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Supreme Court Overturns Washington Workers’ Compensation Law (1)

June 21, 2022, 2:28 PMUpdated: June 21, 2022, 4:52 PM

The US Supreme Court unanimously overturned a Washington state workers’ compensation law designed for federal contractors working at a nuclear waste site, rejecting arguments that the challenge is moot because of a new measure the legislature passed while the dispute was pending.

There are open questions about the impact of the new law, including whether it will prevent the federal government from recouping or avoiding paying as much as $37 million in compensation claims awarded under the earlier law at issue in the case, the justices said Tuesday.

“It is thus not ‘impossible’ that the United States will recover money if we rule in its favor, and this case is not moot,” Justice Stephen Breyer wrote for the court.

The decision overturns a US Court of Appeals for the Ninth Circuit ruling that upheld the law despite Washington’s argument that its new workers’ compensation law made the dispute moot.

The case centers around cleanup work at the decomissioned Hanford site, which produced weapons-grade plutonium for use in the US nuclear program during World War II and the Cold War. Cleanup is expected to continue over the next six decades and involve more than 10,000 workers.

Federal contractors do most of the cleanup work, while some of it is handled by private contractors, state employees, and federal workers.

Washington enacted a law in 2018 that lowered the bar for federal contractors to win workers’ compensation benefits. The measure drew a legal challenge from the federal government, which faced higher costs under the legislation.

In its decision Tuesday, the Supreme Court ruled that the law is unconstitutional because it discriminates against the federal government without authorization from Congress.

No ‘Windfall’ Allowed

The justices disagreed with Washington that a federal law eliminating federal immunity from state workers’ compensation laws on federal lands and projects allows the state to treat federal workers differently than state or private workers.

That measure only allows the extension of state law onto federal domains, not singling out the federal government for unfavorable treatment, the Supreme Court said.

Preventing such discrimination blocks a state from “bestowing a windfall upon its residents” by sticking the federal government with excessive costs, according to the ruling.

“The nondiscrimination principle provides a political check on the State’s ability to impose such laws by ensuring that the State’s own citizens shoulder at least some of the costs,” the court said. “Discriminatory provisions like the one before us contain no such ballot-box safeguard.”

Washington Attorney General Bob Ferguson said in a statement that the ruling has “little practical impact” in the state because of the change in the workers’ compensation law. Washington state’s attorneys previously had argued that the new law has retroactive effect. At any rate, fewer than 100 claims were filed under the 2018 law, they said.

The Justice Department didn’t immediately respond to a request for comment on the decision.

The case is United States v. Washington, U.S., No. 21-404, 6/21/22.

(Updated with details from the opinion and comment from the Washington attorney general.)

To contact the reporters on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com; Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Laura D. Francis at lfrancis@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com; Genevieve Douglas at gdouglas@bloomberglaw.com