Employer Liability Under the Third Party Provision of the Washington Industrial Insurance Act: The Dual Capacity and Dual Persona Doctrines in Evans v. Thompson

NOTE Employer Liability Under the Third Party Provision of the Washington Industrial Insurance Act: The Dual Capacity and Dual Persona Doctrines in Evans v. Thompson Melissa M. Jackson* I. INTRODUCTION Most workers' compensation schemes are designed to provide a swift and sure source of benefits to injured workers by placing on employers the risks and burdens of modern industry.1 In keeping with this policy, Washington's Industrial Insurance Act2 (IIA) requires injured workers to relinquish the right to sue at common law for damages sustained on the job, and it requires employers to accept liability for a measure of damages set out by the statute.' However, if a worker's injuries are caused by the negligence of a third person who is not in the worker's same employ, the IIA's third-party provision allows the worker to pursue an independent cause of action against the third person in addition to his workers' compensation claim.' * B.A., cum laude, 1990, University of California, Los Angeles; J.D. Candidate 1996, Seattle University School of Law. Lead Article Editor, Seattle University Law Review. I would like to thank Gretchen Graham for her invaluable assistance in editing this article. 1. See Joseph H. King, Jr., The Exclusivenessof An Employee's Worker's CompensationRemedy Against His Employer, 55 TENN. L. REV. 405, 406 (1988). 2. WASH. REV. CODE § 51.24 (1994). 3. Id. In effect, a form of strict liability is imposed on the employer to pay for industrial accidents. See Flanigan v. Department of Labor and Indus., 123 Wash. 2d 418, 431, 869 P.2d 14, 20 (1994) (Madsen, J., dissenting); see also Kimzey v. Interpace Corp., 694 P.2d 907, 909 (Kan. Ct. App. 1985). 4. See WASH. REV. CODE § 51.24.030 (1994). The statute, however, then provides for a reimbursement to the state workers' compensation fund. See id. § 51.24.060. Seattle University Law Review [Vol. 19:187 This type of third-party liability provision has prompted considerable debate as to whether an injured employee may ever sue his employer or a co-employee as a third-party tortfeasor. 5 Attempts by injured workers to circumvent the exclusive remedy principle in this way have given rise to the dual capacity and dual persona doctrines,6 under which the employer or co-employees of an injured worker may be found independently liable for the worker's injuries, regardless of whether the worker also recovered workers' compensation benefits. These doctrines are premised on the concept that when an employer or co-employee also serves in a distinct nonemployment capacity toward the employee, or has a legal persona other than that of employer or co-employee, the exclusive remedy principle will not bar the employee's common-law remedies. The application of the dual capacity and dual persona doctrines has an enormous impact on employers, particularly employers who run small businesses or closely-held corporations. For example, many individuals who serve as the sole shareholder, director, and officer of a small, closely-held corporation also, as individuals, own the land on which the corporation is located. Under a recent judicial decision in Washington State, these small businesses, and the individuals who run them, may be subject to a new threat of liability.7 This Note will first explain the structure of Washington's IIA and the exclusive remedy principle. Next, it will explore the third-party provision of the IIA and the judicially-created doctrines that have made employers and co-employees vulnerable to tort suits by injured workers regardless of the exclusive remedy principle. Finally, this Note will discuss the Washington Supreme Court's recent decision in Evans v. Thompson' and argue that the court should not have allowed consideration of the dual persona doctrine on remand because the doctrine, if applied, will circumvent the exclusive remedy principle and put the landowners at unjustifiable risk of being held liable for workplace injuries. II. WASHINGTON'S INDUSTRIAL INSURANCE ACT This section first gives a general introduction to Washington's IIA, then describes the exclusive remedy principle and the third-party 5. See 2A ARTHUR LARSON, WORKMEN'S COMPENSATION LAW § 72.81 (1993). 6. See generally id. § 92.81. See infra notes 25-78 and accompanying text. 7. See Evans v. Thompson, 124 Wash. 2d 435, 879 P.2d 938 (1994). 8. Id. 1995] Employer Liability Under the Washington IIA provision, and finally explores the dual capacity and dual persona doctrines as two exceptions to the exclusive remedy principle. The IIA provides for compensation to injured employees regardless of fault. For example, if a worker is injured while on the job, the worker may make a claim to the state workers' compensation fund regardless of whether the worker's employer legally caused the injury. The IIA requires all employers ° to pay into the accident fund premiums necessary to maintain "actuarial solvency of the accident and medical aid funds in accordance with recognized insurance principles."" A. The Exclusive Remedy Principle In exchange for this guaranteed right of recovery, workers lose the right to bring common-law suits against their employers for on-the-job injuries." In such cases, the IIA provides the exclusive remedy." As a result, the IIA bars all independent causes of action brought by employees against their employers for damages arising out of unintentional work-place injuries. 4 The IIA similarly bars all independent causes of action against an injured worker's co-employees. 1 9. WASH. REV. CODE § 51.04.010 (1994) provides: The common law system governing the remedy of workers against employers for injuries received in employment is inconsistent with modern industrial conditions. In practice it proves to be economically unwise and unfair. Its administration has produced the result that little of the cost of the employer has reached the worker and that little only at large expense to the public. The remedy of the worker has been uncertain, slow and inadequate. Injuries in such works, formerly occasional, have become frequent and inevitable. The welfare of the state depends upon its industries, and even more upon the welfare of its wage worker. The state of Washington, therefore, exercising herein its police and sovereign power, declares that all phases of the premises are withdrawn from private controversy, and sure and certain relief for workers, injured in their work, and their families and dependents is hereby provided regardless of questions of fault and to the exclusion of every other remedy, proceeding or compensation, except as otherwise provided in this title; and to that end all civil actions and civil causes of action for such personal injuries and all jurisdiction of the courts of the state over such causes are hereby abolished, except as in this title provided. 10. The IIA does not impose such responsibility on employers who are self-insured. WASH. REV. CODE § 51.14 (1994). 11. Id. § 51.16.035. 12. Und (...truncated)