Opinion
No. 35052-1-II.
August 7, 2007.
Appeal from a judgment of the Superior Court for Pierce County, No. 05-2-11626-4, Kathryn J. Nelson, J., entered June 2, 2006.
Affirmed by unpublished opinion per Houghton, C.J., concurred in by Quinn-Brintnall and Penoyar, JJ.
The Department of Labor and Industries (LI) appeals from an order granting summary judgment to Darrin Tharaldson and vacating its order demanding $13,908.35 from his settlement with a third party tortfeasor. Because substantial evidence does not support LI's claim for reimbursement, we affirm.
FACTS
On September 17, 2001, while employed with TT Trucking, Inc., Tharaldson fell and injured his back. He received emergency treatment for lower back pain that radiated into his buttocks and right thigh. Unable to work, he filed a claim for industrial insurance benefits. LI allowed the claim and awarded him time-loss compensation, a permanent partial disability award, and treatment costs.
On October 24, while Tharaldson was still receiving treatment for the back injury, he was involved in a motor vehicle collision, unrelated to his employment. After the accident, he complained of increased pain in his neck and lower back, radiating into both legs. On November 14, Dr. Chan Hwang evaluated Tharaldson and concluded that "40% of his current symptoms can be attributed to his work-related aggravation of his low back complaints. . . . Approximately 60% may be attributed to aggravation of the motor vehicle collision." Administrative Record (AR) at 71.
Tharaldson's treating doctor had referred him to Hwang before the automobile accident.
An MRI revealed that Tharaldson suffered from a herniated disc. Dr. Steven Brack, an orthopedic surgeon, performed surgery to alleviate the condition. After about a three month recovery period, Tharaldson returned to work.
Tharaldson sued the driver who caused the motor vehicle accident. In his pleading setting forth his statement of damages, he claimed $17,687.40 in lost wages, $14,516.76 in permanent partial disability, and $27,065.77 in medical expenses. Those amounts, particularly the permanent partial disability claim, relate to the amounts LI paid for the industrial injury.
Tharaldson settled the lawsuit for $50,000. He notified LI of the settlement and provided a copy of his attorney fee agreement, a cost itemization, and a copy of the release reflecting the total settlement amount.
Kim Malcom, an LI employee responsible for resolving third party claims, calculated that LI had paid Tharaldson $39,340.70 in industrial insurance benefits. Malcom determined the amount attributable to the motor vehicle accident was 60 percent of all the benefits paid after the date of the accident, arriving at a figure of $21,700.20. LI then issued an order and notice demanding that Tharaldson pay $13,908.35 in reimbursement. It also refused to pay any additional benefits until he spent $6,490.87 for costs related to his industrial injury.
Tharaldson sought reconsideration of the order and appealed LI's affirmance to the Board of Industrial Insurance Appeals (Board). The Board affirmed the order, finding that LI had a statutory right to reimbursement for payments attributable to the motor vehicle accident. It also ruled that Tharaldson bore the burden of proving a reimbursement order incorrect and he failed to do so.
Tharaldson then appealed the Board's decision to the superior court. He moved for summary judgment, arguing that: (1) the third-party recovery statutes, RCW 51.24.030 and .060, only authorize recovery for industrial injuries; (2) LI bore the burden of proving that it paid additional claim costs as a result of the motor vehicle accident; and (3) the third party recovery statutes are unconstitutional as applied to his settlement because they allowed LI to take his property in violation of his substantive due process rights.
The superior court granted his motion, finding that "there is no foundation for proving that [LI] paid for something it wouldn't otherwise have had to pay for." Report of Proceedings at 23. It otherwise rejected Tharaldson's arguments. Finally, it ordered LI to vacate the order for reimbursement. LI appeals.
ANALYSIS
We must decide, as did the trial court, whether the evidence established LI's reimbursement claim. We review de novo the trial court's summary judgment order. Johnson v. Safeway, Inc., 137 Wn. App. 701, 705, 155 P.3d 145 (2007).
RCW 51.52.115 governs judicial review of a Board decision. Hadley v. Dep't of Labor Indus., 116 Wn.2d 897, 903, 810 P.2d 500 (1991). That section provides, in pertinent part:
In all court proceedings under or pursuant to this title the findings and decision of the board shall be prima facie correct and the burden of proof shall be upon the party attacking the same. If the court shall determine that the board has acted within its power and has correctly construed the law and found the facts, the decision of the board shall be confirmed; otherwise, it shall be reversed or modified. RCW 51.52.115.
Interpreting this statute, our Supreme Court has held that the Board's decision is prima facie correct only if substantial evidence supports it. Hadley, 116 Wn.2d at 903; Jepson v. Dep't of Labor Indus., 89 Wn.2d 394, 401, 573 P.2d 10 (1977). This is because agencies must rely on evidence, not mere fiat, to support administrative decisions. Jepson, 89 Wn.2d at 401. "[A] finding or conclusion of an administrative agency made without evidence to support it is arbitrary." Richard A. Finnigan et al., Washington Administrative Law Practice Manual 9-38 (2006).
LI's reimbursement order specified that it had paid $21,700.20 for Tharaldson's injuries resulting from the car accident. Malcom testified that this figure represented 60 percent of all benefits paid after the accident date. The justification for the 60 percent apportionment was Hwang's testimony that "approximately 40 percent of his symptoms when he presented to me [about three weeks after the car accident] could be attributed to his work-related aggravation and 60 percent could be attributed to the aggravation caused by the motor vehicular collision." AR (Hwang) at 8-9. But both Hwang and Brack testified that the injuries could not be treated separately, nor could they state whether Tharaldson would have required surgery or returned to work earlier if the car accident had not happened.
Sufficient evidence does not support a reimbursement order here. Evidence is substantial when it is sufficient to persuade a fair-minded, rational person of the finding's truth. Watson v. Dep't of Labor Indus., 133 Wn. App. 903, 909, 138 P.3d 177 (2006). The reimbursement statutes require a finding that LI incurred costs that a third party caused. RCW 51.24.030(1) allows a worker to sue a third party who "is or may become liable to pay damages on account of a worker's injury for which benefits and compensation are provided under this title." Similarly, under RCW 51.24.060(1)(c), "[t]he department . . . shall be paid the balance of the recovery made, but only to the extent necessary to reimburse the department and/or self-insurer for benefits paid." In other words, if LI pays benefits for which a third party is responsible, it is entitled to recover those payments from any settlement with the third party. Cox v. Spangler, 141 Wn.2d 431, 440, 5 P.3d 1265 (2000) (LI "entitled to claim a lien for the amount of benefits it paid to [plaintiff] against any recovery [plaintiff] received from [non-employment related third party tortfeasor])".
Tharaldson argued below that the statement in Cox is inapplicable dicta. We read the Court's comment as recognizing LI's reimbursement right.
LI failed to provide substantial evidence that the third party is responsible for the benefits Tharaldson received. Although both medical experts concluded that the car accident aggravated Tharaldson's industrial injury, neither could say that he required additional treatment or recuperation as a consequence of the car accident. Thus, LI has not shown that the car accident caused it to make expenditures. Absent such a showing, sufficient evidence does not support its reimbursement demand.
Nevertheless, to support its claim, LI points to Hwang's testimony that the car accident caused 60 percent of Tharaldson's symptoms. Hwang testified that he examined Tharaldson within eight days of the accident and approximately 60 percent of his symptoms resulted from the car accident and 40 percent resulted from the industrial injury. But at best, this shows only that Tharaldson suffered increased pain due to the accident. It does not establish that the car accident caused 60 percent of Tharaldson's treatment costs, unemployment, and partial disability.
LI also asserts that the lack of evidence apportioning his treatment costs results in Tharaldson receiving a windfall. Although it is true that LI may have paid some costs associated with the accident, substantial evidence must support the amount it claims as reimbursement. That some costs could have been shifted to LI insufficiently supports its claim that the car accident caused it to pay $21,700.20 in industrial insurance benefits it would not have otherwise had to pay.
Finally, LI argues that Tharaldson bears the burden of proving its order wrong. It points to RCW 51.52.050, which provides, "In an appeal before the board, the appellant shall have the burden of proceeding with the evidence to establish a prima facie case for the relief sought." We disagree that this section relieves LI of the duty to base its orders on substantial evidence. See Hadley, 116 Wn.2d at 903.
Tharaldson consistently argued throughout the administrative and judicial appeals that LI failed to show that its payments resulted from the car accident. Even the Board acknowledged that "[o]bviously, there is no scientific objective method for determining precisely how much of Mr. Tharaldson's treatment for his low back after the automobile accident was attributable to the industrial injury versus the automobile accident." AR at 5. But without this information, LI lacks a basis to determine the amount Tharaldson owes and its reimbursement order is arbitrary.
Because substantial evidence does not support the Board's decision, it acted arbitrarily. The trial court correctly granted Tharaldson's motion for summary judgment.
Because we affirm the trial court on the ground that substantial evidence did not support the Board's ruling, we do not address Tharaldson's constitutional argument.
ATTORNEY FEES
Tharaldson requests attorney fees under RCW 51.52.130, which provides for an award of reasonable attorney fees when "on appeal to the superior or appellate court from the decision and order of the board, said decision and order is reversed or modified and additional relief is granted to a worker or beneficiary." Appellant's Br. at 24. Because we affirm the superior court in reversing and vacating the Board's decision and order, we award him reasonable attorney fees and costs on appeal upon compliance with RAP 18.1.
Affirmed.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
QUINN-BRINTNALL, J., PENOYAR, J., concur.