Olson ex rel. Olson v. Colvin
| Decision Date | 09 April 2014 |
| Docket Number | Case No. 12–CV–00563–VEB. |
| Citation | 31 F.Supp.3d 1176 |
| Court | U.S. District Court — District of Washington |
| Parties | Marilyn OLSON, on behalf of Steven W. Olson, deceased, Plaintiff, v. Carolyn W. COLVIN, Acting Commissioner of Social Security, Defendant. |
Robyn Lynn Pugsley, Law Offices of Robyn L. Pugsley, PS, Spokane Valley, WA, for Plaintiff.
Christopher John Brackett, Vikash Chhagan, Social Security Administration, Seattle, WA, Pamela Jean Derusha, US Attorney's Office, Spokane, WA, for Defendant.
DECISION AND ORDER
Plaintiff Marilyn Olson commenced this action on behalf of Steven W. Olson, her late husband, pursuant to 42 U.S.C. §§ 405(g) and 1383(c)(3) seeking judicial review of the Commissioner of Social Security's application of the Social Security Act's offset provisions. The parties consented to the jurisdiction of a United States Magistrate Judge. (Docket No. 5).
On February 3, 2014, the Honorable Rosanna Malouf Peterson, Chief United States District Judge, referred this case to the undersigned pursuant to 28 U.S.C. § 636(b)(1)(A) and (B). (Docket No. 26).
The procedural history may be summarized as follows:
In May of 2005, the Social Security Administration (“SSA”) awarded benefits to Steven W. Olson, Plaintiff's husband, finding him disabled as of March 2, 2002, due to chronic lymphatic leukemia
, fatigue, nausea, and carpal tunnel syndrome. (T at 11, 131).1 Shortly thereafter, Mr. Olson, through counsel, advised the SSA that he had received a permanent partial disability (“PPD”) award under Washington State's workers' compensation program, in the amount of $16,207.68, based on bilateral hearing loss. (T at 31–34). Mr. Olson indicated that he did not believe the SSA was entitled to offset the PPD award against his benefits. (T at 31–34).
The SSA disagreed and reduced Mr. Olson's benefits. (T at 16). The actual amount of the offset was the subject of several redetermination calculations conducted by the SSA between 2005 and 2009. (T at 11–12, 40–43, 54–57, 62–65, 66–73, 74–77, 80–83). Mr. Olson passed away on April 27, 2006, and Plaintiff was substituted in his place. (T at 11).
In March of 2009, Plaintiff requested a hearing before an Administrative Law Judge (“ALJ”) to determine whether the PPD award was subject to the offset provisions of the Social Security Act. (T at 89–90, 91–92). On May 26, 2010, ALJ James Sherry ruled in Plaintiff's favor, concluding that, under Washington state law, the PPD award was not a “substitute” for periodic benefits and was therefore not subject to offset under federal law. (T at 120–28). On July 23, 2010, the Social Security Administration Appeals Council sua sponte
vacated ALJ Sherry's decision and remanded the matter for reconsideration. (T at 130–42). The parties, through counsel, submitted additional legal briefing. (T at 12). The ALJ issued a new decision on January 12, 2011, finding that the PPD award did trigger the offset provisions of the Social Security Act. (T at 8–14). The ALJ's second decision became the Commissioner's final decision on August 20, 2012, when the Appeals Council denied Plaintiff's request for review. (T at 3–6).
On October 9, 2012, Plaintiff, acting by and through her counsel and on behalf of her late husband, timely commenced this action by filing a Complaint in the United States District Court for the Eastern District of Washington. (Docket No. 1). The Commissioner interposed an Answer on December 20, 2012. (Docket No. 9).
Plaintiff filed a supporting Brief on September 3, 2013. (Docket No. 15). Although Plaintiff did not file a summary judgment motion, her Brief requests that relief (Docket No. 15, at p. 10) and this Court will deem the Brief to be a motion for summary judgment. The Commissioner moved for summary judgment on November 8, 2013. (Docket No. 22). As noted above, the parties consented to the jurisdiction of a Magistrate Judge. (Docket No. 5).
For the reasons set forth below, the Commissioner's motion is denied, Plaintiff's motion is granted, and this case is remanded for further proceedings.
The Social Security Act provides, in pertinent part, that a recipient of disability benefits, who is also entitled to “periodic benefits on account of his or her total or partial disability ... under a workmen's compensation law or plan of the United States or a State” shall have his or her Social Security disability benefits reduced by the amount by which the state workers' compensation2 benefits exceed the higher of: (a) 80 percent of the recipient's average current earnings; or (b) the total of the recipient's Social Security disability benefits. 42 U.S.C. § 424a(a)(2–6). The SSA is obliged to follow this offset provision when it applies. See 42 U.S.C. § 424a(a)(2).
A non-periodic (“lump sum”) payment received under state workers' compensation law may be considered a “periodic benefit” subject to offset if the payment was, in reality, “a commutation of, or a substitute for, periodic payments.” 42 U.S.C. § 424a(b) ; see also Black v. Schweiker, 670 F.2d 108, 109–10 (9th Cir.1982). This case presents the issue of whether a lump sum (“PPD”) award under Washington State's workers' compensation program is a “substitute” for periodic payments subject to the Social Security offset provision.
The Court of Appeals for the Ninth Circuit considered the offset provision in Hodge v. Shalala, 27 F.3d 430 (9th Cir.1994). The court noted that the purpose of the offset provision was to prevent double recovery and found that its scope was “extremely broad.” Id. at 432 ; see also Richardson v. Belcher, 404 U.S. 78, 82–83, 92 S.Ct. 254, 30 L.Ed.2d 231 (1971) ().
Hodge involved a workers' compensation award under Oregon law. Id. The claimant received a lump-sum award based on a right forearm injury
. Id. The amount of the award (which is called a “scheduled award” under Oregon law) was determined based upon the value of the injured body part without reference to the claimant's earnings. Id. at 433 (citing Or.Rev.Stat. §§ 656.214(2) –(4) ).
The claimant in Hodge argued that his scheduled award was not a “periodic benefit” subject to the Social Security offset provision. Id. The claimant contrasted his scheduled award with another type of award available under Oregon's workers' compensation law, an unscheduled award, which is calculated by reference to the claimant's loss of earning capacity. The claimant conceded that unscheduled awards are “periodic benefits” subject to offset, but argued that scheduled awards were not substitutes for periodic benefits because they are determined without reference to wages. Id. at 432–33.
The Ninth Circuit rejected the claimant's argument, finding that under Oregon law, “both types of awards—scheduled and unscheduled—are intended to cover a claimant's lost earning capacity.” Id. at 433 (emphasis original) (citing Cutright v. Weyerhaeuser Co., 299 Or. 290, 702 P.2d 403, 407 (1985) ). Thus, Hodge held that a scheduled award granted under Oregon's workers' compensation law is a “substitute for” periodic benefits and is therefore subject to the Social Security offset provision. Id.
This Court is aware of only one published decision applying Hodge to a workers' compensation award under Washington State law. In Kreutner v. Astrue, No. C09–5676, 2010 WL 2376182, 2010 U.S. Dist. LEXIS 68188 (W.D.Wa. June 8, 2010), the claimant received a permanent partial disability (“PPD”) award based on a mental health impairment. Id. at *1, 2010 U.S. Dist. LEXIS 68188 at *2. The award involved a lump sum payment (known under Washington law as a “PPD award”) determined without reference to the claimant's loss of earning power. Id. at *2–3, 2010 U.S. Dist. LEXIS 68188 at *6. The court found that the Washington State PPD award was subject to the Social Security offset provision. Id. at *3, 2010 U.S. Dist. LEXIS 68188 at *7–*8.
The Kreutner court's ruling was based in its conclusion that the “entire scheme of Worker's Compensation law is to compensate workers, who are active in the labor market, for wages lost because of inability (or reduced capacity) to work as a result of a compensable injury....” Id. at *3, 2010 U.S. Dist. LEXIS 68188 at *7 (quoting Hodge, 27 F.3d at 433 ). The court concluded that any distinction between the workers' compensation laws of Oregon and Washington was “a distinction without a difference” and, as such, the Hodge precedent dictated a finding that the PPD award was subject to offset. Id. at *2–3, 2010 U.S. Dist. LEXIS 68188 at *6–*7.
In the present case, the ALJ cited Kreutner in support of his decision on reconsideration finding that the offset provision applied to Mr. Olson's PPD award. (T at 14).
Although the interpretation of the Social Security offset provision is a question of federal law, the application of the provision requires a review of state workers' compensation law. See Hodge, 27 F.3d at 432–33. This Court, upon consideration of Washington State law, finds that the interpretations of the Commissioner of Social Security and this Court's sister court in Kreutner are incorrect. In particular, this Court finds the reasoning in Hodge binding, but its result distinguishable based upon the uniqueness of Washington state law as distinguished from Oregon state law, and concludes that Plaintiff's PPD award was not subject to offset.
The Ninth Circuit's ruling in Hodge was based on its conclusion that “even though the Oregon legislature had assigned specific dollar amounts to particular body parts, scheduled payments [were] still ‘designed to compensate for the economic loss of earning capacity.’ ” Hodge, 27 F.3d at...
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