May 20, 2014
by Lee Ann Lowe

Washington Court of Appeals finally issues long-awaited Zimmerman opinion.

lee ann loweIn Board of Industrial Insurance Appeals v. South Kitsap School District and Daniel Zimmerman, issued today, the Court of Appeals addressed the extent of the Board’s authority to disapprove structured settlements.  

In February 2012 Mr. Zimmerman and the District entered into a structured settlement agreement in which he agreed to forfeit his right to future disability benefits in exchange for $60,000 issued in monthly payments.  As required by statute, the structured settlement was presented to the Board for approval.  The Board members rejected the structured settlement by a vote of two to one stating it did not meet the requirements of RCW 51.04.063(3)(b) because the information provided was not sufficient to determine whether the settlement was in the worker’s best interests.  The Board’s decision indicated that the structured settlement could be resubmitted if additional information was provided, including, but not limited to, claimant’s other sources of income.  The Board expressed concern that the settlement amount would not cover claimant’s living expenses and, therefore, was not in his best interests. 

The District appealed to the Superior Court which granted the District’s motion for summary judgment on the basis that the statute unambiguously precludes the Board’s consideration of a represented worker’s best interest, and that the Board may not substitute its own opinion for that of the worker’s attorney.  The Superior Court further held that RCW 51.04.063(3)(b) “does not include a finding of best interest of the worker.”  The Board appealed to Superior Court. 

The Court of Appeals agreed with the Superior Court stating the statute “does not permit the Board or its hearing examiner to reject a proposed [structured settlement] for a worker represented by an attorney because they deem it not to be in the worker’s best interest.”  In reaching this conclusion the Court noted that the only part in which the statute requires consideration of the worker’s best interest is when a worker is unrepresented and the IAJ must approve the structured settlement before it is presented to the Board members.  Injured workers with attorneys proceed directly to the Board, which is not required to consider the worker’s best interests.  Thus, the Court concluded, the Legislature intended for the Board to consider the worker’s best interests only in those cases in which the worker was not represented by counsel. 

With this decision self-insured employers can now enter into a structured settlement with a represented claimant and no longer fear rejection from the Board on the basis that the agreement is not within the worker’s best interests. Only time will tell whether this will result in more approved structured settlements from the Board.  

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