                                                                                                Filed
                                                                                          Washington State
                                                                                          Court of Appeals
                                                                                           Division Two

                                                                                           March 7, 2017




      IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                        DIVISION II
    TIMOTHY M. NELSON.                                              No. 47672-0-II

                               Appellant,                  PART PUBLISHED OPINION

         v.

    DEPARTMENT OF LABOR & INDUSTRIES,

                               Respondent.

        BJORGEN, C.J. — Timothy Nelson appeals the superior court’s decision affirming the

Board of Industrial Insurance Appeals (Board), which determined that the allocation of Nelson’s

recovery from a third party under the distribution formula of RCW 51.24.060 was proper. Under

the Industrial Insurance Act (IIA), title 51 RCW, a worker injured in the course of his

employment has a right to sue any third party involved in the tortious act. RCW 51.24.030(1).1




1
  “If a third person, not in a worker’s same employ, is or may become liable to pay damages on
account of a worker’s injury for which benefits and compensation are provided under this title,
the injured worker or beneficiary may elect to seek damages from the third person.” RCW
51.24.030(1).
No. 47672-0-II


If the injured worker collects any “recovery” from the third party, it is subject to a distribution

formula that requires, among other matters, the attorney fees and costs to be proportionately

shared by the injured worker and the Department. RCW 51.24.060(1).

       In the published portion of this opinion, we address Nelson’s contention that the

Department’s distribution of his recovery was premature because the pertinent IIA provisions

require that attorney fees and costs from all claims pursued, even if unsuccessful, be included in

the distribution of recovery. We hold that the Department’s distribution of Nelson’s recovery

was not erroneous because the plain language of RCW 51.24.060 indicates that only attorney

fees and costs associated with the resolved claims causing the recovery must be included in a

distribution—not attorney fees and costs related to other unsuccessful claims. We address

Nelson’s remaining arguments in the unpublished portion of this opinion and hold that they fail.

Accordingly, we affirm.

                                               FACTS

       In the course of his employment, Nelson was in a motor vehicle accident with Amanda

Wade and suffered personal injuries. The Department paid $116,958.64 in worker’s

compensation benefits to Nelson. Pursuant to RCW 51.24.030(1), Nelson elected to pursue civil

damages against Wade and Pierce County.2 The trial court granted summary judgment in favor

of Pierce County on all Nelson’s claims against it. Nelson then settled with Wade, releasing all

claims and causes of action against her. The settlement amount totaled $525,000, $408,000 of




2
 Other than a faulty highway design claim, it is unclear from the record what claims Nelson
asserted against Pierce County.


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No. 47672-0-II


which was allocated to pain and suffering.3 The remaining $117,000 constituted economic

damages considered a “recovery” and triggered distribution under the formula set forth in RCW

51.24.060.

       The Department contacted Nelson about the settlement with Wade and requested a copy

of the settlement agreement, his attorney fee agreement, and “a ledger of costs relating to this

recovery.” Clerk’s Papers (CP) at 77. The attorney fee agreement indicated that Nelson’s

lawyers represented him on all claims relevant to his motor vehicle accident with Wade and that

he would pay his lawyers one-third of the total recovery in the case. The ledger of attorney costs

showed various expenses totaling $6,523.23.

       After receiving this information, the Department asserted a lien of $114,957.324 against

Nelson’s settlement. Pursuant to the RCW 51.24.060 formula, the Department then calculated

the distribution of Nelson’s $117,000 settlement. First, the Department calculated the total

attorney fees and costs associated with the settlement as $40,453.75. RCW 51.24.060(1)(a).

Second, the Department distributed 25 percent of the award’s balance, $19,136.56, directly to

Nelson. RCW 51.24.060(1)(b). Finally, the Department allocated the remaining portion,

$57,409.69, to itself for reimbursement of benefits paid out to Nelson. RCW 51.24.060(1)(c).




3
 Under Tobin v. Department of Labor & Industries, 169 Wn.2d 396, 404, 239 P.3d 544 (2010),
pain and suffering damages are not subject to distribution.
4
  According to the Department, the lien was for less than benefits paid out to Nelson because
certain administrative expenses are excluded when the Department asserts a lien against a third
party recovery. E.g. Ziegler v. Dep’t of Labor & Indus., 42 Wn. App. 39, 42, 708 P.2d 1212
(1985) (medical examinations not reimbursable).


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No. 47672-0-II


Subsequently, the Department issued an order that requested Nelson to reimburse the

Department in the amount of $57,409.69.

       Nelson objected to the Department’s distribution order. He argued that the Department’s

order was “premature and potentially overstate[d] the amount the [Department] is entitled to

recover” because the calculation “understates costs and attorney fees incurred in causes of

action[s] . . . being pursued and/or investigated for underinsured motorist, highway design and

products liability, based on the same injuring event.” CP at 100. Nelson hypothesized that

because those cause of actions may ultimately prove unsuccessful, he would never recover the

costs and attorney fees associated with those claims. Furthermore, Nelson alleged that at least

$25,000 in additional expenses had been incurred after the settlement for the other pending

causes of action. He did not contend that the Department’s calculation was incorrect, nor did he

make an argument that its calculation was contrary to the statutory language of RCW 51.24.060.

The Department denied reconsideration of its distribution order.

       Nelson appealed to the Board, where both Nelson and the Department moved for

summary judgment. Nelson reiterated the same argument to the Board that the Department’s

distribution was premature because it failed to account for attorney fees and costs that might

result from other potential causes of action arising from the same incident. Further, Nelson

argued for the first time that the plain language of RCW 51.24.060 does not limit the distribution

of attorney fees and costs to successful claims against parties. Rather, he argued the purpose of

the IIA requires the Department to wait until all claims are resolved to ensure an injured worker

receives the full benefit of sharing attorney fees and costs with the Department. Thus, Nelson




                                                 4
No. 47672-0-II


contended the Department should not have distributed the money received from the settlement

with Wade until all claims related to the auto accident were resolved.

       After a hearing, the Board granted summary judgment in favor of the Department,

reasoning that the plain language of RCW 51.24.060 applies only to actual or realized recoveries,

not to potential or possible recoveries. Relying on RCW 51.24.030(2)5 and prior cases it

adjudicated,6 the Board concluded that the IIA contemplates “multiple . . . causes of action

arising from a claim.” CP at 42-43. Furthermore, the Board explained that the settlement

completely resolved Nelson’s lawsuit against Wade and that the settlement was a recovery

triggering application of RCW 51.24.060 for calculation of a distribution. Along with these

reasons, the Board entered findings of fact and conclusions of law, reflecting that the Department

properly calculated the distribution.7

       Nelson appealed to the superior court. The superior court affirmed the Board and

adopted the Board’s findings of fact and conclusions of law to support its decision. Nelson

appeals.




5
 “In every action brought under this section, the plaintiff shall give notice to the department or
self-insurer when the action is filed.” RCW 51.24.030(2).
6
  See CP at 43 (citing Board decisions In re Richard Boney, No. 98-15811 (Wash. Bd. of Indus.
Ins. Appeals) (Dec. 2001), http://www.biia.wa.gov/DO/9915811_ORD_20011024_DO.PDF; and
In Re Todd A. Hosking, No. 08-17806 (Wash. Bd. of Indus. Ins. Appeals) (Apr. 24, 2009),
http://www.biia.wa.gov/DO/0817806_ORD_20090824_DO.PDF.
7
 These findings of fact and conclusions of law are primarily a reflection of the Department’s
application of the distribution formula to Nelson’s settlement discussed earlier in the Facts
section. To avoid redundancy, we do not reiterate them here.
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No. 47672-0-II


                                            ANALYSIS

                                  I. STATUTORY INTERPRETATION

       Nelson argues that the Board arrived at an erroneous interpretation of RCW 51.24.060 by

finding it “not reasonable to include in the distribution formula any cost not directly related to

the settling defendant even though the cost was incurred in the same litigation.” Br. of Appellant

at 9, 17. The Department contends that the plain meaning of RCW 51.24.060 indicates that a

distribution of a recovery only requires inclusion of the attorney fees and costs associated with

the resolved claims that caused the recovery and triggered the distribution. For the reasons set

forth below, we agree with the Department and resolve the statutory interpretation question on a

plain meaning analysis.

1.     Standard of Review/Legal Principles

       A superior court reviews the Board’s actions de novo, but relies on the certified Board

record and decides only those matters that the administrative tribunals previously determined.

Matthews v. Dep’t of Labor & Indus., 171 Wn. App. 477, 491, 288 P.3d 630 (2012); Rogers v.

Dep’t of Labor & Indus., 151 Wn. App. 174, 179, 210 P.3d 355 (2009). The superior court must

consider the Board’s decision as prima facie correct. RCW 51.52.115. If the superior court

determines that the Board has acted within its power and has correctly construed the law, its

decision will be upheld. Id.

       From the superior court’s judgment, our review “‘is limited to examination of the record

to see whether substantial evidence supports the findings made after the superior court’s de novo

review, and whether the court’s conclusions of law flow from the findings.’” Rogers, 151 Wn.

App. at 180 (quoting Ruse v. Dep’t of Labor & Indus., 138 Wn.2d 1, 5, 977 P.2d 570 (1999)).


                                                  6
No. 47672-0-II


However, the superior court’s findings of fact and conclusions of law were entered in its review

of the summary judgment entered by the Board, which in turn adopted the proposed decision and

order by an industrial insurance judge that found no genuine issues of material fact and granted

summary judgment to the Department. The superior court adopted the findings and conclusions

of the Board’s decision, granting summary judgment. “Findings of fact and conclusions of law

are not necessary on summary judgment and, if made, are superfluous . . .” Concerned

Coupeville Citizens v. Town of Coupeville, 62 Wn. App. 408, 413, 814 P.2d 243 (1991). On

review of summary judgment, as here, we review de novo whether there are any genuine issues

of material fact and whether the moving party is entitled to judgment as a matter of law. CR

56(c).

         Nelson concedes that no genuine issues of material fact exist and that the dispositive

issue was purely of statutory interpretation. Because statutory interpretation is purely a question

of law, we review the superior court’s ruling de novo. Hill v. Dep’t of Labor & Indus., 161 Wn.

App. 286, 292, 253 P.3d 430 (2011). Further, “[a]lthough we may substitute our judgment for

that of the agency on issues of law, we give great weight to the agency's interpretation of the law

it administers.” Jones v. City of Olympia, 171 Wn. App. 614, 621, 287 P.3d 687 (2012).

         The goal of statutory interpretation is to ascertain and give effect to the legislature’s

intent. Birgen v. Dep’t of Labor & Indus., 186 Wn. App. 851, 857, 347 P.3d 503, review denied,

184 Wn.2d 1012 (2015). “To determine legislative intent, we first look to the plain language of

the statute.” Id. To decipher the plain language, we look at the meaning of the provisions in




                                                    7
No. 47672-0-II


question as well as the context of the statute and related statutes. Id. “We do not rewrite

unambiguous statutory language under the guise of interpretation,” or “‘add words where the

legislature has chosen not to include them.’” Id. at 858 (quoting Rest. Dev., Inc. v. Cananwill,

Inc., 150 Wn.2d 674, 682, 80 P.3d 598 (2003)).

       “When statutory language is susceptible to more than one reasonable interpretation, it is

considered ambiguous.” Cockle v. Dep’t of Labor & Indus., 142 Wn.2d 801, 808, 16 P.3d 583

(2001). “However, it is not ambiguous simply because different interpretations are conceivable.”

Hi-Way Fuel Co. v. Estate of Allyn, 128 Wn. App. 351, 358, 115 P.3d 1031 (2005). “We are not

to search for ‘an ambiguity by imagining a variety of alternative interpretations.’” Id. (quoting

Am. Cont’l Ins. Co. v. Steen, 151 Wn.2d 512, 518, 91 P.3d 864 (2004)).

2.     Plain Meaning

       Nelson argues that the Department’s distribution of his recovery was premature because

the IIA requires that attorney fees and costs from all claims pursued, even if unsuccessful, be

included in the distribution of his recovery. We disagree.

       The IIA “is based on a compromise between workers and employers, under which

workers become entitled to speedy and sure relief, while employers are immunized from

common law responsibility.” Flanigan v. Dep’t of Labor & Indus., 123 Wn.2d 418, 422, 869

P.2d 14 (1994) (citing RCW 51.04.010). However, the IIA permits suit against third party

tortfeasors. RCW 51.24.030(1). The injured worker can pursue such an action himself or can

assign his claims to the Department. RCW 51.24.030(1), .050(1). Nelson elected to take the




                                                 8
No. 47672-0-II


former approach, making any successful recovery against a third party subject to a lien by the

Department to offset benefits it paid out to Nelson. RCW 51.24.060(1), (2).

       The distribution of that recovery is subject to a specific formula outlined in RCW

51.24.060, which reads in pertinent part:

               (1) If the injured worker or beneficiary elects to seek damages from the third
       person, any recovery made shall be distributed as follows:
               (a) The costs and reasonable attorneys’ fees shall be paid proportionately
       by the injured worker or beneficiary and the department and/or self-insurer:
       PROVIDED, That the department and/or self-insurer may require court approval
       of costs and attorneys’ fees or may petition a court for determination of the
       reasonableness of costs and attorneys’ fees;
               (b) The injured worker or beneficiary shall be paid twenty-five percent of
       the balance of the award: PROVIDED, That in the event of a compromise and
       settlement by the parties, the injured worker or beneficiary may agree to a sum less
       than twenty-five percent;
               (c) The department and/or self-insurer shall be paid the balance of the
       recovery made, but only to the extent necessary to reimburse the department and/or
       self-insurer for benefits paid;
               (i) The department and/or self-insurer shall bear its proportionate share of
       the costs and reasonable attorneys’ fees incurred by the worker or beneficiary to the
       extent of the benefits paid under this title: PROVIDED, That the department’s
       and/or self-insurer’s proportionate share shall not exceed one hundred percent of
       the costs and reasonable attorneys’ fees;
               (ii) The department’s and/or self-insurer’s proportionate share of the costs
       and reasonable attorneys’ fees shall be determined by dividing the gross recovery
       amount into the benefits paid amount and multiplying this percentage times the
       costs and reasonable attorneys’ fees incurred by the worker or beneficiary;
               (iii) The department’s and/or self-insurer’s reimbursement share shall be
       determined by subtracting their proportionate share of the costs and reasonable
       attorneys’ fees from the benefits paid amount;
               (d) Any remaining balance shall be paid to the injured worker or
       beneficiary.

(Emphasis added.) The key statutory interpretative issue here is the linguistic relationship

between an injured worker’s “recovery” noted in RCW 51.24.060(1) and which attorney fees and

costs must be paid from a distribution of that “recovery.”



                                                 9
No. 47672-0-II


        First, the definition of recovery suggests only attorney fees and costs spent on resolved

claims triggering the recovery should be included in the distribution formula. Under the IIA,

recovery includes “all damages except loss of consortium” and pain and suffering. RCW

51.24.030(5); Tobin v. Dep’t of Labor & Indus., 169 Wn.2d 396, 404, 239 P.3d 544 (2010).

Black’s Law Dictionary at 1466 (10th ed.) defines “recovery” as “1. The regaining or restoration

of something lost or taken away. 2. The obtainment of a right to something (esp. damages) by a

judgment or decree. . . . 4. An amount awarded in or collected from a judgment or decree.” In

Webster’s Third New International Dictionary at 1898 (2002), “recovery” is defined as “the

obtaining in a suit at law of a right to something by a verdict, decree, or judgment of court.”

        Under these definitions, a recovery exists when a plaintiff receives damages other than

loss of consortium and pain and suffering damages. The resolution that fixed the damages might

be the settlement of a single claim against one party or a judgment entered against multiple

parties for multiple claims. In either situation, the recovery will be defined by the damages

acquired from resolving specific claims against specific parties. Thus, the costs and attorney fees

that are subject to the distribution formula are those related to the settlement or judgment of

claims constituting the recovery. RCW 51.24.060(1).

        The legislature’s positioning of the RCW 51.24.060 subsections further buttresses this

interpretation. As the Department suggests, the “‘costs and reasonable attorneys’ fees’ noted in

subsection (1)(a) are linked to the particular ‘recovery’ identified in subsection (1).” Br. of

Resp’t at 13. The legislature’s arrangement of RCW 51.24.060’s subsections shows its intent to

associate the attorney fees and costs with resolved claims causing the recovery and triggering the

distribution formula in the first place.


                                                 10
No. 47672-0-II


       In addition, RCW 51.24.060(5), which imposes a duty on a party who recovers to provide

notice to the Department, further compels this reading of recovery. RCW 51.24.060(5) states:

               It shall be the duty of the person to whom any recovery is paid before
       distribution under this section to advise the department or self-insurer of the fact
       and amount of such recovery, the costs and reasonable attorneys' fees associated
       with the recovery, and to distribute the recovery in compliance with this section.

(Emphasis added). As the Department points out, we interpret a statute to give effect to all

language, so as to render no portion meaningless or superfluous. Rivard v. State, 168 Wn.2d

775, 783, 231 P.3d 186 (2010). Through RCW 51.24.060(5), the legislature only considered the

costs and attorney fees that are associated with the recovery pertinent for the Department to

know in implementing the distribution required by RCW 51.24.060. Thus, RCW 51.24.060(5)

implies that costs and attorney fees that are not associated with the recovery that triggered the

distribution formula are not covered in the distribution of that recovery. This premise, along

with the definitions of recovery and the subsection arrangement of RCW 51.24.060, shows that

the costs and attorney fees to be distributed under that statute are those that are associated with

the resolution of claims that triggered the recovery.

       Nelson argues that this interpretation runs against the mandate of RCW 51.12.010. This

section states that the IIA “shall be liberally construed for the purpose of reducing to a minimum

the suffering and economic loss arising from injuries and/or death occurring in the course of

employment.” However, we “cannot use the liberal construction requirement to support a

‘strained or unrealistic interpretation’ of statutory language.” Birgen, 186 Wn. App. at 862




                                                 11
No. 47672-0-II


(quoting Senate Republican Campaign Comm. v. Pub. Disclosure Comm’n, 133 Wn.2d 229, 243,

943 P.2d 1358 (1997)). Moreover, the liberal construction provision is only triggered when

doubts or ambiguities in the IIA need to be resolved. See Dep’t of Labor & Indus. v. Lyons

Enters. Inc., 185 Wn.2d 721, 734, 374 P.3d 1097, recons. denied, (2016).

        Nelson’s interpretation, while conceivable, would strain the provisions of RCW

51.24.060 to construe an ambiguity that does not exist. Hi-Way Fuel, 128 Wn. App. at 358-59.

Thus, the rule of liberal construction cannot blunt the effect of the plain language of the IIA: in

distributing a recovery under RCW 51.24.060, only the attorney fees and costs associated with

the resolved claims that caused the recovery and triggered the distribution are considered in the

distribution.8

        Nelson also contends that he will receive less than the 25 percent net recovery RCW

51.24.060 guarantees him if other attorney fees and costs from other unsuccessful claims are not

included. Id. The distribution formula, though, requires attorney fees and costs to be deducted

first from the recovery before the worker’s 25 percent share of the remaining balance is

calculated. Tobin, 169 Wn.2d at 408-09 (citing RCW 51.24.060(1)(a), (b), (c)). If, for example,

other costs associated with the unsuccessful Pierce County claim were included in the

distribution formula, Nelson’s entitlement to his portion of the recovery would actually have



8
 This plain meaning analysis is consistent with two cases suggesting that only attorney fees and
costs associated with the recovery are to be included in the distribution. In Davis v. Department
of Labor & Industries, 71 Wn. App. 360, 363, 858 P.2d 1117 (1993), the court stated it is “[t]he
costs and reasonable attorneys’ fees [of the third party recovery]” that shall be paid
proportionately.” (Second alteration in original). In Rhoad v. McLean Trucking Co., 102 Wn.2d
422, 424, 686 P.2d 483 (1984), the court stated that “the Department is required to bear a
proportionate share of the fees and costs incurred in obtaining . . . a recovery.”


                                                 12
No. 47672-0-II


been reduced. Thus, his interpretation may frustrate the IIA’s purpose of protecting an injured

worker because inclusion of additional attorney fees and costs not linked to the specific recovery

could reduce a worker’s potential recovery.

       Finally, Nelson cites Hi-Way Fuel, 128 Wn. App. at 354, arguing that the Department

“unilaterally disallowed” the costs calculated in the distribution formula. Br. of Appellant at 9-

10. In Hi-Way Fuel, 128 Wn. App. at 354-55, the claimant submitted a letter from her attorney

to the Department detailing the attorney fees and costs associated with the third party recovery.

Before calculating the distribution, the Department unilaterally deducted costs related to internal

copying and postage. Id. at 355. The Hi-Way Fuel court held that because the Department may

petition a court to determine whether costs are reasonable, RCW 51.24.060(1)(a), it does not

have a “unilateral right” to determine the amount or types of costs that should be included in the

distribution formula. Id. at 363. It thus remanded the case, in part, for a new distribution

calculation that included the costs for internal copying and postage. Id. Unlike Hi-Way Fuel, the

Department here did not unilaterally deduct any costs from the bill Nelson submitted. Instead,

the Department included all costs Nelson submitted to it when it applied the distribution formula.

Thus, Hi-Way Fuel is inapplicable.

       For the reasons stated above, the costs and attorney fees to be distributed are those that

are associated with the resolution of claims that triggered the recovery. Accordingly, the

Department did not err in its interpretation.

                                          CONCLUSION

       We hold that the Department’s distribution of Nelson’s recovery was not erroneous. The

plain language of RCW 51.24.060 indicates that only the attorney fees and costs associated with


                                                13
No. 47672-0-II


the resolved claims causing the recovery must be included in a distribution—not attorney fees

and costs related to other claims. We affirm the superior court.

       A majority of the panel having determined that only the foregoing portion of this opinion

will be printed in the Washington Appellate Reports and that the remainder shall be filed for public

record pursuant to RCW 2.06.040, it is so ordered.

                                     ADDITIONAL CLAIMS

       In the unpublished portion of this opinion, we consider (1) whether the Department’s

interpretation of RCW 51.24.060 constituted rule making without following the required rule

making procedures, and (2) whether Nelson is entitled to an award of attorney fees and costs.

For the reasons below, we hold that no rule making occurred and that Nelson is not entitled to an

award of attorney fees and costs.

                                         II. RULE MAKING

       Nelson argues that the Department’s interpretation of RCW 51.24.060 constituted rule

making. We disagree.

       The Administrative Procedure Act (APA), chapter 34.05 RCW, sets out certain formal

requirements that an agency must follow before adoption of a new rule. Providence Physician

Servs. Co. v. Dep't of Health, 196 Wn. App. 709, 725, 384 P.3d 658 (2016). If an agency adopts

a rule without compliance with these required procedures, we will declare the rule invalid. Id.

(citing RCW 34.05.570(2)(c)). However, for rule making procedures to apply, an agency action

or inaction must fall into the APA definition of a rule. Id.

       In order to qualify as a “rule” under the APA, two elements must be satisfied. Id. at 726.

First, an agency action must be any agency “‘order, directive, or regulation of general


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No. 47672-0-II


applicability.’” Id. (quoting RCW 34.05.010(16)). Second, as applicable to this appeal, the

agency action must “establish[], alter[], or revoke[] any qualification or requirement relating to

the enjoyment of benefits or privileges conferred by law.” RCW 34.05.010(16)(c)

          First, the Department’s order was not one of general applicability. Rather, the order set

forth the distribution calculation that applied to Nelson’s settlement. Nelson cites to two of the

Department’s representations made to the Board to support his position that the Department’s

order was one of general applicability. First, he cites a declaration that the Department attached

to its summary judgment motion to the Board where a Department representative stated:

                  I determined the Department’s distribution share of Mr. Nelson’s recovery
          against Amanda Wade in the same manner as I would for any recovery made by an
          injured worker against a third party tortfeasor—pursuant to RCW 51.24.060. If Mr.
          Nelson obtains recoveries relating to this incident from additional third persons,
          those recoveries will also be distributed in accordance with Ch. 51.24, RCW.

CP at 78-79. Nelson also cites the hearing before the Board where the Department’s attorney

stated:

          [The Department] believe[s] that the third party statute is unambiguous and so there
          has not been a need for rule making in order to resolve any ambiguities within the
          statute.

CP 149. These statements, though, were part of the Department’s arguments to the Board. They

do not broaden the Department’s original order, which confined itself to an application of the

distribution formula to Nelson’s settlement. Furthermore, Nelson’s original objection to the

Department’s distribution order was not based on an improper interpretation of RCW 51.24.060.

Rather, he believed the calculation was “premature” and “understate[d] costs and attorney fees

incurred” because Nelson had other specific causes of action which might produce additional




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No. 47672-0-II


expenses. CP at 100. The Department’s distribution order and Nelson’s arguments related to

that order were limited to Nelson’s case.

       Second, the Department’s order did not establish, alter, or revoke any qualification or

requirement relating to the enjoyment of benefits or privileges conferred by law. Generally, an

agency is permitted to interpret language in a statute or regulation without going through formal

rule making procedures. Providence Physician Servs. Co., 196 Wn. App. at 726 (collecting

cases). If, however, an agency adds a new requirement to an already well defined regulation,

that requirement will be deemed a rule subject to the formal rule making procedures. Id. at 726-

27 (citing Failor’s Pharmacy v. Dep’t of Soc. & Health Servs., 125 Wn.2d 488, 886 P.2d 147

(1994)).

       To support his argument, Nelson cites to Hillis v. Department of Ecology, 131 Wn.2d

373, 932 P.2d 139 (1997). In Hillis, 131 Wn.2d at 399, the Department of Ecology implemented

a system, not contemplated in the relevant statutes or regulations, in which it prioritized the

processing of applicants for certain water rights. Because applicants had a right under statute to

have their water permit application investigated and decided upon, the Hillis court held that the

agency engaged in improper rule making in creating its own priority system without going

through the formal rule making procedures. Id. at 399-400. Notably, the Department of Ecology

did not rely on an interpretation of any statutory or regulatory language to create its approach;

rather, it was in response to a reduced budget, a large number of applications pending, and the

complexities of determining an individual’s water rights. See id. at 378-80, 394.

       Here, the Department’s order relied on the statutory language of RCW 51.24.060 to apply

the distribution formula to Nelson’s settlement. Although the Department did not engage in an


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No. 47672-0-II


overt interpretation of RCW 51.24.060 in its order, the application to Nelson’s settlement

constitutes an implicit reliance on the distribution formula’s language to arrive at its result.

Therefore, unlike Hillis, the Department’s order is more accurately characterized as a proper

interpretation of a statute, rather than an improper alteration of the distribution formula.

        Accordingly, because the Department’s order is neither generally applicable nor an

alteration of any qualification or requirement in the distribution formula, Nelson’s rule making

claims fails.

                                        III. ATTORNEY FEES

        Nelson argues that he is entitled to attorney fees and costs both at superior court and on

appeal pursuant to RCW 51.52.130.9

                Under RCW 51.52.130, where a worker appeals a decision of the Board of
        Industrial Insurance Appeals, he is entitled to fees and costs if (a) the Board’s
        decision is “reversed or modified” and (b) “the accident fund or medical aid fund
        is affected by the litigation.” RCW 51.52.130(1).

Tobin, 169 Wn.2d at 406.

        Because Nelson fails to prevail on the merits of his claims, we do not reverse or modify

the Board’s decision. Thus, an award of attorney fees and costs is not appropriate.

                                           CONCLUSION

        We hold that (1) the costs and attorney fees to be taken into account in distributing a

recovery under RCW 51.24.060 are those associated with the resolution of claims that triggered




9
  RCW 51.52.130 encompasses fees in both the superior and appellate courts when both courts
review the matter. Hi-Way Fuel Co., 128 Wn. App. at 363-64.


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No. 47672-0-II


the recovery; (2) the Department’s order did not constitute rule making; and (3) an award of

attorney fees and costs is not appropriate. Therefore, we affirm.



                                                     BJORGEN, C.J.
 We concur:



JOHANSON, J.




LEE, J.




                                                18
