Standing v. Department of Labor and Industries

• Decision Date: 09 August 1979
• Docket Number: No. 45913,45913
• Citation: 598 P.2d 725,92 Wn.2d 463
• Parties: Florence R. STANDING, Appellant, v. DEPARTMENT OF LABOR AND INDUSTRIES of the State of Washington, Respondent. William M. WAGNER, Jr., Deceased, by Paul B. Wagner, Appellant, v. DEPARTMENT OF LABOR AND INDUSTRIES of the State of Washington, Respondent.
• Court: Washington Supreme Court

Page 463

92 Wn.2d 463

598 P.2d 725

Florence R. STANDING, Appellant, v. DEPARTMENT OF LABOR AND INDUSTRIES of the State of

Washington, Respondent.

William M. WAGNER, Jr., Deceased, by Paul B. Wagner, Appellant, v. DEPARTMENT OF LABOR AND INDUSTRIES of the State of

Washington, Respondent.

No. 45913.

Supreme Court of Washington, En Banc.

Aug. 9, 1979.

Benson, Chadwick, Stege & Wines, Thomas W. Bingham, Seattle, for appellant.

Slade Gorton, Atty. Gen., Charles R. Bush, Asst. Atty. Gen., Seattle, for respondent.

STAFFORD, Justice.

Standing v. Department of Labor and Industries And Wagner v. Department of Labor and Industries have been consolidated for appeal. At issue in each case are deductions made by the Department which reduced benefits awarded Standing and Wagner under the Crime Victim's Compensation Act, RCW 7.68. In each the statutory award was reduced by an amount which the Department asserted to be a collateral resource deductible pursuant to RCW 7.68.130. The trial court affirmed both reductions in the basic compensation. Although the proper construction of RCW 7.68.130 is common to both cases, the different clauses involved, the factual differences between the cases and our ultimate disposition of the issue in each requires us to consider them separately.

The Crime Victim's Compensation Act (Act) is a program intended by the legislature

to provide a method of compensating and assisting those residents of the state who are innocent victims of criminal acts and who suffer bodily injury or death as a consequence thereof.

RCW 7.68.010. The amount of compensation awarded the victim or survivors is related to the level of benefits available to an injured worker under RCW Title 51 although the Crime Victim's Compensation Act modifies the award to a certain extent. RCW 7.68.070. Further, benefit levels initially calculated by reference to Title 51 and RCW 7.68.070 are to be reduced by the amount of certain specified collateral resources available to the recipient under RCW 7.68. As provided in RCW 7.68.130: ¹

Benefits paid pursuant to this chapter Shall be reduced by the amount of any other public or private insurance, industrial insurance, or medical health or disability benefits available. Payment by the department under this chapter shall be secondary to such other insurance or benefits, notwithstanding the provision of any contract or coverage to the contrary.

(Italics ours.) Under this statutory scheme, the recipient is assured of receiving a minimum level of compensation. That level may be met by available collateral resources, by collateral resources combined with benefits payable under the Act, or exclusively by benefits payable under the Act.

I Standing v. Department of Labor and Industries

Mrs. John Standing filed a claim for benefits under the Act after her husband was killed by burglars in their home on November 21, 1975. The Department ordered that Mrs. Standing be paid $8,500 less the proceeds from her husband's life insurance policy ($7,700) and less Social Security burial expense benefits ($225). As a result, Mrs. Standing received $545 from the Department.

On March 25, 1976, Mrs. Standing appealed the Department's order to the Board of Industrial Insurance Appeals (Board) pursuant to RCW 7.68.110. The parties stipulated that the Sole issue on appeal was the constitutionality of RCW 7.68.130 and .040. The parties also stipulated that if those sections were found unconstitutional, Mrs. Standing would be entitled to additional benefits of $7,700, the amount of the life insurance proceeds offset by the Department. The hearing examiner upheld the Department's calculation of the appropriate benefit level and held further that the Board, as an administrative agency, lacked jurisdiction to rule on the constitutionality of a statute. Thereafter, the Board denied Mrs. Standing's petition for review of the examiner's proposed decision and she sought judicial review in superior court pursuant to RCW 7.68.110 and RCW 34.04.130, .140. Subsequently, Mrs. Standing filed a motion for summary judgment on the ground that RCW 7.68.130 and .040 were unconstitutional. The Department also filed a motion for summary judgment. The trial court denied the Standing motion and granted the Department's motion. Mrs. Standing appealed to the Court of Appeals which certified the matter to this court. We affirm.

In light of the stipulations referred to above, the sole issue before us is the constitutionality of the statutory scheme mandating the reduction in Mrs. Standing's benefits by the amount of proceeds from her husband's private insurance policy. Mrs. Standing first contends the collateral resource reduction employed in RCW 7.68.130 violated the Equal Protection Clause of the fourteenth amendment to the United States Constitution and the Privilege and Immunities Clause of the Washington State Constitution. Const. Art. 1, § 12. In the face of similar challenges we have held the state clause usually is to be given the same interpretation as the federal clause. Griffin v. Department of Soc. & Health Servs., 91 Wash.2d 616, 590 P.2d 816 (1979); Housing Auth. v. Saylors, 87 Wash.2d 732, 557 P.2d 321 (1976).

Mrs. Standing concedes the instant case involves neither fundamental rights nor a suspect classification. Thus, the "rational basis" test is the appropriate constitutional standard by which to measure the challenged classification. A heavy burden is imposed on the party challenging legislation as violative of equal protection under the "rational basis" test. Haddenham v. State, 87 Wash.2d 145, 550 P.2d 9 (1976). The legislature is accorded a wide scope of discretion and its statutory enactments are presumptively valid. This presumption is particularly strong where, as here, grants of public funds are involved.

In the area of economics and social welfare, a State does not violate the Equal Protection Clause merely because the classifications made by its laws are imperfect. If the classification has some "reasonable basis," it does not offend the Constitution simply because the classification "is not made with mathematical nicety or because in practice it results in some inequality." "The problems of government are practical ones and may justify, if they do not require, rough accommodations . . .

(Citations omitted.) Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct. 1153, 1161, 25 L.Ed.2d 491 (1970); Pannell v Thompson, 91 Wash.2d 591, 589 P.2d 1235 (1979). Merely challenging the wisdom or expediency of an enactment does not render it constitutionally infirm. The constitutional safeguard is offended only if the classification rests on grounds wholly irrelevant to the achievement of the state's objective. Haddenham v. State, supra.

RCW 7.68.130 must satisfy two requirements under the "rational basis" test: (1) it must apply alike to all members within the designated class and (2) a reasonable ground must exist for distinguishing between those falling within the class and those falling outside. Belancsik v. Overlake Mem. Hosp.,80 Wash.2d 111, 115, 492 P.2d 219 (1971).

RCW 7.68.130 clearly satisfies the first requirement in that it reduces the benefits of All persons who receive funds from public or private insurance sources. Mrs. Standing contends however that the statute fails to meet the second requirement. She argues that in light of the compensatory purpose of the Act it is unreasonable to reduce the benefits payable to her by the amount of her husband's life insurance because ownership of such insurance does not alone indicate a lack of financial need. From the compensatory motivation for the Act she infers that the collateral resource section was designed to exclude from coverage only those persons who possess Substantial collateral resources, that is, those who have little or no need for such compensation. Given this "implied motivation", Mrs. Standing contends there is no rational justification for the statutory focus on the type of investment (insurance) rather than on the value of all collateral assets available to the victim regardless of their nature.

Mrs. Standing misconceives the relationship between the purpose and the operational characteristics of the Act. First, benefits under Washington's act, unlike certain other states' victim compensation acts, are not predicated on financial need. ² Only those who do not qualify as victims or as survivors are excluded from coverage. Second, although the legislature intended to assist and compensate victims of crime, it clearly evidenced a desire to insure only a basic level of recompense. The language of RCW 7.68.130 specifically declares that payment by the state is to be a Secondary source of compensation. By serving in such a secondary capacity the Act insures that the victim will receive at least a minimum level of monetary compensation. When so viewed, RCW 7.68.130 does not operate to leave the victim or recipient with less than the total amount one would otherwise be entitled to receive under the Act.

We are not called upon to discuss the wisdom of the legislature having structured the reduction based upon the challenged collateral resources rather than on the value of all collateral resources conceivably available to the victim. However, the motivation behind the classification employed may have been an intent that a victim or survivor not be doubly compensated for the same crime, that is, not receive a windfall by collecting both private insurance proceeds and state compensation as a result of the same act. See Cosway, Crime Compensation, 49 Wash.L.Rev. 551, 556 (1974). Similarly, the legislature may have recognized the fact that proceeds from certain insurance policies are statutorily immune from execution while the unprotected nature of other assets may make them an illusory source of support for survivors of the victim. RCW 48.18.410.

Since there exists a rational basis for classifying insurance proceeds in a different manner...