Timothy Nelson, V Department Of L&i State Of Wa
47672-0
Wash. Ct. App.Mar 7, 2017Background
- Nelson sustained injuries in a work-related motor vehicle accident and received $116,958.64 in workers’ compensation benefits.
- Nelson pursued third-party damages against Amanda Wade and Pierce County; Wade settled for $525,000, allocating $408,000 to pain and suffering and $117,000 to economic damages (the recovery).
- The Department of Labor & Industries asserted a lien against Nelson’s settlement under RCW 51.24.060 and calculated a distribution of the $117,000 recovery.
- The Department’s distribution allocated $40,453.75 in costs/attorney’s fees, $19,136.56 (25%) to Nelson, and $57,409.69 to the Department to reimburse benefits paid.
- Nelson objected that the distribution was premature and omitted costs/fees from other potential claims arising from the same incident; the Board denied relief, and the superior court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RCW 51.24.060 requires inclusion of costs for all claims or only those tied to the recovery. | Nelson: include costs for all pursued claims, even if unsuccessful. | Department: include only costs related to the resolved claims that caused the recovery. | Plain language requires costs tied to resolved claims only. |
| Whether the Department’s distribution was premature because it did not account for potential other claims. | Nelson: distribution premature, potentially understates costs. | Department: distribution proper as to the recovery triggering the formula. | Distribution was not erroneous; it applies to the resolved recovery. |
| Whether the Department’s order constituted rule making under the APA. | Nelson: it was rule making and invalid without procedures. | Department: order is a proper statutory interpretation, not a rule. | No rule making occurred; Department’s action was proper statutory interpretation. |
| Whether Nelson is entitled to attorney fees and costs on appeal under RCW 51.52.130. | Nelson: fees and costs should be awarded due to Board reversal/modification. | No reversal or modification of the Board’s decision; fees not warranted. | No award of fees or costs. |
Key Cases Cited
- Davis v. Dep’t of Labor & Indus., 71 Wn. App. 360 (Wash. Ct. App. 1993) (costs and fees linked to third-party recovery are distributed proportionately)
- Rhoad v. McLean Trucking Co., 102 Wn.2d 422 (Wash. 1984) (Department bears a proportionate share of fees and costs)
- Hi-Way Fuel Co. v. Estate of Allyn, 128 Wn. App. 351 (Wash. Ct. App. 2005) (Department cannot unilaterally disallow costs; costs must be tied to recovery)
- Tobin v. Dep’t of Labor & Indus., 169 Wn.2d 396 (Wash. 2010) (definitive framework for RCW 51.24.060 distributions)
- Birgen v. Dep’t of Labor & Indus., 186 Wn. App. 851 (Wash. Ct. App. 2015) (liberal construction not used to create ambiguities in statute)