United States District Court, W.D. Washington, Seattle
MICHELLE L. PETERSON UNITED STATES MAGISTRATE JUDGE
appeals reduction of her Social Security disability benefits
based on receipt of certain state workers' compensation
disability benefits. (Dkt. # 8.) As discussed below, the
Court REVERSES the Commissioner's final decision and
REMANDS the matter for recalculation of benefits under
sentence four of 42 U.S.C. § 405(g).
has been found disabled for Social Security purposes. AR at
16. Plaintiff contends the Commissioner erred by reducing her
Social Security benefits to offset a permanent partial
disability (PPD) award from the State of
Washington. Id. at 24, 10.
Security disability benefits are reduced when a claimant also
receives “periodic benefits on account of his or her
total or partial disability (whether or not
permanent).” 42 U.S.C. § 424a(a).
binding precedent has settled whether Washington PPD payments
constitute periodic benefits justifying an offset. The only
binding precedent addressing Social Security offset for PPD
involved Oregon's law. The Ninth Circuit looked to the
Oregon Supreme Court's interpretation of its
legislature's intent and held that an offset was
permitted because “even though the Oregon legislature
has assigned specific dollar amounts to particular body
parts, [PPD] payments are still ‘designed to compensate
for the economic loss of earning capacity.'”
Hodge v. Shalala, 27 F.3d 430, 433 (9th Cir. 1994)
(quoting In re. Woodman, 289 Or. 551, 614 P.2d 1162,
Commissioner contends Washington's statutory scheme
resembles Oregon's, and thus the Hodge holding
applies directly. (Dkt. # 9.) Plaintiff contends, under
Hodge, this Court must look to Washington's
intended purpose, which is to compensate for loss of bodily
function, not loss of earnings as in Oregon's scheme.
(Dkt. # 8, 10.) The Court agrees with Plaintiff.
Commissioner argues that the plain language of 42 U.S.C.
§ 424a requires offset of “any payments
under any state workers' compensation
plan….” (Dkt. # 9 at 10 (emphasis added).) But
the Ninth Circuit did not interpret the statute to apply
uniformly to all states' plans. The court relied on an
Oregon Supreme Court decision “emphasiz[ing] that
‘the legislature intended workers' compensation
benefits to provide wage replacement.'”
Hodge, 27 F.3d at 433 (emphasis in original)
(quoting Cutright v. Weyerhaeuser Co., 299 Or. 290,
702 P.2d 403, 407 (1985)). Accordingly, this Court will
similarly look to Washington's own courts'
interpretation of the legislature's intent behind its PPD
benefits, not the mechanism by which it calculates awards.
Courts in both the Eastern and Western Districts of
Washington have analyzed relevant Washington state case law,
although they have reached differing conclusions.
Federal Court Cases
cases, courts in the Eastern District of Washington held that
the offset did not apply because Washington's law
“serves a dual purpose and it is not designed solely to
compensate for the economic loss of earning capacity.”
Olson v. Colvin, 31 F.Supp.3d 1176, 1180 (E.D. Wash.
2014); Wheatley v. Colvin, No. C14-0346-RHW, Dkt. #
19 (E.D. Wash. Feb. 4, 2016). Courts in the Western District
of Washington, however, have held in two cases that the
offset does apply despite finding that “Washington law,
unlike the Oregon scheme, specifically does not measure
permanent partial disability by the loss of earning
power.” Kreutner v. Astrue, No. C09-5676-JRC,
Dkt. # 17 at 4 (W.D. Wash. Jun. 8, 2010); Sutton v.
Colvin, No. C14-1734-JPD, Dkt. # 31 (W.D. Wash. Jul. 16,
unpublished memorandum opinion, a three-judge panel of the
Ninth Circuit reversed the district court's decision in
Sutton, holding that a “Washington state
permanent partial disability award was not a periodic benefit
subject to offset.” Sutton v. Berryhill, 677
Fed.Appx. 341 (9th Cir. 2017). The Ninth Circuit held that
the offset did not apply because “[u]nder Washington
law, ” unlike Oregon law, “an award of
workers' compensation benefits for permanent partial
disability is not wage compensation intended to cover a
claimant's lost earning capacity.”Id. at
342 (citing Willoughby v. Dep't of ...