AGO 1968 No. 14 - Mar 26 1968
INDUSTRIAL INSURANCE - LABOR - MASTER AND SERVANT - USE OF INDUSTRIAL INSURANCE CATASTROPHE FUND.
RCW 51.16.130, relating to the distribution of catastrophe costs under the industrial insurance act, is applicable so as to reduce the charges to the class accounts of an employer which are required by RCW 51.16.020, in the case of an industrial accident in which three or more employees of a single employer are fatally or otherwise injured as specified therein, irrespective of whether the same three or more employees were also engaged in a single class of employment.
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March 26, 1968
Honorable Brian J. Lewis
State Representative, 41st District
1804 127th Avenue S.E.
Bellevue, Washington 98004
Cite as: AGO 1968 No. 14
By letter previously acknowledged you have requested an opinion of this office on a question which we paraphrase as follows:
Does RCW 51.16.130, relating to the distribution of catastrophe costs under the industrial insurance act, apply to reduce the charges to the class accounts of an employer as required by RCW 51.16.020 in the case of an industrial accident in which three or more employees of a single employer sustain injuries specified therein where no more than two of the injured employees are in the same class of employment?
We answer your question in the affirmative for the reasons set forth in our analysis.
RCW 51.16.130 provides as follows:
"Whenever there shall occur an accident in which three or more employees are fatally injured or receive injuries consisting of [[Orig. Op. Page 2]] loss of both eyes or sight thereof, or loss of both hands or use thereof, or loss of both feet or use thereof, or loss of one hand and one foot or use thereof, the amount of total costs other than medical aid costs arising out of this accident that shall be charged to the proper class of the accident fund and to the account of the employer, shall be twice the average cost of pension claims chargeable under RCW 51.16.020, and the balance of costs arising out of the accident shall be charged against and defrayed by the catastrophe injury account."
This "catastrophe amendment" was originally enacted as part of § 1, chapter 247, Laws of 1947, in basically the same form as it now exists, except that the amount chargeable was $9,000.00 instead of "twice the average cost of pension claims chargeable under RCW 51.16.020." The present language was enacted in § 22, chapter 70, Laws of 1957.
The obvious intent of the "catastrophe amendment" as expressed in the wording thereof, is to soften the financial impact of single accidents which result in multiple deaths and/or disabilities of the number and type described. It is also clear from the express language of the amendment that the statute affords protection or relief to the "proper class of the accident fund" and, also, to the employer of the workman involved in a catastrophe. The application of this statute can perhaps be better understood after a brief review of some of the basic provisions of the industrial insurance act (Title 51 RCW).
The Washington industrial insurance accident fund is a state fund maintained by premium contributions from employers engaged in employments included within the industrial insurance act. The accident fund is composed of class accounts; employers within the same occupations or risk classifications contribute premiums to the same class accounts. Benefits payable from the accident fund because of injuries to employees of employers within a particular classification are (generally speaking) payable from the class account of the accident fund to which the employers pay premiums. A "charge" to a class account of the accident fund represents an actual money payment or transfer from, or obligation to the particular class account in the accident fund. A "charge" to the account of the employer simply represents an amount utilized (or charged to the employer's cost experience) for purposes of determining his [[Orig. Op. Page 3]] premium rate. The act contemplates that ". . . industry should bear the greater portion of the cost of its accidents . . . in the proportion in which it produces injury and creates expense, . . ." (RCW 51.16.010). The actual premium rate a particular employer is required to pay is normally1/ determined as follows (RCW 51.16.020, in part):
". . . The actual premium rate which any employer shall be required to pay for the accident fund shall be thirty percent of the basic rate, plus seventy percent of the employer's cost rate for each workman hour reported by him during each fiscal year over the five year period next preceding the then last July 1st, but in no case shall the total rate exceed one hundred sixty percent of the basic rate."
It can be seen from the last quoted statutory language that the employer is afforded a measure of protection against an excessively high premium obligation to the accident fund by the provision limiting his premium rate to one hundred sixty percent of the basic rate.2/ Further, under the statutory [[Orig. Op. Page 4]] scheme the individual employer is protected by several provisions limiting the amount of charges to be made against his individual cost experience (which experience is a factor in determining the actual premium rate). For example, RCW 51.16.020 provides, in part:
". . . and in so computing the cost experience of any employer, seventy-five percent of the average cost of pension claims shall be charged against his experience for each injury resulting in death or total permanent disability of a workman instead of the actual cost to the accident fund of such injury. . . ."
Another provision, RCW 51.16.120, limits the charge to an employer in situations wherein a workman is rendered totally and permanently disabled from a combination of an industrial injury or occupational disease and a preexisting disability; the employer is charged "only with the accident cost which would have resulted solely from said further injury or disease, had there been no preexisting disability." The catastrophe amendment under consideration, RCW 51.16.130, supra, also affords protection to the employer (as well as to the class account of the accident fund) and is consistent with other provisions lessening the impact of the normally more costly death or total permanent disability injuries.
Turning now to the specific problem at hand, the question posed assumes a factual situation in which one employer's establishment or work comprises several occupations classified in different risk categories or classes of employment, the employer's premiums being computed according to the hours reported in each [[Orig. Op. Page 5]] classification.3/ The question further assumes an accident in which three or more of the employer's workmen sustain injuries of the magnitude specified in RCW 51.16.130, with no more than two of the workmen being employed in the same classification. The point thus raised is whether the statute requires three or more injuries of the type specifiedin the same classification before the employer is entitled to the statutory relief. The statutory language of RCW 51.16.130 (set forth at the beginning of this opinion) does not specifically require that three or more of the injured workmen must have been reported in the same classification before the employer is entitled to relief. Any such requirement or limitation upon the application of the statute thus must arise from an interpretation or construction of the language of the statute rather than from the plain wording thereof.
On April 15, 1948, shortly after the passage of the 1947 catastrophe amendment, the attorney general issued an opinion (AGO 1947-48:94e) to the director of the department of labor and industries on a question which is the converse of the situation here posed; the question then asked was whether the statute provided relief to theclass account of the accident fund in a multiemployer, single class accident (as distinguished from the instant problem involving a single employer, multiclass accident). The attorney general determined that catastrophe relief should be granted, pointing out that the amendment is highly remedial in nature and should be liberally construed to protect the class account. Much of the reasoning of the opinion is applicable to the question here posed. The opinion, in part, concluded:
"The test of a catastrophe contained in the amendment of 1947 which created the Catastrophe Fund is an accident in which three or more employees are injured in a single accident; that [[Orig. Op. Page 6]] is, a single accident injuring three or more is the decisive factor."
The opinion then noted that the statute does not express an intention to limit the protection afforded aclass to a situation wherein the employees injured have a common employer, and concluded:
". . . We cannot, in the absence of apt language indicating such an intent, impute to the legislature a purpose to limit the application of the quoted section to an accident in which three or more were killed or permanently totally disabled unless they have a single employer. Had the legislature so intended, such purpose would have been manifested by apt terms."
Similarly, in the problem at hand, we note the statute (which on its face affords protection to the employer as well as the class account) does not purport to limit the protection afforded the employer to a situation in which three or more of his employees are reported in the same classification of the employer's business. Had such a limitation been intended it could easily have been expressed by the legislature. To read such a limitation into the statute would be to modify the plain wording of the statute and to give the statute a restrictive rather than a liberal interpretation. Nor do we see any compelling reason to require a departure from the normal rules of statutory construction and to impose such a limitation (assuming we were free to do so).
Clearly, under the rationale of the 1948 opinion, supra, a catastrophe exists as to an employer when three or more of his employees are fatally or otherwise injured in the manner specified in the catastrophe amendment regardless of class to the same extent that a catastrophe exists as to a class regardless of employer in the converse situation. Absent the protection of the statute, an individual employer could well incur a heavy financial burden from multiple injuries of the type specified; this burden would exist whether or not three or more of the specified injuries would have occurred in any one classification.
As we have previously seen, it is not foreign to the purposes of our industrial insurance act to grant the employer relief from the high cost of death and total permanent disability injuries. In fact, in injuries involving a single death or [[Orig. Op. Page 7]] total permanent disability, the account of the employer is charged with "seventy-five percent of the average cost of pension claims" instead of the actual cost to the accident fund of such injury (RCW 51.16.020,supra) with no corresponding relief being afforded to the class account of the accident fund from which the benefits must be paid. Thus, it is not a novel proposition to allow an employer relief without such being contingent upon the effect upon the class account of the accident fund to which he reports.
While analogous provisions in other "state fund" jurisdictions are not particularly in point because of varying statutory language, it is worth noting that our act is not unique in its emphasis on protection for the individual employer. For example, the "catastrophe" provisions of an analogous4/ state workmen's compensation act in West Virginia states (West Virginia Code, chapter 23, article 3, § 1):
"A catastrophe is hereby defined as an accident in which three or more employees are killed or receive injuries, which, in the case of each individual, consist of: Loss of both eyes or the sight thereof; or loss of both hands or the use thereof; or loss of both feet or the use thereof; or loss of one hand and one foot or the use thereof. . . . In case of a catastrophe to the employees of an employer . . . the catastrophe payment arising from such catastrophe shall not be charged against, . . . such employer . . ."
InState ex rel. Mountain Fuel Co. v. Trent, 138 W.Va. 737, 742, 77 S.E. 2d 608 (1953), the West Virginia supreme court [[Orig. Op. Page 8]] of appeals declared:
". . . The catastrophe fund was created by the Legislature for the purpose of minimizing theindividual financial loss to an employer from an accident which resulted in multiple fatalities or designated injuries. . . ." (Emphasis supplied.)
Further, and quite importantly, we are advised that the department of labor and industries in its administrative interpretation and practices since the enactment of the catastrophe amendment in 1947, has never required that three or more of the injuries specified shall have occurred in any one class of the employer's business as a condition to the employer's obtaining catastrophe relief.5/
Assuming, arguendo, an ambiguity in the statute in so far as it applies to the situation posed, this long-standing administrative practice of the department must be accorded considerable weight in the construction of the statute. Bradley v. Dept. Labor & Ind., 52 Wn.2d 780, 329 P.2d 196 (1958). This rule of statutory construction gains additional weight when viewed in light of the attorney general's opinion of 1948, and the fact the legislature amended this particular section of the industrial insurance act in 1957, without modifying the wording thereof to direct a different application of the statute. The following language appears in Bradley v. Dept. Labor & Ind., supra, at page 786:
". . . Where a statute is ambiguous, construction placed upon it by the officer or [[Orig. Op. Page 9]] department charged with its administration is not binding on the courts but is entitled to considerable weight in determining the legislative intention, and the persuasive force of such interpretation is strengthened when the legislature, by its failure to amend or by amending some other particular without repudiating the administrative construction, silently acquiesces in the administrative interpretation. White v. State, 49 Wn.2d 716, 306 P.2d 230."
To summarize, we therefore conclude that an employer is entitled to catastrophe relief under RCW 51.16.130 in the situation posed for several primary reasons: First, the plain wording of the statute indicates catastrophe relief is applicable to protect the employer (as well as the class account of the accident fund into which he pays premiums), and that such relief should apply to the employer so long as three or more of his employees are killed or injured in the manner specified. Secondly, there is no limitation contained in the statute to require that the injured employees must all have been reported in the same classification by the employer; to read such a limitation into the statute would constitute a restrictive rather than a liberal interpretation of the remedial statutory provision. Finally, the long-standing administrative interpretation and practice of the agency charged with administering the statute, acquiesced in by the legislature, must be weighed heavily in favor of the adopted interpretation.
If there should exist considerations of policy or difficulties in practice which would make it advisable that the employer be denied relief in the situation posed, the remedy (at this late date) should be in the form of legislative action clearly expressive of an intent to deny such relief and thereby to abrogate the department's longstanding interpretation of the existing law.
[[Orig. Op. Page 10]]
We trust that the foregoing will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
JOHN C. MARTIN
Assistant Attorney General
PHILIP H. AUSTIN
Assistant Attorney General
*** FOOTNOTES ***
1/Premiums of employers in the building industry as defined in RCW 51.16.050 are computed on a base rate only with no merit rating credits or penalties given or imposed on such employers.
2/The "basic rate" is a basic premium rate for the class which is determined by the department under the following guide lines (RCW 51.16.020, in part):
"The amounts to be paid into the accident fund shall be determined as follows: The department shall, prior to the first day of January of each year, determine for each class and subclass, a basic premium rate for the ensuing calendar year and, in so doing, shall take into consideration: First, that no class shall be liable for the depletion of the accident fund for accidents happening in any other class; second, that each class shall meet and be liable for its own accidents; third, the cost experience of each class and subclass over the two year period immediately preceding July 1st of the year in which the basic rate is being fixed; fourth, the then condition of each class and subclass account."
The catastrophe amendment constitutes a variance from the general principle that each class should be responsible for its own accidents, for charges against the catastrophe injury account of the accident fund are defrayed by charges to each class of the accident fund (in proportion to the total industrial insurance premium contributions of each class for the preceding calendar year). See, RCW 51.44.050; 51.44.060.
3/RCW 51.16.080 provides:
"If a single establishment or work comprises several occupations listed in chapter 51.20 in different risk classes, the premium shall be computed according to the workmen hours of each occupation or, in the discretion of the director, a single rate of premium may be charged for the entire establishment based upon the rate of premium of the occupation reporting the largest number of workmen hours."
4/West Virginia maintains a "state fund"; employers are classified according to the "nature of the business and degree of hazard incident thereto"; premium rates are established for the classes and employers can "earn" an individual rate; provision is also made for the fixing of a minimum and maximum individual rate. In cases of (single) deaths or total permanent disability, the employer's account is charged only with the average cost of pension cases rather than the actual cost to the state fund. Provision is also made limiting the charge to the employer's account in situations similar to that provided in RCW 51.16.120 of our Washington act. See, West Virg. [[Virginia]]Code, chapter 23, Art. 2, § 4.
5/We are advised the first application of this interpretation occurred in 1948, shortly after the issuance of the attorney general's opinion previously noted. The latest such application arose out of the September 25, 1963, U and I Sugar plant disaster in which seven men were killed; one of the employers had three employees killed and was granted catastrophe relief although no more than two of its employees were reported in any one class. The department's practice has been to prorate the catastrophe charge to the employer's cost experience among the various accounts in which he reports (and in which the injuries have occurred) on the basis of the number of injuries involved in each classification.