OFFICES AND OFFICERS ‑- STATE ‑- DEPARTMENT OF LABOR AND INDUSTRIES ‑- INDUSTRIAL INSURANCE ‑- WORKERS' COMPENSATION ‑- APPROVING SETTLEMENTS OF THIRD PARTY CLAIMS
Under the provisions of chapter 51.24 RCW, as amended by chapter 85, Laws of 1977, 1st Ex. Sess. (SSB 2154), either the State Department of Labor and Industries or a self-insured employer may legally approve a settlement between an injured worker (or beneficiary) and a third party tortfeasor which is for an amount less than the amount already disbursed by the department or self-insurer for industrial insurance benefits.
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February 7, 1979
Honorable R. Ted Bottiger
State Senator, 2nd Dist.
405 Public Lands Building
Olympia, Washington 98504 Cite as: AGLO 1979 No. 9
This is written in response to your recent request for our opinion on the following question:
Under the provisions of chapter 51.24 RCW, as amended by chapter 85, Laws of 1977, 1st Ex. Sess. (SSB 2154), may the State Department of Labor and Industries or a self-insured employer approve a settlement between an injured worker (or beneficiary) and a third party tort-feasor which is for an amount less than the amount already disbursed by the department or self-insurer for industrial insurance benefits?
We answer the foregoing question in the affirmative.
Chapter 51.24 RCW, a part of the state industrial insurance law, involves the situation of a worker who is injured in the course of his or her employment as a result [[Orig. Op. Page 2]] of the tortious conduct of a third party (i.e., not the employer or a fellow employee of the injured worker). Under the law such a worker may simultaneously proceed against the Department of Labor and Industries or the worker's self-insuring employer (as the case may be) for industrial insurance benefits and against the third-party tort-feasor in a common law personal injury action. RCW 51.24.020. If the worker prevails against the third party tort-feasor, however, the department or self-insuring employer has a lien against a designated portion (see RCW 51.24.060) of the recovery for those amounts paid out by it pursuant to the industrial insurance claim.
In addition, the statute contemplates the possibility of a settlement between the worker and the third party tort-feasor. Specifically, RCW 51.24.090 provides as follows:
"Any compromise or settlement of the third party cause of action by the injured worker or beneficiary which results in less than the entitlement under this title is void unless made with the written approval of the department or self-insurer."
In your letter you have referred to a previous letter opinion of this office dated December 4, 1978, to State Senator Ruthe Ridder (copy enclosed) as possibly indicating a negative answer to the question you have here posed. At the outset, however, let us quickly dispel that notion. Our opinion to Senator Ridder was directed to an entirely different question; namely, whether the above‑referenced provisions of chapter 51.24 RCW, as amended by chapter 85, Laws of 1977, 1st Ex. Sess., authorize the department or a self-insurer to agree to reduce its statutory lien (as provided for in RCW 51.24.060) against amounts recovered from a third party tort-feasor. Nothing was said or intimated in that opinion, however, about the authority of the department or a self-insurer to approve or disapprove the amount of a settlement between the injured worker and the third party tort-feasor‑-against which the statutory lien would apply.
It seems clear to us from an examination of the express provisions of RCW 51.24.090,supra, that either the department or a self-insurer can legally approve a settlement which will result in a recovery, pursuant to the statutory lien, of an amount less than the amount of benefits already paid out under the industrial insurance act. The language of that statute specifically contemplates that possibility‑-i.e., that the department or self-insurer may [[Orig. Op. Page 3]] approve a settlement ". . . which results in less than the entitlement under this title . . ."‑-since it provides that such a settlement is void ". . . unless made with the written approval of the department or self-insurer. . . ." And since, in accordance with RCW 51.24.040 and 51.24.060, the injured worker may draw industrial insurance benefits during the pendency of his or her third party action it necessarily follows that the "entitlement" thus referred to may already have been paid out, either in whole or in part, before the settlement is negotiated. Therefore, approval for "less than the entitlement" could, in fact, constitute approval for less than the amount of the benefits already paid. Nevertheless, the act contemplates the right of approval of such a settlement without restriction as to the amount of the entitlement actually paid out.
Once again, however, there is a significant distinction to be drawn between such action by the department or a self-insurer and that which we said could not be done in our prior opinion to Senator Ridder, supra. Simply stated, it is one thing for the department or self-insurer to approve of a settlement between the injured worker and the third party tort-feasor which will result in a recovery, under the statutory lien provided for by RCW 51.24.060, of an amount less than the amount already expended by the department or self-insurer for industrial insurance benefits. But it is another for the department or a self-insurer, after the settlement has been consummated, to agree to take a lesser amount from the settlement in satisfaction of the lien than it is statutorily entitled to in accordance with RCW 51.24.060.
We trust that the foregoing will be of assistance to you.
Very truly yours,
JOHN C. MARTIN
Deputy Attorney General