Johnson v. Weyerhaeuser Co.

• Decision Date: 02 April 1998
• Docket Number: No. 65131-1
• Citation: Johnson v. Weyerhaeuser Co., 134 Wn.2d 795, 953 P.2d 800 (Wash. 1998)
• Parties: Dennis R. JOHNSON, Petitioner, v. WEYERHAEUSER COMPANY, Employer, Respondent, The Department of Labor and Industries of the State of Washington.
• Court: Washington Supreme Court

Page 795

134 Wn.2d 795

953 P.2d 800

Dennis R. JOHNSON, Petitioner, v. WEYERHAEUSER COMPANY, Employer, Respondent The Department of Labor and Industries of the State of Washington.

No. 65131-1.

Supreme Court of Washington En Banc.

Argued Oct. 28, 1997.

Decided April 2, 1998.

Annan & Fairley, John Fairley, Spokane, Amicus Curiae for Washington Self-Insurers Association.

Debra Stephens, Harbaugh & Bloom, Gary Bloom, Bryan P. Harnetiaux, Delay, Curran, Thompson & Pontarolo, Michael J. Pontarolo, Spokane, Amicus Curiae for Washington State Trial Lawyers Association.

Lane, Powell, Spears & Lubersky, D. Michael Reilly, Robert J. Guite, Robert J. Dzielak, Seattle, Amicus Curiae for Washington Defense Trial Lawyers.

David B. Vail & Associates, Edward F. St.Onge, Tacoma, for Petitioner.

Kathryn D. Fewell, Tacoma, for Respondent.

JOHNSON, Justice.

We are asked to determine whether evidence of collateral benefits received by an injured worker should be barred from workers' compensation proceedings. We hold that the collateral source rule bars such evidence.

FACTS

On June 4, 1979, Dennis Johnson was injured while in the course of his employment with Weyerhaeuser, a self-insured employer. On June 21, 1979, Johnson filed an application for workers' compensation benefits with The Department of Labor and Industries (Department). Johnson's application was allowed and benefits were provided. On January 24, 1990, the Department closed Johnson's claim with time loss compensation to April 27, 1987. The Department also ordered Weyerhaeuser to pay Johnson a Category 3 permanent partial disability award for low back impairment. ¹ The Department denied Johnson's claim for total permanent disability for a psychiatric condition.

Johnson appealed his award, arguing he was permanently and totally disabled due to a cognitive impairment. Weyerhaeuser argued Johnson was not permanently and totally disabled. Weyerhaeuser asserted Johnson was not motivated to work and, in support of this argument, sought to introduce evidence he was receiving more money per month in disability benefits than he earned while he was employed. Johnson moved to exclude this evidence of receipt of collateral benefits but the industrial appeals judge (IAJ) denied the motion. The IAJ also ruled Johnson could present evidence relating to the collateral benefits issue during his case in chief without waiving his objection.

At the hearing, several physicians testified that Johnson exhibited inconsistent or unexplainable symptoms. Two of those physicians diagnosed Johnson as malingering and a third physician agreed his diagnosis was consistent with a diagnosis of malingering. Testimony regarding specific amounts of money that both Mr. and Mrs. Johnson received from collateral sources was also elicited from some of the physicians and from Mrs. Johnson's former employer.

The IAJ issued a proposed decision and order reversing the Department's order and directing Weyerhaeuser to: (1) allow Johnson's psychiatric condition as causally related to his industrial injury; (2) pay for treatment of that condition; (3) pay time loss compensation for the period of April 27, 1987 until July 26, 1988; and (4) pay a Category 2 permanent partial disability award for a mental condition. ² Weyerhaeuser appealed the IAJ's decision to the Board of Industrial Insurance Appeals (Board). The Board reversed the IAJ's decision and reinstated the Department's order. In re Dennis R. Johnson, Board of Indus. Ins. Appeals No. 90 1282 (1992).

Johnson obtained review by the Lewis County Superior Court, renewing his objection to the introduction of evidence of collateral benefits. The court overruled the objection and the jury returned a verdict affirming the Board's findings. Johnson appealed to the Court of Appeals, Division Two, which affirmed the superior court's decision. Johnson v. Weyerhaeuser Co., 84 Wash.App. 713, 930 P.2d 331 (1997). Johnson then petitioned for discretionary review here. We granted his petition.

ANALYSIS

Johnson argues that evidence of payments he and his wife received from various outside sources should have been barred by the collateral source rule. The common law collateral source rule allows an injured party to recover compensatory damages from a tortfeasor without regard to payments the injured party received from a source independent of the tortfeasor. See Stone v. City of Seattle, 64 Wash.2d 166, 172, 391 P.2d 179 (1964). In the context of personal injury actions, the collateral source rule has been the rule in Washington for 85 years. See Heath v. Seattle Taxicab Co., 73 Wash. 177, 186, 131 P. 843 (1913); Ciminski v. SCI Corp., 90 Wash.2d 802, 804-05, 585 P.2d 1182 (1978). See also Boeke v. International Paint Co., 27 Wash.App. 611, 618, 620 P.2d 103 (1980) ("We agree that the rule of strict exclusion represents the better view"); accord Sutton v. Shufelberger, 31 Wash.App. 579, 583, 643 P.2d 920 (1982).

The issue here is whether there exists such a significant difference between personal injury actions and workers' compensation proceedings that the collateral source rule should not apply in workers' compensation proceedings. In this case, Division Two of the Court of Appeals felt that such a difference exists and held the collateral source rule is inapplicable in workers' compensation proceedings when evidence of collateral benefits is offered to show the plaintiff is malingering. The Court of Appeals reasoned that because "juries in industrial insurance appeals do not determine the amount of damages, the risk that evidence of collateral benefits will be used to improperly reduce damages is slight." Johnson, 84 Wash.App. at 718-19, 930 P.2d 331.

We do not agree this distinction requires abandonment of the collateral source rule. First, workers who are injured in the course of their employment generally do not have the option to bring a personal injury lawsuit. Instead, the injured worker obtains compensation under the Industrial Insurance Act, RCW Title 51 (Act). ³ The Act states:

The state of Washington ... declares that all phases of the premises are withdrawn from private controversy, and sure and certain relief for workers, injured in their work, and their families and dependents is hereby provided regardless of questions of fault and to the exclusion of every other remedy, proceeding or compensation, except as otherwise provided in this title; and to that end all civil actions and civil causes of action for such personal injuries and all jurisdiction of the courts of the state over such causes are hereby abolished, except as in this title provided.

RCW 51.04.010 (emphasis added). We have previously recognized the change in the common law brought about by the Legislature's enactment of the Industrial Insurance Act and that the Act is remedial in nature and "is to be liberally applied to achieve its purpose of providing compensation to all covered persons injured in their employment." Sacred Heart Med. Ctr. v. Carrado, 92 Wash.2d 631, 635, 600 P.2d 1015 (1979).

To deny application of the collateral source rule in workers' compensation proceedings on the basis that such proceedings are distinct from regular personal injury proceedings does a particular injustice to the injured worker who, in most instances, is restricted by the Act from bringing a standard personal injury action where the collateral source rule would apply to bar evidence of collateral source payments. Wheeler v. Catholic Archdiocese, 65 Wash.App. 552, 570-71, 829 P.2d 196 (1992) ("[w]orkers' compensation benefits include compensation for lost wages; they literally take the place of damages in a personal injury action against any employer, which damages would include lost wages"), rev'd on other grounds, Wheeler v. Catholic Archdiocese, 124 Wash.2d 634, 880 P.2d 29 (1994).

Second, simply because the factfinder in a workers' compensation action determines the worker's level of disability and not the specific monetary award does not remove the risk that evidence of monetary amounts the claimant has received from collateral benefits will be misused, particularly when the proceedings may eventually reach trial de novo in superior court. This risk of misuse of the evidence is one of the foundations of the collateral source rule. Furthermore, the risk is fundamentally the same in both personal injury actions and workers' compensation proceedings. This is true because at any stage of a workers' compensation proceeding, the trier of fact could use evidence of collateral source benefits to determine that the claimant does not need the award and, therefore, is not disabled. ⁴ The only existing adequate protection to eliminate this risk is the collateral source rule.

In Franks v. Department of Labor & Indus., 35 Wash.2d 763, 215 P.2d 416 (1950), we recognized that the factfinder in workers' compensation proceedings is highly susceptible to prejudice when evidence of monetary figures is brought before it. In Franks, the factfinder rendered a verdict in favor of a claimant in an action under the workers' compensation act. The Department moved for a new trial arguing, among other things, that a jury instruction which divulged to the jury the actual monetary figure of the award sought by the claimant was erroneous. We stated:

We believe that the mention of past or present permanent disability awards, or claimed awards, in terms of money, is confusing to the jury, whose sole function is to determine disability in terms of physical condition.... Even if the jury properly understands its function, the mention of dollars injects a consideration foreign to the determination of physical condition.

Franks, 35 Wash.2d at 771-72, 215 P.2d 416 (emphasis added); accord Diesso v. Department of Labor & Indus., 36 Wash.2d 58, 62, 216 P.2d 752 (1950) ("[t]he industrial insurance act is not one designed to award full compensation to each individual for all such damages as such individual would...