Washington Appeals Court Holds One-Year Benefit-Repayment Limit Does Not Apply to Overpayments Owed by Vocational Schools

OLYMPIA (LN) — A Washington Court of Appeals panel unanimously held that the one-year statute of limitations in RCW 51.32.240(1)(a) does not apply to the Department of Labor and Industries' recovery of overpayments from vocational service providers, handing the agency a win in its effort to recoup more than $147,000 in principal from a private vocational school that billed the state for workers who, audit findings showed, never started programs or left early.

Office Careers, a Workforce Coordination Training Board-licensed school offering courses in accounting, medical coding and billing, and hospitality, had been an approved DLI provider since 2010, collecting more than $1 million annually from the agency between 2015 and 2020 at an average tuition rate of $12,300 per worker. Two audits — one covering July 2015 through June 2018, a second covering January 2015 through March 2020 — concluded the school had overbilled DLI in dozens of cases, primarily by failing to issue required tuition refunds when workers never started programs or by misidentifying student end dates.

DLI ordered recoupment of $25,434.50 plus interest from the first audit and $122,069.50 plus interest from the second. Office Careers, after exhausting administrative review before the Board of Industrial Insurance Appeals and the superior court, argued on appeal that the one-year limitations period in RCW 51.32.240(1)(a) barred recovery of any overpayments made more than a year before DLI's orders — which would have wiped out virtually the entire recoupment demand.

Judge Lee, writing for Division II, rejected that argument by anchoring the analysis in the statute's plain text. RCW 51.32.240(1)(a) begins with the clause "Whenever any payment of benefits under this title is made" — and the court held that DLI's payments to Office Careers were never "benefits" in the first place. Benefits under the Industrial Insurance Act flow to injured workers and their dependents, not to the providers who bill the state for services. The court pointed to RCW 51.32.095(6)(a), which expressly characterizes vocational program tuition and fees as "costs" rather than benefits, and to RCW 51.36.080, which refers to provider payments as "fees and medical charges."

The court also relied on RCW 51.48.260, which imposes liability for excess payments on any person or institution — explicitly excluding injured workers from its reach. The panel read that exclusion as a legislative signal consistent with DLI's position: the one-year clock in RCW 51.32.240(1)(a) applies to benefits paid to injured workers, not to fees paid to providers.

Office Careers' fallback argument — that RCW 51.32.240(4)(d)'s explicit exclusion of health service providers from the definition of "recipient" in that subsection implied providers were covered recipients everywhere else in the statute — fared no better. The court held that subsection (4) addresses a different scenario entirely: erroneous benefit payments made pursuant to an adjudication later overturned on appeal. That was not the situation here, where workers were properly entitled to benefits but Office Careers received money for services it never fully delivered.

On the separate question of provider-number termination, the court concluded Office Careers had effectively forfeited its objections by filing a notice of non-opposition to DLI's partial summary judgment motion in December 2022, then attempting to reverse course at oral argument after settlement talks collapsed. The Industrial Appeals Judge wrote that the reversal was "too little, too late," and the appellate panel agreed, noting that Office Careers raised no evidentiary objections before the ruling and pointed to no record evidence of a genuine factual dispute on appeal.

The court also rejected Office Careers' challenge to DLI's "triangulation" method — cross-referencing the school's own records against multiple DLI data warehouses to pin down when workers actually stopped attending — holding that nothing in WAC 490-105-130 constrained how the agency verified termination dates, particularly given that Office Careers had provided sparse documentation throughout the audit process.

The school's job placement record during the first audit period illustrated why DLI moved to terminate its provider number: of 388 workers who attended Office Careers programs, the school could identify only 15 who were subsequently employed — a placement rate of 3.9 percent against a regulatory floor of 50 percent under WAC 296-19A-590(4).

The panel declined to award Office Careers attorney fees, leaving intact the superior court's $200 statutory fee award to DLI.