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Seattle School District No. 1 v. Department of Labor and Industries

February 7, 1991

SEATTLE SCHOOL DISTRICT NO. 1, RESPONDENT
v.
THE DEPARTMENT OF LABOR AND INDUSTRIES, PETITIONER



En Banc. Dolliver, J. Dore, C.j., Utter, Brachtenbach, Andersen, Durham, and Guy, JJ., and Callow, J. Pro Tem., concur. Smith and Johnson, JJ., did not participate in the disposition of this case.

Author: Dolliver

Defendant, Department of Labor and Industries, seeks review of a Court of Appeals decision holding second injury fund relief available to plaintiff, Seattle School District, a self-insured employer. Defendant

contends plaintiff is not entitled to second injury fund relief since the injury in question occurred before second injury fund relief was extended to self-insured employers. Plaintiff challenges the statutory provisions awarding attorney fees only to an injured worker or beneficiary as unconstitutional.

The facts are not in dispute. On June 1, 1977, Rose Fears suffered an industrial back injury while in the employment of Seattle School District No. 1 (the District), a self-insured employer. Fears acted promptly to file an industrial insurance claim for the injury with the Department of Labor and Industries (the Department) in June 1977. On July 7, 1978, the Department issued an order closing the claim without any award for permanent partial disability. Fears was rehired by the District in a position other than the one she held at the time of the injury sometime after July 1, 1977.

On September 11, 1980, Fears filed an application to reopen her claim for aggravation of disability. On April 14, 1982, the Department again closed Fears' claim with a permanent partial disability award of 25 percent effective back to August 4, 1980.

Fears also suffers from a nonindustrial psychiatric condition which predated the 1977 back injury. Fears experienced a worsening of this psychiatric condition after April 14, 1982. On May 2, 1983, she filed a second application to reopen her claim for aggravation of disability. The Department reopened her claim, and on April 8, 1985, issued an order classifying Fears as a totally and permanently disabled worker effective as of March 3, 1983, and placed her on the pension rolls the same date. Fears' total disability was caused by the combined effect of the 1977 back injury and the preexisting psychiatric condition. Neither alone would have been sufficient to disable her completely.

On April 8, 1985, the Department also issued an order denying the District's request for second injury fund relief. The Department explained the injury covered by this claim occurred on June 1, 1977, and the provisions of RCW

51.16.120, which extend second injury fund relief to self-insured employers, did not become effective until July 1, 1977. The Department stated industrial insurance claims are governed by the law in effect at the time of the injury. The Department's decision was upheld by both the Board of Industrial Insurance Appeals (the Board) and the King County Superior Court.

The Court of Appeals reversed. Seattle Sch. Dist. 1 v. Department of Labor & Indus., 57 Wash. App. 87, 786 P.2d 843 (1990). This appeal followed.

I

The critical issue before us is what event fixes an employer's eligibility for second injury fund relief. The Department argues the Court of Appeals improperly focused on when a claim for second injury fund relief matures and thereby tied eligibility for second injury fund relief to the time when the total and permanent disability becomes effective -- in this case, March 3, 1983. The Department asserts eligibility for second injury fund relief is distinct from the elements establishing a mature claim for second injury relief and is properly fixed at the time of the industrial injury -- in this case, June 1, 1977.

Prior to 1971, all employers in the state of Washington were State-insured under the workers' compensation statute. During that time, all employers were entitled to second injury fund relief under RCW 51.16.120 by virtue of each employer's compulsory payments into the general accident fund. A portion of each payment was automatically transferred into the second injury fund. The second injury fund statute provides that, when a previously disabled employee suffers an on-the-job injury and the combined effect of the previous disability and the injury results in total and permanent disability, the employer pays only the accident cost attributable exclusively to the industrial injury. The second injury fund covers the remainder. Chicago Bridge & Iron Co. v. Department of Labor & Indus., 46 Wash. App. 252, 254-55,

731 P.2d 1 (1986), review denied, 107 Wash. 2d 1032, cert. denied, 484 U.S. 823 (1987).

In 1971, RCW 51.14 was enacted to allow qualified employers to elect to become self-insurers. Laws of 1971, 1st Ex. Sess., ch. 289, § 27, p. 1562. The District elected to become such a self-insured employer. The statute made no provision to allow self-insured employers to participate in and contribute to the second injury relief fund. That self-insured employers were not covered under the 1971 version of the second injury fund statute is not challenged here. See T.I.M.E.-D.C. v. Schuirman, 42 Wash. App. 607, 610, 711 P.2d 1116, review denied, 105 Wash. 2d 1014 (1986).

In 1977, the Legislature acted to amend RCW 51.16.120 to extend second injury fund relief to self-insured employers. Laws of 1977, 1st Ex. Sess., ch. 323, § 13, p. 1239. Self-insured employers now make periodic payments into the second injury relief fund, and in the event of an injury to a previously disabled worker, pay the cost attributable to the ...


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