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Boeing Co. v. Doss

Supreme Court of Washington, En Banc

April 16, 2015

The Boeing Company, Respondent,
Patricia Doss, Defendant, the Department of Labor and Industries, Petitioner

Argued: February 12, 2015.

Appeal from King County Superior Court. 12-2-01969-0. Honorable James E Rogers.

Robert W. Ferguson, Attorney General, and Annika M. Scharosch and Steve Vinyard, Assistants, for petitioner.

Gilbert M. Stratton and Eric Jensen (of Pratt Day & Stratton PLLC ), for respondent.

AUTHOR: Justice Debra L. Stephens. WE CONCUR: Chief Justice Barbara A. Madsen, Justice Charles W. Johnson, Justice Susan Owens, Justice Mary E. Fairhurst, Justice Charles K. Wiggins, Justice Steven C. González, Justice Sheryl Gordon McCloud, Justice Mary I. Yu.


Page 1084

Debra L. Stephens, J.

[183 Wn.2d 56] [¶1] -- We must decide whether a self-insured employer is entitled to second injury fund relief under RCW 51.16.120(1) for a worker's postpension medical costs. We hold that the plain language of the governing statutes does not allow a charge to the second injury fund for postpension medical treatment under RCW 51.16.120(1). Accordingly, we reverse the Court of Appeals.


[¶2] The underlying facts of this case are undisputed. Patricia Doss filed a claim for workers' compensation with the Department of Labor and Industries (Department) after suffering chemical exposure during the course of employment with The Boeing Company. The exposure permanently aggravated her preexisting asthma, and she requires ongoing medical treatment as a result of these combined injuries.

[¶3] The Department determined that the combined effects of Doss's preexisting asthma and the aggravation of this condition during her Boeing employment rendered her permanently totally disabled. A right knee injury also contributed to Doss's preexisting disability. Due to her permanent total disability, the Department awarded Doss a pension. Pursuant to RCW 51.16.120(1), the Department granted Boeing second injury fund relief, meaning that Boeing was not required to pay the entire cost of Doss's pension, but only the portion attributable to the workplace exposure. The remaining portion of Doss's pension was covered by the second injury fund, into which all employers [183 Wn.2d 57] pay. The Department determined that Doss was also eligible for postpension medical treatment for her asthma under RCW 51.36.010(4). It directed Boeing to pay the cost of such treatment.

[¶4] Boeing agreed to pay for the portion of the pension attributable to Doss's workplace injury but challenged the Department's order requiring it to pay for her postpension medical treatment. Boeing argued that the cost of this treatment should also be covered by the second injury fund. Boeing appealed to the Board.

[¶5] The Board affirmed the Department's order, concluding that postpension medical benefits are not payable from the second injury fund and are properly borne by the self-insured employer. Boeing appealed to superior court, which reversed the Board's determination and held that " Ms. Doss'[s] post pension treatment benefits are properly payable from the Second Injury Fund, and are not the responsibility of Boeing." Clerk's Papers (CP) at 60. The Court of Appeals affirmed. Boeing Co. v. Doss, 180 Wn.App. 427, 321 P.3d 1270 (2014). The Department petitioned to this court, and we granted review. Boeing Co. v. Dep't of Labor & Indus., 181 Wn.2d 1001, 332 P.3d 984 (2014).


[¶6] This case presents an issue of first impression, which turns on our interpretation of several statutes under the Industrial Insurance Act (IIA), Title 51 RCW.

1. Overview of the Relevant Statutory Scheme under the IIA

[¶7] Under the IIA, any worker injured in the course of employment is entitled to compensation for full disability, independent of any preexisting condition. Tomlinson v. Puget Sound Freight Lines, Inc., 166 Wn.2d 105, 117, 206 P.3d 657 (2009) (" 'The worker is to be taken as he or she is, with all his or her preexisting frailties and bodily infirmities [183 Wn.2d 58] .'" (quoting Dennis v. Dep't of Labor & Indus., 109 Wn.2d 467, 471, 745 P.2d 1295 (1987))); RCW 51.32.010 ( " Each worker injured in the course of ... employment ... shall receive compensation." ). An employer must secure such compensation by insuring " the payment of such benefits with the state fund" or by " [q]ualifying as a self-insurer." RCW 51.14.010(1), (2).

[¶8] If an employer insures through the state fund, the Department pays benefits directly to workers for disability benefits through the accident fund and " [t]he medical

Page 1085

aid fund covers medical treatment received by injured workers." WR Enters., Inc. v. Dep't of Labor & Indus., 147 Wn.2d 213, 217, 53 P.3d 504 (2002). Self-insured employers, on the other hand, pay directly to workers any disability and medical benefits. Johnson v. Tradewell Stores, Inc., 95 Wn.2d 739, 742, 630 P.2d 441 (1981). Self-insured employers are generally responsible for all disability and medical costs associated with their workers' compensation claims. See RCW 51.08.173 (defining " self-insurer" ); WAC 296-15-330 (describing self-insured employers' authorization requirements for medical care).

[¶9] A worker who becomes permanently totally disabled [1] from an industrial injury receives a monthly wage-replacement payment based on a percentage of the worker's wages. RCW 51.32.060(1). These monthly payments are generally referred to as " pensions" and are drawn from the pension reserve fund. RCW 51.44.070(1). When the Department places the worker of a self-insured employer on a pension, the employer must pay into the pension reserve fund a sum equal to the estimated present cash value of the worker's monthly payments. Id. These monthly payments are calculated on the basis of an annuity, which factors rates of mortality, disability, remarriage, and interest as determined by the Department. Id.

[183 Wn.2d 59] [¶10] In most circumstances, a pensioned worker is not entitled to continued medical benefits. RCW 51.36.010(4). However, the Department may authorize medical treatment for previously accepted conditions, including life-sustaining treatment. Id. This medical treatment results in postpension medical costs, so called because they are not part of the total cost of the pension reserve, which, as explained, is based on an annuity that estimates future wage replacement benefits. See RCW 51.44.070(1).

[¶11] When a worker's permanent total disability is caused by the combined effects of a " previous bodily disability" and a covered workplace injury or occupational disease, self-insured employers pay a reduced amount into the pension reserve fund. RCW 51.16.120(1). In these circumstances, self-insured employers pay into the reserve fund " only the accident cost which would have resulted solely from the further injury or disease, had there been no preexisting disability." Id. The difference between the portion paid by the employer and the total cost of the pension reserve, i.e., the portion attributed to any preexisting disability, is assessed against the second injury fund. Id. Thus, the second injury fund contributes to the pension reserve fund the balance of the pension costs not covered by the self-insured employer.

[¶12] Self-insured employers fund the second injury fund through assessments determined by the Department. WAC 296-15-221(4)(a); see also RCW 51.44.040 (creating the second injury fund). These assessments are calculated, in part, by the claim costs paid by the self-insured employer, which include, but are not limited to, time loss compensation, permanent partial disability awards, medical bills, and prescriptions. WAC 296-15-221(4)(a)(ii).

[¶13] Accident costs, as described in RCW 51.16.120(1), are equal to the permanent partial disability that a worker would have developed had the worker not suffered from a preexisting disability. Because the statute holds self-insured employers liable only for the accident costs " which [183 Wn.2d 60] would have resulted ... had there been no preexisting disability," it follows that neither the preexisting disability nor the later disability alone could have caused the permanent total disability. RCW 51.16.120(1). Permanent partial disability payments are based on a worker's loss of bodily function, rather than a worker's lost wages or lost earning power. RCW ...

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