Department of Labor & Industries v. Auman

Goodloe, J.

This case presents the issue of whether cost of living adjustments (COLA) on disability pensions should be computed from the amount the claimants received after reduction for prior receipt of a lump sum payment for permanent partial disability, or from the amount which the claimants would have been entitled to had they not received a lump sum permanent partial disability award. We hold that COLA should be computed from the amount owing to the claimants after reduction for prior receipt of any lump sum permanent partial disability awards.

Each of the claimants was injured in the course of employment and was granted one or more permanent partial disability awards. At some later time, each claimant then was ruled to be permanently and totally disabled. Upon being ruled permanently and totally disabled, each claimant became eligible for monthly disability pension payments; the amount of the monthly payments due each claimant was reduced to reflect the amount already paid as a lump sum permanent partial disability payment.

Each claimant receiving monthly disability pension payments is entitled to periodic COLA. According to longstanding practice, the Department of Labor and Industries computed the COLA due each claimant according to the amount owing to that claimant after reduction of the monthly award to reflect the lump sum permanent partial disability awards already received. The claimants challenged the Department's computation before the Board of Industrial Insurance Appeals. The board ruled that COLA should be computed on the basis of the amount which each claimant would have received had no reduction been made for prior lump sum permanent partial disability payments. The Pierce County Superior Court affirmed the board's decision. The Department appealed to the Court of Appeals. The Court of Appeals consolidated the separate causes, and certified them to this court. This court accepted certification. We reverse.

A worker who becomes permanently partially disabled as a result of a work related injury is entitled to a lump sum payment for the disability according to a schedule set forth in RCW 51.32.080. A worker who becomes permanently totally disabled as a result of a work related injury is entitled to a monthly pension, the amount of which is determined according to RCW 51.32.060. If a worker is permanently partially disabled and received a lump sum award for that injury, then later becomes permanently totally disabled, the monthly disability pension to which that worker is entitled as compensation for the total disability will be reduced to reflect the lump sum payment already received for the permanent partial disability. RCW 51.32.080(2).

Monthly disability pensions are periodically increased by COLA as specified in RCW 51.32.075. According to RCW 51.32.075, each July 1,

the amount of compensation to which they [the claimants] are entitled [is multiplied] by a fraction, the denominator of which shall be the average monthly wage in the state under RCW 51.08.018 for the fiscal year in which such person's right to compensation was established, and the numerator of which shall be the average monthly wage in the state under RCW 51.08.018 on July 1st of the year in which the adjustment is being made.

RCW 51.32.075(3). The issue in this case concerns the interpretation of the phrase "the amount of compensation to which they are entitled".

The Department has consistently construed RCW 51.32-.075 to require COLA increases in disability pensions based upon the amount of monthly payments owed to each claimant after reduction for prior lump sum payments made for permanent partial disability. According to this interpretation, "the amount of compensation to which [the claimants] are entitled" is the actual amount paid to them, which is an amount reduced to reflect the lump sum award for permanent partial disability under RCW 51.32.080(2). According to this method, the amount received for monthly pension benefits is increased by a percentage of itself each year and thus, theoretically, the actual purchasing power of the pension remains roughly constant, the percentage increase making up for the effects of inflation.

The claimants argue that "the amount of compensation to which they are entitled" refers not to the actual amount of the pension benefits paid after reduction to reflect prior lump sum awards for permanent partial disability, but rather to the amount of benefits which would have been due had there been no reduction for lump sum permanent partial disability awards. We find this argument unpersuasive. According to this interpretation, each year a claimant's disability pension would be increased by a fraction of the entire value of a permanent total disability claim, including the amount the claimant was previously paid in a lump sum at the time the claimant was found to be permanently partially disabled. Under this theory, the amount of a claimant's pension would not merely increase to keep pace with inflation, but would increase an additional amount insofar as the amount previously paid in a lump sum is considered in computing the COLA. Thus, if a claimant received a lump sum payment and invested it, the claimant's purchasing power for that sum would be increased for inflation twice: first, the claimant would receive a return on the investment (e.ginterest), plus each year the claimant's pension would be increased by a percentage of the amount received in pension and a percentage of the amount already received in the lump sum award.

"[Sjtatutes should receive a sensible construction to effect the legislative intent and, if possible, to avoid unjust and absurd consequences." State v. Vela, 100 Wn.2d 636, 641, 673 P.2d 185 (1983). See Pasco v. Napier, 109 Wn.2d 769, 773-74, 748 P.2d 1108 (1988). We find that RCW 51.32.075 is unambiguous. The amount to which claimants are entitled is that amount owed them after any deductions for lump sum payments previously received. To construe RCW 51.32.075 to allow COLA based upon an amount to which claimants would have been entitled if they had not previously received awards for permanent partial disabilities would be to alter the plain meaning of the statute so as to give an unfair bonus to those claimants who received prior lump sum awards.

We reverse the Superior Courts and reinstate the Department's original awards allowing COLA computed on the basis of the monthly disability pensions due the claimants after reduction for prior lump sum payments for permanent partial disability.

Dolliver, Dore, Callow, and Durham, JJ., concur.