Paula Peak, V. Dept. Of Labor & Industries

Court of Appeals of Washington·Decided August 3, 2026·No. 87862-0·Unpublished

Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

ARTHUR C. BEARD; and PAULA PEAK, surviving spouse of JAMES No. 87862-0-I LORKOWSKI,

Appellants, DIVISION ONE

v.

UNPUBLISHED OPINION

DEPARTMENT OF LABOR & INDUSTRIES, STATE OF WASHINGTON; and THE BOEING COMPANY,

Respondents.

CHUNG, J. — Petitioners Paula Peak, the surviving spouse of James Lorkowski, and Arthur Beard challenge the reduction in workers’ compensation benefits under RCW 51.32.067, .220, and .225. Both Lorkowski and Beard were determined to be permanently and totally disabled under the “Industrial Insurance Act” (IIA), Title 51 RCW, and awarded pensions. Because each worker was married, they were also required to elect a survivorship option for their pension under RCW 51.32.067. Their elections resulted in reduced pension rates in exchange for survivorship benefits. Both workers later became eligible for federal social security benefits once they reached retirement age. As a result, the Department of Labor and Industries (Department) reduced their pensions by the amount they were receiving in social security benefits. Peak and Beard argue that according to the plain language of RCW 51.32.220(5), this

reduced rate cannot go below their pre-actuarially reduced pension rates. We disagree and affirm.

BACKGROUND

James Lorkowski sustained an injury in his course of employment with the Boeing Company (Boeing). Lorkowski died in 2023 for reasons unrelated to his injury. The Department had found Lorkowski was permanently and totally disabled, and approved him for pension benefits effective August 16, 2020. The Department then sent Lorkowski a letter informing him that because he was married, he could choose to receive one of three options concerning his pension benefits: (1) “the full monthly benefit minus any deductions” but his beneficiary “will not receive ongoing benefits after [his] death”; (2) “a reduced monthly benefit” and if he died “from a cause unrelated to [his] covered injury or illness, [his] beneficiary will receive the same level of benefit [he was] receiving minus any deduction”; or (3) “a reduced monthly benefit” and if he “die[d] from a cause unrelated to [his] covered injury or illness, [his] beneficiary will receive 50% of the benefit level [he was] receiving minus any deduction for the rest of [the spouse’s] life.” On August 21, 2020, Lorkowski elected the second option.

Lorkowski began receiving social security retirement benefits in January 2021. In July 2022 and February 2023, the Department issued orders reducing Lorkowski’s pension benefits based on his simultaneous receipt of federal social security benefits. On April 4, 2023, Lorkowski appealed the reduction to the Board of Industrial Insurance Appeals (Board). Lorkowski passed away on April 5, 2023, and the Department approved Peak’s application to claim his pension benefits.

Arthur Beard suffered an industrial injury in early January 2015. The Department determined he was permanently and totally disabled and approved his pension benefits on March 31, 2020. When prompted by the Department to select one of the three options available to married workers, Beard selected option three, a reduced monthly pension benefit so his spouse would receive a portion of the benefit if he died from a cause unrelated to his covered injury.

On September 27, 2021, Beard reached the federal retirement age 1 and began receiving social security retirement benefits rather than social security disability benefits. Accordingly, in October 2021, the Department issued an order adjusting Beard’s pension compensation effective November 16, 2021. On February 2, 2023, Beard appealed the adjustment to the Board.

In their respective appeals to the Board, both Peak and Beard argued that the Department’s adjustments were incorrect because the “offset should be based . . . on [the worker’s] time loss compensation rate notwithstanding any reduction for surviving spouse election.” Peak and Beard both moved for summary judgment based upon stipulated facts. The Board disagreed with Peak and Beard’s reading of the relevant statutes and affirmed the Department’s decisions as a matter of law. Peak and Beard appealed their Board decisions to the superior court and filed a stipulated motion to consolidate the cases, which the court granted.

The superior court granted summary judgment in favor of the Department. Peak and Beard timely appealed to this court.

1 42 U.S.C. § 416(l).

DISCUSSION

I. Appeal of Order Granting Summary Judgment to the Department Peak and Beard contend that the Department cannot reduce their benefits below the rate they were receiving before they elected for survivorship rights. They base this argument on the plain language of RCW 51.32.220(5), which allows the Department to reduce pension benefits once a worker begins receiving social security benefits, but not below “the greater amount the worker may be entitled to” under the IIA or the SSA. The Department disagrees, 2 arguing that related statutes require application of the survivorship reduction before the social security offset. And, it argues, the phrase in RCW 51.32.220(5)—“may be entitled to”—refers to the amount the IIA “provides in all of its provisions,” including actuarial reductions. Thus, the Department contends that “for a worker who has elected to undergo an actuarial reduction, the actuarially reduced benefit is the benefit the worker may be entitled to receive under the [IIA].”

The IIA, Title 51 RCW, governs judicial review of worker’s compensation decisions. Smith v. Dep’t of Lab. & Indus., 22 Wn. App. 2d 500, 506, 512 P.3d 566 (2022). On appeal, the appellate court reviews the superior court’s decision, not the Board’s order. Id.; RCW 51.52.140. “We review the superior court’s decision in the same manner as other civil cases.” Id. 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 no genuine issues of material fact are present and the moving party is entitled to judgment as a matter of law. See CR 56(c). While “[w]e may substitute our own judgment for that of the agency regarding issues of law, . . we give

2 Boeing’s briefing on appeal contains minimal argument and states that it “aligns” with the Department’s arguments.

great weight to the agency’s interpretation of the law it administers.” Bennerstrom v. Dep’t of Lab. & Indus., 120 Wn. App. 853, 858, 86 P.3d 826 (2004).

A. Reverse Offset Provisions “Both federal and state governments have attempted to coordinate benefits paid to workers.” Harris v. Dep’t of Lab. & Indus., 120 Wn.2d 461, 466, 843 P.2d 1056 (1993). Fearful of duplicative state and federal benefits that could “erode state and federal programs and discourage workers from returning to work,” the federal government passed legislation to better coordinate benefits. Id. at 466-67. Thus, the SSA allows the federal government to reduce the amount of social security disability benefits it pays to a worker under the age of 65 who also receives state benefits. 42 U.S.C. § 424a. Additionally, federal law creates an exception to this general offset rule that allows a “reverse offset” if a state passes enabling legislation. Frazier v. Dep’t of Lab. & Indus., 101 Wn. App. 411, 416, 3 P.3d 221 (2000) (citing 42 U.S.C. § 424a(d)). Thus, under federal law, a state may “reduce the amount of disability compensation it pays out if the worker is receiving social security disability benefits.” Id. “The effect of this provision [in the SSA] is that it allows the state to shift costs to the federal government through its reverse offset program.” Harris, 120 Wn.2d at 469.

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