WSIA files friend of the court brief in overpayment case

Oct. 27, 2015

Temple of Justice

Yesterday, WSIA, joined by the Association of Washington Business, filed an amicus curiae (“friend of the court”) brief in the Washington Supreme Court, supporting an appeal by the Department of Labor & Industries in a case dealing with the time frames for recovering an overpayment caused by a worker’s misrepresentation of facts.

The case is Birrueta v. Department of Labor & Industries, and concerns an injured worker who, upon applying for benefits after an injury in 2008, stated on his accident form (filled out by an emergency room doctor, as the worker did not speak English well) that he was married with a child. The Department calculated time loss benefits and issued a wage order based on that premise.

It wasn’t until 2011, when the worker was adjudicated for a pension, that the Department discovered he was single and childless. The Department issued a new wage order based on that information, and assessed a small overpayment. The worker appealed, arguing that the 2008 determination was final and binding as to his benefit amount because it was never challenged.

The Board of Industrial Insurance Appeals tossed aside that reasoning, holding that while the misrepresentation of family status may have been an innocent one, the Department was able to recover the overpayment following the 2011 wage order, since RCW 51.32.240(1)(a) states, for an erroneous payment based on innocent misrepresentation, “the recipient . . . shall repay it and recoupment may be made from any future payments due to the recipient on any claim with the state fund or self-insurer” so long as the claim for recoupment is made within one year of the erroneous payment.

The trial court, however, held that relying on a claimant’s innocent misrepresentation is actually an adjudicator error, which means the overpayment should be analyzed under RCW 51.32.240(1)(b), which gives only the 60 days until the order becomes final in which to seek an overpayment.

The Department appealed, and the Court of Appeals, in a published decision, affirmed the trial court, effectively collapsing subsection .240(1)(a) of the law (innocent misrepresentation, among other things) into subsection .240(1)(b) of the law (adjudicator error).

The Department has asked the Washington Supreme Court to hear the case. WSIA and AWB agree, pointing out that the trial court and Court of Appeals not only misread and misapplied the law, but as the rule now stands, the Department or self-insured employer will have only 60 days in which to detect and correct a worker’s misrepresentation before essentially eating it — not only for the life of the claim, but in pension cases like Birrueta, for the life of the claimant.

While state fund and self-insured employers ought to be able to rely on the honesty of their injured workers’ applications for benefits, the likely result of Birrueta, if left standing, will be to raise the stakes at the wage order phase of claim handling, causing more protest, contention, delay, and cost as the insurer works to make sure that any red flags in the claim file are tested for misrepresentation before issuing a final and binding order.

Clearly that is not the outcome the Legislature provided in subsection .240(1)(a), giving a separate and much longer timeframe for correcting an error based on innocent misrepresentation as opposed to adjudicator error.

Read the WSIA/AWB brief here.