JANSSEN v. WASHINGTON STATE DEPARTMENT OF LABOR INDUSTRIES (2005)

PART PUBLISHED OPINION

The Department of Labor & Industries appeals a Board of Industrial Insurance Appeals decision (affirmed by the superior court) that it improperly deducted interest it paid on permanent partial disability payments to workers when it later converted the workers' claims to permanent total disability pensions.   The workers cross appeal, arguing that the Department miscalculated cost-of-living adjustments;  Janssen contends that the Department wrongly deducted the erroneously paid portion of his permanent partial disability award from his pension reserve.¹  We affirm.

FACTS

Each of the fourteen workers in this appeal received benefits under Washington's Industrial Insurance Act, Title 51 RCW. All were first paid at least one partial permanent disability (PPD) award and later awarded pension benefits.   Because of the size of each of the original PPD awards, the Department paid the PPD in monthly installments as RCW 51.32.080(4) required.   The Department paid statutory interest at a rate of eight percent on the balance of these awards.   After the Department determined that each worker was permanently and totally disabled, it deducted the previously paid PPD principal and interest from the worker's pension reserves.

Thirteen of the fourteen workers' appeals were tried on stipulated facts, including the amount of PPD principal and interest deducted from the claimants' pension reserves.   In the lead case, John Janssen v. Department of Labor & Industries, Pierce County Cause No. 99-2-10452-3, the Department closed Janssen's claim and awarded him a PPD. Janssen's award should have been $31,500, but as he admits, the Department mistakenly awarded him $63,000.   Janssen received $66,875.46 in total, of which $3,875.86 was statutory interest.   The Department later determined that Janssen was permanently and totally disabled, placed him on a pension, and deducted his PPD, including interest, from his pension reserve.   The Department never attempted to recoup the erroneous portion of the PPD.

The workers appealed to the Board of Industrial Insurance Appeals (BIIA), challenging the Department's authority to deduct PPD interest from their pension reserves and the Department's method of calculating cost-of-living adjustments (COLAs).   Janssen also challenged the Department's reduction of his pension reserve by the full amount of his PPD and interest, including the erroneously paid portion.

The Board ruled that the Department correctly deducted the unpaid PPD principal from the workers' pension reserves, that it wrongly deducted the interest on this principal, and that it correctly calculated the COLAs.²  The Board also ruled that in Janssen's case, the entire $63,000 should be considered in reducing his pension reserve.   After consolidating the cases, the Pierce County Superior Court affirmed the Board's rulings.

ANALYSIS

I. Deduction of Statutory Interest

The Department argues that it properly deducted the interest on the workers' PPD awards from their pension reserves because the interest is paid as part of the award.

 PPDs and permanent total disability (PTD) awards are governed by statute.   If a statute is unambiguous, we look only at the statutory words and apply it as written.  Cobra Roofing Serv., Inc. v. Dep't of Labor & Indus., 122 Wash.App. 402, 417, 97 P.3d 17, 23 (2004);  Taylor v. Nalley's Fine Foods, 119 Wash.App. 919, 923, 83 P.3d 1018 (2004).   But if a statute can be interpreted in two or more reasonable ways, we must construe the statute to achieve the legislature's intent.  Dep't of Labor & Indus. v. Kantor, 94 Wash.App. 764, 775, 973 P.2d 30 (1999).

When the PPD compensation provided for in subsections (1) through (3) of RCW 51.32.080 exceeds three times the state's average monthly wage, the Department makes monthly payments instead of awarding a lump sum.  RCW 51.32.080(6).   The Department's first payment is equal to three times the average monthly wage.  RCW 51.32.080(6).   Beginning with the second monthly payment, the Department pays eight percent interest on the unpaid balance of the PPD award.  RCW 51.32.080(6).

 When the Department determines that a worker is permanently and totally disabled, it must establish a pension reserve for the worker. RCW 51.44.070(1).   If a worker received PPD before receiving PTD compensation,

[a]ny portion of the [PPD] compensation which exceeds the amount that would have been paid the injured worker if [PTD] compensation had been paid in the first instance, shall be deducted from the pension reserve of such injured worker and his or her monthly compensation payments shall be reduced accordingly.

RCW 51.32.080(4).

The PPD deduction ensures that the worker does not receive a double recovery.  Messer v. Dep't of Labor & Indus., 118 Wash.App. 635, 640, 77 P.3d 1184 (2003), review denied, 151 Wash.2d 1021, 91 P.3d 94 (2004).   Recovery of PPD awards is required to ensure that injured workers who first receive these awards and later receive total disability pensions “do not receive greater benefits than workers who endure permanent total disabilities in the first instance.”  Stuckey v. Dep't of Labor & Indus., 129 Wash.2d 289, 296, 916 P.2d 399 (1996).

In In re Esther Rodriguez, BIIA, No. 91 5594 (Dec.1993), the Board held that interest should not be included in the PPD amount deducted from the worker's pension reserve.   The Board stated:  “We do not believe that [former] RCW 51.32.080(2) [1993] ³ contemplates the inclusion of interest paid on permanent partial disability awards.   We hold that [former] RCW 51.32.080(2) (which specifically refers only to permanent partial disability compensation) does not include interest paid on the permanent partial disability award.”  Rodriguez, No. 91 5594 (Dec.1993).

 The Board publishes its significant decisions and makes them available to the public.  RCW 51.52.160.   We consider the decisions persuasive but not binding authority.   See Weyerhaeuser v. Tri, 117 Wash.2d 128, 138, 814 P.2d 629 (1991).

 RCW 51.32.080(4) provides that “any portion of the permanent partial disability compensation” exceeding the amount that would have been paid to the worker if he had originally been awarded PTD benefits shall be deducted from the pension reserves.  RCW 51.32.080(6), which refers to the statutory interest on unpaid PPD balances, uses the phrase “the compensation provided for in subsections (1) through (3) of this section.”   Subsection (1) classifies specific types of permanent partial disabilities and assigns specific dollar amounts to each type of injury.   Subsection (3) deals with identifying disabilities not enumerated in subsection (1) and determining the appropriate amount of compensation for such injuries.   Neither subsection mentions interest.   See RCW 51.32.080(1), (3).   Moreover, RCW 51.32.080(6) directs that “interest shall be paid ․ on the unpaid balance of such compensation ” (emphasis added).

We find RCW 51.32.080(4) and (6) unambiguous.   Section (4) requires the Department to deduct any portion of the excess compensation;  it does not mention interest on compensation.   And the legislature has shown that it distinguishes compensation and interest on compensation with the statutory sections discussed above.   Nowhere in the statutes does the legislature mix the concepts of compensation and interest.   Accordingly, we find no statutory support for the Department's broader interpretation of compensation to include interest.   If the legislature had intended the Department to deduct both compensation and interest, it would have said so.   Although reducing pension reserves by the interest as well as the PPD principal is consistent with the legislature's intent to prevent double recoveries, we cannot ignore the plain statutory language to reach such intent.

A majority of the panel having determined that only the foregoing portion of this opinion will be printed in the Washington Appellate Reports and that the remainder shall be filed for public record pursuant to RCW 2.06.040, it is so ordered.

II. COLAs

Injured workers receiving PTD compensation benefits are entitled to periodic COLA adjustments.   See RCW 51.32.075.   The workers argue that the Department should calculate COLAs to pension payments based on the benefit amount they would have received before, instead of after, PPD reductions.   As they acknowledge, the Supreme Court has rejected this argument in Department of Labor & Industries v. Auman, 110 Wash.2d 917, 918, 756 P.2d 1311 (1988), which held that COLAs should be based on the amount owed to a worker after reduction for prior PPD lump sum payments.   Nonetheless, the workers ask this court to revisit the issue, noting that review is pending in Messer v. Department of Labor & Industries, 118 Wash.App. 635, 640, 77 P.3d 1184 (2003), which considered the same issue.   But the Supreme Court recently denied review of Messer.  Messer v. Dep't of Labor & Indus., 151 Wash.2d 1021, 91 P.3d 94 (2004).   Accordingly, under Auman and Messer, the Department properly determined the workers' COLAs.

The workers attempt to distinguish Auman because it involved lump sum payments instead of monthly installment payments.   But they assert only that Auman is “factually distinct.”   Appellant Reply Br. at 7. They do not say why this court should treat COLA determinations, where lump sum payments are involved, differently from those where monthly installments are involved.   The superior court did not err in affirming the Board on this issue.

III. Janssen's PPD

Janssen argues that the Department should not be allowed to reduce his pension reserve by the erroneous $31,500 overpayment on his initial PPD award.   The Department responds that its reduction was correct.

The parties agree that the payment of an additional $31,500 was error and that the Department did not attempt to recoup it within the one-year limit in former RCW 51.32.240(1) (1992).   The version of that statute in effect at the time the Department erroneously calculated the PPD provided:

Whenever any payment of benefits under this title is made because of clerical error, mistake of identity, innocent misrepresentation by or on behalf of the recipient thereof mistakenly acted upon, or any other circumstance of a similar nature, all not induced by fraud, the recipient thereof shall repay it and recoupment may be made from any future payments due to the recipient on any claim with the state fund or self-insurer ․ The department ․ must make claim for such repayment or recoupment within one year.

Former RCW 51.32.240(1) (1992).

Janssen first contends that the erroneous payment was a mathematical error instead of compensation for PPD and, thus, recovery is barred by the one-year time limit in RCW 51.32.240(1).   Relying primarily on Stuckey v. Department of Labor & Industries, 129 Wash.2d 289, 916 P.2d 399 (1996), the Department responds that RCW 51.32.080(4) controls, and thus reduction by the amount of Janssen's entire PPD compensation is appropriate.

In Stuckey, the Supreme Court considered whether RCW 51.32.080(4) or RCW 51.32.240(3) applied when the Department awards PPD benefits, and after an appeal, it determines the worker is permanently and totally disabled and placed on the pension rolls.  Stuckey, 129 Wash.2d at 291, 916 P.2d 399.   RCW 51.32.240(3) purported to apply when a benefits payment was determined to be erroneous on appeal.   This section provided for recoupment in the same manner as RCW 51.32.240(1).   See Stuckey, 129 Wash.2d at 296, 916 P.2d 399.   The Court reviewed the legislative history and plain language of RCW 51.32.080(4) and RCW 51.32.240(3) and determined that RCW 51.32.240(3) did not amend or change RCW 51.32.080(4).  Stuckey, 129 Wash.2d at 299, 916 P.2d 399.   Accordingly, “RCW 51.32.080(4) applies to all situations where permanent partial disability is followed by permanent total disability and any recoupment ․ must be made under that statute.”  Stuckey, 129 Wash.2d at 291, 916 P.2d 399.   The Department is correct that it may still deduct the erroneous portion of the PPD payment from Janssen's pension reserve.

And, unlike the interest the Department paid the other claimants on their PPD, the Department may deduct the interest it paid Janssen on the erroneous $31,500 payment.   The interest paid Janssen differs from the interest paid the other claimants.   The other claimants at the time of the PPD payments and interest were entitled to the payments;  the Department had found these workers permanently and partially disabled.   But when Janssen received the $31,500 excess payment, he was not entitled to it.   And although we have held that the Department's right to recover PPD overpayments does not include interest, we do not consider the erroneously paid $31,500 to be either compensation or interest on compensation.   Rather, it was simply a mistaken payment based on a miscalculation.

Janssen also argues that recoupment of the excess PPD would be an undue hardship.   The Department responds that the hardship is merely the inability to receive the double recovery that the legislature intended to prevent by enacting RCW 51.32.080(4).   See Messer, 118 Wash.App. at 640, 77 P.3d 1184.   Janssen does not identify any specific facts that would cause him undue hardship and under Stuckey and RCW 51.32.080(4), recoupment of the entire PPD principal is proper.   We reject Janssen's hardship argument.

Affirmed.

FOOTNOTES

1.   An amount the Department calculates is necessary to pay the monthly pension benefits.

2.   The parties agree that the ruling in each appeal was identical.

3.   This subsection contained the language now contained in subsection (4).

ARMSTRONG, J.