State loses class-action health benefits case

OLYMPIA – The state Supreme Court on Thursday unanimously upheld a lower court’s ruling that says damages to be paid to part-time state employees who were wrongfully denied health benefits must take into account more than actual out-of-pocket costs.

The high court’s ruling sided with a class-action group’s stance on such damages, and it rejected the Washington Health Care Authority’s argument that the state should only pay for actual costs paid by class members during the time they were denied benefits.

“People without health benefits are less likely to seek and obtain medical treatment, especially preventive care,” the opinion, written by Justice Susan Owens, reads. “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.”

The employees proposed three options to measure the damages due to them: what the state should have paid in health benefits per employee as part of overall compensation; the amount the state saved by failing to provide benefits to the employees; and the amount the state would have paid in health care costs for employees as a group had they been covered.

The King County Superior Court ruling found in favor of the plaintiffs in December 2012, but the court held off on ruling on an award because of questions that remained, including about the size of the class. The case now heads back to King County.

The high court noted that while it affirmed the King County court’s decision to reject the state’s method to measure damages, it was not prescribing a means to determine the value of health benefits.