Federal Judge Dismisses Lawsuit Against WA Cares, Ruling Action Should Be Brought in State Court


OLYMPIA — WA Cares has for now survived another challenge, this time after a federal judge dismissed a lawsuit against Washington's first-of-its-kind long-term care program.

A Democratic priority styled as social insurance passed into law in 2019, WA Cares will allow eligible state residents to collect up to $36,500 to pay for things like meals, transportation and respite care and other needs.

To pay for that, the program will impose a 0.58% payroll tax on employees in Washington — about $290 per year for somebody making $50,000 annually — starting in July 2023.

Last November, six individuals and a trio of businesses filed a legal challenge to WA Cares  in the Western District of Washington against Gov. Jay Inslee and state officials.

Among other things, that lawsuit alleged that WA Cares runs afoul of multiple federal laws, like one that forbids a state from having a law requiring workers to participate in a plan providing medical or sickness benefits.

The legal challenge also contended disparate treatment of people paying the tax but not getting any benefits if they aren't a resident of Washington state, and that it also violated the U.S. Constitution's Equal Protection and the Privileges and Immunities clauses.

But in a ruling Tuesday, U.S. District Court Judge Thomas Zilly struck down those arguments, saying his federal court did not have jurisdiction.

"Any legal challenge to WA Cares must be brought in state court," he wrote.

That is unlikely to happen immediately, according to Richard Birmingham, an attorney with Davis Wright Tremaine who represents the plaintiffs.

"Any state law challenge we may pursue will likely wait until July 1, 2023, the next date by which premium is scheduled to be collected," Birmingham wrote in an email.

That delay will also allow state appeals judges or the state Supreme Court to first resolve a pending legal challenge against another big Democratic priority, he wrote: a lawsuit against the new capital-gains tax.

A Douglas County Superior Court judge last month ruled that tax unconstitutional in a case that will likely reach the Supreme Court. The ultimate outcome could be relevant in a new legal challenge against WA Cares, according to Birmingham.

In a statement, WA Cares Fund Director Ben Veghte praised Zilly's ruling.

"We are glad to see this decision from the court," Veghte, whose office is part of the state Department of Social and Health Services, said in prepared remarks, adding: "This decision is another step toward making long-term care accessible for all Washingtonians and setting an example for the rest of the nation to follow."

Democratic lawmakers and advocacy groups have pointed to the help many people will need as they age as a reason the program is needed. Opponents and even some supporters, however, have criticized the number of state residents who will pay into WA Cares but never receive a benefit.

Under that pressure, Democrats scrambled to delay the state collection of the payroll tax — which had been scheduled to start Jan. 1 this year — and make changes to the law at the start of this year's legislative session. Inslee quickly signed those bills into law.

Under those changes, some people who will pay into the program but would never be eligible for benefits will now be able to permanently opt out of WA Cares.

Those people include about 150,000 people who work in Washington but whose residence is in another state, like Oregon or Idaho; military families rotating through the state;  and some disabled veterans.

Under the original law passed in 2019 creating the program, about 477,000 state residents near retirement age might not have become fully vested to claim full benefits.

And so the legislation signed by Inslee also changed the formulas so residents born before 1968 who aren't fully vested can still receive partial benefits according to the number of years they ultimately pay into WA Cares.