|IN RE: SAWYERS MOTOR SPORTS||)||DOCKET NO. 90 3344|
|FIRM NO. 492,652-02||)||DECISION AND ORDER|
- Employer, Sawyers Motor Sports, by
- Critchlow & Williams, per
- Eugene Schuster, Attorney, and per
- Kathy Krause, Legal Assistant
- The Department of Labor and Industries, by
- The Attorney General, per
- Sharon M. Brown, Assistant, and per
- Kim Studeman, Paralegal
This is an appeal filed by the employer on July 31, 1990 from an order of the Department of Labor and Industries dated July 17, 1990. The order modified an order dated May 22, 1990 and assessed penalties for the costs of injuries sustained by Troy Dodd Sawyers, in Claim No. K-218057 at 50% of the costs and/or reserve value for the accident occurring on December 20, 1988, in the amount of $ 19,240.00. Affirmed.
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 employer to a Proposed Decision and Order issued on August 15, 1991 in which the order of the Department dated July 17, 1990 was affirmed.
We have granted review because our industrial appeals judge applied an incorrect standard of review in reaching her decision. Additionally,  evidentiary rulings were made that, although they do not change the overall outcome of the appeal at the Board, they kept otherwise relevant and admissible evidence out of the record.
RCW 51.48.010, the statute which authorized the Department to assess penalties herein, states:
Every employer shall be liable for the penalties described in this title and may also be liable if an injury or occupational disease has been sustained by a worker prior to the time he or she has secured the payment of such compensation to a penalty in a sum not less than fifty percent nor more than one hundred percent of the cost for such injury or occupational disease...
Because this statute in using the word "may" gives the Department the discretion to assess the penalties, it was apparently concluded by our industrial appeals judge that the Board's standard of review should only be whether there was an abuse of discretion. Clearly this is not the law. The only circumstances in which the Board's review is limited to the "abuse of discretion" standard is when the relevant statute specifically states that the decision is committed to the discretion, i.e., "sole discretion", "in his or her discretion", of the Department, the Director, or the Director's designee. There are countless ways the Department uses its discretion in administering claims and other matters under the industrial insurance laws. When these decisions are appealed to the Board the standard of review is not limited to whether there has been an abuse of discretion. Rather, the standard is the correctness of  the decision based on the preponderance of the evidence. In re C & R Shingle, BIIA Dec., 88 2823 (1990). The use of the word "may" in RCW 51.48.010 means no more than that the penalty is not mandatory. However, that does not limit our scope of review of a Department order assessing such a penalty.
Of equal concern was exclusion of evidence regarding the third party action which arose out of Troy Sawyers' accident. Because the Department has the ability to enforce a lien against any third-party recovery and thereby recover at least part of its costs of administering the claim, the extent of its lien recovery is relevant to the propriety of the amount of penalty based on those claim costs. Therefore it was error to exclude evidence concerning the third party recovery. We recognize that RCW 51.48.010 is a penalty statute and not a statute solely used for the purpose of recovering claim costs, but because the amount of the penalty is tied to the Department's costs; the Department's recovery of some actual costs through its lien rights seems relevant to the determination of the appropriate penalty.
Unfortunately the only offer of evidence on this issue was that the amount of the Department's lien was disputed by the claimant. No attempt was made to offer the precise amount of the lien. Therefore it is impossible to determine if the amount of penalty is incorrect. The employer, as the appealing party, has the burden of proving the Department order is incorrect. Merely presenting evidence that a relevant factor used to determine the amount of the penalty is in dispute  is not sufficient evidence on which the Department order should be reversed. We therefore must affirm the penalty assessment. Based on all the other factual evidence herein, the clear preponderance thereof is that this employer did not secure industrial insurance coverage until after Troy Sawyers' injury of December 20, 1988. Thus, the penalty statute was violated. The employer cannot complain about a penalty assessed at the lowest level of the monetary range provided by the statute, namely, 50% of the costs incurred for the claim; no proof was presented that those costs as stated in the Department's order were incorrect.
Consistent with our discussion herein, proposed Findings of Fact Nos. 1 through 5 and proposed Conclusion of Law No. 1 are hereby adopted as the Board's final findings and conclusion. Proposed Finding of Fact No. 6 is deleted and in its stead the following is entered:
FINDINGS OF FACT
6. The Department of Labor and Industries was correct in assessing Sawyers Motor Sports 50% of the claim costs incurred for the injury to Troy Dodd Sawyers, which occurred prior to the acquisition of industrial insurance coverage by the firm.
Proposed Conclusion of Law No. 2 is deleted, and in its stead the following is entered:
2. The decision of the Department of Labor and Industries issued on July 17, 1990, by notice and order of assessment of industrial insurance penalties, assessing Gerald Sawyers and his wife, dba Sawyers Motor Sports, penalties in the amount of $ 19,240.00 pursuant to RCW 51.48.010, is correct and is hereby affirmed. 
It is so ORDERED.
Dated this 1st day of April, 1992.
BOARD OF INDUSTRIAL INSURANCE APPEALS
S. FREDERICK FELLER Chairperson
FRANK E. FENNERTY, JR. Member
PHILLIP T. BORK Member