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Jones v. Firemen's Relief and Pension Board of City of Richland6/16/1987
The Firemen's Relief and Pension Board of the City of Richland appeals from the trial court's determination it is not entitled to subrogation, as provided by RCW 41.26.150, against any sums Harold R. Jones is to receive as a result of an automobile accident. Two issues are presented: (1) whether the Pension Board's right to subrogation as set out in RCW 41.26.150(3) applies against any of Mr. Jones' automobile insurance benefits, and (2) whether this statutory right to subrogation attaches before the injured individual is fully compensated for his or her injuries.
Both parties stipulate to the following facts. On July 21, 1985, Mr. Jones was severely injured in a 2-car collision.
Mr. Jones received $25,000 (the policy limit) from the other driver's insurer, $10,000 in personal injury protection (PIP) coverage and $25,000 in underinsured motorist benefits (policy limit) from his own insurer. Additionally, the Pension Board paid over $13,000 in disability benefits to Mr. Jones, a disabled, retired fireman, to cover his medical expenses. Thereafter, the Pension Board claimed a right of subrogation against any sums he obtained as a result of his injuries. The parties stipulate the driver of the other automobile is judgment proof. The parties further stipulate Mr. Jones' damages exceed the total amount of all insurance benefits to which he is entitled.
Mr. Jones brought this action seeking a judgment declaring that the Pension Board has no right of subrogation in any benefits. The trial court denied the Pension Board any right to subrogate, holding it could recover only the disability benefits it had paid to Mr. Jones after he had been fully compensated for his injuries. The Pension Board sought direct review of that decision to the Washington Supreme Court which remanded to this court. We affirm.
The Pension Board initially contends its subrogation rights entitle it to be reimbursed for any disability payments it paid to Mr. Jones from the proceeds he received under his underinsured motorist policy. RCW 41.26.150 provides that any employer or disability board, such as the Pension Board here, which pays Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) disability benefits to an active member, e.g., Mr. Jones, may have the right to seek subrogation for any benefits paid. RCW 41.26.150 provides in relevant part:
(1) Whenever any active member . . . is confined in any hospital or . . . requires medical services, the employer shall pay for . . . the necessary medical services not payable from some other source as provided for in subsection (2). . . .
(2) The medical services payable under this section will
be reduced by any amount received or eligible to be received by the member under workers' compensation , social security [,] . . . insurance provided by another employer, other pension plan, or any other similar source. . . .
(3) Upon making such payments as are provided for in subsection (1), the employer shall be subrogated to all rights of the member against any third party who may be held liable for the member's injuries or for the payment of the cost of medical services in connection with a member's sickness or disability to the extent necessary to recover the amount of payments made by the employer.
(Italics ours.)
The Pension Board reads RCW 41.26.150(3) as entitling it to subrogation rights in two different situations: (1) where the member obtains recovery against "any third party"; or (2) where the member is paid for "the cost
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