not be forced to pay for risks not present in their own industry. In School Directors employers in low-risk industries challenged the 1971 amendments to the Industrial Insurance Act which extended coverage of the Act from only extrahazardous industries to virtually all industries. Id. at 370. Their concern was RCW 51.16.035 might be construed to allow L&I to impose disproportionate premiums on the newly included industries to subsidize losses suffered by more hazardous employment classifications. Sch. Dirs. Ass’n, 82 Wn.2d at 379.
The plaintiffs argue that under the new act they are liable for the depletion of the accident fund for accidents happening in classes other than their own. In other words, their premiums must help to pay the costs of insurance for those in risk categories other than their own. They base this argument upon the repeal of RCW 51.16.020 and RCW 51.16.010 in 1971, and the enactment of RCW 51.16.035 ....
Sch. Dirs. Ass’n, 82 Wn.2d at 379. We noted the concern but held RCW 51.16.035 did not change the long-standing rule 'f* *232that each classification must bear its own losses and not be held liable for losses suffered by other classes.
Formerly, under RCW 51.16.020 and RCW 51.16.010, the department was directed that no class should be liable for the depletion of the accident fund for accidents happening in other classes. It was also directed that the industries should pay in proportion to the amount of expense they created as a result of injuries in their particular field. Those industries encountering high accident rates would pay more than those industries encountering lower accident rates. Thus, the rates were based on the amount of risk involved in the particular class, in accordance with recognized insurance principles. We detect no real change in the basic legislative scheme.
Sch. Dirs. Ass’n, 82 Wn.2d at 380 (emphasis added).
We further explained the amendment adhered to the recognized insurance principle that premium rates be charged according to risk.
The new statute merely requires that the department classify all occupations or industries in accordance with their degree of hazard and fix rates that shall be the lowest necessary in accordance with recognized insurance principles. Implicit within the very wording of RCW 51.16.035 is the concept of rates being charged according to the degree of hazard involved within the various classes. Recognized insurance principles require such a concept.
Id. (emphasis added).
A few years later we reiterated this rule in Pan Pacific Trading Corp. v. Department of Labor & Industries, 88 Wn.2d 347, 352, 560 P.2d 1141 (1977). There a company which merchandized raw logs challenged L&I’s classification of its industry (log storage and sorting) together with the more hazardous industry of general logging activities. Id. at 348, 351-52. We concluded L&I’s practice was contrary to RCW 51.16.035 because it charged employers rates that did not properly relate to the “greatly dissimilar” degree of hazard in their respective industries, and while *233the legislature intended to grant L&I discretion to set appropriate rates, “[n\evertheless, the legislature obviously intended an employer not be required to pay for a risk not present in its particular industry” Pan Pac. Trading Corp., 88 Wn.2d at 352 (emphasis added). We held where facts establish a rate established by L&I is not proportional to the risk associated with the class of employers, L&I abuses the limited discretion vested by RCW 51.16.035. See Pan Pac. Trading Corp., 88 Wn.2d at 352.
Crown Zellerbach Corp. v. Department of Labor & Industries, 98 Wn.2d 102, 653 P.2d 626 (1982), again affirmed the same principle. Although the dispute there did not center on RCW 51.16.035, the operative principle was identical to that guiding our decisions in School Directors and Pan Pacific. Crown Zellerbach examined the approach taken by L&I to recover various costs incurred administering the state fund and self-insured claims. Crown Zellerbach Corp., 98 Wn.2d at 104. The Department recovered those costs via assessments against all employers, both self-insured and state fund participants. Id. But if a self-insured employer had claims remaining in the state fund for injuries that occurred before the employer became self-insured, the employer was required to pay for the administration of claims covered by the state fund. Id. at 105. Once these claims were satisfied, the self-insured paid only those administrative costs related to self-insured claims. Id.
Crown Zellerbach became self-insured on July 1, 1975, and challenged L&I’s assessment against it for state fund administrative costs incurred after that date. Id. at 104-06. We rejected this challenge, holding that “[e]ach self-insured employer must be responsible for the estimated total costs of administering its part of the Industrial Insurance Act.” Id. at 107.
We have consistently held that statutes should receive a sensible construction to effect the legislative intent and, if possible, to avoid unjust or absurd consequences. The only sensible conclusion to draw regarding RCW 51.44.150 is that *234the Legislature did not intend to permit an employer to escape paying the administrative costs attributable to continuing State fund claims simply by becoming a self-insured employer. Adopting appellant’s construction of the statute would lead to this incongruous result as well as an inequitable and unjust situation. If the costs of administering State fund claims of self-insurers are not a component of administrative costs to be assessed against self-insurers, then employers remaining in the State fund would be paying not only the costs of administering their claims but also those State fund claims of employers who have since become self-insured.
Id. (emphasis added) (citation omitted). Cf. Dep’t of Labor & Indus. v. Am. Adventures, Inc., 59 Wn. App. 790, 794, 801 P.2d 1032 (1990).
Thus, three times in the decade following the 1971 amendments we held L&I is prohibited by statute from charging employers rates or costs to recover losses or expenses incurred by classes other than their own. And here we have not only “considerable factual information,” Pan Pac. Trading Corp., 88 Wn.2d at 352, that rates charged to WRE are excessive in proportion to the risk inherent in its industry but, in point of fact, these parties stipulate L&I’s rate structure “has resulted in some employers and classifications paying excess premiums to cover losses suffered by classifications other than their own.” Clerk’s Papers (CP) at 5.
The legislature has not amended RCW 51.16.035 to jeopardize the continued vitality of School Directors’ construction of that statute. We presume the legislature is aware of judicial interpretations of its statutes. Glass v. Stahl Specialty Co., 97 Wn.2d 880, 887, 652 P.2d 948 (1982). Just as the legislature has found no reason to amend RCW 51.16.035, there is no reason for today’s majority to judicially amend the statute by refusing to adhere to our precedent which construed it in School Directors and Pan Pacific.
Moreover the majority’s results-oriented approach also *235ignores the legislature’s own direction on how to construe RCW 51.16.035. The majority mistakenly relies on the legislature’s repeal of former RCW 51.16.010 (1961) and RCW 51.16.020 (1961) and enactment of RCW 51.16.035 in their place to argue the legislative intent changed with the 1971 amendments. Majority at 221. According to the majority “it is axiomatic that where one statute is repealed and another takes its place, the new statute supersedes as law.” Id. at 221-22 (citing State v. Bell, 8 Wn. App. 670, 508 P.2d 1398 (1973)).
Although that may be true in the most general sense, RCW 51.98.010 specifically provides we are bound to construe provisions of Title 51 RCW as “restatements and continuations” of repealed statutory provisions insofar as the new and the old statutes are “substantially the same,”12 whereas in School Directors we found RCW 51.16.035 effected “no real change in the basic legislative scheme” that existed under the repealed provisions RCW 51.16.010 and RCW 51.16.020. Sch. Dirs. Ass’n, 82 Wn.2d at 380. The majority does not overrule School Directors, nor could it, since that decision has not been shown to be incorrect, let alone harmful. In re Rights to Waters of Stranger Creek, 77 Wn.2d 649, 653, 466 P.2d 508 (1970).13 But it does not follow it.
L&I’s current rate structure has precisely the failing prohibited by Title 51 RCW. Some employers, WRE among *236them, are charged higher rates to cover losses suffered in other classes. The parties stipulate:
11. Since 1911 the Department set premiums for [the accident fund and medical aid fund] so that each class would be self sufficient and that no class be liable for losses suffered by any other class.
12. However, the Department during the past 20 years changed its rate-setting procedure and now sets premiums for both funds based upon the performance of all classifications statewide and not solely the performance of the individual classification or subclassification.
13. This has resulted in some employers and classifications paying excess premiums to cover losses suffered by classifications other than their own.
CP at 5.
The trial court’s analysis highlighted this stipulation when it initially granted WRE’s motion for partial summary judgment:
Implicit within the very wording of the statute under review in School Directors, then, is the concept that rates charged be according to the degree of hazard involved solely within each specific class. The stipulation of fact says that the Department *237has changed and revised its rate-setting procedures and set the premiums for both the accident fund and the medical aid fund based upon performance of all classifications statewide and not solely on the individual classifications or subclassifications, and, thus, some employers and classifications pay premiums in excess of what is necessary in order to cover losses suffered by classifications other than their own.
I conclude that that process as described and stipulated to by the Labor and Industries in the stipulation does not comply with School Directors, and, accordingly, on summary judgment, I would conclude as a matter of law that a rate-setting procedure as described by Labor and Industries that results in some employers and classifications paying excess premiums to cover losses suffered by other classifications does not meet the requirement of the statute as construed by the Supreme Court in School Directors.
Verbatim Report of Proceedings (Feb. 18, 2000) at 3-4 (emphasis omitted).
Although the trial court ultimately reconsidered, for the reasons stated I would hold it was right the first time when it granted WRE’s motion for partial summary judgment. L&I’s rate structure exceeds its statutory authority under RCW 51.16.035 because the rates imposed do not properly reflect the employers’ actual risk.
I therefore dissent.
Reconsideration denied November 20, 2002.

 ROW 51.98.010 admittedly applies only to provisions repealed by Laws of 1961, ch. 23, whereas the amendment here at issue was adopted in 1971. Nevertheless the language demonstrates a legislative preference for continuity.

 Former RCW 51.16.010 (1961) set out the general provisions for how the accident and medical aid were to be funded:
51.16.010 Enabling provision for establishing premium rates—Quarterly payments. Inasmuch as industry should bear the greater portion of the cost of its accidents and occupational diseases and furnish medical, surgical and hospital care and treatment to its injured workmen in the proportion in which it produces injury and creates expense, each employer shall... pay into the state treasury (1) for the accident fund and (2) for the medical aid fund, a certain number of cents for each man hour worked by the workmen in his employ, engaged in extrahazardous employment; if, however, there should be a *236deficit in any class or subclass, the director, through the supervisor of industrial insurance, shall assess the same against all the contributors to such class or subclass during the calendar year or fraction thereof in which said deficit was incurred or created.. ..
(Emphasis added.) Former ROW 51.16.020 (1961) then set out more specifically the process by which L&I was to determine the premiums for the accident fund:
51.16.020 Basis for determining accident fund premiums—Cost experience. The amounts to be paid into the accident fund shall be determined as follows: The department shall, prior to the first day of January of each year, determine for each class and subclass, a basic premium rate for the ensuing calendar year and, in so doing, shall take into consideration: First, that no class shall be liable for the depletion of the accident fund for accidents happening in any other class; second, that each class shall meet and be liable for its own accidents', third, the cost experience of each class and subclass over the two year period immediately preceding July 1st of the year in which the basic rate is being fixed; fourth, the then condition of each class and subclass account.
(Emphasis added.)