THIRD PARTY ACTIONS (RCW 51.24)
Accord and satisfaction
The principles of accord and satisfaction do not apply to third party lien transactions under the industrial insurance act and do not prevent consideration of the factors of RCW 51.24.060 in responding to a worker's request for compromise of its lien, even if a check tendered with the request is presented for payment. ….Penny Brown, 96 2568 (1999)
Allocation of fault
The statute requires a finding of employer fault before settlement and before the distribution order is issued; without a finding of fault there may be no reduction of the reimbursement amount. In those cases settled after the issuance of Clark v. Pacificorp, 118 Wn.2d 167 (1991), there may be no reduction of the Department's reimbursement amount where settlement is entered into before a finding of employer fault by a trier of fact. (Limiting application of In re Peter N. Hrebeniuk, BIIA Dec., 91 2764 (1992) to cases settled before filing of Clark). ....Michael McQuirk, 93 1355 (1994) [dissent]
Where a worker asserts that the Department cannot assert its lien against a settlement on the basis that the employer had been found partially at fault by a mediator who helped develop the settlement, the Board noted that the mediator's fault determination is not a determination of fault within the meaning of RCW 4.22.070(1). For that reason, the Board returned the matter to the Department to consider the distribution of recovery after the parties have an opportunity to have fault apportionment hearing at court. ....Peter Hrebeniuk, 91 2764 (1992) [Editor's Note: The Board declined the worker's request to refer this matter to the Superior Court with instructions to determine fault allocation.] The Board's decision was appealed to superior court under King County Cause No. 93-2-01774-0.] [Application of principle limited to cases settled before Clark v. Pacificorp 1118 Wn.2d 167 (1991) by In re Michael McQuirk, BIIA Dec., 93 1355 (1994)]
Assignment of action
Where settlement between worker and uninsured motorist coverage carrier was entered without written approval of self-insured employer as required by RCW 51.24.090, and the employer elects to void the deficiency settlement, the voided settlement does not constitute an automatic assignment of the cause of action to the employer. The employer must petition the court or act in accordance with RCW 51.24.090(2). ....Betty Mathes, 89 3473 (1991) [Editor's Note: The Board's decision was appealed to superior court under Kitsap County Cause No. 91-2-00389-2.]
Assignment of interest in distribution of recovery
Where the assignee of a self-insured employer did not inform the Department of its interest in the distribution of third party recovery until well after sixty days following the date of communication of the order to the employer, a later appeal filed by the assignee is not timely, and the Department's distribution order is binding upon the employer and its assignee. ....Calvin Keller, Dec'd., 89 4546 (1991) [Editor's Note: The Board's decision was appealed to superior court under Spokane County Cause No. 91-2-01677-6.]
Benefits
The Department's expense in obtaining an ability to work assessment should not be considered in calculating the Department's third party lien because it is not a "benefit" within the meaning of the third party lien statute. ....Marcos Armendariz, 03 11102 (2004) [Editor's Note: The Board's decision was appealed to superior court under KingCounty CauseNo.04-2-19885-2SEA.]
Compromise of lien
Board's review of the Department's discretionary decision regarding the compromise of its lien pursuant to RCW 51.24.060(3) is limited to determining whether or not the Department has abused its discretion. Department's decision not to compromise its lien because the industrial insurance fund was "not at risk" was not arbitrary and capricious, nor did it constitute an abuse of discretion. ....Johnny Smotherman, 87 0646 (1989) [Compare, Hadley v. Department of Labor & Indus., 116 Wn.2d 897 (1991)] [Editor's Note: The Board's decision was appealed to superior court under King County Cause No. 89-2-07005.]
Definition of injury
The Department has authority to assert a lien against any third party recovery that involves a condition for which it paid benefits, without regard to whether the condition was caused by the industrial injury. ....Darrin Tharaldson, 04 19948 (2005) [Editor's Note: The Board's decision was appealed to superior court under Pierce County Cause No. 02-2-11626-4.]
Distribution of recovery
In determining costs for which the Department is responsible on a proportionate basis under the provisions of RCW 51.24.060, RCW 4.84.010 regarding costs awarded to a prevailing party does not control. Costs listed in proposed decision and order were appropriately included in the calculation, including photocopies, messenger fees, fax expenses, toll calls and mileage. ....Joann Jones, 90 3578 (1991)
The excess recovery subject to offset must be calculated by deducting the Department's proportionate share of costs and reasonable attorney's fees from the remaining balance. Citing In re Maston Mullins, BIIA Dec., 90 0403 (1992) ....Dick Haag, 90 1236 (1991) [Editor's Note: The Board's decision was appealed to superior court under Pierce County Cause No. 91-2-07862-4.] [Rule reversed by Davis v. Department of Labor & Indus., 71 Wn.App. 360 (1993), reviewed denied, 123 Wn.2d 1016 (1994)]
The requirement that the Department or self-insurer pay its proportionate share of costs and reasonable attorney's fees includes the directive that the Department or self-insurer reduce the remaining balance subject to offset by the Department's proportionate share of attorney's fees and costs. ....Maston Mullins, Jr., 90 0403 (1991) [Rule reversed by Davis v. Department of Labor & Indus., 71 Wn.App. 360 (1993), reviewed denied, 123 Wn.2d 1016 (1994) The Board's decision was appealed to superior court under Pierce County Cause No. 91-2-06809-2.]
Where a self-insured employer voided deficiency settlement but did not comply with RCW 51.24.090(2) regarding assignment of action, its attorney's fees and costs associated with its pursuing a third party recovery may not be included in calculating any distribution of the recovery. ....Betty Mathes, 89 3473 (1991) [Editor's Note: The Board's decision was appealed to superior court under Kitsap County Cause No. 91-2-00389-2.]
Under RCW 51.24.060, the Department must pay a proportionate share of the reasonable attorney's fees and costs "incurred" by the worker in obtaining the third party recovery. The term "incurred" refers to the amount of attorney's fees the worker is actually required to pay to secure the third party recovery, not the fee as originally specified in the contingent fee agreement. ....William Goldstein, 88 2275 (1990)
The Department was correct in requiring the self-insured employer to pay, at the time of distribution of the third party recovery, its share of attorneys' fees and costs based on benefits paid and payable. Since the amount of the recovery paid to the worker subject to offset against future benefits was less than his entitlement, the employer will benefit from the offset and must, therefore, pay fees and costs on such amount. In evaluating the share of fees and costs, it was also appropriate for the Department to reduce the structured settlement amount to present cash value. ....John Cloyd, 87 0203 (1988) [dissent] [Editor's Note: The Board's decision was appealed to superior court under Chelan County Cause No. 88-2-04533-1.]
Under RCW 51.24.060, the Department must pay a proportionate share of the reasonable attorneys' fees and costs incurred by a worker in obtaining a third party recovery. The numerator of the proportionate share calculation is the actual amount which the Department has, or will, benefit from the recovery. The Department benefits from the recovery to the extent of the balance remaining after deducting fees and costs and the worker's 25 percent share, or the benefits "paid and payable", whichever is the lesser. ....Bruce Wilson, 86 4043 (1987) [concurrence]
In determining the employer's share of a deficiency third party recovery under the 1983 version of RCW 51.24.060, not only must deductions from the recovery first be made for attorneys' fees and costs and the worker's 25 percent guaranteed share, but the employer must pay a proportionate share of the attorneys' fees and costs as an additional charge against its share of the recovery. The Department's distribution formula is most consistent with the legislative intent of encouraging workers to pursue third party actions and the Board will therefore defer to the administrative interpretation of the statutory distribution scheme. ....Edward Herrin, 85 3448 (1987) [dissent]; Steven McGee, 70,119 (1987) [dissent] [McGee reversed sub nom Longview Fibre Co. v. Department of Labor & Indus., 58 Wn. App. 751 (1989) rev. denied 114 Wn.2d 1030 (1990)]
Insurance guarantee association recovery
The Department and the self-insured employer have a lien against a worker's recovery made from the Oregon Insurance Guarantee Association (OIGA). The OIGA prohibition against payments of subrogated interests being made to "insurers" only applies to "member insurers." Further, a "self-insured" employer is not an "insurer" within the meaning of the OIGA statute. ....Edwin Stamp, 88 1826 (1989)
Interest
The Department incorrectly demanded interest payable from the date of recovery in third party recovery distribution order since RCW 51.24.060(7) permits recovery of interest only from the date the lien order becomes final. ....Kevin Ravsten, 88 3859 (1991) [Affirmed, Ravsten v. Department of Labor & Indus., 72 Wn. App. 124 (1993) review denied, 123 Wn.2d 1030 (1994)]
Multiple beneficiaries
The third party recovery distribution is not altered when monies from third parties are received after a worker's death. Monies received after the death and a spouse's pension are not exempt from offset under the third party distribution scheme. …Richard Boney, Dec'd., 99 15811 (2001)[Editor's Note: The Board's decision was appealed to superior court under Pierce County Cause No. 01-2-13652-1.]
It is not improper for the Department to assert its lien for benefits paid to the worker against the entire third party recovery where there is no valid court order or settlement document allocating the damages recovered between multiple individuals who may legally share in the third party recovery. In this case, the Board held that in the absence of such an allocation it could not speculate as to the amount of the recovery which should be attributed to the spouse's claim for loss of consortium. ....Marvin Mills, 89 3090 (1990) [Editor's Note: The Board's decision was appealed to superior court under King County Cause No. 91-2-00363-7.]
Where the Department had approved a third party settlement and received notice of a court hearing to allocate the recovery between the widow and two minor children, yet chose not to appear, it may not thereafter attempt to allocate the third party settlement between the multiple beneficiaries in a manner different from that ordered by the court. ....Dannie Dillard, Dec'd.,89 3691 (1990)
When a surviving spouse becomes a beneficiary under the Act and becomes entitled to benefits as a result of the worker's death, her benefits cannot be offset under RCW 51.24 unless she has realized a third party recovery (e.g., for loss of consortium). Where the Department attributed the entire amount of a prior third party recovery solely to the worker, the only recovery subject to RCW 51.24 is that made by and previously allocated to the injured worker. ....Lawrence Guyette, Dec'd., 89 0832 (1990)
Recovery limited to injury caused by the third party
When the injury caused by the third party accounts for only a portion of the total injury, the Department and self-insured employer's right to reimbursement for third party recovery is limited to that compensation and benefits that were provided due to the additional injury for which the third party is liable. .…Carma Newton, 00 13742 (2001)
Reduction of lien due to employer fault (RCW 51.24.060(1)(f))
Where a UIM recovery was made by settlement and there has been no determination of fault by the trier-of-fact as required by RCW 4.22.070, the Department's lien cannot be extinguished under RCW 51.24.060(1)(f). ....James Funston, 88 2863 (1990)
Settlement for nuisance value
Where a third party action settles for "nuisance value", the recovery is subject to Department's statutory lien. ....Richard See, 90 0943 (1991) [Editor's Note: Because action was for medical malpractice, the Department has a lien arguably only to the extent the malpractice caused further payment of benefits.]
Settlement of action
There is no statutory prohibition against the worker, employer, and Department participating cooperatively by voluntary mutual consent in negotiations with a third party source. Neither the self-insured employer nor the Department have a legal right to pursue third party recovery for their own benefit and/or the worker's benefit without first obtaining an assignment of the action. RCW 51.24.070(1),(2) ....Betty Mathes, 89 3473 (1991) [Editor's Note: The Board's decision was appealed to superior court under Kitsap County Cause No. 91-2-00389-2.]
Surviving spouse's recovery for loss of consortium
When a surviving spouse becomes a beneficiary under the Act and becomes entitled to benefits as a result of the worker's death, independent of the claim of the deceased worker, the previous recovery made under her third party action for loss of consortium is subject to the offset provisions of RCW 51.24.060. ....Charles Downey, Dec'd., 87 1718 (1989) [See Downey v. Department of Labor & Indus., 65 Wn. App. 200 (1992) review granted, 119 Wn.2d 1018 (1992); Flanigan v. Department of Labor and Indus., 65 Wn. App. 119 (1992)]
Underinsured motorist insurance policy owned by employer
The 1986 amendments to RCW 51.24.030 apply to UIM recoveries made after the effective date of the amendments. Citing O'Rourke v. Department of Labor & Indus., 57 Wn. App. 374 (1990) review denied 115 Wn.2d 1002 (1990) ....James Funston, 88 2863 (1990)
The Department has a lien against a worker's recovery made under his employer's UIM policy, even though the worker was the son of the corporation president, the policy was issued to the corporation and the president individually, and the corporate policy covered the president's family automobiles as well. ....James Funston, 88 2863 (1990)
The 1986 amendments to RCW 51.24.030 were clarifying amendments, at least insofar as they explicitly stated that the Department or self-insured employer has a lien against a worker's recovery under the employer's underinsured motorist coverage. Thus, the 1986 amendments are retroactive, as a legislative interpretation of the original Act, and the Department or self-insurer has a lien against the worker's recovery under the employer's underinsured motorist policy. ....Dale Goers, 88 0661 (1989) ; Lowell Taylor, 87 3817 (1989) [Contra, Department of Labor & Indus. v. Cobb, 59 Wn. App. 360 (1990) review denied 116 Wn.2d 1031 (1991). Cf. O'Rourke v. Department of Labor & Indus., 57 Wn. App. 374 (1990) review denied 115 Wn.2d 1002 (1990)]
A worker's recovery under his employer's underinsured motorist insurance policy is not a third party recovery within the meaning of RCW 51.24 and is not subject to the Department's reimbursement lien provided for in RCW 51.24.060(2). ....Michael Morrissey, 66,831 (1985) [dissent] ; Carl Miller, 68,280 (1985) [dissent]; Jill Cobb, 66,449 (1985) [dissent] [See later statute, RCW 51.24.030(3) as amended 1986 and In re James Funston, BIIA Dec., 88 2863 (1990)] [Cobb affirmed Department of Labor & Indus. v. Cobb, 59 Wn. App. 360 (1990) review denied 116 Wn.2d 1031 (1991)]