Cockle v. Department of Labor and Industries of Washington

• Decision Date: 03 June 1999
• Docket Number: No. 22486-1-II,22486-1-II
• Citation: 977 P.2d 668,96 Wn.App. 69
• Parties: Dianne L. COCKLE, Respondent, v. DEPARTMENT OF LABOR AND INDUSTRIES OF the State of WASHINGTON, Appellant.
• Court: Washington Court of Appeals

Page 69

96 Wn.App. 69

977 P.2d 668

Dianne L. COCKLE, Respondent, v. DEPARTMENT OF LABOR AND INDUSTRIES OF the State of WASHINGTON, Appellant.

No. 22486-1-II.

Court of Appeals of Washington Division 2.

June 3, 1999.

John R. Wasberg, Dept. of Labor & Industries Office of the Atty. Gen., Seattle, for Appellant.

Terry James Barnett, Rumbaugh Rideout Barnett, Tacoma, for Respondent.

Nancy Thygesen Day, Perkins Coie LLP, Seattle, for Amicus Curiae Washington Self-Insurers Assoc.

MORGAN, J.

The question in this appeal is whether the Department of Labor and Industries must include the reasonable value of employer furnished health insurance ¹ in the basis from which it computes an injured worker's time-loss compensation. According to RCW 51.08.178, the answer is yes.

In 1993, Dianne L. Cockle worked full-time for the Pierce County Rural Library District. The District paid her $5.61 per hour. It also furnished her with health insurance, for which it paid premiums of $205.52 per month. ² According to the parties' stipulation, the insurance was worth about twenty percent of Cockle's compensation. ³ On November 4, 1993, Cockle suffered an on-the-job injury. She did not work from then until June 6, 1994, and she worked only part-time from June 6, 1994 to October 24, 1994. The library did not provide health insurance from when she was injured to when she returned to work full-time.

After her injury, Cockle sought time-loss compensation based on her monetary pay and the value of her health insurance. The Department made an award based on monetary pay only.

Cockle appealed to the Board of Industrial Insurance Appeals, which affirmed. She then appealed to the superior court, which ruled:

Plaintiff's health and dental insurance premiums were "wages" because they were compensation which had a monetary value, which she received over and above the hourly wages paid directly to her. During periods of disability the employer stopped paying these premiums for her, so she lost monthly compensation which would have been provided for her had she been working. Such premiums are a form of compensation which should be included in wages under RCW 51.08.178. See that statute, and Rose v. Department of Labor and Industries, 57 Wash.App. 751, 790 P.2d 201, review denied, 115 Wash.2d 1010, 797 P.2d 512 (1990).[ ⁴

The superior court reversed, and the Department filed this appeal.

Washington's Industrial Insurance Act grants time-loss compensation to a worker who is temporarily disabled due to an industrial injury. ⁵ It provides that time-loss compensation shall be a percentage of the worker's "wages" at the time of injury. ⁶ Thus, "wages" are the basis from which time-loss compensation is computed.

Enacted in 1971, RCW⁷ 51.08.178 defines the extent to which the term "wages" shall encompass consideration that an employer furnishes in kind. ⁸ It provides that "[t]he term 'wages' shall include the reasonable value of board, housing, fuel, or other consideration of like nature received from the employer as part of the contract of hire." ⁹ In essence, RCW 51.08.178 creates three categories of consideration furnished in kind. One is board, housing and fuel. Another is "other consideration of like nature" to board, housing and fuel. A third is other consideration not "of like nature" to board, housing and fuel. Items in the first two categories count as "wages" for purposes of time-loss compensation. Items in the third category do not.

It is not hard to discern why the legislature provided that items in the first category shall count as "wages." Board means food. Housing means shelter. Fuel means heat or warmth. Each is a necessity of life, without which the injured worker cannot survive a period of even temporary disability. Before the worker's injury, each was an item that the employer was supplying in kind. After the worker's injury, each is an item that the worker must replace during the period of his or her disability. Thus, each is an item that the worker must replace out of time-loss compensation, and each is an item that should be included in the basis from which time-loss compensation is computed.

It is not hard to discern why the legislature provided that items in the second category shall count as "wages." Board, housing and fuel are not the only items of consideration that an employer may supply to a worker in kind. An employer often supplies other items also. If those other items are such that the worker must replace them during the period of his or her disability, they are items that the worker must replace out of time-loss compensation, and they should be included in the basis from which time-loss compensation is computed.

It is not hard to discern why the legislature provided that items in the third category term shall not count as "wages." An employer may supply to a worker, in kind, items of consideration that the worker can do without while disabled, and restore or replenish after returning to work. Arguably, examples include pension benefits and vacation pay. ¹⁰ The worker need not replace such items out of time-loss compensation, and thus they should not be included in the basis from which time-loss compensation is computed.

The legislature's handling of all three categories is consistent with logic and common sense. The "ultimate goal" of time-loss compensation "is to provide temporary financial support until the injured worker is able to return to work." ¹¹ Indeed, it is for that reason that time-loss compensation terminates when the injured worker's disability ceases or becomes permanent. ¹² It follows that time-loss compensation should be based on items of consideration that the worker will need to replace during the period of his or her disability, but not on items that the worker can restore or replenish after he or she is back at work.

The specific problem here is whether employer-furnished health insurance is an item of in-kind consideration that an injured worker generally must replace, while disabled, out of time-loss compensation. In our view, the answer is yes. Health insurance and health care are interchangeable at least for purposes of this case; health care is the only reason to have health insurance, and health insurance is frequently the only practical way in which a worker can obtain health care. Health care is something that an injured worker must have during the period of his or her disability, for both self and family. ¹³ If an employer was supplying health care (through health insurance or otherwise) before the worker's injury, but no longer supplies it after the worker's injury, the worker must replace it out of time-loss compensation, and it should be included in the basis from which time-loss compensation is computed. Accordingly, we hold that health insurance is consideration "of like nature" to board, housing and fuel, and that the reasonable value of health insurance must be included within "wages" when computing time-loss compensation.

In reaching this result, we reject Cockle's reliance on Rose v. Department of Labor and Industries. ¹⁴ In a single sentence of Rose, we said that the term "wages" "include[s] any and all forms of consideration received by the employee from the employer in exchange for work performed." ¹⁵ When we said that, we were discussing whether the term "wages" includes consideration paid in cash for work done by a prison inmate. We were not considering whether the term "wages" includes each and every form of consideration that an employer might supply to a worker in kind. ¹⁶ Viewed with the benefits of hindsight, the quoted language was non-precedential dictum with respect to consideration furnished in kind.

We also reject Cockle's argument that all forms of consideration must necessarily be included within the basis from which time-loss compensation is computed. She claims (1) that the purpose of time-loss compensation is to replace the "earning capacity" that the injured worker would have had during the period of disability but for the industrial injury; ¹⁷ and (2) that one can accurately gauge the worker's "earning capacity" only if one takes into account all consideration that the worker was receiving, in cash or in kind, at the time of the injury. Although this argument may be sound economically, it is not sound legally. Economically, it is true that an injured worker's "lost" or "future" earning capacity is represented by all consideration that the worker was receiving, in cash or in kind, at the time of injury. Legally, however, the legislature's intent controls, whether or not it makes economic sense. ¹⁸ Here, for reasons already discussed, the legislature's intent was that "wages" include only those items of in-kind consideration that a worker must replace while disabled.

In reaching our result, we also reject various arguments advanced by the Department. The Department claims that health insurance is not "of like nature" to board, housing and fuel because the typical worker may not use it, or at least is likely to use it less frequently than board, housing and fuel. ¹⁹ In our view, however, both use and frequency of use are immaterial. Whether an injured worker must replace an item of in-kind consideration out of time-loss compensation does not turn on whether the worker uses the item, or even on how often the worker uses the item. Rather, it turns on whether the worker must have the item available for use when needed. A worker must purchase food, shelter and heat out of time-loss compensation not because he or she will use those items with any particular degree of frequency, but rather because he or she must have those items available for use when needed by self or family. Analogously, a worker must purchase health insurance out of time-loss compensation not because he or she will use it with any particular degree of frequency, but rather because he or she must have health care available for use when needed by self or family.

The...