Opinion
No. 52012-1-I.
Filed: February 2, 2004. UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 02-2-12747-9. Judgment or order under review. Date filed: 03/11/2003.
Counsel for Appellant(s), Terry James Barnett, Rumbaugh Rideout Barnett, PO Box 1156, Tacoma, WA 98401-1156.
Counsel for Respondent(s), Lisa Daeley Kelley, Ofc of Attorney General, 1019 Pacific Ave Fl 3, Tacoma, WA 98402-4488.
The issue in this appeal is whether res judicata bars disallowance of a claim by the Department of Labor and Industries when, prior to disallowing the claim, the Department issued determinative temporary total disability payment orders that were past the period for appeal. Because the payment orders did not clearly advise the parties of the issue of claim allowance, fundamental fairness precludes the application of res judicata. And because RCW 51.32.240(3) applies to an injured worker whose employer was later found not to be insured with the Department, the Department has statutory authority to order the repayment of funds already distributed.
The essential facts are undisputed. Dennis Johnson employed Randy Simms to repair a leaky roof in May 1999. There were two buildings on the property where Simms did the repair: a storage building that was basically a four car garage leased by Johnson, and Northwest Fire Mechanical's shop facility. Northwest Fire is Johnson's business that installs and maintains fire systems, extinguishers, and exhaust systems. Johnson is its only employee. Simms worked on the storage building roof. In the course of his work, Simms fell and injured his back.
Johnson originally filed a claim on Simms' behalf on May 20, 1999, providing details of the employment and stating that Northwest Fire employed Simms. One month later, the Department rejected the claim on the grounds that Simms was working on the private home of the employer at the time of the injury, and Northwest Fire had not elected to obtain industrial insurance for him. Simms appealed, and the appeal was resolved by an October 21, 1999, agreement among the parties that the Department would investigate further. On January 3, 2000, the Department issued an order allowing the claim as an aggravation to a pre-existing lumbar strain that was the subject of a prior award to Simms. One month later, Northwest Fire timely filed a protest and request for reconsideration, in which Johnson recanted his prior statements supporting the claim. Beginning in April 2000, before resolving Northwest Fire's request for reconsideration, the Department began issuing orders that paid time loss compensation to Simms. The initial orders were on an `interlocutory' basis, but later orders were on a `determinative' basis. The parties agree that an `interlocutory' order is one that accomplishes an administrative step, but does not finally adjudicate rights, while a `determinative' order is one that becomes final unless appealed within a certain statutory time period.
The Department issued a new order that disallowed the claim on January 22, 2001 — approximately one year after the request for reconsideration — on the ground that the Department was unable to substantiate an employer-employee relationship at the time of the injury. The order directed Simms to repay all of the temporary total disability benefits paid to him. One month prior to entering the disallowance order, the Department had issued an order purporting to modify all of the determinative time loss orders to interlocutory orders.
Simms appealed the rejection of his claim, the order of repayment, and the change in status of the orders to the Board of Industrial Insurance Appeals. After holding hearings, the industrial appeals judge issued a proposed decision and order recommending to the Board that it find Simms was a covered worker for Northwest Fire. The Department appealed. The Board rejected the recommended findings and determined that Johnson employed Simms personally, and that such employment was not subject to the mandatory coverage provisions of the Industrial Insurance Act. The Board also ruled that the Department lacked authority to modify the determinative time loss orders to interlocutory orders, but that the nature of the orders did not affect the final decision to disallow the claim.
Simms appealed to superior court. At trial, the jury returned the verdict that Northwest Fire did not employ Simms, but rather Johnson employed Simms, and such employment was excluded by the Industrial Insurance Act. Simms then moved for a judgment as a matter of law. He argued that by issuing orders paying temporary total disability the Department had already determined that Simms was injured in covered employment; and that because those orders were determinative orders that became final after 60 days, res judicata barred the Department from later disallowing the claim. Simms also argued that the Department lacked statutory authority to order repayment of funds. The court denied his motion and entered a judgment affirming the appealed orders. Simms timely appealed.
A Board of Industrial Insurance Appeals final decision is prima facie correct. An appeal of such a decision is heard de novo by the superior court. RCW 51.51.115. The Court of Appeals' review of the superior court's decision `is limited to examination of the record to see whether substantial evidence supports the findings made after the superior court's de novo review, and whether the court's conclusions of law flow from the findings.'' Ruse v. Dept. of Labor Indus., 138 Wn.2d 1, 5-6, 977 P.2d 570 (1999) (quoting Young v. Dept. of Labor Indus., 81 Wn. App. 123, 128, 913 P.2d 402 (1996)). Simms concedes the trial court's findings of fact were supported by substantial evidence. Therefore this appeal concerns only the conclusions of law, which we review de novo. Fray v. Spokane County, 85 Wn. App. 150, 156, 931 P.2d 918 (1997), aff'd, 134 Wn.2d 637, 952 P.2d 601 (1998).
RES JUDICATA
In order to receive workers' compensation benefits, a claimant must have been injured in employment covered by the Industrial Insurance Act. Four conditions must be established before an employee is entitled to benefits: the relationship of employer and employee must exist between the injured person and the employer; the injured person must be injured in the course of his employment; the injured person must be in the actual performance of duties required by the contract of employment; and the work being done must be such as to require the payment of industrial insurance premiums. Colburn v. Dept. of Labor Indus., 63 Wn.2d 965, 971-72, 390 P.2d 10 (1964).
Simms argues that because the Department issued `determinative' time loss compensation orders as opposed to `interlocutory' orders, all four conditions for claim allowance had been satisfied and had become res judicata once the period for appeal had passed. As support, Simms relies on language found in LeBire v. Dept. of Labor Indus., 14 Wn.2d 407, 128 P.2d 308 (1942). There, the Supreme Court stated that it is a well settled rule that an `order or judgment of the department resting upon a finding, or findings, of fact becomes a complete and final adjudication, binding upon both the department and the claimant unless such action of the department is set aside upon appeal or is vacated for fraud or something of like nature.' LeBire, 14 Wn.2d at 415.
Res judicata prohibits litigation of claims that could have been litigated in a prior action. The doctrine of claim preclusion applies to a final judgment of the Department as it would to unappealed orders of a trial court. Marley v. Dept. of Labor Indus., 125 Wn.2d 533, 537-38, 886 P.2d 189 (1994). Res judicata in workers' compensation cases is limited to `the issues encompassed within the terms of the order'. Kingery v. Dept. of Labor Indus., 132 Wn.2d 162, 169, 937 P.2d 565 (1997). `Fundamental fairness' requires that a party must be clearly advised of the issue before it will be barred by the doctrine of res judicata. King v. Dept. of Labor Indus., 12 Wn. App. 1, 4, 528 P.2d 271 (1974). Both Simms and the Department agree that the `determinative' time loss compensation orders are res judicata with respect to the issues encompassed within each order. The dispute is whether the time loss compensation orders encompass all the conditions for claim allowance. Time loss compensation is temporary compensation an industrially injured worker is entitled to receive while totally unable to perform work for the employer before the disability condition has been fixed or determined. Lightle v. Dept. of Labor Indus., 68 Wn.2d 507, 510, 413 P.2d 814 (1966). Its purpose is to provide temporary financial support until the injured worker is able to return to work. Kaiser Alum. v. Overdorff, 57 Wn. App. 291, 296, 788 P.2d 8 (1990). An injured worker is entitled to time loss compensation when the worker is classified as temporarily totally disabled, Davis v. Bendix Corp., 82 Wn. App. 267, 272, 917 P.2d 586 (1996), a classification which contemplates the claimant will reach an eventual complete recovery or a static impaired condition. Franks v. Dept. of Labor Indus., 35 Wn.2d 763, 766, 215 P.2d 416 (1950).
This court recently considered the application of res judicata to an appeal regarding the basis of the time loss compensation included in the payment order in Somsak v. Criton Technologies/Health Techna, 113 Wn. App. 84, 52 P.3d 43, 63 P.3d 800 (2002). In that case, this court decided that the order, to clearly advise the parties of the issue, had to detail the underlying factual basis for the time loss computation. The orders did not state the hours worked, the rate of pay, or the value of health care benefits. Even though such data is necessarily the means by which the Department calculates the time loss compensation, because the order did not explicitly detail this basis, it was not an issue encompassed within the terms of the order. Somsak, 113 Wn. App. at 92-93.
Each of Simms' payment orders states only the total amount of benefits that is to be paid, and the time period that it covers. Nowhere on the orders is there a statement or finding indicating that the Department decided to allow Simms' claim or that the four conditions identified in Colburn had been met. Whether the work Simms did for Johnson fulfilled all the conditions for claim allowance was not an issue encompassed within the terms of those orders. At best, given the purpose of time loss compensation, each order determines that Simms was temporarily totally disabled and unable to return to work for the two week period covered by the order.
Simms argues in his reply brief that Somsak is not on point because the Industrial Insurance Act is to be liberally construed in favor of the worker, and thus `fundamental fairness' as a limit to the application of res judicata applies only to the injured worker. But the Act is to be `liberally construed in order to achieve its purpose of providing compensation to all covered employees injured in their employment, with doubts resolved in favor of the worker.' Dennis v. Dept. of Labor Indus., 109 Wn.2d 467, 470, 745 P.2d 1295 (1987) (emphasis added). Simms was determined not to be a covered employee, and as he has not appealed that determination there is no doubt about it. We reject Simms' implicit argument that the Act must be construed to provide compensation to employees who are not covered.
Because claim allowance was not an issue encompassed within time loss compensation orders, we find that res judicata does not bar the Department from later disallowing Simms' claim even though the majority of the orders were determinative instead of interlocutory.
REPAYMENT OF BENEFITS
Simms further argues that the Department's order requiring repayment of the funds already distributed to him is without statutory authority. The Supreme Court in Deal v. Dept. of Labor Indus., 78 Wn.2d 537, 540, 477 P.2d 175 (1970), held that absent statutory authority, the Department had no right to recoup overpayment of compensation. The Legislature specifically enacted RCW 51.32.240 in response to the ruling in Deal. Stuckey v. Dept. of Labor Indus., 129 Wn.2d 289, 298, 916 P.2d 399 (1996).
Because of res judicata, normally the Department has no basis to exercise authority to set aside unappealed final orders, even erroneous orders. Marley, 125 Wn.2d at 537-38. Currently, RCW 51.32.240 is the only statutory authority that the Department has to correct its own orders and recoup erroneous payments. At issue here is whether the Department is allowed to recoup payments made to Simms under RCW 51.32.240(3):
Whenever the department issues an order rejecting a claim for benefits paid pursuant to RCW 51.32.190 or 51.32.210, after payment for temporary disability benefits has been paid by a self-insurer pursuant to RCW 51.32.190(3) or by the department pursuant to RCW 51.32.210, the recipient thereof shall repay such benefits and recoupment may be made from any future payments.
The Department contends that the repayment statute applies to Simms because his benefits were paid `pursuant to' RCW 51.32.210. RCW 51.32.210 pertains to temporary total disability payments made by the Department:
Claims of injured workers of employers who have secured the payment of compensation by insuring with the department shall be promptly acted upon by the department. Where temporary disability compensation is payable, the first payment thereof shall be mailed within fourteen days after receipt of the claim at the department's offices in Olympia and shall continue at regular semi monthly intervals. The payment of this or any other benefit under this title, prior to the entry of an order by the department in accordance with RCW 51.52.050 as now or hereafter amended, shall be not considered a binding determination of the obligations of the department under this title.
Focusing on the first sentence of the statute, Simms argues that RCW 51.32.210 is applicable only to employees of industrially insured employers, a category that excludes him because the Board and the court found that his employment was not subject to coverage by the Act. This argument is without merit. The goal of the worker's compensation act is to provide the injured employee `a sure and speedy relief'. Weyerhaeuser Co. v. Tri, 117 Wn.2d 128, 138, 814 P.2d 629 (1991) (quoting Favor v. Dept. of Labor Industries, 53 Wn.2d 698, 703, 336 P.2d 382 (1959)). The statute does not make the payment of benefits conditional upon a binding determination that the claim is covered. In fact, it explicitly states that such payments shall not be a binding determination of the Department's obligations. Under RCW 51.32.210, the Department is obligated to pay benefits to all workers filing a claim within 14 days of receipt of the claim — well before any final determination can be made as to whether the worker's employer is industrially insured. The recoupment statute contemplates the possibility that such claims will later be rejected: `Whenever the department issues an order rejecting a claim for benefits paid pursuant to RCW 51.32.210, after payment for temporary disability benefits has been paid the recipient thereof shall repay such benefits'. RCW 51.32.240(3). Simms' benefits were `pursuant to' RCW 51.32.210 because they were temporary total disability benefits.
Equally flawed is Simms' assertion that he does not fall under the auspices of RCW 51.32.210 because of the sentence that reads `The payment of this or any other benefit under this title, prior to the entry of an order by the department in accordance with RCW 51.52.050 shall not be considered a binding determination of the obligations of the department under this title.' RCW 51.32.210 (emphasis added). While it is true that the Department paid temporary total disability benefits to Simms after entering the allowance order of January 3, 2000, that order was under protest and the Department was reconsidering it. A request for reconsideration tolls the statute of limitation on the target order, preventing the order from being final. RCW 51.52.050. And in any event, the timing of the benefit payments does not affect the fact that they were paid `pursuant to' RCW 51.32.210. The language Simms points to is not a limitation on the operation of the recoupment statute.
Because we conclude that Simms was paid temporary disability benefits `pursuant to' RCW 51.32.210, the Department had statutory authority under RCW 51.32.240(3) to order the repayment of those benefits once it rejected his claim.
Simms' request for attorney fees under RCW 51.52.130 is denied.
Affirmed.
ELLINGTON and GROSSE, JJ., concur.