Puget Sound Liberals Weekly Newsletter #199
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Contents * Featured Articles Calendars of Events Communication with Our Members Changing the Way I Contact You* Opportunities Petitions Commentaries from Our Members David Spring: L & I Ignored Known Rebate Error** Rich Austin: Bye Bye Boeing Expansion Here Amelia Kroeger: No to Nuclear Power Ross Hunter: Light Rail on I-90, Not SR-520* Linda Clifton: Dave’s Peacemaking Is Violent* Liberals and Democrats Links to the Beef State and Local Links
to the Beef David Spring: Is Rob McKenna Incompetent or Corrupt?** Featured Advocacy Group: Jobs with Justice Nation and World Links to the Beef Our Liberal Spirit Our
Political Priorities ·
Fair Clean
Elections and Open Government ·
Fair Taxes and
Competent Spending ·
Investment for
Productivity ·
Quality
Health, Education, Jobs, Income ·
Environmental
Protection and Energy Independence ·
Security and
Equal Rights ·
Justice and
Peace Everywhere ·
International
Cooperation and Leadership Conservatives oppose all of these Let’s
End Our National Nightmare
Let’s
Restore Our American Dream More on Conservative opposition to our
American Dream Washington State’s 5 Major Needs · Federal Funding for Health and Education · Substituting
a Progressive Income Tax · Replacing
Conservative Legislators Quote of the Week
Calendar of Events
Saturday,
November 7 at 6:30 at Jeanne Legault’s home (2518 South Brandon Court, Seattle)
- inSPIRe Potluck and Discussion of
genetically engineered foods.
Communication
with Our Members
Changing the Way I Contact You
Last Thursday, either Microsoft, Comcast
or ATT imposed a 50 blast email limit per hour, with the result that it took me
three days to send out 2850 newsletter notices, during which time I could not
send any other emails.
So I have now arranged to send you our
newsletter notices each week through using an email blast service. This service will cost me $50 per month on
top of the $200 per year that I have been spending to maintain our
website.
I don’t want to charge for our
newsletter or do a lot of soliciting for donations. But I would appreciate some donations. I don’t maintain a separate Puget Sound
Liberals bank account, but do maintain a strict accounting of donations and
expenditures. So make your check out to
me and send it to Dave Thomas at 162 - 163rd Place SE, Bellevue
98008
Opportunities
Useful
Websites: contacts, maps, community organizing tools, and more.
Petitions
Tell the Democratic caucus
to strip any Democrat who supports a filibuster of their chairmanships.
Tell
Governor Gregoire’s office to not settle with our coal fired generating plant.
Commentaries
From Our Members
David Spring: L & I Ignored Known Rebate Error
This
update is for anyone who still thinks the Department of Labor and Industries is
trying to follow State Law by fairly balance retro versus retro loss ratios as required by WAC 296-17-90402. This
morning I received a report from the State Auditor’s office called the Towers
Perrin Report which was submitted to the State Auditor on April 29, 2009.
This
report estimated that the computer coding error caused $150 to $160 million in
over payments to retro agencies. This of course is much higher than the L &
I February 10, 2009 press release in which they stated the coding error led to
$100 to $150 million in over payments.
Sadly,
L & I has announced they only plan to recover 3 years of these over
payments – about $30 million. What they failed to announce is that even though
this error in 2008, the three years they are talking about is 2007, 2008 and
2009. Thus, they are only recovering two years.
This
is a clear violation of WAC 296-17-90402. The original requirement of the retro
program was that retro and non-retro would be treated fairly. This was not a
suggestion. It was a requirement. It is still a requirement. Failure to require
repayment of all over payments means L & I is transferring over $100
million from non-retro employers to retro employers.
L
& I’s failure to collect all of the overpayments is also in violation of
RCW 4.16.160 and RCW 51.48.260. These laws require repayment of the full
amount plus interest and specify that there is no time limit for recover of
debts owed the State. It is amazing that L & I thinks they can get away
with giving away over $100 million tax payer dollars to retro agencies.
But
it gets worse. On page 5 of the Towers report, they discussed the Occupational
Disease misassignment error. They stated that it was not “appropriate” for L
& I to be including unassigned claims with non-retro rather than fairly
dividing these claims between retro and non-retro. They indicated that L &
I was working with another actuarial firm to review this matter. Given that
this practice was obviously contrary to State law, one has to question what
there was to review. But the report confirms that L & I has known about
the Occupational Disease error at least since the Spring of 2009. L & I
has admitted that this error was about twice the size of the coding error
meaning that it was responsible for about $300 million in over payments.
So
this afternoon, I went to the Retro Proviso Study meeting. At the beginning of
the meeting, the Director of L & I, Judy Shurke, announced that they would
adopt a new policy to correct the Occupational Disease error beginning with the
January 1, 2010 retro group reporting period. Judy apologized to retro groups
that she could not delay this policy correction any longer. But the group she
should have apologized to were the non-retro groups. Because of her nearly one
year delay in correcting this problem, and giving retro groups yet another $30
million in over payments in 2009, Judy’s delay had cost non-retro groups another $30 million dollars. Judy seemed to be
completely unaware of the fact that when she gives $30 million to one group,
she is taking away $30 million from the other.
But it got worse. For as
the meeting went on, they took up discussion of the 45 month limitation error. This error is roughly half
the size of the double entry coding error, or about $75 million in over
payments. L & I actuary, Bill Vasek, put on a presentation admitting that
the way Retro Contracts were closed at 45 months created an over payment to
retro groups of about 5%. Bill Vasek called it a “bias” which Bill defined as
“an error which always goes in the same direction.”
Owen
Linch, a study group member representing a non-retro group (Joint Council of
Teamsters) asked Bill Vasek how long L & I has known about this error. Bill
said it had been discovered in a study done several years ago.
Owen then asked, the most
important question of the day: If you knew there was this error, why didn’t you
adjust for it?
Bill calmly replied:
“Because it was not part of our procedures.”
Owen
just shook his head in disgust. And so did I. WAC 296-17-90402 required fair
treatment of non-retro groups. Yet even when L & I knew for several years
about a bias or error in the 45 Month Adjustment calculations which favored
retro agencies and increased retro refunds by about $5 million dollars per
year, L & I did not left a finger to
comply with State law and/or fix this problem. Instead, they kept this problem
hidden from non-retro groups and from the public until Wyman discovered it and
called it “actuarially unsound.” This admission by L & I makes me wonder
what other actuarially unsound procedures L & I knows about, but is keeping
hidden from the public?
L
& I is now considering options to fix this “bias” sometime in the next
year. I have a better idea. They should fix the problem immediately by
tacking an additional 5% on to all 45 month retro adjustments and then go back
and demand repayment for all erroneously calculated 45 month adjustments for
the past 15 years. They do not need a new law or a new policy to do this.
Instead, this immediate action is required by WAC 296-17-90402, RCW 4.16.160
and RCW 51.48.260 – just as these same laws require recovery of the over
payments resulting from the double entry coding error and the occupational
disease mis-assignment error. All three of these errors had the same result.
Which was giving away hundreds of millions of dollar in over payments to retro
groups for which the retro groups were not entitled to receive.
Even
if one were to accept the Attorney General’s claim of a 3 year time limit, L
& I has only gone back 2 years on the coding error – costing tax payers and
non-retro groups an extra $15 million. They didn’t go back at all on the
Occupational Disease Error and in fact delayed taking action for nearly an
extra year after the problem was discovered. At $30 million a year times 4
years, this foot dragging cost tax payers and non-retro groups an extra $120
million. In addition, the 45 month limitation error – at $5 million a year
times at least 6 years of foot dragging – will cost tax payers and non-retro
groups at least $30 million. The grand total just in L & I foot dragging on
these three errors is $165 million. That is if one accepts the Attorney General
claim of a 3 year time limit.
But
since RCW 4.16.160 clearly states that there is no time limit, the total owed
is over $500 million. And with interest, the total owed is over $1 billion
dollars. My only comfort is my faith
that someday these hundreds of millions of dollars in undeserved over payments
must and will be paid back. State law requires it and justice demands it.
I
am continuing to deal with the problem of the State Attorney General’s failure
to enforce State laws. But eventually, action must be taken to insist that the
leaders of L & I show as much concern for the well being of non-retro
programs as they are currently showing for retro programs. Regards, David Spring, Director, Fair School Funding
Coalition, springforschools@aol.com.
Rich Austin: Bye Bye Boeing Expansion Here
Boeing's loyalty? Only to investors, both
foreign and domestic.
The Times (as well as other corporate media outlets)
carried stories about how unions are responsible for Boeing moving to South
Carolina. As one might expect, pale and stale devotees to such Beck-isms chimed
in like monkeys on a leash.
It is not surprising that Boeing did what it did.
Capitalism knows no loyalty. It has no
sense of community. It is not
patriotic. Decisions are made solely on
how best to temporarily appease stockholders.
And please remember that many of those anonymous Wall Street investors
are not residents of the U.S. and never will be.
How gullible – and lazy - people are! It would seem that those capable of making
informed decisions based on critical analysis must surely have their gullets
full of “free market” profiteering by now.
Alas, that is not the case. While repeating the anti-union line being
pushed by the right, they conveniently overlook the fact that union folk
received none of the $700 billion bailout money. Here again, billions of our bailout tax
dollars got sucked-up by foreign investors.
Neither are unions responsible for skyrocketing health care costs, nor
mortgage foreclosures. Unions did not start illegal, immoral wars that are
draining our national treasury dry.
Rather than kicking the “dogs” that need to be kicked, people who get
their “information” from FOX now want to attack fellow workers. What chumps? History demonstrates that divide and conquer
is a weapon that has been used by corporatism for eons.
Washingtonians enjoy one of the highest standards of
living in the U.S. We have one of the
best state health care systems in our nation.
We are among the most educated.
Unions have done a lot to contribute to our standard of living. Good
union wages raise compensation for non-union workers. And while no state health care system is
everything it should be, the best state
systems are those with the highest per capita incomes. The same is true of education.
South Carolina is a so-called “right-to-work” [for
less] state. It has one of the lowest
standards of living in our nation, an extremely high rate of illiteracy, and a
horrible health care system.
The South Carolina legislature ponied-up billions and
billions of tax dollars to “buy” Boeing’s relocation. Guess where they found the money? Yup, you got it. In public education and
state health care trust funds.
To all those who want to blame unions for every ill
known to humankind I would offer this suggestion: Move to South Carolina. Those of us here in Washington refuse to
participate in a race to the bottom. We
won’t sacrifice our living standards in order to keep smiles on the faces of
wealthy foreign investors.
If we had any sense we’d bring Boeing to its
knees. Believe me, we’d make a
difference. Boeing’s greedy investors
would soon replace the company’s CEO with someone who could assure
uninterrupted profits. That’s all they care about. Rich
Austin
Amelia Kroeger: No to Nuclear Power
Responding to link in October 30 PSL newsletter #198: In spite of no safe
waste disposal, nuclear energy is being considered to reduce greenhouse gas
emissions. http://seattletimes.nwsource.com/html/politics/2010132622_apusnuclearclimate.html
, here's the Beef:
Additional nuclear power plants not only include high production carbon
inputs; drawing on dwindling fresh water supplies; billions in taxpayer
subsidies; no plan for the transport and storage of nuclear waste, and few
long-term jobs, but a 2003
study revealed an estimate that the uranium rich ore would last three
years. The study (2008 update)
also indicates nuclear cannot generate net useful energy and will produce more
carbon dioxide than a fossil-fueled power station.
Is nuclear the answer, or even a meaningful part of the answer? This
reader does not think so. Readers can call Senators Boxer and Kerry (Clean
Energy Jobs & American Power Act), and Representatives Waxman and Markey
(American Clean Energy & Security Act) toll free 800-270-0309 to
express your dismay that far too much emphasis has been given to new nuclear
power plants. Amelia Kroeger
Ross Hunter:
Light Rail on I-90, Not SR-520
Dave, 520 doesn’t work as the initial light
rail route across Lake Washington for a variety of reasons. Personally, I’d
love to have a train running across 520 and have tried to negotiate to get
this. I’ve been convinced it’s not the right thing to do first. The Eastside
delegation has negotiated that the new bridge will have the capacity for, and
that the design will not preclude, light rail in the future when it makes
sense. The short-term reasons to stay with the I-90 route:
1.
You would have to dig extensive
(expensive) tunnels to get anywhere interesting. You can’t hook up with the
train through the U-District – it’s too deep to get to from Lake Washington.
Current train technology doesn’t climb hills as steep as it would take to get
to I-5. You’d have to go under, and then under Lake Union.
2.
There isn’t enough capacity on the
north-south train on the west side to take all the commuters from the eastside
into downtown Seattle.
3.
The design has been done and agreed
to for years. Re-opening it is a disaster. I would like a north-south route on
the eastside. Nevertheless, this region needs to learn how to make decisions
and execute on them. We cannot keep re-negotiating deals.
4.
Bellevue is a critical job center,
and growing much faster (in jobs) than most other parts of the eastside. This
is mostly by design, and it has to be the center of the train route so that we
get the density we need around the stations.
5.
The environmental sensitivity is
largely if you cross the Mercer Slough at I-90 to get to the BNSF route, which
isn’t going to happen. The train will almost certainly run up Bellevue Way and
over 112th. (People will argue with me over this, but the preferred
route by both Sound Transit and the City of Bellevue is the Bellevue way one.)
I agree that it looks like a good idea on first
glance. Ms. Hutchison had the same reaction. Once you spend some time looking
at it you start to understand why the decisions were made the way they were. If
all you care about is vehicle capacity you might want to leave I-90 alone, and
that’s (I believe) where Hutchison’s suggestion came from. A functional system
runs over I-90. As a region we have made this decision, and many other
decisions that hinge on it, over and over again for the last decade. We should
just execute. Thanks for continuing to
do this newsletter. Ross Hunter
I pointed out the disadvantages of using I-90 to extend light rail
from the Seattle area to the eastside.
Ross effectively points out the disadvantages of using SR-520 to the
Eastside. If using SR-520 won’t work,
then I hope that an I-90 route would somehow link with the BNSF route to
provide service to all Eastside cities.
Linda Clifton: Dave’s Peacemaking Is Violent
Dave,
in your newsletter
198, for a peacemaker you are incredibly violent.
I suppose you are wishing that a violent God would
intervene, sending plague and death, especially to Israeli settlers whom you
single out three times. That is an interesting evasion of the human obligation
to work for peace and justice. I don't know if you are aware that Israel
has proposed multiple times to exchange areas in the disputed territories in an
effort to create a more rational border, as two states are finally created that
can live side by side in peace and prosperity. Those proposals have
been rejected by Palestinian leaders, sometimes out of hand, rather than being
negotiated.
Your words imply that you support ethnic cleansing of
Jews from the West Bank but I'm sure you would support the continued ability
for Israeli Arabs to live, as they do now, with full rights of citizenship in
Israel. Your angry words do nothing to further sincere efforts to create a
much-need peace for all. Linda Clifton
There
is a difference between Israeli Arabs living in their own country and Israeli
Jews living illegally in another occupied country. Dave Thomas
Liberals
and Democrats
Government Watch
Also go to Whitehouse.gov.
Health Care Reform
House presents their
merged health care bill. For more. It
may vote on it this Saturday.
Senator Harry Reid apparently said that health care
reform may not get passed this year. I
don’t understand why waiting will increase the likelihood of it passing. The longer it waits, the longer the delay in
addressing labor, GLBT, immigration and other issues. And as soon as it passes, more attention can
be given to extra stimulus to produce more jobs. It is crucial that we have more jobs and
address these other issues in time to influence people to support Democrats in
the 2010 elections.
I have assumed that health care reform will pass, but
Harry Reid’s comments are making me nervous.
Education Reform
Education
Secretary Arne Duncan has established Race to
the Top funds for schools which meet four challenges.
Other
Our House has
voted to extend household credits and unemployment benefits.
The Senate Environment and Public
Works Committee approved
climate change legislation,
The House is considering a bill to regulate
financial companies and future bailouts.
Here’s the Beef
House
confronts Pharmaceutical Industry
After health care
reform passes, the task will be to convince voters that it helps them.
Two
more Democratic house members have been elected who will support public
option. For
more.
State
and Local
David Spring: Is Rob
McKenna Incompetent or Corrupt?
[I recommend reading the conclusion
of this commentary before reading the beginning. Dave Thomas]
This report reviews the interaction between four State statutes
as well as the Case law regarding whether there is a three year time limit to
recover overpayments made by the Department of Labor and Industries (L & I)
to retro agencies as a result of actuarial errors made by L & I since 1992.
These over payments exceed five hundred million dollars. With interest, the
amount owed the State Treasury exceeds one billion dollars. Yet L & I is
proposing to recover less than $30 million of the amount owed.
L & I claims that they cannot go back more than three years to
recover over payments due to “advice from the Attorney General, Rob
McKenna.” But the Attorney General’s
advice of a three year time limit appears to be contrary to at least two State
laws. These are:
RCW 4.16.160 which states that there is NO TIME LIMIT for recovery of
over payments owed the State (…there shall be no limitation to
actions brought in the name or for the benefit of the state, and no claim of
right predicated upon the lapse of time shall ever be asserted against the
state…). and RCW 51.48.260 which
requires that the full amount of over payments plus interest must be paid back
to the State (Liability of
persons unintentionally obtaining erroneous payments: Any person, firm,
corporation, partnership, association, agency, institution, or other legal
entity, but not including an industrially injured recipient of health services,
that, without intent to violate this chapter, obtains payments under Title 51
RCW to which such person or entity is not entitled, shall be liable for:
(1) Any excess payments received; and
(2) interest on the amount of excess payments at the rate of
one percent each month for the period from the date upon which payment was made
to the date upon which repayment is made to the state).
While
the Attorney General has thus far refused to explain his position, his advice
is believed to be based on two other State laws. RCW 51.52.060 states that L
& I Orders become final after 60 days. And RCW 51.16.190 (2) states that
there is a three year time limit for collection of a delinquent premium.
However, a “controlling” section of our State Constitution (Article 4, Section
6) – requiring our Courts to determine equity and fairness - trumps both of
these laws.
This
is discussed in a 2002 Retro Case, Fields Corp. v. Dep't of Labor &
Indus. (2002) 112 Wn. App. 450) in which a Retro employer failed to appeal
an L & I Order within 60 days and then tried to reverse the Order after the
three year time limit based on “newly discovered evidence” confirming that L
& I had made an error in their original Order. Fields appealed this
decision to Superior Court claiming that “despite every effort of due
diligence” Fields could not have known that the 1995 decision had been made in
error. Thus, Fields asked for “equitable relief” which the Court granted under
what is now known as the “Fields Exception.”
Background
On October 2, 2009, Senator Adam Kline and Representative Maralyn
Chase sent separate emails to the Attorney General providing him with the State
laws listed above and asking him to clarify why he had advised L & I that
there was a three year time limit.
On October 9, 2009, the Attorney General’s office responded to
Representative Chase’s request by stating that he would not answer her
questions due to “attorney client” privilege. Such privilege does not exist
because L & I has already publicly acknowledged the contents of the advice
in numerous press releases.
Since this issue involved a huge amount of money and since the
Attorney General’s advice is contrary to the above State laws, the public and
the legislature are entitled to know the legal reasons for the Attorney
General’s refusal to recover one billion dollars of the tax payers money.
On Friday, October 23, 2009, in order to figure out a solution to
this problem, Senator Jim Kastama arranged for me to meet with Mac Nicholson, a
non-partisan Senate attorney who helped draft Senate Bill 6035 (the Retro
Reform bill) which passed the Senate in 2009 and also passed two House
Committees, but is currently held up in the House Rules Committee.
At this meeting, I presented Mac with some proposed amendments
aimed at reducing the chance of Retro over payments in the future. Mac agreed
to consider the amendments and agreed that the Retro Program needed more
disclosure and better transparency.
Legal Argument
In Support of a Three Year Time Limit
Mac also discussed potential legal arguments that the Attorney
General might use to support his claim that there is a three year time limit.
Mac stated that the legal argument was likely related to the fact that legal
orders issued by L & I are considered “final” if affected parties, such as
retro agencies, do not file an appeal within 60 days. Since retro programs are
subject to a final “adjustment” back to 45 months, L & I might only have a
right to adjust contracts back to that final adjustment period.
For example, RCW 51.52.060 states:
… a worker, beneficiary, employer, health services provider, or
other person aggrieved by an order, decision, or award of the department must,
before he or she appeals to the courts, file with the board and the director,
by mail or personally, within sixty days
from the day on which a copy of the order, decision, or award was communicated
to such person, a notice of appeal to the (Industrial Insurance Review)
board.
In addition, RCW 51.16.190 (2)
Limitation on (Workers Comp) collection actions, states:
Any action to collect any delinquent premium, assessment,
contribution, penalty, or other sum due to the department from any employer
subject to this title shall be brought within three years of the date any
such sum became due.
Mac encouraged me to review the case law
on these two statutes. On a surface
level, the case law appears to support the 60 day final order argument and the
three year time limit.
For example, in Kingery v Department
of Labor and Industries (1997), 132 Wn.2d 162, 937 P.2d 565, our
Supreme Court refused to re-open a widow’s claim for death benefits even though
she had recently obtained new evidence that the original Order, issued 8 years
earlier, had denied her death benefits based on mistakes made by L & I and
the County Coroner.
In a split four to three decision, our
Supreme Court overturned the trial court which had overturned the Industrial
Review Board. The Supreme Court relied on Marley v. Department of Labor & Indus., 125 Wn.2d 533,
886 P.2d 189 (1994):
In Marley, the
claimant sought to overturn an unappealed Department order six years after she
was denied benefits, alleging an error of law in the decision. We held her failure to appeal within the required
60 days precluded her from raising the issue, even where the decision by the
Department may have been wrong; an
erroneous decision by the Department which was not timely appealed is final and
binding on all parties, and cannot be reargued by a claimant. Marley, 125 Wn.2d at 542-43.
The Kingery Opinion went on to state: Under the
system for handling industrial claims and the principles enunciated in Marley, the Department has exceedingly limited
authority to set aside its own unappealed orders. …Mrs. Kingery points to
no other basis for allowing the Department to exercise authority to set aside
unappealed final orders.
Thus on the surface, it appears as if L & I and the tax payers
are stuck with L & I’s final orders even if those Orders are based upon
hundreds of millions of dollars in errors made by L & I.
Legal Argument
that there is NOT a Three Year Time Limit
Thankfully for the tax payers, for several reasons discussed
below, this is not even remotely the case. First, we need to look more closely
at the Kingery case to see what really happened. First of all, the
majority of our Supreme Court did NOT agree with the claim that unappealed
Orders were final even when L & I made a mistake. In fact, only three
members of the Supreme Court agreed with this Opinion.
There was also a dissenting, but majority Opinion written by
Justice Alexander and supported by a total of four Supreme Court Justices,
which agreed with the trial court that final unappealed Orders of L & I
could be reviewed even beyond the time limits for review if such review was
required by the “equitable power of the court.”
Justice Alexander’s Opinion
was based upon Article 4, Section 6 of the Washington State Constitution
which states:
“Superior
courts and district courts have concurrent jurisdiction in cases in equity.
The superior court shall have original jurisdiction in all cases at law which
involve the title or possession of real property, or the legality of any tax,
impost, assessment, toll, or municipal fine..”
Whenever there is a conflict between two statutes, the court must
decide which of the two statutes is the “controlling” statute. Our State
Constitution trumps all other State laws. Thus, as Justice Alexander pointed
out in his Opinion, our Superior Court is always permitted to rule on cases of
equity or fairness:
“In
concluding that equitable considerations justified judicial intervention to
reopen Kingery's claim, the trial court relied on this court's decision in Abraham
v. Department of Labor & Indus., 178 Wash. 160, 34 P.2d 457 (1934). In
Abraham, we discussed the finality of unappealed orders of the Department and
said this court has long recognized that an unappealed Department order is
final "unless fraud, or something of like nature, which equity
recognizes as sufficient to vacate a judgment, has intervened."
Abraham, 178 Wash. at 163. “
“Despite being faced with
evidence which would have justified an award of benefits had it been presented
in 1983, the Department and Board refused to allow her to reopen her claim. It
was only then that she sought the intervention of the superior court. These facts cry out for the equitable
relief that the trial court granted to her.”
Justice Alexander pointed out that there
was a power differential between Mrs. Kingery and the Department of Labor ad
Industries such that it was reasonable for Mrs. Kingery to assume the
Department was correct which was what caused her to fail to appeal:
“In
light of those circumstances and the additional fact that she was given
information by officials of the government which pointed toward her not having
a valid claim for widow's benefits her decision to not appeal is understandable.
Despite these setbacks, she attempted to learn the facts and was rebuffed at
every turn until she was finally able to obtain the necessary evidence through
extra-judicial means.”
The deciding vote in Kingery was cast by
Justice Madsen who wrote: “I agree with Justice
Alexander that the court's equitable powers are not limited to cases where it
is shown that the claimant is essentially incompetent… I agree with the
majority, however, that the claimant in this case failed to diligently pursue
her rights.”
Thus, this case was NOT decided on the
basis that L & I cases are unappealable past the statute of limitations,
but it was decided based upon the contention of the majority that Mrs. Kingery
could have discovered the evidence of error by the County Coroner sooner.
In fact, because Justice Alexander’s
Opinion was in the majority on the issue now in question, the case summary for
this case states:
Order - Erroneous Decision
- Equitable Relief - Grounds - Inability to Obtain Facts - Circumstances Beyond Claimant's Control. An unappealed, erroneous decision by the Department of Labor and
Industries on a claim for industrial insurance benefits may be vacated,
and the claim reargued, if the claimant's failure to seek timely review was the
result of frustrated attempts to obtain the true facts of the case owing to
circumstances largely beyond the claimant's control. [See concurring
opinion of Madsen, J., and dissenting opinion of Alexander, J.]
In
2002, a Retro employer appealed a decision by L & I (Fields Corp. v. Dep't of Labor &
Indus. (2002) 112 Wn. App. 450) based on a
claim filed in 1995. Fields had the right to appeal the order within 60 days.
It did not, because it "had no information on which to do so."
Three years later, Fields received evidence from an expert witness
proving that the 1995 L & I Order had been made in error. Fields therefore
filed a petition for review with the Industrial Insurance Review Board. They
denied his petition because the 1995 Order had become a final order when Fields
failed to appeal it in 60 days. Fields appealed this decision to Superior Court
claiming that “despite every effort of due diligence” Fields could not have
known that the 1995 decision had been made in error. Thus, Fields asked for
“equitable relief.”
The Court granted equitable relief for Fields stating: “The Department acknowledged that the
"Washington State Constitution provides equity power to the courts,"
and that the Industrial Insurance Act "cannot and did not alter this
power." Relying on Kingery v. Department of Labor &
Industries, the Department then argues that this power "is
extremely limited," and that it either cannot or should not be applied
here.”
The Court disagreed with L & I. Instead, the Court found that
Fields had “valid reasons” for not questioning the original final order. These
“circumstances” justified granting Fields relief from the Statute of
Limitations:
“ The
parties have stipulated that "it was impossible" - not just difficult
or impractical - for Fields to have known within the 60 days prescribed for
appeal that Pierce's two claims were really only one claim. Thus, Fields cannot
be faulted for not appealing by December 1, 1995. …Thus, to withhold relief would
be to sanction the Department's collection, from a citizen of this State, an amount the Department knows is
not due… Here, we hold that an employer should be
permitted to litigate a claim that the Department does not dispute, and
that the employer had valid reasons for not litigating earlier. Declining to
endorse the Department's attempt to collect from a citizen of this State an
amount the Department knows truth will not support, we conclude that the
trial court did not err by granting equitable relief.”
This ruling, which discussed the Kingery ruling at length, has
since become known in subsequent cases as the “Fields Exception” to the general rule that L & I final orders
cannot be reviewed. Certainly if retro employers are entitled to re-open “final
orders” based upon the fact that they could not have possibly known that they
were being over charged, L & I should be able to re-open final orders based
upon the fact that they could not have possibly known they were under-charging
retro employers. To do otherwise is to sanction NOT collecting an amount the Department knows is due.
3 Year Statute of Limitations Applies only to “Collections”
of Defaults
Industrial
Insurance - Assessment for Default - Increased Premiums - Review.
“The
dispute centers upon the duty to pay, and is not related to the steps to be
taken because of a refusal to pay…“The aforementioned (3 year) statute of
limitations serves to limit the time in which the Department may bring an
action to collect delinquent premiums. The proceeding before the Board,
as we have already noted, was not a collection action. “ (emphasis added).
Similarly, an Order to recover over payments is not a collection action
because Retro agencies are not in default. They are simply being required to
return over payments to which they were not entitled to receive.
What are the
Controlling Statutes in the Retro Over Payment Recovery Case?
Controlling
Statute #1 The most controlling statute is Article 4, Section 6 of the
Washington State Constitution which states: “Superior courts and district courts have concurrent jurisdiction in cases
in equity. The superior court shall have original jurisdiction in all cases
at law which involve the title or possession of real property, or the legality of any tax, impost,
assessment, toll, or municipal fine..”
There are at least two reasons Article 4 Section 6 of our State
Constitution applies:
First, there is the equity
question. It would be extremely unfair to the tax payers and to non-retro
employers if retro employers were not required to return the hundreds of
millions of dollars in over payments. Failure to require return of over
payments hurts the public because, the loss of hundreds of millions of dollars
from the Accident Fund (a part of the State Treasury) must be made up by
increased Workers Comp premiums, and possibly even other taxes, which will
ultimately have to be paid by the public. Failure to require pay back of over
payments would hurt non-retro employers even more. Not only would they be
subjected to higher Workers Comp rates, but they would not be able to fairly
compete with retro employers since retro employers would have hundreds of
millions of tax payers dollars with which they could drive non-retro employers
out of business by offering lower prices.
In Reed v. Cunningham,
126 Iowa 302, 101 N. W. 1055, the Court said: "…such refusal or neglect (of State officers to protect the public
interest) is the very basis on which equity will take jurisdiction; for otherwise the taxpayer whose interest
is indirect would be utterly without remedy. But for the right to invoke the
aid of a court of equity, officers might plunder the public treasury with
entire immunity so long as they, or others for them, continue in control of the
governing body."
Second, the retro overpayment recovery issue involves the legality of a “tax” and/or “assessment.” This is because all
premiums and payments to and from the Department of Labor and Industries are in
fact taxes. The following is in the Introduction section of the Industrial
Insurance (Workers Compensation Program) Act:
RCW 51.08.015 "Amount," "payment,"
"premium," "contribution," "assessment."
Wherever and whenever in any of the provisions of
this title relating to any payments by an employer or worker the words
"amount" and/or "amounts," "payment" and/or
"payments," "premium" and/or "premiums,"
"contribution" and/or "contributions," and
"assessment" and/or "assessments" appear said words shall be construed to mean taxes,
which are the money payments by an employer or worker which are required by this title to be made to the
state treasury for the accident fund, the medical aid fund, the supplemental
pension fund, or any other fund created by this title.
Thus, the claim that L & I’s final Orders cannot be subject to
equitable review is not supported either by Case Law or by our State
Constitution.
Controlling
Statute #2 RCW 4.16.160.
According to Senator Adam Kline, who is the Chair of the Senate
Judiciary Committee and an attorney with more than 30 years of legal
experience, Chapter 4.16 is the most important or “controlling statute” because
it defines the Statutes of Limitations for all causes of action. The specific
section which applies to this case is RCW 4.16.160 which states:
RCW 4.16.160 Application of limitations to actions by state,
counties, municipalities.
The
limitations prescribed in this chapter (RCW 4.16) shall apply to actions
brought in the name or for the benefit of any county or other municipality or
quasi-municipality of the state, in the same manner as to actions brought by
private parties: PROVIDED, That, except as provided in RCW 4.16.310, (a statute which applies to defects in
building construction) there shall be no
limitation to actions brought in the name or for the benefit of the state, and no claim of right predicated upon the
lapse of time shall ever be asserted against the state…
The most recent Supreme Court case deciding an issue related to
RCW 4.16.160 was
Wash.
State Major League Baseball Stadium Pub. Facil. Dist. v. Huber, Hunt &
Nichols-Kiewit Constr., Co, et. al., Supreme Court Docket #
81029-0. The Opinion was filed on March
5, 2009. This case concluded that a State agency (in this case the State
Public Facilities District or PFD) was entitled to collect more than $2.46
million dollars in damages involving SAFECO field repairs even though the
normal Statute of Limitations had expired. The
Supreme Court ruled that there was no Statute of Limitations on debts owed a
State agency.
Justice Stephens, who wrote the Supreme Court Opinion then explains when and why there is not
Statute of Limitations on debts owed a State agency:
“We have found an action to be “for the benefit of the state” under RCW 4.16.160 where it involves a duty and power inherent in the notion of sovereignty or embodied in the state constitution. WPPSS, 113 Wn.2d at 296. For example, in Bellevue School District No. 405 v. Brazier Construction Co., 103 Wn.2d 111, 115-16, 691 P.2d 178 (1984), we held that a school district could bring tort claims for design and construction defects 20 years after completion because in building schools the district was acting in its sovereign capacity. Similarly, we have held that actions arising out of the sovereign power of taxation are not subject to the bar of a statute of limitations. Gustaveson v. Dwyer, 83 Wash. 303, 309-10, 145 P. 458 (1915); Commercial Waterway Dist. No. 1 v. King County, 10 Wn.2d 474, 479-80, 117 P.2d 189 (1941); City of Tacoma v. Hyster Co., 93 Wn.2d 815, 821, 613 P.2d 784 (1980); Allis-Chalmers Corp. v. City of North Bonneville, 113 Wn.2d 108, 112, 775 P.2d 953 (1989). This court in Gustaveson stated: It is apparent from the doctrine of these authorities that a general statute of limitations has no application, whether the tax sought to be collected is to become the property of the state and payable directly into the state treasury, or whether it is to become the property of the particular county or municipality and payable into the municipal treasury to be expended for municipal purposes. In either case the tax has been imposed and collected for the express purpose of carrying on the functions of government. . . . All of the rights of the county here involved are traceable to and rest in the sovereign power of taxation. Gustaveson, 83 Wash. at 309-10.
Another relevant case was HERRMANN v. CISSNA et al., 82 Wn.2d 1, 507 P.2d 144 decided by the Washington State Supreme Court on March 1, 1973. This case is relevant because it involves the obligations of an insurance company (such as the Retro Insurance companies). In this case, the State Insurance Commissioner brought an action in King County Superior Court against an insurance company. The Insurance Company filed a motion for partial summary judgment contending the State’s claim for $661,000 was time barred by the Statute of Limitations. King County Superior Court granted the insurance companies motion. In a unanimous Opinion, the Washington State Supreme Court found that there is no time limit to State claims and thus reversed the trial court. Justice Rosellini writing for the Supreme Court noted:
“The respondents (Insurance company) suggest that this
provision (RCW 4.16.160) is inapplicable because the action is not brought in
the name of the state itself but rather in the name of the Insurance
Commissioner. We held in Smith v. Hopkins, 10 Wash. 77, 38 P. 854 (1894), that
it was immaterial whether an insurance commissioner's action to recover assets
of the corporation was brought in his own name or in the name of the state…
The fourth relevant case was State v Vinther, just discussed by Justice Rosellini in which the Supreme Court found that the Workers Compensation Act was specifically in accordance with the “sovereign powers of the State.” We discussed the public policy considerations which prompted the enactment of the workmen's compensation act and said of it: The act, as a whole, is the exercise of a governmental function in the fullest sense of the word, having its support in the police power of the state. 176 Wash. at 394. In conclusion, recovery of claims by the Workers Comp program meets the tests of RCW 4.16.160 and thus is not time barred by the Statute of Limitations.
Controlling Statute #3 : RCW 51.48.260.
RCW
51.48.260 states: Liability of persons unintentionally obtaining erroneous
payments. Any
person, firm, corporation, partnership, association, agency, institution, or
other legal entity, but not including an industrially injured recipient of
health services, that, without intent to
violate this chapter, obtains payments under Title 51
RCW to which such person or entity is
not entitled, shall be liable for:
(1) Any excess payments received;
and (2) interest
on the amount of excess payments at the rate of one percent each month for the
period from the date upon which payment was made to the date upon which
repayment is made to the state.
This statute is different from RCW 4.16.160 in that it applies
specifically to cases involving payments received under Title 51 RCW (in other
words to payments received under the Workers Compensation Act including over
payments made to Retro agencies). RCW 51.48.260 requires repayment of “excess
payments received” including interest - even when there was no intent to
violate the Chapter. There are only two citable cases regarding this statute.
Both specifically concluded that claims
owed the Workers Compensation program are NOT time barred.
The first case, decided by
Division Two of the Court of Appeals on March 19, 1999 is Dept of Labor and
Industries v. Kantor, (1999) 94 Wn. App. 764. The primary issues were what
the words “entitled” and “excess payments” meant in RCW 51.48.260. Division Two
reversed the trial court and held that the Department of Labor and Industries
has a statutory right under RCW 51.48.260 to recover “any excess payments.” Thus,
when a payment has been later determined to be in excess of what the payee was
“entitled to receive”, L & I (and the State’s tax payers) can recover the
tax payers money back without limitation as to the reason the excess payment
was made to the provider, even if there was no intention to violate the Workers
Compensation Act.
In a
unanimous Opinion, Division Two wrote: “If
a health care provider, acting without intent to violate the Act, "obtains
payments" to which he or she is not "entitled," the provider is
liable for "any excess payments received" and any applicable interest
on such excess payments. RCW 51.48.260.”
Here is how
Division Two defines the word “entitled:
“Neither the Industrial Insurance Act, the medical aid
rules, nor case law defines "entitled" as that term is used in RCW
51.48.260. Nor does the legislative
history provide guidance. Thus, we resort to extrinsic aids, such as
dictionaries, to find the word's ordinary meaning. Brenner v. Leake, 46 Wn. App. 852, 854-55, 732 P.2d 1031 (1987). A
legal definition of "entitle" is "to give a right or legal title
to" something. BLACK'S LAW DICTIONARY 477 (5th ed. 1979). A more common
meaning is to "furnish with proper grounds for seeking or claiming
something." WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 758 (3d ed.
1969).
Here, Kantor did not have a legal right to payment… And the
audit authorized by RCW 51.36.100 provides the basis for L&I to take
"corrective action," including …recoupment of payments made to the
provider, together with interest. Because the Act authorized Kantor to bill
L&I for proper and necessary treatment only, Kantor's bill for medically
unnecessary treatment did not provide "proper grounds" for or a
"right or legal title" to payment by L&I. Because Kantor was not
"entitled" to receive payment for improper treatment, he is liable to
L&I for those monies as "excess" payments. RCW 51.48.260.
RCW 51.48.260
focuses on the repayment of funds to which the payee was not entitled.«10»
Because Kantor is a payee of funds to which he was not entitled, the statute
authorized L&I to demand a refund.
Here is how Division Two defines the term “excess”:
“We also note that "excess" is an undefined term.
According to the common dictionary definition, "excess" is a
"state of surpassing or going beyond limits" or "more than or
above the usual or specified amount." WEBSTER'S THIRD NEW INTERNATIONAL
DICTIONARY 7?2 (3d ed. 1969). As Kantor was limited to payments to which he was
entitled only, and he was entitled only to payment for proper and necessary
medical treatment, payments for improper and unnecessary treatment are
"excess" under RCW 5l.48.260. "We note that RCW 51.32.240
allows L&I to recoup disability payments made to injured workers due to
error, mistake, erroneous adjudication and fraud. See Weyerhaeuser Co. v.
Bradshaw, 82 Wn. App. 277,
918 P.2d 933 (1996). Thus excess merely means more than
what the payee was entitled to receive even if that amount in excess was
determined after the payee had received the payment.
What is the correct process for getting
the Attorney General to enforce State law?
The Attorney General has at least three affirmative duties:
1.
A legal duty to enforce and comply with existing State
laws.
2.
A financial duty to minimize losses to the State Treasury.
3.
A social duty to act in the public interest.
In advising the Department of Labor and Industries that there was
a three year time limit to recover over payments when in fact, under RCW
4.160.160 there was no time limit, the Attorney General failed to perform all
three of the affirmative duties:
1.
The advice was clearly contrary to existing State law (RCW
4.16.160 among others).
2.
The advice might cost the State Treasury more than one
billion dollars.
3.
The advice was not in the best interest of the public.
Paramount Duty
of the Attorney General
The Attorney General’s letter to Representative Chase focuses on
the Attorney General’s Duty to represent the Department of Labor and Industries
– as if L & I were the Attorney General’s primary client. In fact, the
Attorney General has a far greater duty to protect the public interest than to
L & I.
In State ex rel. Dunbar v. State Bd. Of Equalization, 140 Wash. 433, 440, 249
P. 996 (1926), our Supreme Court stated: “(The Attorney General’s) paramount
duty is the protection of the interest of the people of the state and, where he
is cognizant of violations of the constitution or the statutes by a state officer,
his duty is to obstruct and not to assist; and where the interests of the
public are antagonistic to those of state officers, or where state officers may
conflict among themselves, it is improper for the Attorney General to defend
such state officers.”
Thus, where there is a conflict between protecting the public interest versus protecting the improper actions of employees of a State agency, the Attorney General has a higher duty to the pubic than to the employees of the State agency. In Reiter v. Wallgren (1947), 28 Wn.2d 872, our Supreme
Court discussed the possibility that an Attorney General might fail to protect
the public interest: “The attorney general may be incompetent or corrupt, and may
therefore refuse to institute proceedings to prevent actions however illegal,
and the funds and property of the state be placed at the mercy of state
officers, who, by corruption or incompetency, may produce or allow such a
disposition of the property or funds of the state, during their term of office,
and before they could be reached by the slow process of impeachment, as would
practically ruin the state… We never have held that, in a proper case where the
attorney general refused to act to protect the public interest, a taxpayer
could not do so. We have not had occasion to pass upon such a question, and we
trust we never shall. “
We are rapidly reaching the point where such a question might have to be asked. What can be done when the Attorney General refuses to act? Dunbar mentions the possibility of (the Governor) appointing a special prosecutor when the attorney general’s representation would conflict with the duty to represent and protect the interests of the people of the state. Dunbar (1926), 140 Wash. at 440-41. Article III, Section 5 of Our State Constitution does charge the Governor with the responsibility to see that the laws are faithfully executed. In Reiter v. Wallgren (1947), 28 Wn.2d 872, our Supreme Court stated: "Under our form of government, it is the right and duty of the judicial department to interpret the law and declare its true meaning and intent. Equally, it is the right and duty of the executive department to see that the laws as thus interpreted are properly enforced. As the final right to determine the true intent and purpose of all laws is lodged in the supreme court of this state, so is the final determination as to their enforcement and execution lodged in the governor. “
Therefore, the proper course of action is to draft a Complaint to the Attorney General - pointing out the State laws which are not being enforced - and demanding that the Attorney General take action to enforce these laws. Hopefully, the Attorney General will then take the actions required by State law. But if the Attorney General refuses to act within a reasonable time, such as 30 days, and fails to address the issues raised in the Complaint, then the next step would be to ask the Governor to appoint a special prosecutor to look in this matter. I realize this has never been done before. But we have never had an Attorney General refuse to act in a matter involving the recovery of over one billion tax payer dollars before.
As one final point, it is not merely
the Attorney General’s duty to enforce State law and act in the public interest.
It
is also the duty of our Governor and every member of our legislature. I
therefore hope that we can work together to find a resolution to this problem
which allows our State Treasury to recover the hundreds of millions of dollars
in over payments which were improperly given to retro agencies. Regards, David Spring, Director, Fair School Funding Coalition, springforschools@aol.com
Proposed letter
from Legislators to the Attorney General
November 1, 2009
To Rob McKenna, Attorney General of Washington
1125 Washington Street SE, PO Box 40100
Olympia, WA 98504 -0100
RE: Complaint
and Demand to Enforce RCW 4.16.160, RCW 51.48.260 & WAC 296-17-90402
Dear Attorney General McKenna,
Please consider this email/letter to be a complaint and demand
that you enforce RCW 4.16.160,
RCW 51.48.260 and WAC 296-17-90402.
In a Senate Labor and Commerce Committee hearing on October 2,
2009, the Director of Labor and Industries, Judy Schruke, was asked why she
could not recover the full amount of over payments which were improperly given
to retrospective rating agencies during the past 17 years. Judy stated that she
had been advised by the Attorney General’s office that there is a three year
time limit for recover of over payments owed the State.
We believed that this advice given by your office of a three year
time limit is in error, based upon the plain meaning of RCW 4.16.160, RCW
51.48.260 and WAC 296-17-90402:
RCW 4.16.160 Application of limitations to actions by state,
counties, municipalities.
The limitations prescribed in this
chapter (RCW 4.16) shall apply to actions brought in the name or for the
benefit of any county or other municipality or quasi-municipality of the state,
in the same manner as to actions brought by private parties: PROVIDED, That,
except as provided in RCW 4.16.310, (a statute which applies only to
defects in building construction) there
shall be no limitation to actions brought in the name or for the benefit of the
state, and no claim of right
predicated upon the lapse of time shall ever be asserted against the state…
RCW
51.48.260 states: Liability of persons unintentionally obtaining erroneous
payments: Any
person, firm, corporation, partnership, association, agency, institution, or
other legal entity, but not including an industrially injured recipient of
health services, that, without intent to
violate this chapter, obtains payments under Title 51
RCW to which such person or entity is
not entitled, shall be liable for:
(1) Any excess payments received;
and (2) interest
on the amount of excess payments at the rate of one percent each month for the
period from the date upon which payment was made to the date upon which
repayment is made to the state.
WAC
296-17-90402 requires that
retro employers as a group and non-retro employers as a group fund the same portion of their total claim costs
relative to their total premium charges. (If retro groups are not required to
refund ALL over payments, then they will have paid a lower proportion of
premiums than non-retro groups which is a violation of WAC 296-17-90402).
We ask that you correct this error by advising the Department of
Labor and Industries that, according to RCW 4.16.160, there is no time limit
for recovery of over payments; and according to RCW 51.48.260, and WAC
296-17-90402, the Department of Labor and Industries is required to accurately
determine the full amount of over payments made to retrospective rating
agencies and collect the full amount of over payments so that, after these over
payments are refunded by retro agencies, retro and non-retro agencies will have
funded the same proportion of claims relative to their premiums.
In addition, we request that you send us a copy of your letter to
the Department of Labor and Industries. Thank you for your assistance in
addressing this matter.
Sincerely,
SIGNATURES OF LEGISLATORS, CC TO GOVERNOR
Return to beginning of this Commentary.
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Here’s the Beef
What proportion of our
legislators should be charged with ethics violations for accepting bribes? More.
Our
public disclosure commission protects the public disclosure of campaign
donations.
ACORN’s
voter registration drives are trusted in Washington State.
Nation
and World
Here’s the Beef
Democrat
Creigh Deeds ran for Virginia governor as a conservative and was easily beat.
Our
Liberal Spirit
When Messes Occur
When I was unable last week
to send my newsletter notices quickly and unable to send emails, I recalled one
of my understandings of such a situation.
When registering for college, there were always similar messes, but they
always got resolved. So amidst my
frustration, I assumed that I would find a way to resolve the situation.
I began by describing my mess
to three people, one of whom directed me to two others. One of these others, John Bunn was able to
direct me to Constant Contact and guide me through setting it up. So as with college registration, my mess was
resolved.
The lesson is that when
messes occur, don’t panic - which is often easier said than done. Assume that a solution will be found and
begin looking for it.
Recommended Books – See our list of books for liberals
Eric
Alterman, 2003, What Liberal Media? The
Truth about BIAS and the News
Eric Alterman claims that the commercial media are not
liberal. In fact they present far more
Conservatives than Liberals. Last week’s
newsletter listed a
large number of Liberal commentators, very few of which have gotten any
exposure by commercial media.