| IN RE: WHATCOM COUNTY | ) | DOCKET NO. 87 0826 |
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| FIRM NO. 700,353 | ) | DECISION AND ORDER |
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- APPEARANCES
- Self-Insured Employer, Whatcom County, by
- Rolland, O'Malley & Williams, per
- Wayne L. Williams
- Department of Labor and Industries, by
- The Attorney General, per
- Jerome E. Westby, Assistant
This is an appeal filed by the self-insured employer on March 18, 1987 from an order of the Department of Labor and Industries dated February 25, 1987 which denied Whatcom County's request for refund of administrative assessment in the amount of $ 1,398.76. Reversed and remanded.
DECISION
Pursuant to RCW 51.52.104 and RCW 51.52.106, this matter is before the Board for review and decision on a timely Petition for Review filed by the self-insured employer to a Proposed Decision and Order issued on March 30, 1988 in which the order of the Department dated February 25, 1987 was affirmed.
The issue to be determined is whether the Department may, as a part of an assessment for the costs of administering the self-insurance program, require a self-insured employer which became self-insured on January 1, 1984 to pay a proportionate share of the undercollected [2] actual administrative costs for the administration of self- insurance program during the prior years of 1982 and 1983, when this employer was insured with the state fund. The Industrial Appeals Judge determined that the Department was so authorized.
Our review of the applicable law convinces us that the Department improperly charged Whatcom County with self-insurance administrative costs incurred prior to 1984, when no portion of those costs were actually incurred by or on behalf of this employer. The administrative costs were incurred on behalf of those employers which were self- insured prior to 1984, and such costs should have been borne by those self-insurers alone.
Whatcom County became certified as a self-insured employer on January 1, 1984. Prior to that date, the employer was insured with the state fund. During 1983 the employer's premium payments to the state fund included a portion attributable to state fund administrative costs. As a condition of certification as a self-insured employer, this employer was required to make up a share of a deficit in the state fund, in the amount of $ 1,945.39, a portion of which was attributable to administrative costs.
The Department's authority to assess self-insurers for administrative costs is contained in RCW 51.44.150 which provides as follows:
The director shall impose and collect assessments each fiscal year on all self-insurers in the amount of the estimated costs of administering their portion of this title during such fiscal year. The time and manner of imposing and collecting assessments due the department shall be set forth in regulations promulgated by the director in accordance with chapter 34.04 RCW. [3]
Pursuant to this statute, the Department has adopted WAC 296-15-060 which provides as follows:
(1) Assessments levied by the department against each self-insurer shall be based on the self- insured employer's proportionate share of the administrative costs determined to be attributable to self-insurers, including expenses of the Safety Division, the Industrial Insurance Division, the University of Washington Environmental Research Facility, the Board of Industrial Insurance Appeals, appeals expenses, and other general administrative expenses.
(2) The director shall determine the assessment rate annually, prescribing the self-insured employer's share of the attributable costs determined pursuant to the provisions of subsection (1). For employers who have been covered under the Workers' Compensation Act for a period of less than two full calendar years, the assessment rate shall be a percentage of the premium which would have been collected at manual rate had the self-insurer been covered by the state fund. For employers who have been subject to the provisions of the Workers' Compensation Act in excess of two calendar years, the administrative assessment rate shall be a percentage of the payments made on all claims involving the self-insured employer....
The Supreme Court has had the opportunity to review this statutory provision and the administrative regulation in the case of Crown Zellerbach v. Department of Labor and Industries, 98 Wn.2d 102 (1982). At issue in that case was the Department's ability to assess self-insured employers for the administrative costs of claims incurred while the employer was insured with the state fund. In reaching its decision, the court was faced with precisely the same question as is before us, namely, whether the statutory language "their portion of this title" refers to self-insurers as a group or to the individual self-insured employers. The court stated:
We read the language, however, as referring to the individual self-insured employers. Each self- insured employer must be responsible for the [4] estimated total costs of administering its part of the Industrial Insurance Act -- self-insured and prior continuing state fund claims.
Crown Zellerbach, at 107. Based upon the Supreme Court's construction, it appears clear that Whatcom County is only responsible for administrative costs associated with the self-insurance program, which in some way might be attributed to this particular employer's activities in its self-insured capacity. The Department, in making assessments, is entitled to wide latitude, and it is not required that an assessment determine with exactitude a particular employer's responsibility. It is the responsibility of the employer to show that there is no reasonable basis for the assessment. We find no authority, however, to authorize the Department to assess this self-insured employer for administrative costs associated with the self-insurance program, which are in no way attributable to its own activities as a self-insured employer. Obviously, there were no self-insured administrative costs attributable to this employer prior to January 1, 1984 when Whatcom County was certified as a self-insured employer. This employer therefore cannot be assessed for the actual costs of administration of the self-insurance program incurred in 1982 and 1983. The Department order must be reversed and Whatcom County refunded the amount of $ 1,398.76.
FINDINGS OF FACT
- On February 25, 1987 the Department issued an order indicating that a review of the evidence disclosed no error or injustice in the method of calculating the administrative assessment for 1984 and the request for refund by Whatcom County in the amount of $ 1,398.76 was denied. On March 18, 1987 the Board of Industrial Insurance Appeals received a notice of appeal from the February 25, 1987 [5] Department order. On March 27, 1987 the Board issued an order granting the appeal, assigned it Docket No. 87 0826, and directed that proceedings be held on the issues raised by the appeal.
- Whatcom County was certified as a self-insured employer on January 1, 1984.
- Prior to becoming self-insured, this employer was required to make up a share of a deficit or insufficiency in the state fund, in the amount of $ 1,945.39, a portion of which was attributable to administrative costs.
- After Whatcom County was certified as a self- insured employer on January 1, 1984, the Department assessed Whatcom County for under collection of actual costs attributable to administration of the self-insurance program during the years 1982 and 1983, when this employer was insured with the state fund, in the amount of $ 1,398.76.
- The total amount paid for "net assessments under collected during previous years" in 1984 and early 1985 by Whatcom County was $ 1,398.76.
CONCLUSIONS OF LAW
- The Board of Industrial Insurance Appeals has jurisdiction over the parties and the subject matter of this appeal.
- The Department of Labor and Industries improperly assessed Whatcom County for a proportionate share of actual administrative costs of the self- insurance program under collected for the years 1982 and 1983.
- The order of the Department of Labor and Industries dated February 25, 1987, providing that Whatcom County's request for refund of administrative assessment paid during 1984 and early 1985 for the years 1982 and 1983 be denied, is incorrect and is reversed and the matter remanded to the Department [6] with direction to refund $ 1,398.76 to Whatcom County.
It is so ORDERED.
Dated this 13th day of October, 1988.
BOARD OF INDUSTRIAL INSURANCE APPEALS
/s/
SARA T. HARMONChairperson
/s/
FRANK E. FENNERTY, JR.Member
/s/
PHILLIP T. BORKMember