Superior Court of Pierce County. Superior Court Docket No. 91-2-06809-2. Date Filed In Superior Court: May 6, 1994. Superior Court Judge Signing: Karen Strombom.
Seinfeld, C.j., Morgan, J., Conoly, P.t.j., concur
SEINFELD, C.J. -- Maston Mullins, a recipient of workers' compensation benefits, challenges the Department of Labor and Industries' (L&I) distribution formula regarding a third party settlement. We conclude that L&I used the correct formula to calculate the distribution up to the date of the settlement. However, the retroactive application of RCW 51.24.060 requires an increase in L&I's share of attorneys' fees related to its reimbursement for post-settlement benefits. Thus, we remand the matter to the superior court for entry of a corrected judgment.
Mullins sustained an on-the-job injury that left him permanently and totally disabled. He then brought a third party cause of action and obtained a $165,000 settlement. After deducting attorneys' fees and costs of $61,575.88, his net recovery equaled $103,424.12. Pursuant to RCW 51.24.060, Mullins was entitled to retain $25,856.03, 25 percent of the net recovery. This left a $77,568.09 balance against which L&I could assert a claim for reimbursement.
As of the date of settlement, L&I had paid Mullins $94,581.65 in industrial insurance benefits and, thus, had lien rights against the third party recovery for that amount, minus its proportionate share of attorneys' fees, $35,295.29.*fn1 This left L&I with a net lien of $59,286.36, which L&I subtracted from the $77,568.09 balance, leaving what we will refer to as a "remaining balance" of $18,281.73. This amount would go to the worker if L&I paid no further benefits. However, Mullins continued to be eligible for benefits after the date of settlement. Thus, L&I claimed the right to defer paying further benefits
until their total value equalled the amount of the remaining balance.
Mullins appealed L&I's decision to the Board of Industrial Insurance Appeals (BIIA). He contended that this offset for future benefits would deprive him of compensation for L&I's pro rata share of attorneys' fees. The BIIA agreed with Mullins. It allowed Mullins to retain the entire remaining balance, depriving L&I of any offset.
L&I appealed the BIIA decision to superior court. The superior court approved L&I's calculation and granted its motion for summary judgment. Mullins now appeals to this court, claiming that the superior court erred in concluding that RCW 51.24.060(1)(c) makes the entire remaining balance subject to offset.
The Industrial Insurance Act gives L&I a right to the proceeds of a third party recovery "to the extent necessary to reimburse" it for benefits paid, minus L&I's proportionate share of attorneys' fees and costs. RCW 51.24.060(1)(c)(i). The statute provides for distribution of a third party recovery in the following order: (1) pay attorneys' fees and costs; (2) pay 25 percent of the balance to the injured worker; (3) reimburse L&I for benefits it has already paid, less its proportionate share of attorneys' fees and costs; and (4) pay any remaining balance to the injured worker. RCW 51.24.060(1)(a)-(e). Thereafter the injured worker may not receive any additional workers' compensation benefits "until the amount of any further compensation and benefits shall equal any such remaining balance minus [L&I's] proportionate share of the costs and reasonable attorneys' fees in regards to the remaining balance." RCW 51.24.060(1)(e).*fn2
Applying this scheme here, the result is as follows: