Opinion
No. 56161-8-I.
May 1, 2006.
Appeal from a judgment of the Superior Court for King County, No. 04-2-22211-7, Carol A. Schapira, J., entered April 12, 2005.
Counsel for Appellant(s), David Andrews Williams, Attorney at Law, 9 Lake Bellevue Dr Ste 104, Bellevue, WA 98005-2454.
Counsel for Respondent(s), Helen Regina Cullen, Atty Gen Ofc, 900 4th Ave Ste 2000, Seattle, WA 98164-1012.
Michael King Hall, Office of the Atty General, 900 4th Ave Ste 2000, Seattle, WA 98164-1076.
Affirmed by unpublished opinion per Grosse, J., concurred in by Agid and Ellington, JJ.
RCW 51.24.060(3) grants the Department of Labor and Industries (the Department) discretion to compromise its lien on an injured worker's recovery in a third-party lawsuit, and directs the Department to consider at least three factors in exercising its discretion. Because the evidence shows the Department considered the required statutory factors and because the Department's decision not to compromise its lien was not manifestly unreasonable, we affirm.
FACTS
On September 14, 1998, LeeAnn Huggins was riding in an elevator at her workplace when it suddenly fell and stopped 18 to 20 inches below the floor level. The incident caused Huggins to injure her back and neck. Huggins claimed and received industrial insurance benefits. These benefits totaled $22,487.63. Huggins also filed a third-party action in King County against the building owner, the company providing maintenance to the elevator, and other defendants for the injuries she sustained.
A mediation session was held without notice to the Department of Labor and Industries (the Department) and on November 14, 2002, counsel for Huggins informed the Department that there had been an offer of $35,000 in settlement for the third-party lawsuit. In that letter, counsel requested the Department to compromise its lien on the settlement:
We request compromise for the following reasons:
Liability issues abound. We allege that LeeAnn's injuries occurred when the elevator she was in "slipped" a foot or so, jolting her. The elevator was inspected shortly after the accident, however, and no defect was discovered. Further, the elevator is designed such that it cannot "slip" more than about a foot. The incident was unwitnessed, and the Defendants contest whether it even occurred. In any event, the Defendants contest whether a "jolt" of force sufficient to injure LeeAnn occurred, or even could have occurred. Certainly they deny "negligence" in connection with the event.
In my opinion there is extreme risk of a defense verdict, should the case proceed, on the issue of whether the Defendants were in any way "negligent" in connection with the kind of "slip" that almost every juror will have experienced without injury.
Damages are very difficult. There are several issues here.
First, LeeAnn had just recovered from injuries sustained in an auto accident several months before this incident. Thus, the damages attributable to this incident will be questioned severely in any event.
Second, as noted above, by no account will we have the elevator "slipping" a substantial distance, and the Defendant's expert testimony will be that she sustained little if any appreciable injury in the event. The enclosed IME report is instructive as to that defense.
Third, LeeAnn's lost income claim is very "soft." The Department paid her $4,165.00 in time loss; while we claim much more in her lawsuit, by virtue of lost opportunities, the simple and undeniable fact is: she is a stockbroker. Virtually all stockbrokers have seen decline in their earnings the past several years because of market conditions. It will be very, very difficult to convince any jury that LeeAnn, by contrast would have made much more money than she did without her injury.
Under these circumstances a very substantial compromise is suggested. I see this as a claim where the Department very appropriately paid benefits (because LeeAnn's injuries did occur at work), but one in which the third party claim is very, very tenuous indeed. For this reason we ask for a more than usual compromise on the part of the Department, into the area of $3,500.00, relative to its lien.
Lori Butterfield, a third-party adjudicator with the Department, responded with a letter on November 20, 2002, indicating that the Department would not compromise its lien. On December 2, 2002, Huggins accepted the settlement and signed the release. Communications between the Department and Huggins' counsel continued resulting in no change in the Department's decision not to compromise its lien.
A third-party distribution order was issued on January 31, 2003. The Department distributed the $35,000 in settlement proceeds as follows: $13,208.08 for attorney fees and costs; $8,292.97 to Huggins; $13,498.95 to the Department. Huggins appealed, claiming the Department's decision not to compromise its lien was an abuse of discretion. On appeal, the Board of Industrial Insurance Appeals (the Board) and King County Superior Court affirmed the distribution order. Huggins now appeals to this court.
ANALYSIS
RCW 51.24.060(3) grants the Department discretion to compromise its lien on an injured worker's recovery in a third-party lawsuit, and directs the Department to consider at least three factors in exercising its discretion. RCW 51.24.060(3) states:
(3) The department or self-insurer has sole discretion to compromise the amount of its lien. In deciding whether or to what extent to compromise its lien, the department or self-insurer shall consider at least the following:
(a) The likelihood of collection of the award or settlement as may be affected by insurance coverage, solvency, or other factors relating to the third person;
(b) Factual and legal issues of liability as between the injured worker or beneficiary and the third person. Such issues include but are not limited to possible contributory negligence and novel theories of liability; and
(c) Problems of proof faced in obtaining the award or settlement.
"In reviewing a decision of the Board under RCW 51.24.060(3), the Board's decision shall be considered prima facie correct." Furthermore, [t]o determine whether the Board has correctly approved a decision on whether to compromise a statutory lien therefor, "[t]he proper question for review . . . is whether the Department [or self-insurer] considered the statutory factors and whether" the Department (or self-insurer) abused its discretion by basing its decision on compromising its lien in a way which is contrary to law.
Springstun v. Wright Schuchart, Inc., 70 Wn. App. 83, 87-88, 851 P.2d 755 (1993) (citing Hadley v. Labor Indus., 116 Wn.2d 897, 903, 810 P.2d 500 (1991)).
Springstun, 70 Wn. App. at 88 (quoting Hadley, 116 Wn.2d at 902-03).
"The trial court and the appellate court, in reviewing a discretionary decision of the Department, must find that the decision was `manifestly unreasonable' in order to reverse it."
Hadley, 116 Wn.2d at 906.
We first address whether the Department considered the required statutory factors. The Board found that
[t]he Department had a reasonable basis for denying Ms. Huggins' request and it gave due consideration to such factors as: (1) the likelihood of collection of the order settlement as may be affected by insurance coverage, solvency, or other factors relating to the third person; (2) factual and legal issues of liability as between the injured worker or beneficiary in the third person; and (3) problems of proof faced in obtaining the award or settlement.
The Board's finding that the Department considered the required statutory provisions is supported by substantial evidence. Third-party adjudicator Lori Butterfield and James Nylander, manager of the Department's third-party section, both testified that they considered all of the RCW 51.24.060(3) factors in making the decision not to compromise the Department's lien.
Huggins does not challenge whether the Department considered these factors but instead contends that the Department abused its discretion in applying these factors. Nylander and Butterfield testified in detail about how the Department arrived at its decision not to compromise its lien. First, Nylander explained that the likelihood of the collection of the settlement did not appear to be a problem in this case. Second, addressing the factual and legal theories of liability, Nylander explained that there were no novel issues of liability or issues of contributory negligence in this case. Nylander noted the letter from Huggins' counsel informed the Department there was evidence that the elevators were known to frequently slip. This fact, coupled with the common sense notion that elevators should not slip, Nylander explained, would have been consistent with a negligence claim. Furthermore, Nylander noted the lack of any depositions or other documents to confirm Huggins' counsel's narration of the liability problems.
Third, addressing the problems of proof, Nylander explained there was expert medical testimony on both sides of this case as to the causal relationship between the elevator incident and Huggins' injuries, including Huggins chiropractor who had treated Huggins both before and after the elevator incident. Nylander also referred to the Department's own independent medical examination which included an orthopedist, a neurologist, and a chiropractor who related the elevator incident as the cause of her injuries. Butterfield explained the examination also stated Huggins was medically stationary from a prior automobile accident at the time of the elevator incident. Nylander noted Huggins complained of the injury immediately and it was diagnosed right away.
In light of the testimony of Nylander and Butterfield, the Department's decision not to compromise its lien was not a manifest abuse of discretion. While we sympathize with Huggins' position and might have been persuaded to find in her favor had there been more in the record before the Department to support the concerns expressed by Huggins' counsel in his letters requesting a lien compromise, ultimately, the Department considered the required statutory factors and came to a reasonable conclusion based on the limited information it had at its disposal.
For the above reasons, we affirm the Board's decision.
ELLINGTON and AGID, JJ., concur.