Department of Labor and Industries of State of Wash. v. Fankhauser

• Decision Date: 22 April 1993
• Docket Number: No. 59170-9,59170-9
• Citation: 121 Wn.2d 304,849 P.2d 1209
• Parties: DEPARTMENT OF LABOR AND INDUSTRIES of the State of Washington, Respondent, v. Marvin FANKHAUSER, Appellant. DEPARTMENT OF LABOR AND INDUSTRIES of the State of Washington, Appellant, v. Curtis RUDOLPH, Respondent. En Banc
• Court: Washington Supreme Court

Page 304

121 Wn.2d 304

849 P.2d 1209

DEPARTMENT OF LABOR AND INDUSTRIES of the State of

Washington, Respondent, v. Marvin FANKHAUSER, Appellant.

DEPARTMENT OF LABOR AND INDUSTRIES of the State of

Washington, Appellant, v. Curtis RUDOLPH, Respondent.

No. 59170-9.

Supreme Court of Washington,

En Banc.

April 22, 1993.

Levinson, Friedman, Vhugen, Duggan & Bland, William D. Hochberg, Seattle, for Fankhauser and Rudolph.

Christine O. Gregoire, Atty. Gen., Nancy Thygesen Day, Sr. Counsel, Seattle, for State.

JOHNSON, Justice.

At issue in this case is whether under the "last injurious exposure" rule Marvin Fankhauser and Curtis Rudolph are excluded from coverage under the Washington Industrial Insurance Act (the Act) when they were exposed to asbestos contributing to their occupational disease during employment covered by the Act, but their last exposure occurred during self-employment not covered by the Act. The Board of Industrial Insurance Appeals (the Board) concluded the last injurious exposure rule does not bar their workers' compensation claims. On summary judgment, Kitsap County Superior Court upheld the Board's ruling in Rudolph's case, but Snohomish County Superior Court reversed in Fankhauser's case. We affirm the Board and Kitsap County Superior Court, and reverse Snohomish County Superior Court.

I

The parties have stipulated to the facts. Marvin Fankhauser was exposed to asbestos during the following employment: (1) machinist mate in the United States Coast Guard from 1939 to 1947; (2) executive officer of Hub Brakes in Everett, Washington, from 1961 to 1962; and (3) owner/operator of Hub Brakes from 1962 to 1983. While working as executive officer of Hub Brakes, Fankhauser's employment was covered under RCW Title 51, the Washington Industrial Insurance Act. When he became owner of Hub Brakes in 1962, he elected not to be covered under the Act and continued not to elect coverage until his retirement in 1983.

Curtis Rudolph was exposed to asbestos while working as a carpenter for the following employers: (1) William Gorsegner from 1940 to 1942; (2) Delguzzi Construction from 1947 to 1961; (3) Ramstead Construction from 1961 to 1963; and (4) Settle Construction from 1963 to 1965. Each of these employers were covered under the Act. From 1965 to 1980, Rudolph was also exposed to asbestos while self-employed. Like Fankhauser, Rudolph did not choose elective coverage under the Act.

Fankhauser and Rudolph have been diagnosed as having asbestos-related diseases. The parties have stipulated that Rudolph's doctor would testify that each and every exposure to asbestos contributed to Rudolph's current condition. Stipulation of Parties; Respondent's Clerk's Papers, at 104. Likewise, Fankhauser's doctor would testify that the concentration of asbestos fibers in Fankhauser's lungs indicates his condition is related to asbestos exposure. Stipulation of Facts; Appellant's Clerk's Papers, at 78. Claimants both filed for workers' compensation benefits for asbestos-related diseases resulting from their exposure while working for employers who were covered under the Act. The Department of Labor and Industries (the Department) rejected their claims based upon its interpretation of WAC 296-14-350(1), which codifies the last injurious exposure rule. WAC 296-14-350(1) states:

The liable insurer in occupational disease cases is the insurer on risk at the time of the last injurious exposure to the injurious substance or hazard of disease which gave rise to the claim for compensation.

In rejecting both claims, the Department stated: "[T]he evidence reveals that the last injurious exposure which gave rise to the disease for which the claim was filed, did not occur during employment subject to coverage under the Industrial Insurance Laws of the state of Washington." Appellant's Clerk's Papers, at 79; accord, Respondent's Clerk's Papers, at 105.

Claimants appealed to the Board of Industrial Insurance Appeals. The Board reversed the Department's orders, holding the last injurious exposure rule did not bar the claims because the rule did not apply to claimants' self-employment, which was employment outside the coverage of the Act. The Board concluded the last injurious exposure rule applies to allocate liability only among insurers providing industrial insurance under the provisions of the Washington Act. Therefore, Fankhauser and Rudolph could bring claims for compensation for occupational disease from exposure occurring during their covered employment.

The Department appealed Fankhauser's case to Snohomish County Superior Court and Rudolph's case to Kitsap County Superior Court. All parties moved for summary judgment. Kitsap County Superior Court granted summary judgment for Rudolph, affirming the Board's ruling that the last injurious exposure rule did not bar Rudolph's claim. In Fankhauser's case, however, Snohomish County Superior Court reversed the Board's decision and reinstated the Department's order denying Fankhauser's claim. Fankhauser appealed to Division One of the Court of Appeals, and the Department appealed to Division Two. All parties moved to transfer and consolidate the appeals in this court. This court granted the motions and accepted direct review.

II

We begin by determining the appropriate standard of review. Upon appeal to superior court, the standard of review of the Board's findings of fact and conclusions of law is de novo. RCW 51.52.115; Garrett Freightlines, Inc. v. Department of Labor & Indus., 45 Wash.App. 335, 339, 725 P.2d 463 (1986). A superior court may grant summary judgment only if there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. CR 56(c). Likewise, on appeal of a summary judgment order where no facts are in dispute and the only issue is a question of law, the standard of review is de novo. Shum v. Department of Labor & Indus., 63 Wash.App. 405, 407, 819 P.2d 399 (1991).

A

None of the parties dispute that claimants were exposed to asbestos during employment covered by the Act. Fankhauser was exposed at Hub Brakes, and Rudolph was exposed at various carpentry jobs. Both parties have been diagnosed as suffering from asbestos-related diseases. Such disease is an occupational disease if it arose "naturally and proximately out of employment" under the mandatory or elective provisions of the Act. RCW 51.08.140. Workers who suffer disability from an occupational disease in the course of employment covered by the Act are entitled to benefits. RCW 51.32.180. Claimants argue that they meet these requirements and thus are entitled to benefits for their disability resulting from employment covered by the Act. The Department, however, argues the plain language of the Act unambiguously excludes claimants from workers' compensation coverage for two reasons: (1) both were self-employed at the time of their last injurious exposure to asbestos, and (2) neither elected optional coverage under the Act before his occupational disease occurred.

Under RCW 51.12.020(5), sole proprietors or partners are expressly excluded from mandatory coverage and are not required to participate in Washington's workers' compensation system. ¹ RCW 51.12.020. Neither are they considered "workers" or "employees" automatically covered under the statute. Berry v. Department of Labor & Indus., 45 Wash.App. 883, 884-85, 729 P.2d 63 (1986) (holding partner killed in helicopter crash is not "worker" under the Industrial Insurance Act and is not entitled to mandatory coverage); see RCW 51.08.180, 51.08.185. Sole proprietors or partners may opt into the system under RCW 51.12.110 and 51.32.030, but neither claimant in this case elected coverage during his self-employment. See Johnson v. Department of Labor & Indus., 33 Wash.2d 399, 404-05, 205 P.2d 896 (1949) (holding partners are excluded from coverage unless they request it in writing prior to the date of injury).

The Department is correct in maintaining that sole proprietors or partners are excluded from receiving compensation benefits under the Act for disease or injuries sustained during their self-employment unless they request coverage prior to the date of injury or disease. But that determination only tells us that claimants could not recover for an injury occurring solely during their self-employment. Such is not the case here. Claimants are trying to recover for an ongoing injury occurring over the course of successive employments, part of which was covered by the Act and part of which was not. Thus, the Department's argument is not dispositive.

B

The Department next argues claimants are excluded from coverage because of the last injurious exposure rule. Under this rule, the last "insurer covering the risk during the most recent exposure bearing a causal relationship to the disability" is liable for the entire amount of the workers' compensation award. ² Weyerhaeuser Co. v. Tri, 117 Wash.2d 128, 130, 814 P.2d 629 (1991); WAC 296-14-350(1). The last injurious exposure rule is actually two rules: a rule of proof and a rule for assignment of responsibility. In re Runft, 303 Or. 493, 499, 739 P.2d 12 (1987); Weyerhaeuser, 117 Wash.2d at 134-35, 814 P.2d 629. Only the second application is at issue in this case. As a rule for assignment of responsibility, the last injurious exposure rule avoids the usual difficulty in determining which insurer should be held responsible for what percentage of the award, as required under an apportionment system. In occupational disease cases, this determination is particularly difficult because the worker often received multiple multiple exposures over a long period of time. Weyerhaeuser, 117 Wash.2d at 135, 814 P.2d 629 (citing In re Renfro, Bd. of Indus. Ins. Appeals Dec. 86,2392 (1988)). The last injurious exposure rule avoids this problem by assigning responsibility to the last insurer at risk. Although the rule may appear arbitrary in a specific case, the law of averages...