Carrera Ex Rel. Department of Labor & Industries v. Olmstead ( 2016 )

Filed
Washington State
Court of Appeals
Division Two
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
October 4, 2016
DIVISION II
BASILIO CORNELIO CARRERA, an No. 47397-6-II
unmarried individual; DEPARTMENT OF
LABOR & INDUSTRIES, as statutory assignee
of Basilio Cornelio Carrera,
Petitioners, PUBLISHED OPINION
v.
SUNHEAVEN FARMS, a Washington general
Partnership; SUNHEAVEN FARMS, LLC, a
Washington limited liability company; BRENT
SCHULTHIES FARMS, LLC, a Washington
limited liability company; BRENT
SCHULTHIES and ELAINE SCHULTHIES,
husband and wife, and the marital community
comprised thereof, individually and as general
partner of Sunheaven Farms; and JOHN DOES
and JANE DOES 1 through 10 inclusive,
Respondents,
THOMAS S. OLMSTEAD and BARBRA E.
OLMSTEAD, husband and wife, and the
marital community comprised thereof; LAW
OFFICE OF THOMAS S. OLMSTEAD, a
Washington sole proprietorship; JOHN DOES
and JANE DOES 1 through 10 inclusive,
Defendants.
BJORGEN, C.J. — The Department of Labor and Industries (L&I) appeals the superior
court’s order granting partial summary judgment in a third party action brought under the
Industrial Insurance Act (IIA), title 51 RCW, against farming conglomerate Sunheaven Farms
and certain persons associated with its operations. The action arose from injuries to Basilio
Carrera, an employee of Sunheaven’s member company Brent Hartley Farms LLC. The
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superior court ruled that L&I could not seek damages in an assigned third party action beyond
the amount L&I had paid to Carrera for workers’ compensation benefits because the statute of
limitations had run on his claims. L&I argues that this ruling was in error because (1) it may
seek noneconomic damages in an assigned third party action and (2) it was acting in the State’s
interest and, therefore, was not subject to the statute of limitations due to statutory and
sovereign immunity.
We hold first that L&I may seek and recover, but may not retain, noneconomic damages
in an assigned third party action. Instead, it must disburse those damages through the
distribution formula prescribed by statute. Second, we hold that when L&I seeks such damages
in an assigned third party action, it does so in part on behalf of the State and is, therefore, not
subject to any statute of limitations. Accordingly, we reverse the superior court’s order of
summary judgment in favor of Sunheaven and remand for proceedings consistent with this
opinion.
FACTS
In the summer of 2009, Carrera was hired by Brent Hartley Farms, one of Sunheaven’s
constituent farms, to perform seasonal agricultural labor. Sunheaven contracted to provide safety
compliance services at the farm but was not Carrera’s direct employer. On August 14, Carrera
was grievously injured while working with a conveyor belt. According to the complaint, Carrera
had not been properly trained to use the machine, and the machine’s safety features did not meet
state standards.
Carrera brought a negligence suit against his employer, but the suit was dismissed
because such claims are not allowed under the IIA. L&I was notified of the suit after the
dismissal and identified Sunheaven and other entities as potential third party defendants subject
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to suit under the IIA’s third party action statutes. As required by those statutes, L&I notified
Carrera on December 24, 2013 that he must elect whether he would pursue a third party action.
When he failed to respond within 60 days as required, the action was assigned to L&I by
operation of law.
Choosing to prosecute the assigned action, L&I filed an amended complaint against
Sunheaven, Brent Hartley Farms and others on April 7, 2014, more than four years after Carrera
was injured, asserting negligence claims and seeking both economic and noneconomic damages.
This amended complaint included legal malpractice claims against Carrera’s counsel in the
earlier action against his employer. Among its affirmative defenses, Sunheaven claimed that a
statutory three-year statute of limitations period had run and that applicable statutes allowed L&I
to pursue Carrera’s claims to recover only the amount it had paid Carrera for workers’
compensation benefits.
Sunheaven sought summary judgment on the statute of limitations defense. The superior
court granted the motion in part, barring L&I from seeking noneconomic damages and limiting
economic damages to the amounts L&I paid or would pay in benefits. The superior court based
its ruling on its “finding” that
[t]he State of Washington Department of Labor & Industries, as statutory assignee
of any applicable third party claims, stands in the shoes of the injured worker
Basilio Carrera in asserting the third party claims made herein, and therefore the
State’s claims for the injured worker’s non-economic damages claimed against
Defendants Sunheaven Farms and Brent Schulthies herein are subject to all of the
defenses available against the injured worker, including the statute of limitations,
notwithstanding the provisions of RCW 4.16.160.
Clerk’s Papers (CP) at 404. The superior court determined that L&I had paid or would pay
$788,418 in total benefits and, therefore, ordered that its damages be limited to that amount.
L&I appeals the superior court’s grant of partial summary judgment.
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ANALYSIS
We review a grant of summary judgment de novo, engaging in the same inquiry as the
court granting the motion. Citizens All. for Prop. Rights Legal Fund v. San Juan County, 184
Wn.2d 428, 435, 359 P.3d 753 (2015). Summary judgment is proper if
the pleadings, depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of law.
CR 56(c). This appeal presents no genuine issue of fact that is material to the order of partial
summary judgment. Therefore, our analysis is confined to issues of law.
To determine whether the superior court erred, we must assess the scope and nature of
assigned third party claims under the IIA. We look first to the statutory scheme authorizing third
party actions and their assignment. Within the context of this statutory scheme, we then consider
L&I’s right to prosecute assigned third party actions in light of the damages it may retain.
Finally, we examine the operation of statutes of limitation on third party claims and whether L&I
enjoys sovereign immunity in its prosecution of such claims.
I. STATUTORY SCHEME
This case involves a challenge to an action brought by L&I against third parties allegedly
liable for Carrera’s injuries. We begin by considering the statutes and case law treating the
nature and operation of third party actions generally, as well as the State’s right of recovery in
such actions.
A. Third Party Actions under the IIA
The IIA grants workers injured on the job “speedy and sure relief” in the form of
workers’ compensation benefits, but prohibits them from bringing negligence actions against
their employers. See Flanigan v. Dep’t of Labor & Indus., 123 Wn.2d 418, 422-23, 869 P.2d 144
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(1994) (citing RCW 51.04.010). However, the IIA does not exempt third parties from liability in
this manner, providing that
[i]f a third person, not in a worker’s same employ, is or may become liable to pay
damages on account of a worker’s injury for which benefits and compensation are
provided under this title, the injured worker or beneficiary may elect to seek
damages from the third person.
RCW 51.24.030(1).
A worker may initiate a third party action, RCW 51.24.030(1); but where, as here, the
worker fails to elect whether to do so, the right to bring the action is assigned to L&I or the
worker’s self-insuring employer by operation of law. RCW 51.24.050(1).1 L&I or the self-
insurer may bring suit in the injured worker’s name or compromise the claim as it sees fit. RCW
51.24.050(1). Any resulting damages award is subject to the following distribution arrangement:
(1) L&I or the self-insurer is paid expenses incurred in making the recovery, including
reasonable costs and attorney fees, RCW 51.24.050(4)(a); (2) 25 percent of the remaining
balance goes to the injured worker, RCW 51.24.050(4)(b); (3) L&I or the self-insurer is then
“paid the compensation and benefits paid to or on behalf of the injured worker or beneficiary,”
RCW 51.24.050(4)(c); and (4) any remaining balance is paid to the injured worker, RCW
51.24.050(4)(d). Any such remaining balance paid to the injured worker is counted against the
worker’s future benefits. RCW 51.24.050(5).
B. L&I’s Right of Recovery in Assigned Third Party Actions
To determine the boundaries of the State’s right of recovery in assigned third party
actions, we must interpret the opinions of our Supreme Court in Flanigan, supra, and Tobin v.
1
If a worker has made no election, L&I may send a written demand under RCW 51.24.070(1).
If the worker does not make the election within 60 days of receiving that demand, the action is
assigned to L&I by operation of law. RCW 51.24.070(2).
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Department of Labor & Industries, 169 Wn.2d 396, 239 P.3d 544 (2010), and decide whether
those cases apply to recovery under RCW 51.24.050.
1. Flanigan and Tobin
Our Supreme Court has clarified that worker-initiated third party actions under RCW
51.24.060 may be brought seeking noneconomic damages that exceed the sums paid for workers’
compensation benefits, but that L&I is not entitled to any resulting noneconomic damages.
Tobin, 169 Wn.2d 396; Flanigan, 123 Wn.2d 418. Because workers’ compensation benefits
“cannot take into account noneconomic damages, such as an employee’s own pain and
suffering,” allowing a worker to recover such damages was intended to “increase his or her
compensation beyond the Act’s limited benefits.” Flanigan, 123 Wn.2d at 423-24. However,
“where the Department has not paid out benefits for a type of damages, it cannot seek
reimbursement from that type of damages.” Tobin, 169 Wn.2d at 401.
In Flanigan, the court addressed whether L&I’s right of reimbursement under the
distribution formula extended to damages awarded in a private third party action for loss of
consortium. 123 Wn.2d at 422. The court held that L&I was not entitled to distribution of such
noneconomic damages because the workers’ compensation benefits “[a]t the most . . . cover only
certain out-of-pocket expenses, such as a portion of lost wages.” Id. at 423. It reasoned that if
L&I could reach an injured worker’s recovery for loss of consortium, it would receive “an
unjustified windfall” for a “share in damages for which it has provided no compensation.” Id. at
425-26. Therefore, while “third party actions for loss of consortium are indeed covered by the
Act . . . the statutory right of reimbursement under RCW 51.24.060 does not reach these
recoveries.” Id. at 426.
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Following the Flanigan decision, the legislature amended the IIA to clarify that
“‘recovery’ includes all damages except loss of consortium.” RCW 51.24.030(5). In Tobin, the
court considered the effect of that amendment and whether the reasoning in Flanigan should be
extended to bar L&I from seeking its statutory share from other noneconomic damages awarded
in a third party action to compensate an injured worker for pain and suffering. 169 Wn.2d at
401. As in Flanigan, the court reviewed a private third party action rather than one prosecuted
by L&I. Id. at 398. The court interpreted the amendment and concluded that “the legislature
intended to codify the holding of Flanigan and left the reasoning of Flanigan undisturbed.” Id.
at 402. On this basis, the court reasoned that, under RCW 51.24.060, L&I was not entitled to
distribution of damages awarded for noneconomic harm like pain and suffering because, as in
Flanigan, it had not paid any benefits as compensation for such harm. Id. at 402-03. It held that
“chapter 51.24 RCW does not authorize the Department to subject pain and suffering damages to
its reimbursement calculation.” Id. at 404.
2. Applicability of Flanigan and Tobin to Assigned Third Party Actions
The parties disagree as to whether Flanigan and Tobin apply to assigned third party
actions under RCW 51.24.050. According to Sunheaven, under Flanigan and Tobin L&I may
not recover money awarded to an injured worker for noneconomic damages in any third party
action under chapter 51.24 RCW. Our Supreme Court in Tobin repeatedly mentioned that, under
chapter 51.24 RCW, L&I was not entitled to money awarded for noneconomic damages. The
court stated, for example, that “[t]he central issue in this case is whether chapter 51.24 RCW
authorizes the Department to include Tobin’s pain and suffering damages in the distribution
calculation,” 169 Wn.2d at 400, and that “chapter 51.24 RCW does not authorize the Department
to subject pain and suffering damages to its reimbursement calculation.” Id. at 404. This
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suggests, at least, that its holding extended generally to all third party actions under chapter
51.24 RCW. Tobin, 169 Wn.2d at 404, 406-07. The dissent in that case so interpreted the
majority’s holding. See id. at 407-09 (Fairhurst, J., dissenting).2
According to L&I, Flanigan and Tobin apply exclusively to worker-initiated third party
actions under RCW 51.24.060. Key to the court’s holdings in both cases was language in RCW
51.24.060 entitling L&I to payment of a portion of damages “‘only to the extent necessary to
reimburse’” it for benefits paid. Tobin, 169 Wn.2d at 402 (quoting RCW 51.24.060(1)(c)). As
L&I points out, this language is not present in RCW 51.24.050. In addition, even if the Supreme
Court did decide that L&I was limited to reimbursement recovery in all actions under chapter
51.24 RCW, that decision would be dictum as to recovery under RCW 51.24.050 because the
recovery in both Flanigan and Tobin was governed only by RCW 51.24.060.
L&I is correct that in their holdings Flanigan and Tobin did not interpret RCW
51.24.030(5) or RCW 51.24.050, but instead only interpreted RCW 51.24.060 in light of the
legislature’s amendment. The court in Tobin also included language that indicates its holding is
limited to RCW 51.24.060:
The legislature amended the definitional section of the statute that codified
the explicit holding of Flanigan. . . . [T]he legislature did not revise RCW
51.24.060(1)(c), the section restricting the Department to recovery “to the extent
necessary . . . for benefits paid” or clearly define what types of damages the statute
intends to provide compensation for. Because Flanigan’s reasoning rested on this
unaltered section of the statute, damages for ‘pain and suffering,’ like loss of
consortium, constitute noneconomic damage that the workers’ compensation
statutes do not compensate for.
2
The dissenters even stated that “[i]t is now the legislature’s turn to undo what the majority has
done.” Id. at 418 (Fairhurst, J., dissenting). The legislature has not done so in the six years that
have elapsed since issuance of the decision in Tobin.
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169 Wn.2d at 406. Moreover, interpreting RCW 51.24.030(5) as amended to define “recovery”
as generally excluding noneconomic damages for all purposes of chapter 51.24 RCW would
have barred not only L&I but also injured workers from recovering such damages. See RCW
51.24.050(4); RCW 51.24.060(1). Yet the court in Flanigan, 123 Wn.2d at 424, clearly stated
that third party actions under the IIA were intended to allow such recovery by workers, and in
Tobin, 169 Wn.2d at 403 expressly followed the reasoning of Flanigan.
However, the general reasoning of Flanigan and Tobin does apply with equal force to
RCW 51.24.050. That statute provides that “[t]he department and/or self-insurer shall be paid
the compensation and benefits paid to or on behalf of the injured worker or beneficiary by the
department and/or self-insurer.” RCW 51.24.050(4)(c). This describes a reimbursement
scheme, even though it does not use the language of RCW 51.24.060. The court in both
Flanigan and Tobin held that interpreting such a scheme to allow L&I distribution of
noneconomic damages was inconsistent with chapter 51.24 RCW, because workers’
compensation benefits compensate an injured worker exclusively for economic harm. 123
Wn.2d at 426; 169 Wn.2d at 401. We extend that reasoning to RCW 51.24.050 and hold that
L&I may not retain noneconomic damages in assigned third party actions.
II. PROSECUTION OF ASSIGNED THIRD PARTY ACTIONS SEEKING
DAMAGES L&I MAY NOT RETAIN
L&I argues that it may prosecute an assigned third party action seeking all available
damages, even those it may not retain under the statutory distribution scheme. We agree.
To determine whether L&I is limited in its ability to pursue certain types of damages in
assigned third party actions, we must interpret RCW 51.24.050, the statute authorizing L&I to
bring such actions. When interpreting a statute, we must determine and give effect to the
legislature’s intent. Jametsky v. Olsen, 179 Wn.2d 756, 762, 317 P.3d 1003 (2014). We look
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first to the plain language of the statute. Id. “When the legislature has expressed its intent in the
plain language of a statute, we cannot substitute our judgment for the legislature's judgment.”
Protect the Peninsula’s Future v. Growth Mgmt. Hr’gs Bd., 185 Wn. App. 959, 972, 344 P.3d
705 (2015). To assess the meaning of the plain language, we consider the text of the provision in
question, the context of the statute in which the provision is found, and related statutes. In re
Estate of Mower, 193 Wn. App. 706, 713, 374 P.3d 180 (2016). Where a statutory term is not
expressly defined in the statute, we will look to its usual and ordinary meaning. Id.If the plain meaning of a statute is unambiguous, we must apply that plain meaning as an
expression of legislative intent without considering extrinsic sources. Jametsky, 179 Wn.2d at
762. Statutory language is ambiguous if it is open to more than one reasonable interpretation.
Bostain v. Food Express, Inc., 159 Wn.2d 700, 708, 153 P.3d 846 (2007). We will not add
language to an unambiguous statute. Kilian v. Atkinson, 147 Wn.2d 16, 20, 50 P.3d 638 (2002).
RCW 51.24.050(1) provides:
An election not to proceed against the third person operates as an assignment of the
cause of action to the department or self-insurer, which may prosecute or
compromise the action in its discretion in the name of the injured worker,
beneficiary or legal representative.
“Any recovery” that results from prosecution or compromise is then distributed according to the
scheme described in part I(A), above. RCW 51.24.050(4). L&I is entitled to, at most, the
amount required to compensate it for its legal fees and the workers’ compensation benefits it has
paid. If the amount awarded or paid in compromise exceeds the amount L&I may retain plus the
25 percent distributed to the injured worker, the injured worker or beneficiaries “shall be paid
any remaining balance,” RCW 51.24.050(4)(d), which then counts against future workers’
compensation benefits, RCW 51.24.050(5).
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This scheme anticipates that L&I would pursue assigned third party actions for damages
beyond those it could retain. Simply to fully compensate L&I for the benefits it paid, the amount
awarded would need to cover the injured worker’s 25 percent distribution. Further, the statute
provides for a specific distribution of remaining sums, clearly indicating that L&I may pursue
such surplus damages. However, L&I is not entitled to retain any such surplus damages.
Because these implications are plain on any reasonable reading of the statute, they are
unambiguous.
Therefore, based on the plain meaning of RCW 51.24.050, we hold that L&I is not barred
from seeking and recovering damages greater than the amount it may retain in an assigned third
party action under the IIA. See Duskin v. Carlson, 136 Wn.2d 550, 555, 965 P.2d 611 (1998)
(approving settlement of an assigned third party action that included an amount payable to L&I
for the benefits paid and a greater amount payable to the injured worker). Even if L&I may not
retain all the proceeds it requests as damages, it may seek and recover those damages in an
assigned third party action and dispense them according to the statutory distribution scheme.
III. SOVEREIGN IMMUNITY FROM STATUTES OF LIMITATION
L&I argues that the superior court erred by concluding that it was time barred under the
applicable statute of limitations from seeking any damages it could not retain. L&I does not
dispute that third party actions under the IIA may be subject to a statute of limitations or that the
statutory period ran before it brought the third party action. Instead, it argues that the superior
court should not have effectively split the cause of action by limiting the available damages and
that sovereign immunity rendered the statute of limitations inapplicable. We agree.
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A. The Statute of Limitations
Carrera’s claims against Sunheaven, had he brought them privately, would have been
barred by the applicable statute of limitations. Under RCW 4.16.080(2),3 the following must be
brought within three years:
An[y] action for taking, detaining, or injuring personal property, including an action
for the specific recovery thereof, or for any other injury to the person or rights of
another not hereinafter enumerated.
This statute of limitations applies generally “to any other injury to the person or rights of another
not enumerated in other limitation sections.” Stenberg v. Pac. Power & Light Co., 104 Wn.2d
710, 720, 709 P.2d 793 (1985).
A statute of limitations period for third party actions under the IIA is not among those
enumerated elsewhere, so this three-year limitations period applies.4 Because L&I raised
Carrera’s claims in a third party action more than three years after he was injured, it acted
outside of this limitations period. Therefore, this third party action would be time barred, unless
L&I is immune from operation of the statute.
B. Separation of the Cause of Action
L&I argues that by barring some but not all recovery under the statute of limitations, the
superior court in effect separated the third party action into two different actions seeking
different classes of damages, and that it was error to do so. We agree.
RCW 51.24.030 grants the injured worker the right to pursue a third party action. This
statutory right vests in the worker but is subject to valid election. RCW 51.24.030(1). If the
3
RCW 4.16.080 was amended in 2011. The amendment does not affect the issues in this case.
4
L&I does not dispute the applicability of RCW 4.16.080(2) or contend that the statute of
limitations period was tolled.
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worker brings the action, L&I or the worker’s self-insuring employer has a “statutory interest in
recovery” that entitles it to notice and an opportunity to intervene to protect its interest. RCW
51.24.030(2). Plainly, in such an action neither L&I nor a self-insurer has a separate claim
against the third party by which it may seek its own damages, but rather has an interest in any
resulting recovery.
However, if the injured worker elects not to pursue a third party action, that election
“operates as an assignment of the cause of action to the department or self-insurer.” RCW
51.24.050(1). For purposes of such an action, L&I or the self-insurer becomes the real party in
interest controlling the prosecution or settlement of the cause of action. Burnett v. Dep’t of
Corr., 187 Wn. App. 159, 172, 349 P.3d 42 (2015). At that point, pursuant to the statutory
scheme for distribution, the injured worker possesses a statutory interest in any resulting
recovery. See RCW 51.24.050(4).
The plain meaning of this statutory language, considered in the context of the larger
statutory scheme, authorizes assignment of the underlying claims and does not create any new
and independent cause of action. Chapter 51.24 RCW does not give an injured worker any
particular legal claim against a third party. Instead, chapter 51.24 RCW operates as an
exemption to the general rule under the IIA that an injured worker is limited in his or her
recovery to workers’ compensation benefits, allowing an injured worker to bring claims against
third parties “liable to pay damages on account of a worker’s injury for which benefits and
compensation are provided.” RCW 51.24.030(1). As the complaint in this case makes clear, the
underlying source of such third party liabilities are the injured worker’s claims resulting from the
injury. By assigning the “cause of action” to L&I or a self-insuring employer, RCW
51.24.050(1) operates to assign the right to bring these underlying claims.
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No language in the statute creates a new and independent cause of action that L&I may
bring on its own behalf or indicates that the worker’s underlying claims for damages L&I cannot
retain should be transformed into a separate cause. Instead, the plain language of RCW
51.24.050(1) shows that L&I or a self-insurer may prosecute or compromise the underlying
claims if the worker elects not to bring a third party action to litigate and redress those claims.
Accordingly, we hold that L&I brings a single action when prosecuting or compromising an
assigned third party action and has no separate cause of action that it may pursue independently. 5
Statutes of limitations like RCW 4.16.080 attach to claims. In re Estates of Palmer, 145
Wn. App. 249, 258, 187 P.3d 758 (2008). Sunheaven points to no authority allowing operation
of the statute of limitations to bar particular classes of damages. Therefore, the superior court
erred by applying the statute of limitations to allow L&I to prosecute Carrera’s claims but bar
recovery of certain damages.
5
Sunheaven argues that the claims underlying an assigned third party action may be time barred
prior to assignment and thereby rendered inherently invalid. However, at most the third party
action and its underlying claims are assigned subject to a possible statute of limitations defense.
See Pac. Nw. Bell Tel. Co. v. Dep’t of Revenue, 78 Wn.2d 961, 964-67, 481 P.2d 556 (1971).
The claims are not inherently nullified by the possibility that they are time barred. See CR 8(c)
(grouping statutes of limitations among “matter[s] constituting an avoidance or affirmative
defense”). Therefore, for us to determine whether an assigned third party action is time barred
we must first determine whether L&I is protected by sovereign immunity when it brings such an
action.
We recognize that Gorman v. City of Woodinville, 175 Wn.2d 68, 283 P.3d 1082 (2012),
held that title extinguished by adverse possession is invalid, and Pacific Northwest Bell
Telephone Co., 78 Wn.2d at 964, noted that the State takes derivative property rights subject to
any valid statute of limitations defense. These cases, though, are factually distinguishable. A
property right by its nature is one that would be extinguished under the circumstances of Gorman
and Pacific Northwest Bell. The assigned right to a monetary recovery, on the other hand, would
be barred by a statute of limitations only if it were applicable against the plaintiff.
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C. Sovereign Immunity
L&I takes the position that assigned third party actions under the IIA are not subject to
statutes of limitations because it enjoys sovereign immunity from those limitations. We agree.
L&I argues that it was not subject to the limitations period because it was acting in the
interests of the state. RCW 4.16.160 provides that when a public entity brings an action,
except as provided in RCW 4.16.310, there shall be no limitation to actions brought
in the name or for the benefit of the state, and no claim of right predicated upon the
lapse of time shall ever be asserted against the state: AND . . . no previously
existing statute of limitations shall be interposed as a defense to any action brought
in the name or for the benefit of the state.
This statute applies the common law doctrine of sovereign immunity to statutes of limitations.
Wash. State Major League Baseball Stadium Pub. Facilities Dist. v. Huber, Hunt & Nichols-
Kiewit Constr. Co., 165 Wn.2d 679, 686, 202 P.3d 924 (2009).
Under that common law doctrine, a public entity enjoys immunity from statutes of
limitations for actions “aris[ing] from an exercise of powers traceable to delegated sovereign
state powers.” Id. Where a public entity acts for the benefit of the State pursuant to delegated
authority, it exercises such sovereign powers. Id. at 686-87. Even where a statutory scheme
allows private prosecution of certain claims, a public entity acting for the benefit of the State
may enjoy sovereign immunity when it brings the same or similar claims. See State v. LG Elec.,
Inc., 185 Wn. App. 123, 144, 340 P.3d 915 (2014), review granted, 183 Wn.2d 1001 (2015).
An action is taken “for the benefit of the state” if it is taken “for the common good.”
Wash. State Major League Baseball Stadium Pub. Facilities Dist., 165 Wn.2d at 687. “The fact
that the state may be exercising a right derived by assignment or operation of law from a private
individual is not determinative.” Herrmann v. Cissna, 82 Wn.2d 1, 7, 507 P.2d 144 (1973).
However, if the action is “for the specific benefit or profit” of a private entity, it is taken on
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that’s entity’s behalf rather than on behalf of the State. Wash. State Major League Baseball
Stadium Pub. Facilities Dist., 165 Wn.2d at 689. Where such actions are authorized by statute,
they are immune from statutes of limitations unless the authorizing statute includes an express
provision abrogating immunity. LG Elec., 185 Wn. App. at 137; see also Herrmann, 82 Wn.2d
at 7.
In the context of third party actions under the IIA, the issue turns on “whether the state, in
suing for the benefit of the accident fund, is acting in its sovereign capacity in furtherance of its
public policy, or merely suing . . . for the benefit of private individuals.” State v. Vinther, 176
Wash. 391, 393, 29 P.2d 693 (1934). An otherwise applicable statute of limitations, therefore,
“will apply when the state is a mere formal plaintiff in a suit, not for the purpose of asserting any
public right or protecting any public interest, but merely to form a conduit through which one
private person can conduct litigation against another private person.” Id.; accord Herrmann, 82
Wn.2d at 5.
In Vinther, our Supreme Court addressed an earlier workers’ compensation statute that
limited the State’s recovery to a subrogation amount when a worker or his beneficiaries elected
to take workers’ compensation benefits. 176 Wash. at 391-92. At the time, the State was not
allowed to seek damages beyond this subrogation amount. Vinther stands for the proposition
that the State is not bound by statutes of limitations when it seeks statutorily authorized
repayment for sums paid to an injured worker or his beneficiaries under a workers’ compensation
statute. Under Vinther, L&I may bring third party claims outside of the otherwise applicable
limitations period to the extent those claims seek authorized repayment of benefits.
If L&I is not authorized to retain damages, it is necessarily seeking those damages not as
repayment but rather on behalf of the injured worker. However, this does not necessarily make
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L&I merely a conduit for the injured worker, since actions taken on behalf of private entities
may still further important statutory purposes for the benefit of the State and its people.
In Hermann, our Supreme Court addressed a similar situation regarding an action brought
by the state insurance commissioner on behalf of a defunct insurer against its former officers and
directors. 82 Wn.2d at 2. The court held that the action was exempt from the statute of
limitations because the commissioner was acting in part to regulate negligent and fraudulent
conduct by the officers and directors of insurance companies. Id. at 7. It noted that
[t]he legislature reasonably could have concluded that the deterrent effect of such
proceedings by the commissioner, upon other parties charged with the
responsibility of managing insurance companies, is a factor tending to benefit the
public in general.
Id.As L&I points out, it is similarly reasonable to believe the legislature intended third party
actions under the IIA to have a deterrent effect on dangerous workplace conduct and conditions.
Tort law has a deterrent effect on negligence, and exemptions from tort liability can weaken that
deterrent effect. See Davis v. Baugh Indus. Contractors, Inc., 159 Wn.2d 413, 419-20, 150 P.3d
545 (2007). While the IIA exempts employers from such liability, it specifically excludes third
party tortfeasors from that exemption by authorizing third party actions. By allowing L&I to
prosecute or compromise third party actions that an injured worker cannot or does not want to
pursue, the IIA strengthens the threat of liability to negligent third parties. In this way, the
assignment of third party actions creates a deterrent that can be considered a form of workplace
regulation.
Further, L&I has no separate cause of action in assigned third party claims. Therefore,
L&I can replenish its coffers only by bringing the injured worker’s assigned underlying claims.
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Such replenishment clearly benefits the State, as it reduces fiscal strain and promotes the
continued viability of the workers’ compensation system. More importantly, the legislature
clearly contemplated that L&I would be able to seek replenishment in this manner, as it gave
L&I a statutory interest in the damages awarded in any third party action for repayment of the
benefits amount. See RCW 51.24.050(4); RCW 51.24.060(1).
L&I acts for the benefit of the State when it prosecutes or compromises assigned third
party actions pursuant to the authority granted in RCW 51.24.050.6 Although it may not retain
all damages it may seek, it is not pursuing the action merely as a conduit for the injured worker.
Its actions promote a deterrent effect as well as replenish its coffers. As such, L&I is acting on
behalf of the State in ensuring the efficacy and vitality of the workers’ compensation system.
Because nothing in chapter 51.24 RCW expressly abrogates or limits sovereign immunity, RCW
4.16.160 insulates L&I from application of the statute of limitations found in RCW 4.16.080(2).
The superior court erred by granting summary judgment on grounds that it was time barred under
that statute.
CONCLUSION
We hold that L&I may seek and recover, but not retain, noneconomic damages in an
assigned third party action. Instead, it must dispense those damages through the statutory
distribution formula. We also hold that when L&I seeks such noneconomic damages in an
assigned third party action, it does so in part on behalf of the State and is, therefore, not subject
6
Due to the factual scope of this case, we do not address whether this holding should extend to
self-insuring employers who prosecute or compromise assigned third party actions under RCW
51.24.050.
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to any statute of limitations. Accordingly, we reverse the superior court’s order of summary
judgment in favor of Sunheaven and remand for proceedings consistent with this opinion.
BJORGEN, C.J.
We concur:
WORSWICK, J.
LEE, J.
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