WORKERS' COMPENSATION ‑- INDUSTRIAL INSURANCE ‑- EMPLOYERS ‑- FUNDING CERTAIN INDUSTRIAL INSURANCE BENEFITS
Where an employer who is certified to self-insure its workers' compensation obligations has paid a permanent partial disability award to an employee who subsequently becomes totally and permanently disabled from the combined effects of the injury and a preexisting disability, that employer is then required to pay into the state pension reserve fund the accident cost which would have resulted solely from the injury had there been no preexisting disability.
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June 18, 1984
Director, Department of Labor and Industries
General Administration Building
Olympia, Washington 98504
Cite as: AGO 1984 No. 15
By recent letter you requested our opinion on a question which we paraphrase as follows:
Where an employer who is certified to self‑insure its workers' compensation obligations has paid a permanent partial disability award to an employee who subsequently becomes totally and permanently disabled from the combined effects of theinjury and a preexisting disability, is that employer then required to pay into the state pension reserve fund the accident cost which would have resulted solely from the injury had there been no preexisting disability?
We answer this question in the affirmative subject to the qualifications set forth in our analysis.
Your inquiry asks us to assume a single industrial injury initially resulting in a permanent partial disability for which the self‑insuring employer has paid a permanent partial disability award. Thereafter, that same injury, combined with a preexisting [Orig. Op. Page 2] disability, has resulted in total and permanent disability. Without the prior disability, however, the noted injury would not have resulted in total permanent disability but, instead, only in a partial permanent disability.
The first statute to be considered in connection with this matter is RCW 51.16.120(1) which reads as follows:
"(1) Whenever a worker has a previous bodily disability from any previous injury or disease and shall suffer a further disability from injury or occupational disease in employment covered by this title and become totally and permanently disabled from the combined effects thereof or die when death was substantially accelerated by the combined effects thereof, then the experience record of an employer insured with the state fund at the time of said further injury or disease shall be charged anda self‑insured employer shall pay directly into the reserve fund only the accident cost which would have resulted solely from said further injury or disease, had there been no preexisting disability, and which accident cost shall be based upon an evaluation of the disability by medical experts. The difference between the charge thus assessed to such employer at the time of said further injury or disease and the total cost of the pension reserve shall be assessed against the second injury fund. The department shall pass upon the application of this section in all cases where benefits are paid for total permanent disability or death and issue an order thereon appealable by the employer. Pending outcome of such appeal the transfer or payment shall be made as required by such order." (Emphasis supplied)
Also to be noted is RCW 51.32.080(2) which relates to permanent partial disability awards and contains the following pertinent proviso:
". . . PROVIDED FURTHER, That in case permanent partial disability compensation is followed by permanent total disability compensation, any portion of the permanent partial disability compensation which exceeds the amount that would have been paid the injured worker if permanent total disability compensation had been paid in the first instance, shall be deducted from the pension reserve of such injured worker and his or her monthly compensation payments shall be reduced accordingly."
[Orig. Op. Page 3]
The concepts of permanent partial disability and total permanent disability are entirely separate concepts. The respective definitions of those terms appear in RCW 51.08.150 and 51.08.160; and see also,Ellis v. Department of Labor and Industries, 88 Wn.2d 844, 567 P.2d 224 (1977);Franks v. Department of Labor and Industries, 35 Wn.2d 763, 215 P.2d 416 (1950); andFochtman v. Department of Labor and Industries, 7 Wn.App 286, 499 P.2d 255 (1972). Compensation for permanent partial disability is paid for loss of bodily function and has no relationship, per se, to the claimant's ability to work. Conversely, compensation for total permanent disability is paid solely for a claimant's inability to carry on a gainful occupation.
As a consequence, the fact that a claimant was paid a permanent partial disability award earlier in a claim history should have no effect on the employer's responsibility to fund a subsequently awarded total disability pension. The pension must be fully funded. It is either an obligation of the state fund (in the case of a state fund employer) or of the employer (i.e., self‑insurer). RCW 51.14.010. [Orig. Op. Page 3] And where the second injury fund contributes to the pension reserve fund under 51.16.120(1),supra, the balance must be made up by the accident fund (in the case of a state fund employer) or it must likewise be paid by the self‑insurer. Indeed, if the self‑insurer were relieved of this obligation by virtue of its having previously paid a permanent partial disability award to the claimant, the state fund would then have to make up the difference‑‑or the second injury fund would have to fund the entire total disability pension. Neither ofthose results, however, is contemplated by the workers' compensation act. Moreover, we should also note that if the second injury fund did not apply, the self‑insuring employer would have to fund the entire pension‑‑regardless of whether it had previously paid a permanent partial disability award to the claimant.1/
There is, however, a qualification on the foregoing‑-resulting from the last proviso to RCW 51.32.080(2), supra. If the pension reserve of the injured worker and his or her monthly compensation payments are reduced under that proviso by reason of the prior receipt of a permanent partial disability award, we believe that the employer's contribution into the pension reserve fund should be [[Orig. Op. Page 4]] reduced or eliminated correspondingly. For example, if the claimant's pension reserve is reduced by the entire amount of the previously paid partial disability award, and that award is adjudged to be the amount of the employer's liability to the pension reserve under RCW 51.16.120,supra, the employer would not then be responsible for any payment into the pension reserve fund. But if, instead, the aforementioned proviso of RCW 51.32.080(2) does not reduce the pension reserve, the self-insurer must contribute its share pursuant to RCW 51.16.120(1), supra.
We trust that the foregoing will be of assistance to you.
Very truly yours,
KENNETH O. EIKENBERRY
ROBERT G. SWENSON
Assistant Attorney General
*** FOOTNOTES ***
1/Under the industrial insurance law, the department pays any total disability pension award, even in the case of a self-insuring employer, subject to reimbursement by the employer as provided for in RCW 51.44.070.a0