Somsak v. CRITON TECHNOLOGIES

• Decision Date: 19 August 2002
• Docket Number: No. 48948-8-I.,48948-8-I.
• Citation: 52 P.3d 43,113 Wash.App. 84
• Parties: Mary J. SOMSAK, Appellant, v. CRITON TECHNOLOGIES/HEATH TECNA, INC., Respondent.
• Court: Washington Court of Appeals

52 P.3d 43

113 Wash.App. 84

Mary J. SOMSAK, Appellant, v. CRITON TECHNOLOGIES/HEATH TECNA, INC., Respondent.

No. 48948-8-I.

Court of Appeals of Washington, Division 1.

August 19, 2002.

Gordon C. Klug, Eims & Flynn P.S., Seattle, WA, for Appellant.

Christine A. Foster, Seattle, WA, for Respondent, Mary Jo. Somsak.

John R. Wasberg, Department of Labor & Industries, Seattle, WA, for Respondent Department of Labor & Industries.

APPELWICK, J.

A jury found that Mary J. Somsak's industrial insurance benefits did not include compensation she was entitled to for overtime hours and health care benefits. A superior court judge remanded the case for valuation of her health care benefits and recalculation of her compensation. Criton appeals.

It was during Somsak's appeal that the Court of Appeals and the Supreme Court interpreted the Industrial Insurance Act to include health care benefits paid by an employer in the time loss compensation calculation. Cockle v. Dep't of Labor & Indus., 96 Wash.App. 69, 86, 977 P.2d 668 (1999), aff'd,142 Wash.2d 801, 823, 16 P.3d 583 (2001). After the Court of Appeals decision was filed, Somsak argued for the first time that she was also entitled to consideration of health care benefits. By doing so, she preserved the issue. But the law regarding valuation of health care benefits was unsettled at that time. Somsak's failure to present valuation evidence under these peculiar facts does not defeat her claim as a matter of law. Rather, she is entitled to a determination of that issue on remand. We must, however, reverse the superior court's direction to the Department of Labor and Industries on how to calculate the payments due to Somsak. Accordingly, we affirm in part and reverse in part.

FACTS

From 1980 to 1984, Mary J. Somsak was employed at Criton Technologies,¹ a self-insured company. While at Criton, Somsak suffered from respiratory occupational disease. She received monthly industrial insurance benefits from the Department of Labor and Industries for a permanent partial disability See RCW 51.32.080; WAC 296-20-380(5).

On February 5, 1998, the Department issued a monthly wage order to Somsak. That order explained—for the first time—the factual basis underlying the time-loss compensation. That order stated, in part: "The monthly wage was calculated using $6.18 per hour, 8 hours per day, 5 days per week."

Somsak filed a timely protest of that order, contending that she regularly worked overtime.² On February 22, 1999, the Department affirmed its monthly wage order.

Somsak appealed to the Board of Industrial Insurance Appeals. Again, Somsak argued that her monthly industrial insurance benefits should be higher because she regularly worked overtime. Relying upon a recently-decided Court of Appeals case, she also argued that her industrial insurance benefits should reflect the value of health care benefits she had been receiving. See Cockle v. Dep't of Labor & Indus., 96 Wash. App. 69, 977 P.2d 668 (1999) (interpreting the Industrial Insurance Act to include in time-loss compensation health care benefits paid by an employer), aff'd, 142 Wash.2d 801, 16 P.3d 583 (2001). The Board held a hearing, during which Somsak and Criton presented testimony.

An Industrial Appeals Judge (IAJ) issued a proposed decision and order, concluding that the Department's February 22, 1999 order was correct. On May 3, 2000, the Board denied Somsak's petition for review and adopted the IAJ's proposed decision and order.

On May 15, 2000, Somsak appealed to King County Superior Court. Then, on January 18, 2001, the Supreme Court published an opinion affirming the Court of Appeals case in Cockle. Cockle, 142 Wash.2d at 823, 16 P.3d 583 (affirming Cockle, 96 Wash.App. 69, 977 P.2d 668).

At a pretrial hearing on May 10, 2001, the superior court observed that the record did not contain evidence of the value of Somsak's health care benefits. It, however, noted that the law on the issue was unsettled when she presented evidence to the Board. It therefore concluded that Somsak was not required to present value evidence to the Board. Because such evidence was not part of the record, the jury was not required to find the value of her health care benefits. Instead, the superior court determined that the issue should be decided on remand.

The superior court held a three-and-a-half day jury trial on evidence and testimony that was offered to the Board. The issues presented to the jury are summarized as follows:

(1) Was the [Board] correct in finding that [Somsak] is not entitled to consideration of health care benefits provided by her employer in the calculation of her total disability benefits?

(2) Was the [Board] correct in finding that [Somsak] worked forty (40) hours per week, five (5) days per week?

. . . . (3)(a) [If not,] [w]hat is the number of overtime hours [Somsak] normally worked per month?

The jury found that Somsak worked 48 hours of overtime per month at the time of her occupational disease. It also found that she received health care benefits from Criton during that time and that she was entitled to consideration of those benefits. In an order dated July 9, 2001, the superior court remanded the case back to the Department for (1) a valuation of Somsak's health care benefits, (2) a recalculation of her time-loss compensation, and (3) payment of the difference between the benefits paid and new amount of benefits. The superior court also awarded Somsak attorney fees and costs. Criton appeals.

ANALYSIS

Criton contends that Somsak's protest and subsequent appeals are barred by res judicata and laches. In the alternative, it argues that it is entitled to judgment as a matter of law on the issues presented to the jury. Criton also disputes the superior court's evidentiary rulings and attorney fees award.

A Board of Industrial Insurance Appeals final decision is prima facie correct. RCW 51.52.115. An appeal of such a decision is heard de novo by the superior court. RCW 51.52.115. An appellant can attack the Board's findings "by demonstrating to a trier of fact, at trial in superior court, that the evidence preponderates against those findings." Harrison Mem'l Hosp. v. Gagnon, 110 Wash.App. 475, 482, 40 P.3d 1221 (2002).

The Court of Appeals' review of the superior court's decision "`is limited to examination of the record to see whether substantial evidence supports the findings made after the superior court's de novo review, and whether the court's conclusions of law flow from the findings.'" Ruse v. Dep't of Labor & Indus., 138 Wash.2d 1, 5-6, 977 P.2d 570 (1999) (quoting Young v. Dep't of Labor & Indus., 81 Wash.App. 123, 128, 913 P.2d 402 (1996)).

I. Res Judicata

Somsak received three orders regarding her industrial insurance benefits that she did not protest. One order dated March 8, 1989, closed her claim. And two orders were issued in 1996, reflecting adjustments made to her monthly benefits. It is undisputed that none of these orders detailed the underlying factual basis for her time-loss compensation.³ Even so, Criton contends that the doctrine of res judicata bars Somsak's protest and subsequent appeal. The superior court disagreed.

The doctrine of res judicata prohibits litigation of claims that could have been litigated in a prior action. Marley v. Dep't of Labor & Indus., 125 Wash.2d 533, 537-38, 886 P.2d 189 (1994). That doctrine applies equally to a final adjudication issued by the Department of Labor & Industries. Marley, 125 Wash.2d at 537, 886 P.2d 189. Under res judicata, an appeal is barred if it is identical in subject matter, cause of action, persons and parties, and the quality of the persons for or against whom the action is taken. Loveridge v. Fred Meyer, Inc., 125 Wash.2d 759, 763, 887 P.2d 898 (1995).

In an industrial appeals case, our Supreme Court explained that "[a]n unappealed Department order is res judicata as to the issues encompassed within the terms of the order, absent fraud in the entry of the order[.]" Kingery v. Dep't of Labor & Indus., 132 Wash.2d 162, 169, 937 P.2d 565 (1997). "Fundamental fairness" requires that a claimant must be clearly advised of the issue before it will be barred by the doctrine of res judicata. King v. Dep't of Labor & Indus., 12 Wash.App. 1, 4, 528 P.2d 271 (1974).

The orders that Somsak did not protest failed to clearly advise her of time-loss compensation's underlying factual basis. Those orders did not state the hours worked or the rate of pay. They also did not mention health care benefits. The factual basis underlying Somsak's time-loss compensation is therefore not an issue encompassed within the terms of those orders. As soon as Somsak received an order informing her of the hours worked and rate of pay on which her time-loss compensation was based, she timely protested. Under these circumstances, fundamental fairness precludes the application of res judicata. The superior court correctly concluded that Somsak's appeal is not barred.

II. Laches

Criton urges this court to conclude that Somsak's protest and subsequent appeals are barred by the doctrine of laches. The superior court concluded that laches did not bar Somsak's action.

"Laches is an implied waiver arising from knowledge of existing conditions and acquiescence in them." Buell v. City of Bremerton, 80 Wash.2d 518, 522, 495 P.2d 1358 (1972). The doctrine of laches bars a cause of action if the defendant establishes that (1) the plaintiff knew, or had a reasonable opportunity to discover, the facts constituting a cause of action; (2) the plaintiff unreasonably delayed commencing an action; and (3) the defendant was materially prejudiced by the delay in bringing the action. Davidson v. State, 116 Wash.2d 13, 25, 802 P.2d 1374 (1991).

Under the industrial insurance system, workers injured on the job receive "a swift, certain no-fault remedy[.]" Kingery, 132 Wash.2d at 169, 937 P.2d 565. "In exchange for this guaranteed compensation, the injured worker...