Timothy Nelson, V Department Of L&i State Of Wa

Filed
Washington State
Court of Appeals
Division Two
March 7, 2017
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
TIMOTHY M. NELSON. No. 47672-0-II
Appellant, PART PUBLISHED OPINION
v.
DEPARTMENT OF LABOR & INDUSTRIES,
Respondent.
BJORGEN, C.J. — Timothy Nelson appeals the superior court’s decision affirming the
Board of Industrial Insurance Appeals (Board), which determined that the allocation of Nelson’s
recovery from a third party under the distribution formula of RCW 51.24.060 was proper. Under
the Industrial Insurance Act (IIA), title 51 RCW, a worker injured in the course of his
employment has a right to sue any third party involved in the tortious act. RCW 51.24.030(1).1
1
“If 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).
No. 47672-0-II
If the injured worker collects any “recovery” from the third party, it is subject to a distribution
formula that requires, among other matters, the attorney fees and costs to be proportionately
shared by the injured worker and the Department. RCW 51.24.060(1).
In the published portion of this opinion, we address Nelson’s contention that the
Department’s distribution of his recovery was premature because the pertinent IIA provisions
require that attorney fees and costs from all claims pursued, even if unsuccessful, be included in
the distribution of recovery. We hold that the Department’s distribution of Nelson’s recovery
was not erroneous because the plain language of RCW 51.24.060 indicates that only attorney
fees and costs associated with the resolved claims causing the recovery must be included in a
distribution—not attorney fees and costs related to other unsuccessful claims. We address
Nelson’s remaining arguments in the unpublished portion of this opinion and hold that they fail.
Accordingly, we affirm.
FACTS
In the course of his employment, Nelson was in a motor vehicle accident with Amanda
Wade and suffered personal injuries. The Department paid $116,958.64 in worker’s
compensation benefits to Nelson. Pursuant to RCW 51.24.030(1), Nelson elected to pursue civil
damages against Wade and Pierce County.2 The trial court granted summary judgment in favor
of Pierce County on all Nelson’s claims against it. Nelson then settled with Wade, releasing all
claims and causes of action against her. The settlement amount totaled $525,000, $408,000 of
2
Other than a faulty highway design claim, it is unclear from the record what claims Nelson
asserted against Pierce County.
2
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which was allocated to pain and suffering.3 The remaining $117,000 constituted economic
damages considered a “recovery” and triggered distribution under the formula set forth in RCW
51.24.060.
The Department contacted Nelson about the settlement with Wade and requested a copy
of the settlement agreement, his attorney fee agreement, and “a ledger of costs relating to this
recovery.” Clerk’s Papers (CP) at 77. The attorney fee agreement indicated that Nelson’s
lawyers represented him on all claims relevant to his motor vehicle accident with Wade and that
he would pay his lawyers one-third of the total recovery in the case. The ledger of attorney costs
showed various expenses totaling $6,523.23.
After receiving this information, the Department asserted a lien of $114,957.324 against
Nelson’s settlement. Pursuant to the RCW 51.24.060 formula, the Department then calculated
the distribution of Nelson’s $117,000 settlement. First, the Department calculated the total
attorney fees and costs associated with the settlement as $40,453.75. RCW 51.24.060(1)(a).
Second, the Department distributed 25 percent of the award’s balance, $19,136.56, directly to
Nelson. RCW 51.24.060(1)(b). Finally, the Department allocated the remaining portion,
$57,409.69, to itself for reimbursement of benefits paid out to Nelson. RCW 51.24.060(1)(c).
3
Under Tobin v. Department of Labor & Industries, 169 Wash. 2d 396, 404, 239 P.3d 544 (2010),
pain and suffering damages are not subject to distribution.
4
According to the Department, the lien was for less than benefits paid out to Nelson because
certain administrative expenses are excluded when the Department asserts a lien against a third
party recovery. E.g. Ziegler v. Dep’t of Labor & Indus., 42 Wash. App. 39, 42, 708 P.2d 1212
(1985) (medical examinations not reimbursable).
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Subsequently, the Department issued an order that requested Nelson to reimburse the
Department in the amount of $57,409.69.
Nelson objected to the Department’s distribution order. He argued that the Department’s
order was “premature and potentially overstate[d] the amount the [Department] is entitled to
recover” because the calculation “understates costs and attorney fees incurred in causes of
action[s] . . . being pursued and/or investigated for underinsured motorist, highway design and
products liability, based on the same injuring event.” CP at 100. Nelson hypothesized that
because those cause of actions may ultimately prove unsuccessful, he would never recover the
costs and attorney fees associated with those claims. Furthermore, Nelson alleged that at least
$25,000 in additional expenses had been incurred after the settlement for the other pending
causes of action. He did not contend that the Department’s calculation was incorrect, nor did he
make an argument that its calculation was contrary to the statutory language of RCW 51.24.060.
The Department denied reconsideration of its distribution order.
Nelson appealed to the Board, where both Nelson and the Department moved for
summary judgment. Nelson reiterated the same argument to the Board that the Department’s
distribution was premature because it failed to account for attorney fees and costs that might
result from other potential causes of action arising from the same incident. Further, Nelson
argued for the first time that the plain language of RCW 51.24.060 does not limit the distribution
of attorney fees and costs to successful claims against parties. Rather, he argued the purpose of
the IIA requires the Department to wait until all claims are resolved to ensure an injured worker
receives the full benefit of sharing attorney fees and costs with the Department. Thus, Nelson
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contended the Department should not have distributed the money received from the settlement
with Wade until all claims related to the auto accident were resolved.
After a hearing, the Board granted summary judgment in favor of the Department,
reasoning that the plain language of RCW 51.24.060 applies only to actual or realized recoveries,
not to potential or possible recoveries. Relying on RCW 51.24.030(2)5 and prior cases it
adjudicated,6 the Board concluded that the IIA contemplates “multiple . . . causes of action
arising from a claim.” CP at 42-43. Furthermore, the Board explained that the settlement
completely resolved Nelson’s lawsuit against Wade and that the settlement was a recovery
triggering application of RCW 51.24.060 for calculation of a distribution. Along with these
reasons, the Board entered findings of fact and conclusions of law, reflecting that the Department
properly calculated the distribution.7
Nelson appealed to the superior court. The superior court affirmed the Board and
adopted the Board’s findings of fact and conclusions of law to support its decision. Nelson
appeals.
5
“In every action brought under this section, the plaintiff shall give notice to the department or
self-insurer when the action is filed.” RCW 51.24.030(2).
6
See CP at 43 (citing Board decisions In re Richard Boney, No. 98-15811 (Wash. Bd. of Indus.
Ins. Appeals) (Dec. 2001), http://www.biia.wa.gov/DO/9915811_ORD_20011024_DO.PDF; and
In Re Todd A. Hosking, No. 08-17806 (Wash. Bd. of Indus. Ins. Appeals) (Apr. 24, 2009),
http://www.biia.wa.gov/DO/0817806_ORD_20090824_DO.PDF.
7
These findings of fact and conclusions of law are primarily a reflection of the Department’s
application of the distribution formula to Nelson’s settlement discussed earlier in the Facts
section. To avoid redundancy, we do not reiterate them here.
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ANALYSIS
I. STATUTORY INTERPRETATION
Nelson argues that the Board arrived at an erroneous interpretation of RCW 51.24.060 by
finding it “not reasonable to include in the distribution formula any cost not directly related to
the settling defendant even though the cost was incurred in the same litigation.” Br. of Appellant
at 9, 17. The Department contends that the plain meaning of RCW 51.24.060 indicates that a
distribution of a recovery only requires inclusion of the attorney fees and costs associated with
the resolved claims that caused the recovery and triggered the distribution. For the reasons set
forth below, we agree with the Department and resolve the statutory interpretation question on a
plain meaning analysis.
1. Standard of Review/Legal Principles
A superior court reviews the Board’s actions de novo, but relies on the certified Board
record and decides only those matters that the administrative tribunals previously determined.
Matthews v. Dep’t of Labor & Indus., 171 Wash. App. 477, 491, 288 P.3d 630 (2012); Rogers v.
Dep’t of Labor & Indus., 151 Wash. App. 174, 179, 210 P.3d 355 (2009). The superior court must
consider the Board’s decision as prima facie correct. RCW 51.52.115. If the superior court
determines that the Board has acted within its power and has correctly construed the law, its
decision will be upheld. Id.
From the superior court’s judgment, our review “‘is limited to examination of the record
to see whether substantial evidence supports the findings made after the superior court’s de novo
review, and whether the court’s conclusions of law flow from the findings.’” Rogers, 151 Wn.
App. at 180 (quoting Ruse v. Dep’t of Labor & Indus., 138 Wash. 2d 1, 5, 977 P.2d 570 (1999)).
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However, the superior court’s findings of fact and conclusions of law were entered in its review
of the summary judgment entered by the Board, which in turn adopted the proposed decision and
order by an industrial insurance judge that found no genuine issues of material fact and granted
summary judgment to the Department. The superior court adopted the findings and conclusions
of the Board’s decision, granting summary judgment. “Findings of fact and conclusions of law
are not necessary on summary judgment and, if made, are superfluous . . .” Concerned
Coupeville Citizens v. Town of Coupeville, 62 Wash. App. 408, 413, 814 P.2d 243 (1991). On
review of summary judgment, as here, we review de novo whether there are any genuine issues
of material fact and whether the moving party is entitled to judgment as a matter of law. CR
56(c).
Nelson concedes that no genuine issues of material fact exist and that the dispositive
issue was purely of statutory interpretation. Because statutory interpretation is purely a question
of law, we review the superior court’s ruling de novo. Hill v. Dep’t of Labor & Indus., 161 Wn.
App. 286, 292, 253 P.3d 430 (2011). Further, “[a]lthough we may substitute our judgment for
that of the agency on issues of law, we give great weight to the agency's interpretation of the law
it administers.” Jones v. City of Olympia, 171 Wash. App. 614, 621, 287 P.3d 687 (2012).
The goal of statutory interpretation is to ascertain and give effect to the legislature’s
intent. Birgen v. Dep’t of Labor & Indus., 186 Wash. App. 851, 857, 347 P.3d 503, review denied,
184 Wash. 2d 1012 (2015). “To determine legislative intent, we first look to the plain language of
the statute.” Id. To decipher the plain language, we look at the meaning of the provisions in
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No. 47672-0-II
question as well as the context of the statute and related statutes. Id. “We do not rewrite
unambiguous statutory language under the guise of interpretation,” or “‘add words where the
legislature has chosen not to include them.’” Id. at 858 (quoting Rest. Dev., Inc. v. Cananwill,
Inc., 150 Wash. 2d 674, 682, 80 P.3d 598 (2003)).
“When statutory language is susceptible to more than one reasonable interpretation, it is
considered ambiguous.” Cockle v. Dep’t of Labor & Indus., 142 Wash. 2d 801, 808, 16 P.3d 583
(2001). “However, it is not ambiguous simply because different interpretations are conceivable.”
Hi-Way Fuel Co. v. Estate of Allyn, 128 Wash. App. 351, 358, 115 P.3d 1031 (2005). “We are not
to search for ‘an ambiguity by imagining a variety of alternative interpretations.’” Id. (quoting
Am. Cont’l Ins. Co. v. Steen, 151 Wash. 2d 512, 518, 91 P.3d 864 (2004)).
2. Plain Meaning
Nelson argues that the Department’s distribution of his recovery was premature because
the IIA requires that attorney fees and costs from all claims pursued, even if unsuccessful, be
included in the distribution of his recovery. We disagree.
The IIA “is based on a compromise between workers and employers, under which
workers become entitled to speedy and sure relief, while employers are immunized from
common law responsibility.” Flanigan v. Dep’t of Labor & Indus., 123 Wash. 2d 418, 422, 869
P.2d 14 (1994) (citing RCW 51.04.010). However, the IIA permits suit against third party
tortfeasors. RCW 51.24.030(1). The injured worker can pursue such an action himself or can
assign his claims to the Department. RCW 51.24.030(1), .050(1). Nelson elected to take the
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former approach, making any successful recovery against a third party subject to a lien by the
Department to offset benefits it paid out to Nelson. RCW 51.24.060(1), (2).
The distribution of that recovery is subject to a specific formula outlined in RCW
51.24.060, which reads in pertinent part:
(1) If the injured worker or beneficiary elects to seek damages from the third
person, any recovery made shall be distributed as follows:
(a) The costs and reasonable attorneys’ fees shall be paid proportionately
by the injured worker or beneficiary and the department and/or self-insurer:
PROVIDED, That the department and/or self-insurer may require court approval
of costs and attorneys’ fees or may petition a court for determination of the
reasonableness of costs and attorneys’ fees;
(b) The injured worker or beneficiary shall be paid twenty-five percent of
the balance of the award: PROVIDED, That in the event of a compromise and
settlement by the parties, the injured worker or beneficiary may agree to a sum less
than twenty-five percent;
(c) The department and/or self-insurer shall be paid the balance of the
recovery made, but only to the extent necessary to reimburse the department and/or
self-insurer for benefits paid;
(i) The department and/or self-insurer shall bear its proportionate share of
the costs and reasonable attorneys’ fees incurred by the worker or beneficiary to the
extent of the benefits paid under this title: PROVIDED, That the department’s
and/or self-insurer’s proportionate share shall not exceed one hundred percent of
the costs and reasonable attorneys’ fees;
(ii) The department’s and/or self-insurer’s proportionate share of the costs
and reasonable attorneys’ fees shall be determined by dividing the gross recovery
amount into the benefits paid amount and multiplying this percentage times the
costs and reasonable attorneys’ fees incurred by the worker or beneficiary;
(iii) The department’s and/or self-insurer’s reimbursement share shall be
determined by subtracting their proportionate share of the costs and reasonable
attorneys’ fees from the benefits paid amount;
(d) Any remaining balance shall be paid to the injured worker or
beneficiary.
(Emphasis added.) The key statutory interpretative issue here is the linguistic relationship
between an injured worker’s “recovery” noted in RCW 51.24.060(1) and which attorney fees and
costs must be paid from a distribution of that “recovery.”
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First, the definition of recovery suggests only attorney fees and costs spent on resolved
claims triggering the recovery should be included in the distribution formula. Under the IIA,
recovery includes “all damages except loss of consortium” and pain and suffering. RCW
51.24.030(5); Tobin v. Dep’t of Labor & Indus., 169 Wash. 2d 396, 404, 239 P.3d 544 (2010).
Black’s Law Dictionary at 1466 (10th ed.) defines “recovery” as “1. The regaining or restoration
of something lost or taken away. 2. The obtainment of a right to something (esp. damages) by a
judgment or decree. . . . 4. An amount awarded in or collected from a judgment or decree.” In
Webster’s Third New International Dictionary at 1898 (2002), “recovery” is defined as “the
obtaining in a suit at law of a right to something by a verdict, decree, or judgment of court.”
Under these definitions, a recovery exists when a plaintiff receives damages other than
loss of consortium and pain and suffering damages. The resolution that fixed the damages might
be the settlement of a single claim against one party or a judgment entered against multiple
parties for multiple claims. In either situation, the recovery will be defined by the damages
acquired from resolving specific claims against specific parties. Thus, the costs and attorney fees
that are subject to the distribution formula are those related to the settlement or judgment of
claims constituting the recovery. RCW 51.24.060(1).
The legislature’s positioning of the RCW 51.24.060 subsections further buttresses this
interpretation. As the Department suggests, the “‘costs and reasonable attorneys’ fees’ noted in
subsection (1)(a) are linked to the particular ‘recovery’ identified in subsection (1).” Br. of
Resp’t at 13. The legislature’s arrangement of RCW 51.24.060’s subsections shows its intent to
associate the attorney fees and costs with resolved claims causing the recovery and triggering the
distribution formula in the first place.
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In addition, RCW 51.24.060(5), which imposes a duty on a party who recovers to provide
notice to the Department, further compels this reading of recovery. RCW 51.24.060(5) states:
It shall be the duty of the person to whom any recovery is paid before
distribution under this section to advise the department or self-insurer of the fact
and amount of such recovery, the costs and reasonable attorneys' fees associated
with the recovery, and to distribute the recovery in compliance with this section.
(Emphasis added). As the Department points out, we interpret a statute to give effect to all
language, so as to render no portion meaningless or superfluous. Rivard v. State, 168 Wash. 2d
775, 783, 231 P.3d 186 (2010). Through RCW 51.24.060(5), the legislature only considered the
costs and attorney fees that are associated with the recovery pertinent for the Department to
know in implementing the distribution required by RCW 51.24.060. Thus, RCW 51.24.060(5)
implies that costs and attorney fees that are not associated with the recovery that triggered the
distribution formula are not covered in the distribution of that recovery. This premise, along
with the definitions of recovery and the subsection arrangement of RCW 51.24.060, shows that
the costs and attorney fees to be distributed under that statute are those that are associated with
the resolution of claims that triggered the recovery.
Nelson argues that this interpretation runs against the mandate of RCW 51.12.010. This
section states that the IIA “shall be liberally construed for the purpose of reducing to a minimum
the suffering and economic loss arising from injuries and/or death occurring in the course of
employment.” However, we “cannot use the liberal construction requirement to support a
‘strained or unrealistic interpretation’ of statutory language.” Birgen, 186 Wash. App. at 862
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(quoting Senate Republican Campaign Comm. v. Pub. Disclosure Comm’n, 133 Wash. 2d 229, 243,
943 P.2d 1358 (1997)). Moreover, the liberal construction provision is only triggered when
doubts or ambiguities in the IIA need to be resolved. See Dep’t of Labor & Indus. v. Lyons
Enters. Inc., 185 Wash. 2d 721, 734, 374 P.3d 1097, recons. denied, (2016).
Nelson’s interpretation, while conceivable, would strain the provisions of RCW
51.24.060 to construe an ambiguity that does not exist. Hi-Way Fuel, 128 Wash. App. at 358-59.
Thus, the rule of liberal construction cannot blunt the effect of the plain language of the IIA: in
distributing a recovery under RCW 51.24.060, only the attorney fees and costs associated with
the resolved claims that caused the recovery and triggered the distribution are considered in the
distribution.8
Nelson also contends that he will receive less than the 25 percent net recovery RCW
51.24.060 guarantees him if other attorney fees and costs from other unsuccessful claims are not
included. Id. The distribution formula, though, requires attorney fees and costs to be deducted
first from the recovery before the worker’s 25 percent share of the remaining balance is
calculated. Tobin, 169 Wash. 2d at 408-09 (citing RCW 51.24.060(1)(a), (b), (c)). If, for example,
other costs associated with the unsuccessful Pierce County claim were included in the
distribution formula, Nelson’s entitlement to his portion of the recovery would actually have
8
This plain meaning analysis is consistent with two cases suggesting that only attorney fees and
costs associated with the recovery are to be included in the distribution. In Davis v. Department
of Labor & Industries, 71 Wash. App. 360, 363, 858 P.2d 1117 (1993), the court stated it is “[t]he
costs and reasonable attorneys’ fees [of the third party recovery]” that shall be paid
proportionately.” (Second alteration in original). In Rhoad v. McLean Trucking Co., 102 Wash. 2d
422, 424, 686 P.2d 483 (1984), the court stated that “the Department is required to bear a
proportionate share of the fees and costs incurred in obtaining . . . a recovery.”
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been reduced. Thus, his interpretation may frustrate the IIA’s purpose of protecting an injured
worker because inclusion of additional attorney fees and costs not linked to the specific recovery
could reduce a worker’s potential recovery.
Finally, Nelson cites Hi-Way Fuel, 128 Wash. App. at 354, arguing that the Department
“unilaterally disallowed” the costs calculated in the distribution formula. Br. of Appellant at 9-
10. In Hi-Way Fuel, 128 Wash. App. at 354-55, the claimant submitted a letter from her attorney
to the Department detailing the attorney fees and costs associated with the third party recovery.
Before calculating the distribution, the Department unilaterally deducted costs related to internal
copying and postage. Id. at 355. The Hi-Way Fuel court held that because the Department may
petition a court to determine whether costs are reasonable, RCW 51.24.060(1)(a), it does not
have a “unilateral right” to determine the amount or types of costs that should be included in the
distribution formula. Id. at 363. It thus remanded the case, in part, for a new distribution
calculation that included the costs for internal copying and postage. Id. Unlike Hi-Way Fuel, the
Department here did not unilaterally deduct any costs from the bill Nelson submitted. Instead,
the Department included all costs Nelson submitted to it when it applied the distribution formula.
Thus, Hi-Way Fuel is inapplicable.
For the reasons stated above, the costs and attorney fees to be distributed are those that
are associated with the resolution of claims that triggered the recovery. Accordingly, the
Department did not err in its interpretation.
CONCLUSION
We hold that the Department’s distribution of Nelson’s recovery was not erroneous. The
plain language of RCW 51.24.060 indicates that only the attorney fees and costs associated with
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the resolved claims causing the recovery must be included in a distribution—not attorney fees
and costs related to other claims. We affirm the superior court.
A majority of the panel having determined that only the foregoing portion of this opinion
will be printed in the Washington Appellate Reports and that the remainder shall be filed for public
record pursuant to RCW 2.06.040, it is so ordered.
ADDITIONAL CLAIMS
In the unpublished portion of this opinion, we consider (1) whether the Department’s
interpretation of RCW 51.24.060 constituted rule making without following the required rule
making procedures, and (2) whether Nelson is entitled to an award of attorney fees and costs.
For the reasons below, we hold that no rule making occurred and that Nelson is not entitled to an
award of attorney fees and costs.
II. RULE MAKING
Nelson argues that the Department’s interpretation of RCW 51.24.060 constituted rule
making. We disagree.
The Administrative Procedure Act (APA), chapter 34.05 RCW, sets out certain formal
requirements that an agency must follow before adoption of a new rule. Providence Physician
Servs. Co. v. Dep't of Health, 196 Wash. App. 709, 725, 384 P.3d 658 (2016). If an agency adopts
a rule without compliance with these required procedures, we will declare the rule invalid. Id.
(citing RCW 34.05.570(2)(c)). However, for rule making procedures to apply, an agency action
or inaction must fall into the APA definition of a rule. Id.
In order to qualify as a “rule” under the APA, two elements must be satisfied. Id. at 726.
First, an agency action must be any agency “‘order, directive, or regulation of general
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applicability.’” Id. (quoting RCW 34.05.010(16)). Second, as applicable to this appeal, the
agency action must “establish[], alter[], or revoke[] any qualification or requirement relating to
the enjoyment of benefits or privileges conferred by law.” RCW 34.05.010(16)(c)
First, the Department’s order was not one of general applicability. Rather, the order set
forth the distribution calculation that applied to Nelson’s settlement. Nelson cites to two of the
Department’s representations made to the Board to support his position that the Department’s
order was one of general applicability. First, he cites a declaration that the Department attached
to its summary judgment motion to the Board where a Department representative stated:
I determined the Department’s distribution share of Mr. Nelson’s recovery
against Amanda Wade in the same manner as I would for any recovery made by an
injured worker against a third party tortfeasor—pursuant to RCW 51.24.060. If Mr.
Nelson obtains recoveries relating to this incident from additional third persons,
those recoveries will also be distributed in accordance with Ch. 51.24, RCW.
CP at 78-79. Nelson also cites the hearing before the Board where the Department’s attorney
stated:
[The Department] believe[s] that the third party statute is unambiguous and so there
has not been a need for rule making in order to resolve any ambiguities within the
statute.
CP 149. These statements, though, were part of the Department’s arguments to the Board. They
do not broaden the Department’s original order, which confined itself to an application of the
distribution formula to Nelson’s settlement. Furthermore, Nelson’s original objection to the
Department’s distribution order was not based on an improper interpretation of RCW 51.24.060.
Rather, he believed the calculation was “premature” and “understate[d] costs and attorney fees
incurred” because Nelson had other specific causes of action which might produce additional
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expenses. CP at 100. The Department’s distribution order and Nelson’s arguments related to
that order were limited to Nelson’s case.
Second, the Department’s order did not establish, alter, or revoke any qualification or
requirement relating to the enjoyment of benefits or privileges conferred by law. Generally, an
agency is permitted to interpret language in a statute or regulation without going through formal
rule making procedures. Providence Physician Servs. Co., 196 Wash. App. at 726 (collecting
cases). If, however, an agency adds a new requirement to an already well defined regulation,
that requirement will be deemed a rule subject to the formal rule making procedures. Id. at 726-
27 (citing Failor’s Pharmacy v. Dep’t of Soc. & Health Servs., 125 Wash. 2d 488, 886 P.2d 147
(1994)).
To support his argument, Nelson cites to Hillis v. Department of Ecology, 131 Wash. 2d
373, 932 P.2d 139 (1997). In Hillis, 131 Wash. 2d at 399, the Department of Ecology implemented
a system, not contemplated in the relevant statutes or regulations, in which it prioritized the
processing of applicants for certain water rights. Because applicants had a right under statute to
have their water permit application investigated and decided upon, the Hillis court held that the
agency engaged in improper rule making in creating its own priority system without going
through the formal rule making procedures. Id. at 399-400. Notably, the Department of Ecology
did not rely on an interpretation of any statutory or regulatory language to create its approach;
rather, it was in response to a reduced budget, a large number of applications pending, and the
complexities of determining an individual’s water rights. See id. at 378-80, 394.
Here, the Department’s order relied on the statutory language of RCW 51.24.060 to apply
the distribution formula to Nelson’s settlement. Although the Department did not engage in an
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overt interpretation of RCW 51.24.060 in its order, the application to Nelson’s settlement
constitutes an implicit reliance on the distribution formula’s language to arrive at its result.
Therefore, unlike Hillis, the Department’s order is more accurately characterized as a proper
interpretation of a statute, rather than an improper alteration of the distribution formula.
Accordingly, because the Department’s order is neither generally applicable nor an
alteration of any qualification or requirement in the distribution formula, Nelson’s rule making
claims fails.
III. ATTORNEY FEES
Nelson argues that he is entitled to attorney fees and costs both at superior court and on
appeal pursuant to RCW 51.52.130.9
Under RCW 51.52.130, where a worker appeals a decision of the Board of
Industrial Insurance Appeals, he is entitled to fees and costs if (a) the Board’s
decision is “reversed or modified” and (b) “the accident fund or medical aid fund
is affected by the litigation.” RCW 51.52.130(1).
Tobin, 169 Wash. 2d at 406.
Because Nelson fails to prevail on the merits of his claims, we do not reverse or modify
the Board’s decision. Thus, an award of attorney fees and costs is not appropriate.
CONCLUSION
We hold that (1) the costs and attorney fees to be taken into account in distributing a
recovery under RCW 51.24.060 are those associated with the resolution of claims that triggered
9
RCW 51.52.130 encompasses fees in both the superior and appellate courts when both courts
review the matter. Hi-Way Fuel Co., 128 Wash. App. at 363-64.
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the recovery; (2) the Department’s order did not constitute rule making; and (3) an award of
attorney fees and costs is not appropriate. Therefore, we affirm.
BJORGEN, C.J.
We concur:
JOHANSON, J.
LEE, J.
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