A Thurston County judge on Friday found that the Department of Social and Health Services owes about 22,000 in-home health-care workers $96 million in back pay and accrued interest.

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As lawmakers work to close a $2 billion state budget shortfall, a cost-savings decision from eight years ago could ultimately prove expensive.

A Thurston County judge on Friday ruled the state Department of Social and Health Services (DSHS) owes about 22,000 home-care workers almost $96 million in back pay and accrued interest.

Though DSHS plans to appeal the ruling, each day of delay could cost the state more than $30,000 in interest charges if the caregivers were to prevail, according to the plaintiffs’ attorney.

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Kirkland attorney Greg McBroom, who represents the caregivers in the class-action lawsuit, said the state illegally cut benefits without first assessing DSHS clients’ individual needs. He said many of the Medicaid beneficiaries had medical conditions that required extensive care.

Friday’s ruling by Superior Court Judge Thomas McPhee came down almost a year after a Thurston County jury found that DSHS shortchanged the workers, awarding the plaintiffs $57 million in back pay.

The case, filed in 2007, went back to McPhee to determine interest charges, which the judge pegged Friday at $38.6 million. Attorney fees will be determined later.

McBroom said the case involves about 16,000 disabled clients; the judgment represents about $4,400 in back pay and interest for every provider.

States across the nation are becoming overwhelmed by lawsuits over deep budget cuts. Washington state has been sued more than a dozen times because of cuts lawmakers made in recent years to curtail spending and balance the budget.

The caregivers’ lawsuit stems from a 2003 state decision to cut payments by 15 percent to Medicaid beneficiaries who lived in the same home as their caregivers.

The state argued that taxpayers shouldn’t have to pay in-home caregivers — many of whom were relatives of the Medicaid clients — for tasks they would perform for their own households.

The state lawyers argued, for example, that the in-home caregivers would perform such jobs as shopping, cooking and doing laundry regardless of whether they were caring for a Medicaid client.

“This was a budget-cutting measure. We reduced the amount of money to the people who provided the services, not to the people receiving them,” said DSHS spokesman Thomas Shapley.

In 2007, the state Supreme Court ruled that the cuts violated federal Medicaid law stating all beneficiaries should be treated equitably.

The state restored the payments but did not reimburse the four years of lost payments.

Adam Glickman, with the Service Employees International Union (SEIU), said the home-care workers, most of whom are represented by his union, were cheated by the state.

“Clearly, workers for several years were denied pay for work they were doing. These are workers who were making at the time $8 to $9 per hour,” Glickman said. “This is justice for these workers to get this back pay.”

Glickman doubts the case will be a factor in the current budget debate because it will be tied up on appeal, but he believes it will be a big factor down the road.

Information from Seattle Times archives is included in this report.

Jennifer Sullivan: 206-464-8294 or jensullivan@seattletimes.com. On Twitter @SeattleSullivan.

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