FILED
JULY 9, 2015
In the Office of the Clerk of Court
W A State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
JOSE L. BIRRUETA, ) ) No. 32210-6-111 Respondent, ) ) v. ) ) DEPARTMENT OF LABOR AND ) PUBLISHED OPINION INDUSTRIES OF THE STATE OF ) WASHINGTON ) ) Appellant. )
SIDDOWAY, C.J. - The superior court in this case held that the Department of
Labor and Industries was without authority to assess Jose Birrueta for an overpayment of
time-loss benefits and to change his marital status for compensation purposes under RCW
51.32.240. This was because Mr. Birrueta's marital status had been determined in a 2008
notice of decision by the department that had become final under RCW 51.52.050. In so
holding, the trial court implicitly rejected at least two decisions by the Board of Industrial
Insurance Appeals that construed the current version ofRCW 51.32.240 as providing
authority for recovering overpayments following a final order. The department appeals.
The construction ofRCW 51.32.240 urged by the department fails to read the
statute as a whole and fails in particular to consider language added by the legislature in No. 32210-6-111
Birrueta v. Dep't ofLabor & Indus.
1999 and 2004. The board decisions on which the department relies also fail to address
that critical language and reflect no specialized analysis to which we should accord
deference. We agree with the trial court's reading of the statute and a:ffirm.
FACTS AND PROCEDURAL BACKGROUND
The material facts are not in dispute. In August 2004, Jose Luis Birrueta suffered
a back injury when he fell from a ladder at work. He was taken to Our Lady of Lourdes
Hospital, where someone completed patient information for him on a Department of
Labor and Industries claim form evidently made available to the hospital. 1 The attending
emergency room physician completed the medical section on the same day, indicating
that Mr. Birrueta suffered a strain and would miss two days of work as a result. The
patient information section indicated that at the time of the injury, Mr. Birrueta was
married, that his spouse's name was Graciela, and that he had one child, Araceli.
In fact, Mr. Birrueta was not married at the time he was injured. But he thereafter
1 Theform, which was addressed to the Department of Labor and Industries' Insurance Services Division in Olympia, included the following "Instructions" at the top: MEDICAL PERSONNEL (NOTE: MEDICAL COMPLETION INSTRUCTION ON PAGE 2) Give the last page of this form to the patient before you complete your section. After you complete the medical section, send page 1 to the address listed to the left. Keep page 2 and send the remainder to the patient's employer.
Board Record, Ex. 1.
I No. 32210-6-111
received time-loss benefits calculated as ifhe was, resulting in larger payments than he
would have received as a single individual. Mr. Birrueta would later testity by
declaration that he does not read or write in English; that the patient information included
on the claim form was not his handwriting; that the form bears his signature but he
doesn't recall signing it; that when he was taken to the emergency room he was
unconscious much of the time; and that during transport by ambulance to the hospital he
recalls being asked whether he had family in the area and responding that he had a sister,
Graciela, who had a daughter, Araceli. At the time of his injury, Mr. Birrueta was living
in the same house with Graciela and Araceli.
In September 2008, the department issued a notice of decision announcing its
determination of Mr. Birrueta's wage for compensation purposes. The notice of decision
stated that the department treated his marital status eligibility as "married with 0
children." Board Record, Ex. 2. It disclosed the following additional determinations on
which the wage was based:
The wage for the job of injury is based on reported income for the twelve month period from 0110112003 to 12/3112003 of $14,577.48 equaling $1,214.79 per month. Additional wage for the job of injury include: Health care benefits NONE per month Housing/Board/Fuel NONE per month Worker's total gross wage is $1,214.79 per month.
Id.
No. 32210-6-111
Birrueta v. Dep 't ofLabor & Indus.
At the bottom of the notice was prominent text stating, "This order becomes final
60 days from the date it is communicated to you unless you do one of the following: file a
written request for reconsideration with the Department or file a written appeal with the
Board of Industrial Insurance Appeals." Id. Although Mr. Birrueta initially protested the
order, he eventually dismissed his appeal.
After a number of time-loss payments to Mr. Birrueta, the department found him
to be totally and permanently disabled in January 2011 and ordered him placed on a
pension. In that connection, he completed a pension benefits questionnaire that asked
among other matters about his marital status at the time of injury. He answered that he
had been single.
In light of this corrected information, the department issued an order assessing an
overpayment of$100.86 for time-loss benefits paid between the time it received the
pension questionnaire and the day before Mr. Birrueta was placed on pension, treating the
time-loss benefits as having been overpaid due to an innocent misrepresentation as to
marital status. In June 2011, the department issued an order changing Mr. Birrueta's
marital status for compensation purposes from married to single, effective as of the time
it received the pension questionnaire, again because of the innocent misrepresentation.
Mr. Birrueta appealed both orders to the Board of Industrial Insurance Appeals,
arguing that the department lacked authority to assess an overpayment and to change his
marital status because its September 2008 wage order was final and binding. An
No. 3221 0-6-III
Birrueta v. Dep '( ofLabor & Indus.
industrial appeals judge granted a department motion for summary judgment and
affirmed both orders. Mr. Birrueta's petition for review was denied by the board, which
adopted the industrial appeal judge's proposed decision as its final decision and order.
Mr. Birrueta appealed to the Franklin County Superior Court. Following trial, the
court ruled that RCW 51.32.240 does not authorize the department to assess payments
that are made pursuant to final adjudications as asserted overpayments, and the wage rate
order establishing Mr. Birrueta's marital status was final. In its findings of fact and
conclusions oflaw, the court adopted several of the board's findings but reversed its
decision, concluding that the department lacked authority to issue the assessment and
marital status change orders. The department appeals.
ANALYSIS
Plain Language Analysis
RCW 51.3 2.240 provides in part that
[w]henever any payment of benefits under this title is made because of clerical error, mistake of identity, innocent misrepresentation by or on behalf of the recipient thereof mistakenly acted upon, or any other circumstance of a similar nature, all not induced by willful misrepresentation, the recipient thereof shall repay it.
RCW 51.32.240(1)(a). Under this "innocent error provision" (a term we sometimes use
as shorthand in referring to subparagraph (l)(a) hereafter), the department is allowed to
recoup the overpayment from future payments. The provision limits the time within
which the department may make claim for repayment to one year.
No. 32210-6-II1 Birrueta v. Dep 't ofLabor & Indus.
I Elsewhere, however, the statute provides that "[e]xcept as provided in subsections
(3), (4), and (5) of [RCW 51.32.240], the department may only assess an overpayment of
benefits because of adjudicator error when the order upon which the overpayment is
based is not yet final as provided in RCW 51.52.050 and 51.52.060." RCW
51.32.240(1)(b). Subsection (3) of the statute deals with a recipient's obligation to repay
temporary disability benefits if the department later rejects his or her claim. Subsection
(4) deals with a recipient's obligation to repay benefits that are paid pursuant to a
department, board, or lower court determination that is reversed by a final decision on
appeal. Subsection (5) deals with a recipient's obligation to repay benefits that have been
induced by a recipient's "willful misrepresentation." Notably, the statute does not say
"except as provided in subsections (l)(a), (3), (4), and (5) ... the department may only
assess an overpayment ... when the order upon which the overpayment is based is not
yet final."
The department's position is that unlike subsections (3), (4), and (5) ofRCW
51.32.240, the innocent error provision does not need to be excluded from the operation
of subparagraph (1 )(b) because the innocent errors it describes and "adjudicator error" are
mutually exclusive. How to construe an overpayment "because of adjudicator error"
proves to be at the heart of the parties' dispute. Because the department contends that
innocent error addressed by subparagraph (1)(a) and adjudicator error are mutually
exclusive concepts, it argues that the department may always collect overpayments
No. 32210-6-111 Birrueta v. Dep't ofLabor & Indus.
attributable to innocent error but may never collect overpayments attributable to
adjudicator error. For his part, Mr. Birrueta contends that "adjudicator error" means any
adjudication that squarely encompasses and resolves the matter at issue and is now
contended to be wrong for any reason. While the department's position has some surface
appeal, it cannot withstand critical or historical analysis.
Chapter 51.52 RCW deals with industrial insurance appeals and "provides finality
to decisions of the Department." Kingery v. Dep 't ofLabor & Indus., 132 Wn.2d 162,
169,937 P.2d 565 (1997). RCW 51.52.050(1) states that all department orders "shall
become final within sixty days from the date the order is communicated to the parties
unless a written request for reconsideration is filed with the department ... or an appeal
is filed with the board of industrial insurance appeals." Thus, "[0]nce the 60-day appeal
. period expires and the order becomes final, it cannot be appealed." Leuluaialii v. Dep't of
Labor & Indus., 169 Wn. App. 672, 678,279 P.3d 515 (2012) (citing Shafer v. Dep't of
Labor & Indus., 166 Wn.2d 710,717,213 P.3d 591 (2009)). RCW 51.52.050(1) makes
no reference to RCW 51.32.240.
As a limitation on setting aside final orders, "adjudicator error" is broadly defined
by RCW 51.32.240; it "includes the failure to consider information in the claim file,
failure to secure adequate information, or an error in judgment." RCW 51.32.240(2)(b)
(emphasis added). In construing a statute, the word "includes" is a term of enlargement.
Brown v. Scott Paper Worldwide Co., 143 Wn.2d 349,359,20 P.3d 921 (2001).
Elsewhere, the statute uses the parallel term "erroneous adjudication" in a context that
clearly means erroneous for any reason:
Whenever any payment of benefits under this title has been made pursuant to an adjudication by the department or by order of the board or any court and timely appeal therefrom has been made where the final decision is that any such payment was made pursuant to an erroneous adjudication, the recipient thereof shall repay it.
RCW 51.32.240(4) (emphasis added). And by explicitly providing that the department
can assess overpayments under subsection (5) following a final order, RCW
51.32.240(1)(b) treats a decision induced by a recipient's willful misrepresentation of
facts as adjudicator error. If a decision induced by a recipient's willful representation is
adjudicator error, then how can a decision induced by a recipient's innocent
representation not be?
Because the same words used in the same statute should be interpreted alike,
"includes" is a term of enlargement, and the common meaning of "adjudicator error" is
any error by an adjudicator, "adjudicator error" is reasonably construed to include an
adjudicator's clerical error, his or her mistake of identity, or his or her reliance on an
innocent misrepresentation. There is no basis for the department's treatment of the
concepts of adjudicator error and subsection (1 )(a)'s categories ofinnocent error as
mutually exclusive. As a result, RCW 51.32.240( 1)(b) plainly provides that apart from
temporary benefits advanced on a claim that is later denied, benefits paid pursuant to an
order reversed on appeal, or benefits induced by a willful misrepresentation, "the
No. 32210-6-III
department may only assess an overpayment of benefits because of adjudicator error"
even innocent error-"when the order upon which the overpayment is based is not yet
final as provided in RCW 51.52.050 and 51.52.060."
Legislative History
Legislative history further supports this plain reading of the statute.
In 1994, the Washington Supreme Court decided Marley v. Department ofLabor
and Industries, 125 Wn.2d 533, 886 P.2d 189, a seminal decision on the finality of the
department's orders. The department had issued an order that Beverly Marley was not
eligible for payments as a beneficiary following her husband's death, based on her
admission that while her husband had been paid child support up to the time of his death,
he and she had lived separately for over 10 years. Id. at 535. She did not appeal the
agency's order, which therefore became final after 60 days. Id. at 536. She challenged it
six years later on the grounds that it contained an error of law as to her eligibility.
As of 1994, RCW 51.32.240 was similar to its present form in providing for
repayment to the department of benefits overpaid because of clerical error, mistake of
identity, or innocent mistake; temporary benefits advanced on a claim that was later
denied; and benefits paid pursuant to an order reversed on appeal. It was unlike the
present statute in that benefits were required to be repaid if overpayment was induced by
"fraud" and it made no mention of finality or adjudicator error. Most importantly for the
issues in Marley, it included no provision under which a recipient could recover benefits
No. 3221O-6-III Birrueta v. Dep't ofLabor & Indus.
that had been underpaid. Former RCW 51.32.240(1 )-(4) (1991). Rather than rely on the
statute, then, Ms. Marley relied on this court's decision in Fairley v. Department ofLabor
and Industries, 29 Wn. App. 477, 481, 627 P.2d 961 (1981), which held that a
department's order misconstruing the Industrial Insurance Act, Title 51 RCW, was void
and did not require that an appeal be taken.
Marley overruled Fairley, holding that "[a]n order from the Department is void
only when the Department lacks personal or subject matter jurisdiction." Marley, 125
Wn.2d at 542. It explained that
[e]ven assuming Mrs. Marley's argument has merit, she has only proved that the Department made an error, not that it ruled without jurisdiction. Whether right or wrong, the Department clearly had the authority to decide whether Mrs. Marley was living in a state of abandonment [as defined under the Act].
Id. at 543 (footnote omitted).
It was in response to the decision in Marley that legislators proposed the adoption
of what became current subsection (2) ofRCW 51.32.240 in 1999. As originally
proposed, House Bill 1894 would have simply modified former RCW 51.32.240( 1) to
include underpayments as well as overpayments by providing, e.g., "Whenever any
payment of benefits under this title is ... withheld because of clerical error ... the
recipient thereof shall be entitled to benefits underpaid, or shall repay ...." H.B. 1894, at
1, 56th Leg., Reg. Sess. (Wash. 1999). The House Bill Analysis described the disparity
under then-current law between the department's right to recover overpayments and a
No. 3221O-6-III
beneficiary's burden to timely appeal an underpayment, mentioned Marley, and
summarized the proposed legislation as follows:
If industrial insurance benefits are withheld because of clerical error, mistaken identity, innocent misrepresentation, or other similar circumstances, the recipient is entitled to the benefits underpaid. The claim for these benefits must be made within one year of the underpayment or it is deemed waived.
H.B. ANALYSIS ON H.B. 1894, at 2, 56th Leg., Reg. Sess. (Wash. 1999). In its originally
proposed form, the bill made no exception for adjudicator error.
The House Committee on Commerce & Labor took action on the bill on February
24 and 25, 1999. At the committee meeting on February 24, Douglas Connell, the
assistant director of insurance services for the department, appeared and explained that
based on the department's concerns with the way the bill was then written, the
department had prepared and had circulated, that morning, a revised version, to "define
some of the terms that we're dealing with" and "put some parameters around it." Hr'g on
H.B. 1894 Before the H. Commerce and Labor Comm., 56 th Leg., Reg. Sess. (Feb. 24,
1999) at 5 min., 37 sec. through 5 min., 50 sec., available at
http://www.digitalarchives.wa.gov. He described the objective as being "so it is clear as
to when the overpayment or underpayments can take place." Hr'g on H.B. 1894, supra,
at 6 min. 12 sec. through 6 min., 18 sec. While Mr. Connell's explanation of the changes
was extremely general, he provided the following answer to a question posed by
Representative Conway:
Q. Being around these worker comp benefits ... time-loss benefits, and ... I would assume this also would ... Does this apply to the PPD awards as well? Is that ... A. The proposal that we have would apply only to the payment of temporary total disability or time-loss ... Q. Time-loss benefits.
Hr'g on H.B. 1894, supra, at 7 min., 22 sec. through 7 min., 46 sec.
The department's concerns appear to have been addressed by amendments
introducing the "adjudicator error" limitation. As amended, what became Engrossed
House Bill 1894 added a new section to the statute to address underpayments rather than
incorporate provision for them in RCW 51.32.240( 1). The new section largely paralleled
RCW 51.32.240(1)'s provision for recovering overpayments but also included the
following unique limitation now codified at RCW 51.32.240(2)(b):
The recipient may not seek an adjustment of benefits because of adjudicator error. "Adjudicator error" includes the failure to consider information in the claim file, failure to secure adequate information, or an error in judgment.
ENGROSSED H.B. 1894, at 2, 56th Leg., Reg. Sess. (Wash. 1999).
The limitation likely reflected the department's concern that the new section could
open the door to an onslaught of requests for increased benefits from recipients alleging
that some staff member, witness, or information provider once made a clerical error,
mistake of identity, or innocent misrepresentation. The "adjudicator error" limitation
placed an important limit on reopening department determinations.
12 No. 32210-6-111
Finally, amendments to RCW 51.32.240 in 2004 added clarity to the relationship
between adjudicator error and finality. Several amendments to the Industrial Insurance
Act were made by Engrossed Substitute House Bill 3188, passed by the legislature in
2004. The two principal amendments to the overpayment and underpayment provisions
of RCW 51.3 2.240 were to allow the department to recover overpayments induced by a
recipient's willful misrepresentation rather than fraud, and to increase parity between the
department's right to recover overpayments and a worker's right to recover
underpayments. It did so by adding a limitation for adjudicator error to the department's
rights under RCW 51.32.240(1).
Perhaps because it would make subsection (1) quite long, and perhaps to parallel
subsection (2), the amendment to subsection (1) was broken into subparagraphs for the
first time, including the adjudicator error limitation in new subparagraph (b). Contrary to
the department's argument that subparagraphs (1)(a) and (1)(b) address different matters
and that (1 )(b)' s general limitation of overpayment recovery to nonfinal orders does not
apply to (1)(a), the legislature's House Bill Report on Engrossed Substitute House Bill
3188 recognizes no distinction and characterizes the limitation to non final orders as
applying to innocent error. The House Bill Report's summary of the bill described the
adjudicator error changes as follows:
If benefits are overpaid because ofadjudicator error, the Department may only assess an overpayment when the order on which the overpayment is based is not yetfinaI, unless the overpayment relates to an order rejecting
13 No. 32210-6-III
the claim, results from a final appeal ofa Department or Board of Industrial Appeals order, or has been induced by willful misrepresentation. If benefits fail to be paid because of adjudicator error, the claimant must address the adjustment by filing a written request for reconsideration or an appeal within the statutory sixty-day appeal period.
H.B. REp. ON ENGROSSED SUBSTITUTE H.B. 3188, at 4, 58th Leg., Reg. Sess., (Wash.
2004 ) (emphasis added).
This legislative history, like the plain language ofRCW 51.32.240, demonstrates
the legislature's intent that only nonfinal orders are subject to a claim that benefits were
underpaid or overpaid as a result of clerical errors, mistake of identity, or innocent
misrepresentation.
Board Decisions
We finally tum to decisions of the Board of Industrial Insurance Appeals brought
to our attention by the parties, at least two of which conflict with our construction of the
statute. This court will accord "deference to an agency interpretation of the law where
the agency has specialized expertise in dealing with such issues." City ofRedmond v.
Cent. Puget Sound Growth Mgmt. Hr'gs Bd., 136 Wn.2d 38, 46,959 P.2d 1091 (1998);
Doty v. Town ofS. Prairie, 155 Wn.2d 527,537, 120 P.3d 941 (2005) (a board's
interpretation of the Industrial Insurance Act is not binding on this court, but "is entitled
to great deference") (quoting Weyerhaeuser Co. v. Tri, 117 Wn.2d 128, 138,814 P.2d
629 (1991». Nonetheless, this court is "not bound by an agency's interpretation ofa
statute." Redmond, 136 Wn.2d at 46. "The Department's interpretation of the [Industrial
Insurance Act] is subject to de novo review." Shafer v. Dep't ofLabor & Indus., 166
Wn.2d at 715.
The board reached the opposite conclusion to our own in both In re Veliz, No. 11
20348, 2013 WL 3185978 (Wash. Bd. Indus. Ins. Appeals Mar. 4, 2013) and In re
Johnson, No. 12 15248,2013 WL 3636375 (Wash. Bd. Indus. Ins. Appeals April 11,
2013). The facts in both cases were materially identical to those presented here. In both
cases, the department issued orders establishing the workers' compensation rate based on
the workers' representations that they were married at the time of their injury. Upon later
learning that the information about their marital status at the time of injury was incorrect,
the department in both cases issued orders changing the workers' status to single for
wage calculation purposes. Despite earlier entered wage determination orders that had
become final, the board held in both cases that the department had authority under RCW
51.32.240(1) to change a worker's marital status that had been based on an innocent
misrepresentation. 2
In Veliz, the board stated that "[0]nce [a] misrepresentation has been established,
2 One member of the board filed a dissent in Veliz. He disagreed that the department could use RCW 51.32.240 to avoid the res judicata effect of its wage order in light of the Washington Supreme Court's rulings in Marley v. Dep 't ofLabor & Indus., 125 Wn.2d 533 and Kingery, 132 Wn.2d 162 (plurality opinion). Veliz, 2013 WL 3185978, at *4.
15 No. 32210-6-111
RCW 51.32.240( I) provides relief from the res judicata application of an otherwise final
determination and allows the Department to recoup benefits that had been overpaid."
Veliz, 2013 WL 3185978, at *2. That would be true if subsection (1) was all that the
statute had to say on the subject. But RCW 51.32.240(2) limits the department's right of
recoupment to overpayments made under nonfinal orders, except as provided by RCW
51.32.240(3), (4), and (5). Veliz fails to address that limitation.
In Johnson, the board cited an earlier Johnson decision, In re Teresa M Johnson,
No. 853229, 1987 WL 61380 (Wash. Bd. Indus. Ins. Appeals Aug. 26, 1987), for its
reasoning that "the overpayment statute would be rendered meaningless if the principle of
res judicata prevented the Department from correcting an inaccurate rate of compensation
after sixty days had elapsed." Lloyd D. Johnson, 2013 WL 3636375, at *2. But in
Teresa M Johnson, the department had not yet adjudicated Ms. Johnson's wage rate at
the time it sought to recover overpayments, it had simply paid time-loss compensation on
an unexplained basis that it later determined to be inaccurate. Unlike the order in this
case, which laid out the basis on which the department would calculate Mr. Birrueta's
wage for compensation purposes, a mere payment order does not adjudicate the basis of
the wage rate. In Somsak v. Criton Technologies/Heath Teena, Inc., 113 Wn. App. 84,
92, 52 P.3d 43 (2002), this court held that an unappealed department order is res judicata
"as to the issues encompassed within the terms of the order, absent fraud." It held that
the factual basis for a wage rate is not encompassed within the terms of a payment order
that does not disclose that factual basis. 3
We agree that if the department could not recover overpayments made under
nonfinal orders that did not adjudicate facts a recipient was required to appeal, then RCW
5l.32.240(1) would be rendered meaningless. But because it is only final orders
adjudicating the claimed error that are excluded from the right to recoup overpayments,
subsection (1) is not rendered meaningless at all. The board's decision in In re Anita
Bordua, No. 93 1851, 1994 WL 364993 (Wash. Bd. Indus. Ins. Appeals May 2,1994) is
also distinguishable as involving a nonfinal order that was legitimately subject to
recoupment for overpayment.
While the board has expertise in dealing with workmen's compensation matters,
its decisions in Veliz and Lloyd D. Johnson are not entitled to deference where they fail to
consider RCW 51.32.240 in its entirety and fail to make a distinction between final orders
adjudicating a matter, on the one hand, and nonfinal orders or orders that do not
adjudicate that matter, on the other.
3 Notably, while rejecting Ms. Johnson's appeal because her wage rate had not been adjudicated by a final order, the board's decision observed, "Had the issue of the basis of the time-loss compensation rate been squarely before the Department in any of the orders issued prior to August 1985, there might have been some merit to Ms. Johnson's contention." Johnson, 1987 WL 61380, at *2.
17 No. 32210-6-111
Attorney Fees
Mr. Birrueta requests attorney fees and costs under RAP 18.1 and RCW
51.52.130. RAP 18.1 pennits recovery of reasonable attorney fees or expenses on review
if applicable law grants that right. RCW 51.52.130 provides, in relevant part:
If, on appeal to the superior or appellate court from the decision and order of the board ... a party other than the worker or beneficiary is the appealing party and the worker's or beneficiary's right to relief is sustained, a reasonable fee for the services ofthe worker's or beneficiary's attorney shall be fixed by the court.
Since the department was the appealing party and Mr. Birrueta's right to relief is
sustained, his request for attorney fees is granted, subject to compliance with RAP
18.l(d).
Affinned.
WE CONCUR:
Lawrence-Berrey, J.