OFFICES AND OFFICERS ‑- STATE ‑- DEPARTMENT OF LABOR & INDUSTRIES ‑- ATTORNEY'S FEES UNDER § 7, CHAPTER 274, LAWS OF 1961

OFFICES AND OFFICERS ‑- STATE ‑- DEPARTMENT OF LABOR & INDUSTRIES ‑- ATTORNEY'S FEES UNDER § 7, CHAPTER 274, LAWS OF 1961.

(1) Under § 7, chapter 274, Laws of 1961 (RCW 51.24.010), an injured workman who successfully maintains a third party action, the recovery of which is had after June 8, 1961, is entitled to have the state bear a proportionate share of the costs and attorney's fees (after approval of the court) that he has incurred in effecting recovery.

(2) Before the department of labor and industries can be called upon to contribute a proportionate share of attorney's fees and costs the workman must file a civil action in a court of law.

                                                              - - - - - - - - - - - - -

                                                                  March 27, 1962

Honorable Jerry Hagan
Director, Department of
Labor and Industries
General Administration Building
Olympia, Washington

                                                                                                              Cite as:  AGO 61-62 No. 104

Dear Sir:

            By letter previously acknowledged you requested an opinion of this office regarding the construction to be placed on § 7, chapter 274, Laws of 1961.  We paraphrase your questions as follows:

            (1) Under § 7, chapter 274, Laws of 1961, is it the date of injury or date of recovery which determines whether the amount to be repaid the state, as the result of a "third party action," is to bear "its proportionate share of attorney's fees and costs incurred by the injured workman? . . ."

            (2) Is it necessary, before the 1961 amendment to RCW 51.24.010 may be applicable, for an injured workman to file a civil action in a court of law?

            In answer to your first question, it is our opinion that it is the date of recovery rather than the date of injury which is determinative. We answer question two in the affirmative as explained in our analysis.

             [[Orig. Op. Page 2]]

                                                                     ANALYSIS

            Question (1):

            By way of background it should be noted that pursuant to RCW 51.24.010, a workman who is covered by workmen's compensation and who is injured in the course of his employment as the result of the negligence or wrong of another not in the same employ, may elect to seek recovery against that person rather than assign the claim to the department of labor and industries.  During the pendency of the third party action the person is allowed to receive benefits under the workmen's compensation act.  Prior to 1961, the workman had to repay to the department, out of his third party recovery, all amounts received under the act without any deduction for attorney's fees and costs.  In 1961, our legislature passed § 7, chapter 274, Laws of 1961, amending RCW 51.24.010, chapter 23, Laws of 1961, and RCW 51.24.010, to read as follows:

            "If the injury to a workman is due to negligence or wrong of another not in the same employ, the injured workman or, if death results from the injury, his widow, children, or dependents, as the case may be, shall elect whether to take under this title or seek a remedy against such other, such election to be in advance of any suit under this section and, if he takes under this title, the cause of action against such other shall be assigned to the state for the benefit of the accident fund and the medical aid fund; if the other choice is made, the accident fund and the medical aid fund shall contribute only the deficiency, if any, between the amount of recovery against such third person actually collected and the compensation provided or estimated by this title for such case:  PROVIDED, That the injured workman or if death results from his injury, his widow, children or dependents as the case may be, electing to seek a remedy against such other person, shall receive benefits payable under this title as if such election had not been made, and the department for the benefit of the accident fund and the medical aid fund to the extent of such payments having been made by the department to the injured workman or if death results from his injury, his widow, children or dependents as the case may be shall be subrogated to the rights of such person or persons against the recovery had from such third party and shall have a lien thereupon.  Any such cause of  [[Orig. Op. Page 3]] action assigned to the state may be prosecuted or compromised by the department in its discretion in the name of the workman, beneficiaries, or legal representative.  Any compromise by the workman of any such suit, which would leave a deficiency to be made good out of the accident fund or the medical aid fund may be made only with the written approval of the department.  If such approval is not obtained, claim for the deficiency will be deemed to have been waived.

            "In any action brought under this section wherein recovery is made by compromise and settlement or otherwise, the amount to be repaid to the state of Washington as a result of said action shall bear its proportionate share of attorney's fees and costs incurred by the injured workman or his widow, children, or dependents, as the case may be, and the court shall approve the amount of attorney's fees."  (Emphasis indicates pertinent amendatory language.)

            From a reading of the statute and considering the history thereof, it appears that the legislature by its 1961 amendment intended to remove, what, we presume, it considered to be the injustice which existed under the earlier law.  No doubt the legislature recognized that the department would incur legal expenses if an action were filed by it upon assignment from the workman and that it was only fair and reasonable, that the department should bear a portion of the expenses where the workman maintains the action and a recovery is made which inures to the benefit of the department.

            With this in mind, you desire to know in what "actions" the state will be required to bear its proportionate share of any attorney's fees and costs incurred by a workman in effecting recovery.

            In resolving your inquiry, it must be remembered that: (1) The general rule in this state is thatawards payable under the workmen's compensation act are governed by the law in effect at the time of the injury.  See,Lynch v. Dept. of Labor and Industries, 19 Wn. (2d) 802, 145 P. (2d) 265 (1944); (2) a statute is presumed to operate prospectively only and it will not be held to apply retrospectively in the absence of language clearly indicating such legislative intent; Lynch v. Department of Labor and Industries, supra; (3) the general rule that the legislature intended an act to operate prospectively onlyis not applied when the statute relates to remedies only and does not affect vested rights.  Pape v. Department of Labor and Industries, 43 Wn. (2d) 736, 264 P. (2d) 241 (1953);Hammack v. Monroe St. Lbr. Co., 54 Wn. (2d) 224, 339 P. (2d) 684 (1959).

             [[Orig. Op. Page 4]]

            InSavitt v. L. & F. Construction Co., 124 N.J.L. 173, 10 A. (2d) 728 (1939), the supreme court of New Jersey determined a statute similar to § 7, chapter 274, Laws of 1961, supra, related to the "remedy" rather then substantive contractual rights.  While we concede that theSavitt case can be distinguished from the situation at hand, we feel the reasoning of the court is of assistance to us in determining the "actions" which fall within the purview of § 7, supra.  Therein the court said (p. 174):

            "As pointed out in the opinion, the statute concerns the remedy rather than substantive contractual rights.  Evidently, its purpose was to correct a manifest and unintentional injustice in the earlier statute, under which the injured employee could receive substantially less compensation where there was a recovery from a third-party tortfeasor [[tort-feasor]]than where there was none.  In essence, the statutory provision under review merely places upon the employer the burden of the counsel fee payable for service rendered in the third-party action to his ultimate profit.  After all, these provisions have nothing to do with the compensation to be paid under the basic statutory scheme of compensation.  Clearly, it was not the legislative purpose to vary the compensation payments, i.e., to create two classes with essentially different rights‑-one where a third-party recovery is had and the other where there is none such.  The design of all these provisions relating to credit for a third-party recovery was to advantage the employer‑-to give him the benefit of the moneys thus paid.  The regulation of this incidental phase of the compensation statute cannot reasonably be said to impair the obligation of the basic contract."  (Emphasis supplied.)

            See, also,Record v. Indemnity Ins. Co. of North America, 103 Cal.App. 2d 434, 229 P. (2d) 851 (1951).

            Accordingly, it is our opinion that the statute relates to "remedies" rather than substantive rights and hence should be applied in any case wherein recovery is had after the effective date of § 7, chapter 274, Laws of 1961.  We do not construe the payment of the proportionate share of such costs as an "award" or "benefit" under the workmen's compensation act, the amount of which, under the earlier decisions of our supreme court, is fixed by the date of injury.

             [[Orig. Op. Page 5]]

            In other words, an injured workman, irrespective of the date of his injury, who successfully maintains a third party action, the recovery of which is had after June 8, 1961, is entitled to have the state bear a proportionate share of the costs and attorney's fees he has incurred in effecting recovery after approval by the court.

            In passing, it should be mentioned that in our consideration of your inquiry we have not overlookedHammack v. Monroe St. Lbr. Co., supra; Layton v. Home Indemnity Co., 9 Wn. (2d) 25, 113 P. (2d) 538 (1941); andBodine v. Dept. of Labor and Industries, 29 Wn. (2d) 879, 190 P. (2d) 89 (1948).  Suffice it to say, we do not feel these cases warrant a conclusion different than that stated above.

            Question (2):

            Relative to your second question, it is our opinion that before the department can be called upon to contribute a proportionate share of attorney's fees and costs, the workman must file a civil action in a court of law.  Where the language of a statute is plain and unambiguous, as in this case, there is no room for construction.  The meaning will be discovered from the wording of the statute itself.  State v. Houck, 32 Wn. (2d) 681, 203 P. (2d) 693 (1949).  As used in the statute, the term "action" is a word of art.  InState ex rel. Calderwood v. Schomber, 23 Wash. 573, 575, 63 Pac. 221 (1900), the court quoted with approval the following definition of "action":

            "'The formal demand of one's right from another person or party made and insisted on in a court of justice.  In a quite common sense, action includes all the formal proceedings in a court of justice attendant upon the demand of a right made by one person or party or another in such court, including an adjudication upon the right and its enforcement or denial by the court.'"

            Also, the last sentence of the amendment quoted above requires that "the court shall approve the amount of attorney's fees."  This language leaves no room for doubt; an action must be filed before this provision becomes operative.

            We trust that the foregoing will be of assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

GILBERT C. VALLEY
Assistant Attorney General