Peterson v. Wash. State Dep't of Labor & Indus.

• Citation: 17 Wash.App.2d 208,485 P.3d 338
• Decision Date: 20 April 2021
• Docket Number: No. 53885-7-II,53885-7-II
• Court: Court of Appeals of Washington
• Parties: Joshua W. PETERSON, Appellant, v. WASHINGTON STATE DEPARTMENT OF LABOR AND INDUSTRIES, Respondent.

17 Wash.App.2d 208

485 P.3d 338

Joshua W. PETERSON, Appellant,

v.WASHINGTON STATE DEPARTMENT OF LABOR AND INDUSTRIES, Respondent.

No. 53885-7-II

Court of Appeals of Washington, Division 2.

Filed April 20, 2021

Douglas Maclean Palmer, Hamrick Palmer Johansen, PLLC, Po Box 1306, Vancouver, WA, 98666-1306, for Appellant.

William Henry, Attorney at Law, Anastasia R. Sandstrom, Attorney General's Office, 800 Fifth Ave. Ste. 2000 Seattle, WA, 98104-3188, for Respondent.

PUBLISHED OPINION

Worswick, J. ¶1 Joshua Peterson was injured on a barge in maritime jurisdiction in 2011, and received both an award of benefits from the Department of Labor and Industries (DLI) and a settlement under federal maritime law. DLI ordered Peterson to repay a portion of his state benefits in accordance with RCW 51.12.100. That statute provides that a claimant shall repay benefits paid under the state workers’ compensation scheme when payments are also made under the federal maritime scheme. An Industrial Appeals Judge (IAJ) upheld DLI's order, and the Board of Industrial Insurance Appeals (Board) affirmed. The superior court affirmed the Board.

¶2 Peterson seeks to retain his double recovery. He appeals the superior court decision, arguing that the trial court erred when it affirmed the Board's decision because (1) the order allowing the initial award under the state scheme was final, (2) DLI's actions prevent it from arguing that the Industrial Insurance Act (IIA), Title 51 RCW, does not apply to his claim, and (3) RCW 51.52.104 prohibits the Board from altering unchallenged conclusions of law.¹ In the alternative, Peterson argues that (4) DLI is limited to recouping benefits previously paid at the time of concurrent receipt of maritime benefits under RCW 51.12.100(4), and (5) the superior court erred when it awarded DLI statutory costs and fees. We find no error and affirm.

FACTS

I. INJURY AND CLAIMS

A. State Workers’ Compensation Claim

¶3 In December 2011, Peterson injured his back while working for his employer on a barge in navigable waters. Peterson filed a workers’ compensation claim with DLI. Peterson reported to DLI that he was performing "rigging [and] general labor." 2 Administrative Record (AR) at 580. Nothing in his report identified the claim as maritime in nature.

¶4 DLI issued an allowance order and began paying Peterson benefits. DLI's Notice of Decision explained that the allowance order became final 60 days from the date it was communicated to Peterson unless he filed for reconsideration.

No party appealed this allowance order. Over the next several years, DLI paid Peterson $89,482.47 in time-loss compensation and $25,700.20 in medical aid.

B. Federal Maritime Claims

¶5 Peterson also sought compensation under federal maritime laws, filing a claim under the Longshore and Harbor Worker's Compensation Act (LHWCA) and filing a third-party negligence claim under the Jones Act.^{2 ,3} The IIA does not apply to a "master or member of a crew of any vessel, or to employers and workers for whom a right or obligation exists under the maritime laws or federal employees’ compensation act for personal injuries or death of such workers." RCW 51.12.100(1). The IIA additionally allows DLI to recover payments made to such a worker, providing:

In the event payments are made both under this title and under the maritime laws or federal employees’ compensation act, such benefits paid under this title shall be repaid by the worker or beneficiary. For any claims made under the Jones Act, the employer is deemed a third party, and the injured worker's cause of action is subject to RCW 51.24.030 through 51.24.120.^{[4 ]}

RCW 51.12.100(4).

¶6 In March 2015, DLI informed Peterson it would seek reimbursement of his state benefits when he received a settlement for his maritime claims. In June, in accordance with RCW 51.12.100(4), DLI rejected Peterson's December 2011 claim and issued an overpayment order based on his LHWCA and Jones Act payments. Peterson appealed this June 2015 order to the Board.

II. PROCEDURAL HISTORY

¶7 In December, Peterson and DLI entered into an agreement before an IAJ. Peterson stipulated that he sought benefits under maritime law, but that the final determination had not been made on those claims, and he had not received compensation under any federal scheme. DLI agreed to pay provisional benefits pending the outcome of Peterson's maritime claims and continued to pay Peterson interlocutory payments pending the resolution of his maritime claims.

¶8 In March 2016, Peterson told DLI's third-party adjudicator that settlement of his maritime claims was imminent. Peterson stated that the portion of the settlement allocated to the Jones Act claim would be $90,000. DLI's adjudicator agreed that $25,000 would satisfy DLI's share of the Jones Act recovery under RCW 51.12.100(4) and 51.24.030 through 51.24.120. DLI then issued an order distributing the $90,000 Jones Act award among Peterson, his attorneys, and DLI. After DLI received the $25,000, it determined the remaining outstanding balance Peterson owed under RCW 51.12.100(4) from his LHWCA settlement was $72,450.89.

¶9 In April, Peterson settled both his LHWCA and Jones Act claims for a combined amount of $900,000. DLI was not a party to the settlement. The United States Department of Labor approved the settlement in May. From the record on appeal, it appears that some time passed between the federal approval and DLI's learning about the settlement.

¶10 In September, DLI issued an overpayment order "correct[ing] and supersed[ing]" its prior orders, rejecting Peterson's claim, and requiring Peterson pay the remaining $72,450.89 to DLI. 2 AR at 623. Peterson requested that DLI reconsider this order. On December 9, DLI affirmed the overpayment order, and again rejected Peterson's 2011 claim. Peterson appealed the December 9 order.⁵

¶11 The IAJ issued a Proposed Decision and Order (PD&O) in February 2018. The IAJ determined that DLI was entitled to the remaining $72,450.89. In conclusion of law 2, the IAJ found that the December 2011 allowance order was final. However, in conclusion of law 5 the IAJ determined that "[p]ursuant to RCW 51.12.100(4), [DLI] is entitled to repayment of the balance of time-loss compensation paid to Mr. Peterson in the amount of $72,450.89." 1 AR at 65. In conclusion of law 6, the IAJ remanded the issue to DLI to resolve by "closing rather than rejecting the claim." 1 AR at 65.

¶12 Peterson petitioned for review. In his petition, he requested the Board review the PD&O, specifically disputing five findings of fact and "the associated Conclusions of Law." 1 AR at 23. Peterson did not specifically challenge conclusion of law 5 or DLI's statutory right to recovery under RCW 51.12.100(4). DLI did not seek review of this PD&O.

¶13 In May 2018, the Board accepted review and affirmed all of the IAJ's findings and conclusions, with the exception of conclusion of law 6. Although neither party contested conclusion of law 6, the Board stated that it had granted review "solely to correct Conclusion of Law No. 6." 1 AR at 4. The Board reversed the IAJ's PD&O on that point, concluding that DLI correctly rejected Peterson's claim under RCW 51.12.100. In its decision, the Board relied on Rhodes v. Department of Labor & Industries , 103 Wash.2d 895, 898, 700 P.2d 729 (1985). The Board's decision stated, "The settlement of Mr. Peterson's maritime claims established that he was entitled to federal coverage rather than coverage through Washington's industrial insurance laws. Thereafter, [DLI] was correct in rejecting the claim that had previously been allowed. RCW 51.12.100." 1 AR at 8.

¶14 Peterson appealed to the superior court, arguing that Rhodes did not apply. Peterson also argued that DLI's right of reimbursement was limited by RCW 51.32.240(3), which states that certain claims must be rejected for DLI to seek reimbursement, and because DLI had not appealed conclusion of law 6, the claim could only be closed . Thus, Peterson argued that because his claim could not be rejected, DLI is not entitled to reimbursement.

¶15 The superior court disagreed and adopted the Board's conclusions of law. The superior court found that "[DLI]’s lien was $72,450.89, recoverable under RCW 51.12.100(4) from his ... LHWCA entitlement." Clerk's Papers (CP) at 76. In its opinion, the superior court explained that, despite the decision becoming final within 60 days if not appealed, the award in this case was "never adjudicated or final" because the "statute expressly provides that benefits shall be repaid if recovery is subsequently made under Federal Maritime law (LHWCA)." Suppl. CP at 86. The superior court also noted that DLI has "the ability to reject a prior allowance order and reject the claim to enable or ensure the purpose of the reimbursement reservation." Suppl. CP at 86. The superior court affirmed the Board's decision and awarded DLI attorney fees.

¶16 Peterson appeals.

ANALYSIS

¶17 Peterson argues that he is entitled to double recovery of state workers’ compensation benefits plus federal maritime benefits. He claims that because DLI's December 2011 allowance order was final and not appealed, res judicata bars DLI from seeking repayment. But his argument is contrary to settled law. He also argues that because DLI did not deny his claim in December 2011, it could not later reject it unless DLI lacked "subject matter jurisdiction" to award the claim in the first place. Br. of Appellant at 37. But this statutory construction would render the recoupment language in RCW 51.12.100(4) meaningless.

¶18 Peterson also argues that the Board improperly increased its scope of review when it addressed conclusion of law 6, and that waiver prevents DLI from now defending the Board's decision. However, the Board had authority to address the conclusion because it was an issue Peterson raised in his petition, and thus, whether the claim could be rejected was an issue on review. Finally, he claims that the IIA does not...