Vanhess v. Department of Labor & Industries

• Decision Date: 28 March 2006
• Docket Number: No. 33200-1-II.,33200-1-II.
• Citation: 132 Wn. App. 304,130 P.3d 902
• Parties: Mark P. VANHESS, Respondent, v. DEPARTMENT OF LABOR AND INDUSTRIES OF the STATE OF WASHINGTON, Appellant, Northwest Rock, Inc., Defendant.
• Court: Washington Court of Appeals

130 P.3d 902

132 Wn. App. 304

Mark P. VANHESS, Respondent, v. DEPARTMENT OF LABOR AND INDUSTRIES OF the STATE OF WASHINGTON, Appellant, Northwest Rock, Inc., Defendant.

No. 33200-1-II.

Court of Appeals of Washington, Division 2.

March 28, 2006.

Wayne L. Williams, Williams Wyckoff & Ostrander PLLC, Olympia, WA, for Respondent.

Steve Vinyard, Attorney at Law, Olympia, WA, for Appellant.

VAN DEREN, J.

¶ 1 The Department of Labor and Industries (Department) appeals the trial court's reversal of its denial of a recalculation of Mark P. VanHess's time loss compensation rate to reflect the value of health care formerly paid by his employer. The Department allowed VanHess's claim for an industrial injury he sustained in December 1996. In September 1998, the Department calculated VanHess's time loss compensation rate without including employer-provided health care benefits that VanHess received at the time of his industrial injury. VanHess had stopped receiving the health care benefits before the Department issued its order calculating time loss compensation, but VanHess did not appeal the Department's order within the prescribed 60 day period. Rather, in 2002, he requested recalculation of his time loss compensation rate to include those benefits. The Department denied the request and VanHess appealed to the Board of Industrial Insurance Appeals (BIIA), which affirmed the Department's decision. VanHess then appealed to Grays Harbor County Superior Court. The trial court reversed the BIIA's decision and the Department timely appeals.

¶ 2 We reverse the trial court's decision and reinstate the BIIA's September 10, 2003 decision and order affirming (1) that a time loss compensation calculation is final if a request for reconsideration or an appeal is not filed within 60 days of its issuance, and (2) that a claimant may not show a "change of circumstances" under RCW 51.28.040 based solely on a new judicial interpretation of RCW 51.08.178.

FACTS

¶ 3 VanHess sustained an industrial injury on December 12, 1996. At the time, VanHess's employer provided health care benefits that VanHess continued to receive until November 30, 1997.

¶ 4 In a payment order dated September 28, 1998, the Department allowed VanHess's claim, setting his time loss compensation rate under RCW 51.08.178 at $1,777.09 per month. The Department's order explained that the rate was based on VanHess's marital status of "single," zero dependents, and wages of $2,640 per month. Admin. Record (AR) at 64. But the order did not specifically state whether the Department considered his discontinued employer-provided health benefits in its calculation of his time loss compensation rate.

¶ 5 The order also directed VanHess to notify his claim manager within 60 days of receipt of the order if he disagreed with the order's listed marital or dependent status, wage information, or date of injury and further advised VanHess that the order would become final unless VanHess requested reconsideration or appealed within 60 days of receiving it.

¶ 6 VanHess did not appeal or request reconsideration of the September 1998 order within 60 days. But in a letter dated April 19, 2002, VanHess informed the Department that his employer had terminated his health care benefits and requested that the Department adjust his time loss compensation rate to reflect the amount of those benefits. The Department denied VanHess's request for adjustment in an order dated June 10, 2002, explaining that a "change in circumstance" did not support VanHess's request. AR at 35.

¶ 7 VanHess appealed the Department's June 2002 order to the BIIA. The BIIA affirmed the Department's order in a Proposed Decision and Order (PDO) dated April 29, 2003, concluding that (1) under Cockle v. Dep't of Labor & Indus., 142 Wash.2d 801, 16 P.3d 583 (2001), employer-provided health care benefits are considered wages when calculating time loss compensation; (2) the Department's September 1998 order calculating VanHess's time loss compensation rate included the elements on which the rate was based; (3) the September 1998 order was final because VanHess did not timely protest or appeal it; (4) VanHess did not experience a "change of circumstances" because the Department's order setting VanHess's time loss compensation rate was issued in September 1998 and his employer's withdrawal of health care benefits occurred in November 1997; and (5) equity arguments advanced by VanHess were meritless.

¶ 8 VanHess petitioned the BIIA to review the PDO. The BIIA granted review, but it affirmed the PDO in a decision and order dated September 10, 2003. VanHess then appealed the BIIA's decision to Grays Harbor Superior Court. The trial court reversed and remanded the BIIA's decision, finding that, "the Cockle decision is a change of circumstance, as contemplated by RCW 51.28.040." Clerk's Papers at 41-43.

¶ 9 The Department timely appeals.

ANALYSIS

I. STANDARD OF REVIEW

¶ 10 A reviewing court may reverse an agency's adjudicative decision if, among other reasons, the agency erroneously applied the law. Timberlane Mobile Home Park v. Wash. Human Rights Comm'n, 122 Wash.App. 896, 900, 95 P.3d 1288 (2004). When reviewing a superior court's reversal of a decision by the BIIA on summary judgment we sit in the same position as the superior court and apply the Administrative Procedure Act's standards directly to the BIIA's record. Timberlane, 122 Wash.App. at 900, 95 P.3d 1288; Bennerstrom v. Dep't of Labor & Indus., 120 Wash.App. 853, 858, 86 P.3d 826 (2004). Although we review the BIIA's legal conclusions de novo and may substitute our own judgment for that of the BIIA, we afford great weight to the BIIA's interpretation of the Industrial Insurance Act. Timberlane, 122 Wash.App. at 900, 95 P.3d 1288; Bennerstrom, 120 Wash.App. at 858, 86 P.3d 826.

II. FINALITY OF ORDER

¶ 11 The Department argues that its September 1998 time loss compensation calculation and order became final and binding because VanHess did not request reconsideration or appeal it within 60 days. In support of its argument, the Department points first to Chavez v. Dep't of Labor & Indus., 129 Wash.App. 236, 118 P.3d 392 (2005), a recent case that deals squarely with many of the issues VanHess raises in response.¹

¶ 12 In Chavez, the worker sustained an industrial injury and in an August 31, 1998 order, the Department allowed his claim and set his time loss compensation rate under RCW 51.08.178 without including the amount of the worker's employer-provided health care benefits. 129 Wash.App. at 238-39, 118 P.3d 392. The worker did not appeal the Department's order. Chavez, 129 Wash.App. at 239, 118 P.3d 392.

¶ 13 In January 2001, the Washington Supreme Court issued Cockle, a decision interpreting RCW 51.08.178 to include the amount of employer-provided health care benefits in the calculation of a worker's time loss compensation rate. 142 Wash.2d at 822-23, 16 P.3d 583. Citing Cockle, the worker in Chavez requested that his time loss compensation rate be recalculated to include the amount of his employer-provided health care benefits. 129 Wash.App. at 239, 118 P.3d 392. The Department denied his request, concluding that the original August 1998 order was final and that the Cockle decision was not a "change of circumstances" warranting recalculation of his time loss compensation rate under RCW 51.28.040.

¶ 14 The BIIA affirmed the Department's order and the worker appealed to the superior court. Chavez, 129 Wash.App. at 239, 118 P.3d 392. The trial court also affirmed the Department's denial of the worker's request for recalculation. Chavez, 129 Wash.App. at 239, 118 P.3d 392. The worker appealed and we affirmed the BIIA's decision, holding that the Department's August 1998 order carried preclusive effect. See Chavez, 129 Wash. App. at 239-43, 118 P.3d 392.

¶ 15 In reaching this determination, we squarely addressed three of five arguments VanHess advances. Further, Division One of this court recently addressed these issues in Lynn v. Dep't of Labor & Indus., 130 Wash. App. 829, 125 P.3d 202 (2005)

A. Fiduciary Duty

¶ 16 First, VanHess argues that the Department breached its fiduciary duty as trustee. The Department serves as an administrative body authorized by law to act as trustee of a fund created, established, and maintained for the purpose of providing compensation to workers and their dependents for disabilities proximately caused by industrial accidents or occupational diseases. Parks v. Dep't of Labor & Indus., 46 Wash.2d 895, 897, 286 P.2d 104 (1955). A trustee owes to the beneficiaries of the trust "the highest degree of good faith, care, loyalty, and integrity." Allard v. Pac. Nat'l Bank, 99 Wash.2d 394, 403, 663 P.2d 104 (1983).

¶ 17 To prevail on a breach of fiduciary duty claim, the worker must show that the Department formulated its interpretation of RCW 51.08.178 without using the judgment and care those persons of prudence, discretion, and intelligence exercise in the management of their own affairs. Lynn, 130 Wash. App. at 840, 125 P.3d 202; Chavez, 129 Wash. App. at 241, 118 P.3d 392; see also In re Estate of Cooper, 81 Wash.App. 79, 88, 913 P.2d 393 (1996). In Chavez, we explained that the Department did not breach its duty as trustee of the industrial insurance fund because the worker presented no evidence supporting his contention. 129 Wash.App. at 241, 118 P.3d 392.

¶ 18 Similarly, VanHess has presented no evidence that the Department breached its fiduciary duty as trustee. Although VanHess implies that the Department misled him by not asking about employer-provided health care benefits on its industrial injury accident form, the Department did not interpret RCW 51.08.178 to include employerprovided health benefits before the 2001 Cockle decision. Cockle, 142 Wash.2d at 811-12, 16 P.3d 583. In Cockle, the court acknowledged at the outset that the Department had proposed a reasonable interpretation of RCW 51.08.178. 142 Wash.2d...