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

• Decision Date: 20 April 1992
• Docket Number: No. 28139-9-I,28139-9-I
• Court: Washington Court of Appeals
• Parties: Miriam DOWNEY, Appellant, v. DEPARTMENT OF LABOR AND INDUSTRIES OF the STATE OF WASHINGTON, Respondent.

Page 200

65 Wn.App. 200

827 P.2d 1101

Miriam DOWNEY, Appellant, v. DEPARTMENT OF LABOR AND INDUSTRIES OF the STATE OF

WASHINGTON, Respondent.

No. 28139-9-I.

Court of Appeals of Washington,

Division 1.

April 20, 1992.

Richard Hilfer, Castle Schnautz & Hilfer, Seattle, for appellant.

Beverly Goetz, Asst. Atty. Gen., Dept. Labor & Industries, Seattle, for respondent.

FORREST, Judge.

Miriam Downey appeals the superior court's grant of summary judgment affirming a Board of Industrial Insurance Appeals ruling that the Department of Labor and Industries (hereinafter Department) has a right to reimbursement against her loss of consortium recovery, thus offsetting her surviving spouse pension benefits. We affirm.

The parties have stipulated to all relevant facts. Miriam Downey's husband contracted asbestosis through his employment and thereby received worker's compensation benefits pursuant to RCW Title 51. Both husband and wife then sued several third parties pursuant to RCW 51.24.030, which allows an injured worker or beneficiary to seek damages from third parties other than the employer. The Downeys settled their claims, and of the recovery 80 percent was allotted to Mr. Downey for personal injury damages and 20 percent was allotted to Mrs. Downey for loss of consortium. ¹

RCW 51.24.060 provides that the Department has a right to reimbursement for benefits paid by the Department against any amount recovered from third parties. At the time of the Downeys' recovery the Department asserted a right to reimbursement as to Mr. Downey's portion of the recovery, but asserted no such right against Mrs. Downey's portion of the recovery. Thereafter, Mr. Downey passed away, and Mrs. Downey applied for pension benefits from the Department. Mrs. Downey was awarded a pension, but the Department asserted a right to reimbursement as to Mrs. Downey's portion of the previous third party recovery to offset her pension benefits. ²

Mrs. Downey appealed the Department order to the Board of Industrial Insurance Appeals. The Board issued a decision in favor of the Department on May 31, 1989. Mrs. Downey then timely filed a notice of appeal to the Superior Court. Both parties stipulated to the facts, and on cross-motions for summary judgment the superior court granted summary judgment in favor of the Department. Mrs. Downey (hereinafter Downey) now appeals to this court.

Downey contends that she was not a "beneficiary" at the time of her recovery for loss of consortium and thus the Department has no right to reimbursement. We disagree. Downey construes "beneficiary" too narrowly, and her interpretation of the statute is inconsistent with the statutory framework as well as this court's decision in Bankhead v. Aztec Construction Co. ³ Downey construes beneficiary as meaning a person currently receiving benefits from the Department. Not surprisingly Downey does not refer to the statutory definition of beneficiary; it is inconsistent with her position. Beneficiary is defined by the Industrial Insurance Act as "a husband, wife, child, or dependent of a worker in whom shall vest a right to receive payment under this title ..." RCW 51.08.020, in part. (Emphasis added.) First, the statute uses the word "shall", implying futurity rather than a contemporaneous right to benefits. Second, Downey's construction is inconsistent with general legal usage. One can have a vested right to future benefits. Indeed, persons named to receive benefits under a will, insurance policy, trust or contracts are routinely characterized as beneficiaries whether they are currently receiving benefits or not. Although not currently receiving benefits, Downey was clearly a contingent beneficiary of her husband's pension at the time of receipt of the consortium settlement. Accordingly, we hold that in order to be a "beneficiary" under RCW 51.24.060 one need not be receiving benefits at the time of the third party recovery.

Downey asserts that because loss of consortium is a separate action based on her own injuries, she is not a beneficiary. It is certainly true that courts have held that loss of consortium is an action separate from the worker's claim. ⁴ However, this fact does not establish that recovery is not subject to the right of reimbursement. Indeed, Downey concedes that a consortium claim paid to her after her husband's death, when she was receiving pension benefits, was properly subject to reimbursement. A worker or beneficiary's third party claim may include many elements of damages not specifically compensated by worker's compensation benefits, ⁵ but they are all subject to reimbursement. It is not the nature of the claimed damages but the status of the recipient that governs reimbursement.

The preemption of civil actions by the Industrial Insurance Act, RCW 51.04.010, is sweeping and comprehensive. ⁶ Downey's cause of action for loss of consortium exists only by reason of the exception provided in RCW 51.24.030:

(1) If a third person, not in a worker's same employ, is or may become liable to pay damages on account of a worker's injury for which benefits and compensation are provided under this title, the injured worker or beneficiary may elect to seek damages from the third person.

(Emphasis added.) Since Downey is plainly not a worker, she must have been a "beneficiary" or she was not authorized under RCW 51.24.030 to maintain an action for consortium against a third party. Thus, Downey's argument proves too much.

This view was adopted by this court in Bankhead v. Aztec Construction Co. ⁷ , in which the injured worker's mother sued a third party under RCW 51.24.030 as the estate's personal representative. Bankhead argued that as personal representative she was neither an injured worker nor a beneficiary and thus the Department could assert no right to reimbursement under RCW 51.24.060. This court, holding that she was acting as an injured worker, stated, "if she were neither an 'injured worker or beneficiary', then she would never have been entitled to bring a third party action under RCW 51.24.030; she would have no action at law whatsoever for her son's workplace injuries." Bankhead, 48 Wash.App. at 106-07, 737 P.2d 1291.

This view is further supported by the striking similarity between the language of RCW 51.24.030(1) and RCW 51.24.060(1). RCW 51.24.030(1) authorizes third party suits, stating, "the injured worker or beneficiary may elect to seek damages from the third person." RCW 51.24.060(1) governs distribution of the award of settlement and states, "[i]f the injured worker or beneficiary elects to seek damages from the third person, any recovery made shall be distributed as follows:" (Emphasis added.) We find this to be persuasive evidence that all those authorized to bring third party actions are also subject to a duty of reimbursement. Such duty only matures when and to the extent benefits are paid.

RCW 51.24.060(1)(c) provides that the Department "shall be paid the balance of the recovery made, but only to the extent necessary to reimburse the department ... for compensation and benefits paid ". (Emphasis added.) The Department, having paid nothing to Downey at the time of recovery, possessed a right to reimbursement but that right lay dormant. The Department's right to reimbursement is activated only when and to the extent departmental benefits are received: in this case when Downey began receiving pension benefits after her husband's death. Therefore, Downey's argument that the Department's position is inconsistent because of their failure to assert a right to reimbursement as to her portion of the recovery before her husband's death is without merit.

The authorization for suits against third parties contained in RCW 51.24.030 effectuates two principal policies: (1) it allows, and indeed encourages, workers and their families to seek full compensation from responsible third parties for injuries the worker may suffer in the course of his employment, while (2) immediately providing the worker the direct benefits of the act subject to reimbursement to protect the compensation fund. Previous Washington cases favor a strong policy of protecting the compensation fund through reimbursement. ⁸ We find no reason to deviate in regard to Downey's consortium claim.

Downey urges this court to follow an Illinois court which held under the Illinois statute that an employer could not receive credit for a widow's recovery from a third party for loss of consortium because the action was brought in her own behalf. ⁹ This case is inapposite in that the Illinois statute only allows such credit for judgments and settlements paid to "the disabled employee or his personal representative". Owens Corning Fiberglass Corp. v. Industrial Commission, 198 Ill.App.3d 605, 144 Ill.Dec. 714, 555 N.E.2d 1233, 1240-41 (1990) (quoting Ill.Rev.Stat.1983, ch. 48, par. 172.40(b)). Our statute on the other hand, allows for reimbursement for damages recovered by...