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Washington State Department of Labor and Industries v. Mullins

September 6, 1996

WASHINGTON STATE DEPARTMENT OF LABOR AND INDUSTRIES, RESPONDENT,
v.
AMENDED MASTON MULLINS, JR., APPELLANT.



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.

As Amended September 6, 1996.

Written By: Seinfeld, C.j. Concurred IN By: Morgan, J., Conoley, Jpt

The opinion of the court was delivered by: Seinfeld

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's formula for distributing the settlement proceeds was correct except for its failure to deduct L&I's proportionate share of attorneys' fees from the remaining balance. Thus, we affirm in part and reverse in part.

FACTS

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 former RCW 51.24.060 (Laws of 1987, ch. 442, sec. 1118), 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. Mullins, however, continued to be eligible for benefits after the date of settlement. But L&I said it would pay no further benefits until the total value of accrued benefits equaled the amount of the remaining balance.

Mullins appealed L&I's decision to the Board of Industrial Insurance Appeals (BIIA). The BIIA agreed with Mullins and allowed him 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 former RCW 51.24.060(1)(c) makes the entire remaining balance subject to offset.

I

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. Former RCW 51.24.060(1)(a), (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. Former RCW 51.24.060(1)(a)-(d). 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." Former RCW 51.24.060(1)(e).

Applying this scheme here, the result is as follows:

Third Party Recovery $165,000.00

Minus Attorneys' Fees and Costs ...


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