Margaret West, V. State Of Wa, Dept Of L & I

• Court: Court of Appeals of Washington
• Decided: October 31, 2023
• Docket: 58180-9
• Status: Unpublished

Opinion

Filed Washington State Court of Appeals Division Two

October 31, 2023

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION II MARGARET WEST AND No. 58180-9-II HAROLD R. LONG,

Appellants,

v. UNPUBLISHED OPINION

DEPARTMENT OF LABOR AND INDUSTRIES OF THE STATE OF WASHINGTON,

Respondent.

MAXA, J. – Margaret West and Harold Long appeal the superior court’s order affirming

the reductions made to their workers’ compensation disability benefits by the Department of

Labor and Industries (DLI). West and Long sustained injuries while working and received

disability benefits from DLI. But once they began receiving social security retirement benefits

after reaching retirement age, DLI reduced their disability benefits based on RCW 51.32.225.

42 U.S.C § 424a(a) provides that if a person has not yet reached retirement age and is

entitled to receive both social security disability benefits and disability benefits under a state

workers’ compensation plan, the person’s social security benefits will be reduced. However, 42

U.S.C. § 424a(d) expressly allows states to adopt a “reverse offset” – reducing workers’

compensation benefits by the amount of social security disability benefits. Section 424a(d)

makes no mention of reverse offsets for social security retirement benefits. But RCW No. 58180-9-II

51.32.225(1) provides that for a person receiving workers’ compensation benefits for temporary

or permanent disability, DLI shall reduce that compensation by the amount of social security

retirement benefits payable to that person.

The superior court ruled that the federal statute did not preempt RCW 51.32.225(1) and

affirmed DLI’s reductions of West and Long’s disability benefits. West and Long argue that 42

U.S.C. § 424a preempts RCW 51.32.225(1).

We hold that 42 U.S.C. § 424a does not preempt state law in the area of reverse offsets

for social security retirement benefits. Accordingly, we affirm the superior court’s order.

FACTS

West was born in 1955. In March 2018, she sustained multiple injuries during the course

of her employment. West was 63 years old at the time she sustained her injuries.

West filed a claim with DLI for time loss compensation benefits based on her disability,

which DLI approved. In April 2019, West became eligible for social security retirement

benefits. DLI issued an order that reduced West’s disability benefits by the amount of her social

security retirement benefits, effective July 1, 2019. And DLI assessed an overpayment in the

amount of $4,544.80.

Long was born in 1951. In May 2012, he injured his lower back during the course of his

employment. Long was 61 years old at the time of his injury.

Long filed a claim with DLI for time loss compensation benefits based on his disability,

which DLI approved. In January 2015, Long became eligible for social security retirement

benefits. DLI issued an order that reduced Long’s disability benefits by the amount of his social

security retirement benefits, effective January 1, 2017. And DLI assessed an overpayment in the

amount of $13,073.40.

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West and Long separately protested DLI’s orders. DLI affirmed both of the initial orders.

West and Long separately appealed DLI’s decisions before the Board of Industrial Insurance

Appeals (BIIA), seeking a determination that DLI did not have the authority to reduce their time

loss compensation benefits by the amount of their social security retirement benefits. At the

BIIA, the two appeals were consolidated.

The BIIA judge found that DLI was authorized to reduce the time loss compensation by

the amount of social security retirement benefits based on RCW 51.32.225 and granted judgment

as a matter of law in favor of DLI. The BIIA judge issued a proposed decision and order

affirming the initial DLI orders. West and Long filed a petition for review, but the BIIA denied

the petition and adopted the proposed decision and order as its final order.

West and Long appealed the BIIA’s final order to the superior court. The court affirmed

the BIIA’s final order that adopted DLI’s initial orders for West and Long.

West and Long appeal the superior court’s order.

ANALYSIS

A. STANDARD OF REVIEW

The Industrial Insurance Act (IIA), chapter 51.04 RCW, governs judicial review of

workers’ compensation decisions. Smith v. Dep’t of Lab. & Indus., 22 Wn. App. 2d 500, 506,

512 P.3d 566, review denied, 200 Wn.2d 1013 (2022). Under the IIA, we review the superior

court’s decision and not the BIIA’s order. Id.; RCW 51.52.140.

We review summary judgment orders de novo. Sartin v. Est. of McPike, 15 Wn. App. 2d

163, 172, 475 P.3d 522 (2020). Summary judgment is appropriate if there are no genuine issues

of material fact and the moving party is entitled to judgment as a matter of law. Id.; CR 56(c).

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In addition, the superior court’s construction of a statute is a question of law, which we review

de novo. Smith, 22 Wn. App. 2d at 506.

B. STATUTORY OVERVIEW

1. Federal Law

Under the Social Security Act of 1935 (SSA), title 42 U.S.C. chapter 7, a person reaches

early retirement age at 62 and any person who turned 62 between December 31, 2004 and

January 1, 2017 or December 31, 2016 and January 1, 2022, reaches retirement age at 66 years

old. 42 U.S.C. § 416(l)(1)-(2). Under 42 U.S.C. § 423(a), an insured person is entitled to social

security disability insurance benefits if they (1) have not reached retirement age, (2) have filed an

application for disability insurance benefits, and (3) are under a disability. 42 U.S.C. § 402

covers old age (retirement) and survivor’s insurance benefit payments.

In 1965, the federal government passed legislation implementing a federal offset program

to avoid discouraging workers who were receiving both federal and state benefits from returning

to work. Harris v. Dep’t of Lab. & Indus., 120 Wn.2d 461, 466-67, 843 P.2d 1056 (1993). 42

U.S.C § 424a(a) provides that if a person has not yet reached retirement age and is entitled to

receive both § 423 disability benefits and disability benefits under a state workers’ compensation

plan, the total of their § 423 disability and § 402 retirement/survivor’s benefits will be reduced if

the total federal and state disability benefits exceed the higher of (1) 80 percent of their salary or

(2) the total of their § 423 and § 402 benefits.

Section 424a(d) states an exception to the § 424a(a) offset. Under § 424a(d), the

§ 424a(a) reduction will not be applied if a state workers’ compensation law provides that

workers’ compensation benefits will be reduced by the amount of social security disability

benefits the person is entitled to receive. This exception allows states to create a “reverse offset”

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for social security disability benefits. Harris, 120 Wn.2d at 469. The purpose of this exception

is to avoid a double offset by federal and state governments. Id.

Section 424a(d) allows states to enact a reverse offset for social security disability

benefits, but that subsection does not reference a reverse offset for social security retirement

benefits.

42 U.S.C. § 403(b) uses an earnings test to reduce a person’s social security benefits if

the person is still working and receiving income when receiving those benefits. The Senior

Citizens’ Freedom to Work Act of 2000 eliminated this reduction for people who reach

retirement age. Pub. L. 106-182, §§ 2 to 4(a), 114 Stat. 198, 199 (2000); see 42 U.S.C.

§ 403(f)(8)(E).

2. State Law

Washington enacted a reverse offset provision for disability compensation in 1975, which

reduces a state worker’s disability compensation benefits if they are receiving social security

benefits. Harris, 120 Wn.2d at 467. RCW 51.32.220(1) states,

For persons receiving compensation for temporary or permanent total disability pursuant to the provisions of this chapter, such compensation shall be reduced by an amount equal to the benefits payable under the federal old-age, survivors, and disability insurance act as now or hereafter amended not to exceed the amount of the reduction established pursuant to 42 U.S.C. Sec. 424a.

RCW 51.32.220(1) further states that the reduction of disability compensation cannot

exceed the amount of the reduction established in 42 U.S.C. § 424a. The reduction applies

to workers who reach the age of 65. RCW 51.32.220(7)(c).

In 1986, Washington enacted legislation allowing a worker’s disability compensation to

be reduced by the amount of social security retirement benefits the worker receives. RCW

51.32.225. That statute states in part,

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(1) For persons receiving compensation for temporary or permanent total disability under this title, the compensation shall be reduced by the department to allow an offset for social security retirement benefits payable under the federal social security, old age survivors, and disability insurance act, 42 U.S.C. This reduction shall not apply to any worker who is receiving permanent total disability benefits prior to July 1, 1986. This reduction does not apply to workers who had applied to receive social security retirement benefits prior to the date of their injury or to workers who were receiving social security benefits prior to their injury.

(2) Reductions for social security retirement benefits under this section shall comply with the procedures in RCW 51.32.220 (1) through (6) and with any other procedures established by the department to administer this section. For any worker whose entitlement to social security retirement benefits is immediately preceded by an entitlement to social security disability benefits, the offset shall be based on the formulas provided under 42 U.S.C. Sec. 424a. For all other workers entitled to social security retirement benefits, the offset shall be based on procedures established and determined by the department to most closely follow the intent of RCW 51.32.220.

RCW 51.32.225. The last sentence of RCW 51.32.225(1) was added in 2018. LAWS OF 2018,

ch. 163, § 1.

C. FEDERAL PREEMPTION OF RCW 51.32.225

West and Long argue that 42 U.S.C. § 424a preempts RCW 52.32.225(1) because

§ 424a(d) only authorizes states to offset for social security disability benefits and not for social

security retirement benefits. We disagree.

1. Legal Principles

The Supremacy Clause of the United States Constitution, article VI, clause 2, provides

that “the Laws of the United States . . . shall be the supreme Law of the Land . . . any Thing in

the Constitution or Laws of any State to the Contrary notwithstanding.” But we assume that the

historic police powers of the states are not preempted by a federal law unless preemption was

Congress’s clear and manifest purpose. Waste Mgmt. of Wash., Inc. v. Wash. Utils. & Transp.

Comm’n, 24 Wn. App. 2d 338, 350, 519 P.3d 963 (2022), review denied, 1 Wn.3d 1003 (2023).

6 No. 58180-9-II

And we strongly presume against finding federal preemption of state law. Kincer v. State, 26

Wn. App. 2d 143, 148, 527 P.3d 837 (2023).

Conflict preemption can occur when either (1) compliance with both federal and state law

is impossible, or (2) state law stands as an obstacle to accomplishing the full purposes and

objectives of federal law. Id. When a federal law forbids an action that state law requires, then

compliance is impossible. Id. The party claiming preemption has the burden of proof. Id. at

149. And we review preemption issues de novo. Id.

In Harris, our Supreme Court addressed whether 42 U.S.C. § 424a preempted RCW

51.32.225(1). 120 Wn.2d at 468-72. Amicus argued that § 424a(d) only allowed state reverse

offsets for social security disability benefits because the section did not mention offsets for social

security retirement benefits. Id. at 469. But the court held that there was a lack of congressional

intent to preempt state law because § 424a contained no clear evidence of such intent. Id. at 469-

70. And the court “decline[d] to infer preemption from Congress’s silence.” Id. at 470.

In addition, the court held that § 424a did not express an intent to occupy the field of

benefits. Id. at 471. The fact that § 424a(d) provided for some types of reverse offsets actually

indicated “a Congressional interest in sharing the field of benefit coordination.” Id.

Finally, the court held that RCW 51.32.225(1) was not at odds with the purposes and

objectives of federal law because § 424a was “clear evidence of Congress’s interest in

coordinating benefits to avoid duplication.” Id.

2. Analysis

The Supreme Court in Harris addressed the same issue West and Long raise here and

explicitly held that federal law did not preempt RCW 51.32.225(1). Id. However, West and

Long argue that Harris does not apply here. We disagree.

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First, West and Long argue that Harris improperly held that § 424a(d) allowed states to

offset for social security retirement benefits because that section only provided for states to offset

for social security disability benefits. But we are bound by Supreme Court decisions. Bogen v.

City of Bremerton, 18 Wn. App. 2d 676, 684, 493 P.3d 774 (2021). Therefore, we must follow

the Supreme Court’s decision in Harris.

Second, West and Long argue that the Senior Citizens’ Freedom to Work Act of 2000,

which amended 42 U.S.C. § 403, rendered Harris moot. At the time of the Supreme Court’s

decision in Harris, only people over the age of 70 could continue working without having their

social security benefits reduced. Harris, 120 Wn.2d at 470. After the 2000 amendment to § 403,

anyone who is of retirement age, which is between 65 and 67, can continue working without

having their social security benefits reduced. 42 U.S.C. § 403(f)(8)(E); 42 U.S.C.

§ 416(l)(1)(A)-(E).

The 2000 amendment to § 403 changed the law with respect to the age at which a person

can earn income without reducing social security benefits. But the amendment did not change

the law regarding reverse offsets for social security benefits. The amendment is unrelated to

RCW 51.32.225(1) and so did not render Harris moot.

Third, West and Long argue that RCW 51.32.225(1) presents an obstacle to the SSA’s

objective to assure that retired workers have adequate incomes. Section 403(f)(8)(E) now

prohibits a reduction in social security benefits for people who still earn income once they reach

retirement age. This provision expresses a specific federal policy regarding the integration of

social security benefits and income, while § 424a offers no clear evidence of congressional intent

regarding reverse offsets for social security retirement benefits. Harris, 120 Wn.2d at 470.

Therefore, RCW 51.32.225(1) does not present any obstacle to the SSA’s objectives.

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West and Long cite to the reference in Harris to Raskin v. Moran, 684 F.2d 472 (7th Cir.

1982). However, the court in Harris held that RCW 51.32.225(1) was not at odds with the

objectives of federal law because both § 424a and RCW 51.32.225(1) coordinated benefits to

avoid duplication. Harris, 120 Wn.2d at 471. In addition, the court did not rely on Raskin. The

court merely cited to the case in order to distinguish congressional intent between § 403 and

§ 424a. Harris, 120 Wn.2d at 470.

Fourth, West and Long argue that RCW 51.32.225(1) frustrates the purpose of the 2000

amendment to § 403. However, RCW 51.32.225(1) provides for a worker’s disability

compensation to be reduced by the amount of their social security retirement benefits. The 2000

amendment to § 403 allows people who are of retirement age and receiving social security

benefits to continue working without a reduction of their benefits. 42 U.S.C. § 403(f)(8)(E).

These statutes address different purposes and both ensure that a person’s social security benefits

are not being reduced. RCW 51.32.225(1) does not frustrate the purpose of the 2000 amendment

to § 403.

Fifth, West and Long argue that the 2018 amendment to RCW 51.32.225(1) indicated the

legislature’s intent to prohibit reverse offsets for social security retirement benefits. The 2018

amendment to RCW 51.32.225(1) added the sentence, “This reduction does not apply to workers

who had applied to receive social security retirement benefits prior to the date of their injury or

to workers who were receiving social security benefits prior to their injury.” LAWS OF 2018, ch.

163, § 1. But this amendment only prohibits reverse offsets for workers who had already applied

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for, or were already receiving, social security retirement benefits and then suffered an injury.

RCW 51.32.225(1). It does not suggest that all reverse offsets should be prohibited.1

Finally, West and Long argue that RCW 51.32.225(1) contradicts § 424a because RCW

51.32.220(1) states that the required reduction cannot exceed the reduction established in

§ 424a(a), which only applies to people who have not reached retirement age. RCW

51.32.225(1) does not contain the same age restriction.

RCW 51.32.225(2) requires the reductions of disability compensation to comply with the

procedures in RCW 51.32.220(1)-(6). RCW 51.32.220(1) states that the reduction of disability

compensation cannot exceed the amount of the reduction established in § 424a. Section 424a(a)

requires that social security benefits be reduced if the total of federal and state disability benefits

exceeds the higher of (1) 80 percent of a person’s salary or (2) the total of a person’s § 423 and

§ 402 benefits.

Section 424a(a) requires that the reduction only apply to people below retirement age.

But RCW 51.32.225(2) merely uses the established reduction as a guideline for its own

reduction. Although the statutes aim the reduction at different age groups, the two statutes do

not contradict one another.

In summary, § 424a shows no clear intent to preempt state law in the area of reverse

offsets for social security benefits and therefore RCW 51.32.225 is consistent with federal

policy. Accordingly, we hold that § 424a does not preempt RCW 51.32.225(1).

CONCLUSION

We affirm the superior court’s order.

1 West and Long also contend that the 2018 amendment to RCW 51.32.225(1) arbitrarily decided whether a person receives a reverse offset. However, they do not explain how this implicates any type of federal preemption.

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A majority of the panel having determined that this opinion will not be printed in the

Washington Appellate Reports, but will be filed for public record in accordance with RCW

2.06.040, it is so ordered.

MAXA, J.

We concur:

LEE, J.

GLASGOW, C.J.