Rekhter v. State
| Decision Date | 03 April 2014 |
| Docket Number | No. 86822–1.,86822–1. |
| Citation | 180 Wash.2d 102,323 P.3d 1036 |
| Court | Washington Supreme Court |
| Parties | Leya REKHTER, an individual receiving Medicaid benefits under the Community Options Program Entry System (COPES), and Alex Zimmerman, an aggrieved live-in care provider for an individual in the COPES program, Lisa R. Fuchser, an individual receiving Medicaid benefits under the Medicaid Personal care (MPC) program, and Judith L. Alberts, a live-in care provider for an individual in the MPC program, and Paul Raccheta, a live-in care provider for an individual in the COPES program, and others similarly situated, Respondents/Cross–Appellants, v. STATE of Washington, DEPARTMENT OF SOCIAL AND HEALTH SERVICES, a Washington State Agency, Robin Arnold–Williams (individual and official capacities), Secretary of DSHS, Dennis Braddock (individual and official capacities ), former Secretary of DSHS, Kathy Leitch (individual and official capacities), Assistant Secretary for the Aging and Disability Services Administration, Jane and John Doe Nos. 1 thru 100, Appellants/Cross–Respondents. Natasha Pfaff, by and through her guardians, Maureen and Donald Pfaff, individually and on behalf of all other similarly situated persons, Respondent/Cross–Appellant, v. Robin Arnold–Williams, in her official capacity as the Secretary of Washington State Department of Social and Health Services, and The Washington State Department of Social and Health Services, Appellants/Cross–Respondents. Service Employees International Union 775, on behalf of the individual providers it represents, and Cindy Weens, individually and on behalf of all other similarly situated persons, Respondents/Cross–Appellants, v. Robin Arnold–Williams, in her official capacity as the Secretary of Washington State Department of Social and Health Services, and the Washington State Department of Social and Health Services, Appellants/Cross–Respondents. |
OPINION TEXT STARTS HERE
Jay Douglas Geck, Carrie L. Bashaw, Michael Mackaman Young, Elizabeth Christina Beusch, Office of the Attorney General, Olympia, WA, for Appellant/Cross–Respondent.
Darrell L. Cochran, Pfau Cochran, Vertetis Amala PLLC, Tacoma, WA, Dmitri L. Iglitzin, Jennifer L. Robbins, Schwerin Campbell, Barnard Iglitzin & Lav, Michael Thomas Pfau, Pfau Cochran, Vertetis Amala
PLLC, Seattle, WA, Gregory A. McBroom, John James White Jr., Kevin Blair Hansen, Livengood, Fitzgerald, Alskog, PLLC, Kirkland, WA, for Respondent/Cross–Appellant.
¶ 1 In this class action case, a jury found that the Department of Social and Health Services (DSHS) violated the implied duty of good faith and fair dealing in its contracts with individual providers who live with the DSHS clients for whom they provide care. The jury found that the providers incurred $57,123,794.50 in damages, and the judge awarded an additional $38,652,219.85 in interest. The DSHS clients who lived with their providers also filed a class action suit, but the judge did not allow them to recover any damages. We uphold the jury's verdict for the providers, the judge's decision to disallow the clients from recovering damages, and the dismissal of the providers' wage claims, because all comply with Washington law. However, we reverse the judge's award of prejudgment interest because the damages could not be determined with certainty.
¶ 2 DSHS provides public assistance for in-home care for certain individuals with disabilities, referred to herein as “clients.” To provide this assistance, DSHS contracts with individual care providers to perform necessary services for clients. In their contracts with DSHS, the providers agree to assist with those personal care services and household tasks included in the client's “service plan.” The providers also agree that DSHS will pay only for authorized services in the client's service plan and that their monthly payment will not exceed the amount authorized in the service plan. The contracts explicitly incorporate by reference the service plan of the particular client, but because the contracts are signed before the service plan is created, key terms such as tasks to be performed and authorized hours are left undefined until long after the contract is executed.
¶ 3 Beginning in 2003, DSHS implemented the Comprehensive Assessment and Reporting Evaluation (CARE) process to determine how many hours of paid assistance a client was eligible to receive. Part of the CARE process was the shared living rule, which automatically reduced assistance for in-home care by 15 percent for clients that live with their providers. The rationale for the shared living rule was that the providers would already be performing certain household tasks (shopping, laundry, housekeeping, meal preparation, and wood supply services) even if they were not providing in-home care for a person with a disability. The shared living rule created an irrebuttable presumption that clients living with their providers needed 15 percent less paid assistance, even if those clients did need assistance with those household tasks.
¶ 4 When DSHS reduced the authorized hours of support for a client pursuant to the shared living rule, it did not change or reduce the service plan's list of services the provider was required to perform. Indeed, even when a service plan specifically described a client's need for help with shopping or cooking as “[t]otal dependence” and instructed the caregiver to complete such tasks, DSHS still eliminated payment for such household tasks because the client lived with the provider. See Clerk's Papers (CP) at 3982–84. As a result, live-in providers were required by contract to perform necessary services without compensation. The structure of the agreements also resulted in DSHS requiring live-in providers to perform the same services as live-out providers for less compensation.
¶ 5 In 2004, three affected clients filed administrative appeals of determinations made pursuant to the shared living rule. The administrative law judges dismissed the appeals because they did not have authority to review the validity of agency rules. The three affected clients sought review in the courts, and in 2005, two trial courts held that the shared living rule was invalid under federal law. Those decisions were stayed pending a consolidated appeal, and in May 2007, this court affirmed the trial courts and found the rule violated federal law that required parity for individuals on Medicaid. Jenkins v. Dep't of Soc. & Health Servs., 160 Wash.2d 287, 290–91, 157 P.3d 388 (2007). Throughoutthis process, DSHS continued to apply the shared living rule. DSHS ultimately repealed the shared living rule effective June 29, 2007, and began reassessing affected clients—a process that was not completed until June 2008.
¶ 6 Shortly after Jenkins, separate class action lawsuits were filed on behalf of clients and providers affected by the shared living rule between April 2003 and June 2008. The lawsuits were consolidated in 2009. Prior to trial, the trial judge granted summary judgment to DSHS on the providers' claims that DSHS (1) wrongfully withheld wages in violation of RCW 49.52.050 and .070 and (2) failed to pay the providers for all hours worked, in violation of the Washington Minimum Wage Act (MWA), chapter 49.46 RCW.
¶ 7 At trial, the jury found that DSHS “breached an implied duty of good faith and fair dealing with the Providers as to [DSHS's] performance of a specific term in the Individual Provider Contracts.” CP at 2985. The jury found that the providers incurred $57,123,794.50 in damages. The trial judge ruled that prejudgment interest applied to the jury's verdict for the providers, which amounted to $38,652,219.85.
¶ 8 The jury was not instructed to render an advisory verdict on the clients' claim, but the judge accorded the jury verdict on the providers' claim substantial weight in considering the clients' claim. The trial judge then found that the clients “suffered the same damages as the Provider Class” but that they should not be awarded a money judgment because “the Client Class actually received the Rule related services and thus it sues to pass damages through to the Provider Class.” CP at 3473–75.
¶ 9 DSHS appealed both the $57.12 million judgment and the award of $38.65 million in prejudgment interest. The clients and providers cross appealed, arguing that the clients should have been awarded damages. We granted direct review.
¶ 10 1. As a matter of law, could the jury find that DSHS violated an implied duty of good faith and fair dealing?
¶ 11 2. Do the jury instructions accurately reflect the law related to the implied duty of good faith and fair dealing?
¶ 12 3. Did the trial judge correctly disallow compensation to clients in light of the judgment for providers?
¶ 13 4. Did the trial judge correctly grant summary judgment to DSHS on the providers' wage claims?
¶ 14 5. Was the trial judge's award of prejudgment interest proper?
¶ 15 6. Should any party receive attorney fees?
¶ 16 The jury found that when DSHS implemented the shared living rule and automatically reduced the hours it would authorize for live-in providers, it breached an implied duty of good faith and fair dealing as to its performance of a specific term in its provider contracts. DSHS claims that the jury's finding fails as a matter of law because it (1) contradicts the jury's other finding that DSHS did not breach a contract term; (2) adds a “free-floating obligation of good faith and fair dealing” to its contracts, Appellants' Opening Br. at 5, 29–30; and (3) enforces duties arising from a statute and not the terms of the contract.1 Because the issue is whether the jury award is prohibited as a matter of law, our review is de novo. For the reasons described below, DSHS's arguments fail.
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