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Moore v. Washington State Health Care Authority

Supreme Court of Washington, En Banc

August 21, 2014

Douglas L. Moore et al., Respondents,
v.
The Washington State Health Care Authority et al., Petitioners

Argued: May 15, 2014.

Appeal from King County Superior Court. 06-2-21115-4. Honorable Catherine D. Shaffer.

Timothy G. Leyh and Randall T. Thomsen (of Calfo Harrigan Leyh & Eakes LLP ); and Robert W. Ferguson, Attorney General, and Todd Bowers, Catherine Hendricks, Peter B. Gonick, and Eric A. Mentzer, Assistants, for petitioners.

Stephen K. Festor, Stephen K. Strong, and David F. Stobaugh (of Bendich Stobaugh & Strong PC ); and Philip A. Talmadge (of Talmadge / Fitzpatrick ), for respondents.

AUTHOR: Justice Susan Owens. WE CONCUR: Chief Justice Barbara A. Madsen, Justice Charles W. Johnson, Justice Mary E. Fairhurst, Justice Debra L. Stephens, Justice Charles K. Wiggins, Justice Steven C. Gonzá lez, Justice Sheryl Gordon McCloud, Anne L. Ellington,Justice Pro Tem.

OPINION

Page 462

Owens, J.

[181 Wn.2d 302] ¶ 1 -- In this class action lawsuit, the trial court found that the State wrongfully denied health benefits to a number of its part-time employees. We must now determine how to value the damages suffered by that group of

Page 463

employees when they were denied health benefits. The State argues that the only damages to the employees were immediate medical expenses paid by employees during the time they were denied health benefits. But evidence shows that people denied health care benefits suffer additional damage. They often avoid going to the doctor for preventive care, and they defer care for medical problems. This results in increased long-term medical costs and a lower quality of life. Based on this evidence, the trial court correctly rejected the State's limited definition of damages because it would significantly understate the damages suffered by the employees. We affirm.

FACTS

¶ 2 In 2006, this class action lawsuit was filed on behalf of part-time employees who were improperly denied health benefits by the State of Washington. In a series of partial summary judgment rulings, the trial court ruled that the State violated multiple statutes when it failed to provide the health benefits. The legislature later codified the rulings. Laws of 2009, ch. 537.

¶ 3 The parties simultaneously moved for summary judgment on the measure of damages. The State argued that the only damages that it should pay are out-of-pocket costs paid [181 Wn.2d 303] by class members for medical expenses or substitute health insurance during the time they were denied health benefits. Furthermore, the State argued that damages must be established through an individual claims process.

¶ 4 The employees argued that the State's method was inaccurate, contrary to the evidence, and would lead to a windfall for the wrongdoer. Instead, the employees proposed three alternative methods of measuring damages. First, the employees argued that the health benefits were part of the employees' compensation, so the damages should be based on the employees' lost wages (i.e., the amount the State should have paid to provide health benefits to those employees). Second, the employees argued that the court could measure damages based on how much money the State unlawfully retained by failing to provide health benefits to those employees. Third, the employees argued that the court could measure damages as the amount that the State would have paid in health care costs for the group of employees had they been covered. The employees argue that the most accurate measure of this cost is to use an actuarial method based on the average health care costs for a comparable group of State employees with health benefits. They presented evidence that this method would be more accurate than the one proposed by the State because it would take into account the fact that people postpone medical care when they do not have health insurance.

¶ 5 The trial court specifically rejected both parts of the State's proposed approach--limiting damages to out-of-pocket costs and requiring that the damages be shown through an individual claims process--ruling that it was " wrong as a matter of common sense, public policy and general knowledge." Clerk's Papers (CP) at 591. The court generally agreed with the employees that the failure to pay benefits was a failure to pay wages and, alternatively, that the State may owe restitution because it received a windfall when it failed to provide these benefits. The trial court nonetheless concluded that issues of fact remained, including [181 Wn.2d 304] how many members of the class would likely have opted out of coverage altogether, so it denied both motions for summary judgment.

¶ 6 The State moved for discretionary review of the trial court's order, which the Court of Appeals commissioner granted. The employees moved to transfer review to this court pursuant to RAP 4.4, which the acting commissioner granted.

ISSUES

¶ 7 1. Did the trial court err when it rejected the State's proposed method of calculating damages, which took into account only out-of-pocket expenses assessed through an individual claims process?

¶ 8 2. Did the trial court err when it expressed support for the employees' proposed methods of calculating damages, which were ...


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