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           IN THE SUPREME COURT OF THE STATE OF WASHINGTON


DOUGLAS L. MOORE, MARY CAMP,                        )
GAYLORD CASE, and a class of similarly              )
situated individuals,                               )
                                                    )
                         Respondents,               )                 No. 89774-3
                                                    )
      v.                                            )                   EnBanc
                                                    )
HEALTH CARE AUTHORITY and                           )
STATE OF WASHINGTON,                                )
                                                    )      Filed _ _AU_G_2_1_2_0_14__
                         Petitioners.               )
_____________________________)

      OWENS, J. -           In this class action lawsuit, the trial court found that the State

wrongfully denied health benefits to a number of its part-time employees. We must

now determine how to value the damages suffered by that group of employees when

they were denied health benefits. The State argues that the only damages to the

employees were immediate medical expenses paid by employees during the time they

were denied health benefits. But evidence shows that people denied health care

benefits suffer additional damage. They often avoid going to the doctor for preventive
Moore v. Health Care Auth.
No. 89774-3


care, and they defer care for medical problems. This results in increased long-term

medical costs and a lower quality of life. Based on this evidence, the trial court

correctly rejected the State's limited definition of damages because it would

significantly understate the damages suffered by the employees. We affirm.

                                         FACTS

       In 2006, this class action lawsuit was filed on behalf of part-time employees

who were improperly denied health benefits by the State of Washington. In a series of

partial summary judgment rulings, the trial court ruled that the State violated multiple

statutes when it failed to provide the health benefits. The legislature later codified the

rulings. LAWS OF 2009, ch. 537.

       The parties simultaneously moved for summary judgment on the measure of

damages. The State argued that the only damages that it should pay are out-of-pocket

costs paid by class members for medical expenses or substitute health insurance

during the time they were denied health benefits. Furthermore, the State argued that

damages must be established through an individual claims process.

       The employees argued that the State's method was inaccurate, contrary to the

evidence, and would lead to a windfall for the wrongdoer. Instead, the employees

proposed three alternative methods of measuring damages. First, the employees

argued that the health benefits were part of the employees' compensation, so the

damages should be based on the employees' lost wages (i.e., the amount the State



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Moore v. Health Care Auth.
No. 89774-3


should have paid to provide health benefits to those employees). Second, the

employees argued that the court could measure damages based on how much money

the State unlawfully retained by failing to provide health benefits to those employees.

Third, the employees argued that the court could measure damages as the amount that

the State would have paid in health care costs for the group of employees had they

been covered. The employees argue that the most accurate measure of this cost is to

use an actuarial method based on the average health care costs for a comparable group

of State employees with health benefits. They presented evidence that this method

would be more accurate than the one proposed by the State because it would take into

account the fact that people postpone medical care when they do not have health

msurance.

       The trial court specifically rejected both parts of the State's proposed

approach-limiting damages to out-of-pocket costs and requiring that the damages be

shown through an individual claims process-ruling that it was "wrong as a matter of

common sense, public policy and general knowledge." Clerk's Papers (CP) at 591.

The court generally agreed with the employees that the failure to pay benefits was a

failure to pay wages and, alternatively, that the State may owe restitution because it

received a windfall when it failed to provide these benefits. The trial court

nonetheless concluded that issues of fact remained, including how many members of




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Moore v. Health Care Auth.
No. 89774-3


the class would likely have opted out of coverage altogether, so it denied both motions

for summary judgment.

       The State moved for discretionary review of the trial court's order, which the

Court of Appeals commissioner granted. The employees moved to transfer review to

this court pursuant to RAP 4.4, which the acting commissioner granted.

                                        ISSUES

       1. Did the trial court err when it rejected the State's proposed method of

calculating damages, which took into account only out-of-pocket expenses assessed

through an individual claims process?

       2. Did the trial court err when it expressed support for the employees'

proposed methods of calculating damages, which were equivalent to the amount the

State should have paid for the health benefits wrongfully denied to the employees?

                              STANDARD OF REVIEW

       The parties dispute the standard of review. The employees characterize the

issue as the judge "choosing one of several lawful measures of damages," which

should be reviewed for abuse of discretion. Br. of Pl. Class/Resp 'ts at 12 (citing In re

Marriage ofFarmer, 172 Wn.2d 616, 631-32, 259 P.3d 256 (2011)). The State

characterizes the issue as the determination of the measure of damages, which is a

question of law and thus reviewed de novo. Br. of Appellants at 14 n.27 (citing

Shoemake v. Ferrer, 168 Wn.2d 193, 198, 225 P.3d 990 (2010)). There was a similar



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Moore v. Health Care Auth.
No. 89774-3


dispute over the standard of review in Farmer, and we concluded that "[i]n a sense

both parties are correct." 172 Wn.2d at 624. The trial judge's ultimate choice of

remedy is reviewed for abuse of discretion, but "a trial court necessarily abuses its

discretion if it awards damages based upon an improper method of measuring

damages." !d. at 625.

       Thus, we essentially have two questions with two different standards. First, we

determine as a matter of law whether the measure of damages proposed by the State is

the only proper measure. If so, we must reverse the trial court's decision as a matter

of law. If multiple measures of damages are allowed by law, then we review the

judge's choice of measure for abuse of discretion.

                                      ANALYSIS

   1. Immediate Out-of-Pocket Costs Is Not the Only Permissible Measure of
      Damages

       The State argues that the only proper measure of damages for the wrongfully

denied health benefits is the out-of-pocket costs incurred by employees for the

payment of covered medical expenses or the purchase of substitute health insurance.

We disagree. The State's measure relies on the assumption that the only damages

suffered by those denied health benefits are out-of-pocket expenses incurred during

the time period they were denied benefits-an assumption that is contradicted by both

common sense and the evidence in the record. The State also argues that its proposed

measure is the only one allowed by law based on non-health-insurance case law in


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Moore v. Health Care Auth.
No. 89774-3


Washington and certain out-of-state cases. Because the reasoning in those cases does

not apply to this case, we disagree with the State's conclusion. Finally, the State

argues that the employees must establish the damages to each class member through

an individual claims process. Because such a process would be counter to the goals

underlying a class action, including efficiency, deterrence, and access to justice, the

trial court was correct to reject this argument.

       A. The Main Assumption Underlying the State's Proposal Is Incorrect

       The main assumption underlying the State's argument is that individuals who

are improperly denied health benefits do not suffer damages unless they go to a doctor

and pay out of pocket or pay for substitute health insurance. This assumption is

fundamentally flawed, both because "[i]t is wrong as a matter of common sense,

public policy and general knowledge," as noted by the trial judge, CP at 591, and

because it is contrary to undisputed evidence in the record.

       The primary flaw in this underlying assumption is that it refuses to

acknowledge that those who are wrongfully denied health benefits suffer damage even

if they do not incur direct out-of-pocket medical expenses during that particular time

period. In its ruling, the trial court pointed to studies showing that people who do not

have health insurance do not obtain routine preventive care, which results in deferred

medical problems. More significantly, studies show that those without health benefits

even put off necessary care for urgent medical issues. Based on these studies, the trial



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Moore v. Health Care Auth.
No. 89774-3


court concluded that the State's method of calculating damages would result in a

"great understatement" of the actual damages. Verbatim Report ofProceedings

(VRP) (Oct. 26, 2012) at 41.

       The employees presented expert testimony supporting this conclusion. A

highly experienced actuary explained that the method proposed by the State would

"significantly underestimate the loss to the class here because it would fail to take into

account both the deferred costs due to delayed care and the economic loss in

foregoing a healthier and longer life." CP at 157. That expert pointed out that the

study cited by the State's expert as "'the best available evidence on the costs of being

uninsured in the United States"' actually concluded that '"the economic value of the

healthier and longer life that an uninsured child or adult forgoes because he or she

lacks health insurance ranges between $1,645 and $3,280 for each additional year

spent without coverage."' Id. at 156-57. The State's method refuses to acknowledge

any damage to a person who is wrongfully denied health benefits and does not have

immediate medical expenses, but it provided no evidence contradicting the

employees' expert testimony regarding the long-term damages. The trial court

properly held that the assumption underlying the State's method was wrong as a

matter of common sense and as demonstrated by the evidence before the court.

       Finally, the State contends that the employees conceded that some members of

the class suffered no monetary damages because they stipulated to the fact that some



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Moore v. Health Care Auth.
No. 89774-3


members of the class did not incur out-of-pocket expenses during the time the State

improperly failed to provide them with health benefits. This leap of logic simply

repeats the same mistake described above. While some members of the class did not

(or could not) obtain health insurance and avoided or deferred direct health care

expenses at the time that they were uninsured, the undisputed evidence on the record

shows that such individuals still suffered long-term damages from the lack of health

benefits. 1

       B. Due Process Does Not Require an Individual Claims Process in This Case

       The State argues that under the Court of Appeals case Sitton v. State Farm

Mutual Automobile Insurance Co., 116 Wn. App. 245, 63 P.3d 198 (2003), due

process requires the trial court to establish an individual claims process where each

individual class member must demonstrate his or her out-of-pocket expenses during

the time the State improperly failed to provide health benefits. The State attempts to

argue that the trial court erred in its ruling because it "allows the Plaintiffs to 'skip

over' proving the fact of damages for each class member, contrary to Sitton." Br. of

Appellants at 16. This is incorrect. When liability has already been established, it is




1
  The State argues that some members of the class may have had other access to health
insurance and thus did not suffer this particular type of long-term damage. As discussed
below, this possibility was explicitly recognized by the trial court. In fact, the trial court
denied summary judgment because this factual issue remained unresolved, and indicated
that this information would need to be developed and taken into account when ultimately
calculating damages.

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Moore v. Health Care Auth.
No. 89774-3


not necessary for each plaintiff in a class action to prove the amount of damages on an

individualized basis.

       Sitton involved a class action brought by people insured by State Farm who

claimed that State Farm acted in bad faith to deny coverage for their claims. 116 Wn.

App. at 248. The Court of Appeals vacated the trial plan because it did not require the

claimants to show causation and damages and it did not provide a mechanism for

State Farm to provide a defense for denying the individual claims. !d. at 258-59.

That plan would affect State Farm's right to due process because there were

potentially members of that class whose claims were not denied due to bad faith. But

as this court explained in a later case, Sitton was unique because "the trial court

accepted a bifurcated trial plan that ultimately resulted in damages being determined

before causation." Moeller v. Farmers Ins. Co. of Wash., 173 Wn.2d 264, 280, 267

P.3d 998 (2011). This case, like Moeller, is distinguishable from Sitton because the

State has already been found liable. The class membership can be determined with

certainty based on the State's employment records, and damages can be calculated

based on that class membership.

       "[I]t is not unusual, and probably more likely in many types of cases, that

aggregate evidence of the defendant's liability is more accurate and precise than

would be so with individual proofs of loss." 3 ALBA CONTE & HERBERT B.

NEWBERG, NEWBERG ON CLASS ACTIONS§ 10:2, at 479 (4th ed. 2002). The facts of



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Moore v. Health Care Auth.
No. 89774-3


this case make it particularly suitable for using aggregate proof of damages. First, the

employees' expert explained that the number of total class members is large enough to

be able to statistically estimate their health care costs by comparing the group with

State employees who did receive health benefits (controlling for any demographic

differences). Second, the time period covered by the class action is from 2009 and

before, which means it will be very difficult for many class members to produce

records of medical expenses. They may have had no reason to retain medical records

from so long ago, particularly those with small expenses and those who did not know

that they were wrongfully denied health benefits. The employees' expert also

indicated that the employees may have difficulty obtaining such records from their

providers, who "may have moved, merged, gone out of business, had billing records

destroyed, or have difficulties in obtaining the old documentation." CP at 159.

Earlier, the State acknowledged that obtaining such information from a class of

thousands of people '"would be unmanageable and unduly burdensome."' !d. Class

members with small claims would be unlikely to pursue their claims, and of course,

absent class members would automatically be deemed to have no damages. These

results defeat the purpose of a class action, which is to provide relief for large groups

of people with the same claim, particularly when each individual claim may be too

small to pursue. See Scott v. Cingular Wireless, 160 Wn.2d 843, 851, 161 P.3d 1000

(2007) (class actions demonstrate "a state policy favoring aggregation of small claims



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Moore v. Health Care Auth.
No. 89774-3


for purposes of efficiency, deterrence, and access to justice"). Adopting the State's

method in this case would not only create an unreasonable burden on class members,

it would hinder our state policy underlying class action lawsuits. The trial court was

correct to reject it.

       C. We Reject a One-Size-Fits-All Measure ofDamages Caused by the Failure
          To Provide Health Benefits

       Other jurisdictions are split as to how to calculate damages from the failure to

provide health benefits. 2 The State argues that we should join the jurisdictions

holding that the only proper measure of damages is the actual medical costs incurred.

That argument fails because those cases rely on the same flawed assumption that the

only damages to those without health benefits are immediate medical costs. The

evidence presented in this case shows that assumption to be false. There is no

indication that those other courts had the benefit of similar evidence, particularly since

many are based on case law from 20 to 30 years ago, when such evidence may not

have been available. It does not make sense for us to adopt the strict holding of




2
 Cases holding that damages from lack of insurance should be measured by immediate
out-of-pocket medical costs include Galindo v. Stoody Co., 793 F .2d 1502, 1517 (9th Cir.
1986); Kossman v. Calumet County, 800 F.2d 697, 703-04 (7th Cir. 1986), overruled on
other grounds by Coston v. Plitt Theatres, Inc., 860 F.2d 834, 836 (7th Cir. 1988); and
Lubke v. City ofArlington, 455 F.3d 489, 499 (5th Cir. 2006). Cases holding that
damages from lack of insurance can be measured by the premiums that should have been
paid include Equal Employment Opportunity Commission v. Dial Corp., 469 F .3d 735,
744 (8th Cir. 2006), and Fariss v. Lynchburg Foundry, 769 F.2d 958, 965-66 (4th Cir.
1985).

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Moore v. Health Care Auth.
No. 89774-3


another court when that court's underlying reasoning is directly contradicted by the

evidence presented in this case.

       As we discuss further below, the method proposed by the State is the least

accurate of all of the proposed methods in this case based on the evidence in the

record. As a result, the trial court properly rejected this method in this case.

However, that does not mean that such a method could never be used to value health

benefits. Instead, we defer to trial courts to determine the best measure of damages

depending on the facts of the case. For instance, consider a case involving an

individual who was unlawfully fired and purchased substitute health insurance but

was unable to obtain health insurance at as low a cost as the employer could have.

Under such circumstances, a trial court could reasonably find that the most accurate

measure of damages to that individual is the cost of purchasing substitute health

insurance. But such a one-size-fits-all measure is not appropriate for every situation.

Valuing health benefits, and particularly valuing the damage from denying health

benefits to a large group of people, is a complex matter that depends on facts of the

particular situation. As described below, measuring damages exclusively through out-

of-pocket expenses is highly inaccurate in this particular case, and thus we affirm the

trial court's decision to reject it. However, our opinion should not be interpreted as

prescribing this method as the only appropriate way to value health benefits. Instead,




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Moore v. Health Care Auth.
No. 89774-3


trial courts have discretion to select the most appropriate method for calculating

damages depending on the facts presented.

   2. The Trial Court Did Not Err When It Expressed Support for the Lost Wages
      and Restitution Methods of Measuring Damages

       The employees proposed three methods of measuring damages: (1) measuring

damages as the amount the State should have paid to provide the health benefits

because the failure to provide health benefits was a failure to pay wages, (2)

measuring damages as the amount the State unlawfully retained by failing to provide

health benefits to those employees, or (3) measuring damages as the amount that the

State would have paid in health care costs for the group of employees had they been

covered.

       The trial court did not select a particular method of damages in its ruling;

however, it did generally support the first two methods proposed by the employees by

agreeing that a failure to provide health care benefits is a failure to pay wages and that

the State received a windfall by failing to provide the health benefits. Nonetheless,

the trial court found that "huge factual issues" remained, including how many class

members would likely have opted out of coverage and which level of coverage the

class members would likely have chosen. VRP (Oct. 26, 2012) at 46. Because factual

issues remained, the trial court concluded that summary judgment was inappropriate.




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Moore v. Health Care Auth.
No. 89774-3


       A. The Methods Proposed by the Employees Are Allowed by Law

       The State fails to directly address the damage calculation methods proposed by

the employees and supported by the trial court. That is probably because treating the

State's failure to pay health benefits as a failure to pay wages (and measuring

damages as the value of those lost wages) is well grounded in the law. In this case,

the State was found to have violated RCW 41.05.050(1) for failing to provide the

proper contributions for health benefits for this class of employees. In light of that, it

is reasonable to estimate the damages as the contributions the State should have paid

to provide health benefits for the employees. The trial court pointed to Cockle v.

Department ofLabor & Industries, 142 Wn.2d 801, 16 P.3d 583 (2001), for support,

where this court had faced an analogous situation in the workers' compensation

context:

       [I]t is very clear to me that in Washington, if not in other places, that we
       view the right to health care benefits as a form of wages. I agree that
       Cockle is a workers compensation case, but I do not agree that Cockle is
       limited to wages in the workers compensation context. The Cockle
       Court looked very broadly at what wages are under Washington law, and
       the court expressly rejected any method that required a hypothetical
       calculation of market value. The Court in Cockle indicated that
       premiums actually paid by the employer to secure the benefit are going
       to be the best measurement for wages lost.

VRP (Oct. 26, 2012) at 43. The State points out that the parties in Cockle stipulated

that the amount paid by the employer for health benefits "fairly reflected the benefit's

value," 142 Wn.2d at 820 n.1 0, and thus Cockle does not stand for the proposition that



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Moore v. Health Care Auth.
No. 89774-3


health benefits must be valued as the amount the employer should have paid towards

providing the benefits. While the State is correct that Cockle does not stand for the

proposition that this method must be used to value health benefits, it does stand for the

proposition that such a measure can be used to value health benefits. As described

above, we are not providing a one-size-fits-all measure for valuing health benefits in

all circumstances; however, the "lost wages" method used in Cockle and generally

supported by the trial court in this case is one lawful method of measuring the damage

caused by the improper failure to provide health benefits. Therefore, the trial court

did not favor an unlawful method of damages when it expressed support for using the

lost wages method in this case.

       B. The Trial Court Expressed Support for the Most Accurate Measures
          Available

       As briefly described above, the employees presented expert testimony that

explained in detail why the methods proposed by the employees were more accurate

than the method proposed by the State. The State did not rebut the fact that the

employees' methods are more accurate. The State cited a study showing that those

without insurance have lower medical expenses than those with insurance but

strikingly failed to acknowledge that-as explained by the employees' expert-the

same study showed that "the lower present expenses are directly correlated to deferred

costs and lost health and longevity for the uninsured because the lower expenses are

due to the inability to access preventive services, timely care, and medical treatment."


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Moore v. Health Care Auth.
No. 89774-3


CP at 156 (emphasis added). The employees' expert went on to explain that the study

showed that "deferred care is often more expensive and less effective." !d. Yet, the

State argues that the court should deny the existence of this type of scientifically

demonstrated long-term damage and allow the class to recover only short-term

economic damages. The trial court properly rejected this argument, and we do as

well.

        People without health benefits are less likely to seek and obtain medical

treatment, especially preventive care. This is true as a matter of common sense and as

shown by the evidence in the record. The State would use this fact as a reason to use

a lower estimate of the damage it caused to the employees to whom it improperly

denied health benefits. But those lower short-term medical costs have significant

long-term consequences, both medical and financial, to uninsured individuals. We see

no error in the trial court's decision to consider those long-term consequences in its

damages calculation.

        In addition, the trial court recognized that issues of fact remained in order to

make an accurate estimate of the class-wide damages. The trial court refused to grant

summary judgment to either side because additional information was needed on the

likelihood that any members would have opted out of coverage (notably, a State

employee can opt out of health coverage only if they have comparable health

coverage from another source, WAC 182-12-128) and what level of coverage they



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Moore v. Health Care Auth.
No. 89774-3


likely would have chosen. As these additional facts are developed, the measure of

damages proposed by the employees will become even more accurate.

       C. The Trial Court's Decision Avoids a Windfall for the Wrongdoer

       Both sides argue that the other side's method for measuring damages would

result in a windfall for that side. The employees contend that the State's method

would result in a windfall for the State because it would retain a significant portion of

the money it should have paid to provide health benefits to the employees. The State

argues that the employees' method would result in a windfall for those employees that

did not incur medical expenses during the time they were wrongfully denied health

benefits.

       First, since the methods proposed by the employees are the most accurate, they

are the most likely to avoid a windfall for any party. But more importantly,'" [t]he

most elementary conceptions of justice and public policy require that the wrongdoer

shall bear the risk of the uncertainty which his own wrong has created."' Wenzler &

Ward Plumbing & Heating Co. v. Sellen, 53 Wn.2d 96, 99, 330 P.2d 1068 (1958)

(quoting Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 265, 66 S. Ct. 574, 90 L.

Ed. 652 (1946)). Adopting the State's method would not only result in a less accurate

measure of damages, it would also result in the wrongdoer benefitting from its

wrongdoing. Thus, we agree with the trial court's decision to reject that method and

support one of the methods proposed by the employees instead. VRP (Oct. 26, 2012)



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Moore v. Health Care Auth.
No. 89774-3


at 46 (concluding "that the State received a windfall ... that it shouldn't have

received, by not paying for the folks that are in the class").

       The State also argues that the methods proposed by the employees will result in

some employees being undercompensated (e.g., if they had a significant amount of

immediate medical expenses). But the State confuses the method of calculating the

aggregate damages class-wide with the method of distributing the damage award to

members. Using the methods proposed by the employees will result in an accurate

estimation of the class-wide damages; in contrast, the methods proposed by the State

will significantly underestimate the class-wide damages. Once the award is made, the

trial court will address how the award will be distributed. There are many

distribution methods available to the court, some of which provide a mechanism for

fairly compensating those with larger claims. But importantly, the trial court has not

yet ruled on a distribution plan, and thus there is no basis on which to claim that

certain class members will be undercompensated.

                                     CONCLUSION

       When people do not have health benefits, they often postpone needed health

care. In light of this fact, the trial court properly rejected the State's proposed method

of calculating damages to the group of employees wrongfully denied health benefits,

which failed to take into account the damage resulting from those delays in receiving

needed health care. In addition, the trial court did not err when it agreed with the



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Moore v. Health Care Auth.
No. 89774-3


methods proposed by the employees, which provided more accurate estimates of

damages and avoided any party benefitting from its wrongdoing. We affirm.




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Moore v. Health Care Auth.
No. 89774-3




WE CONCUR:




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