2007-036. State of Alaska Department of Corrections Movant vs. Scott A. Dennis Earthworks and Umiliak Insurance Co. Respondents.

Case DateMarch 27, 2007
CourtAlaska
Alaska Workers Compensation Decisions 2007. Workers' Compensation Appeals Commission 2007-036. State of Alaska Department of Corrections Movant vs. Scott A. Dennis Earthworks and Umiliak Insurance Co. Respondents Alaska Workers' Compensation Appeals Commission State of Alaska, Department of Corrections, Movant, vs. Scott A. Dennis, Earthworks, and Umiliak Insurance Co., Respondents.Decision No. 036 March 27, 2007AWCAC Appeal No. 07-001 AWCB Decision No. 06-0331 AWCB Case No. 200602608M, 199927013Memorandum Decision Motion for Extraordinary Review of Alaska Workers' Compensation Board Interlocutory Decision and Order No. 06-0331, issued December 20, 2006, by the southeastern panel at Juneau, Janel Wright, Chair, Richard Behrends, Member for Management, and James Rhodes, Member for Labor. Appearances: Talis J. Colberg, Attorney General, and Daniel N. Cadra, Assistant Attorney General, for movant State of Alaska, Department of Corrections. Tom G. Batchelor, Batchelor and Assoc., P.C., for respondent Scott A. Dennis. Colby J. Smith, Griffin and Smith, for respondents Earthworks and Umiliak Insurance Co.Commissioners: Jim Robison, Philip Ulmer, and Kristin Knudsen.This decision has been edited to conform to technical standards for publication. By: Kristin Knudsen, Chair. The State of Alaska, Department of Corrections, requests extraordinary review of a decision by the board directing the Department of Corrections to pay benefits under AS 23.30.155(d) as the last employer who may be liable for compensation to Scott Dennis. The board correctly determined that imposition of an order to pay temporary compensation against the last employer under § 155(d) requires only the establishment of a causal link between the temporary disability and the employment concerned, if the prior employer, who would otherwise be liable for compensation, asserts as its sole defense that the later employment is the legal cause of the disability and thereby assumes the risk of reimbursement. The last employer retains the right to controvert liability on the basis of evidence sufficient to overcome the presumption, but it must pay (subject to the right of reimbursement) temporary compensation despite a valid controversion. While we agree that the case presents novel and important questions of law, any errors in the board's interpretation of the last injurious exposure rule and the recent amendment to AS 23.30.010 are not likely to evade review and should be reviewed on appeal from a final board decision. We conclude, for the reasons set out below, that it is premature to take up the remaining issues urged upon us by the Department of Corrections in this case. In particular, the issue of what is substantial evidence supporting a finding of "the substantial cause" will be better addressed after the facts are developed and the board has made its findings of fact. We anticipate further proceedings in this case, so we provide guidance to the board in this decision.(fn1) Factual background and board proceedings. Dennis injured his back in his employment at Earthworks. Earthworks paid him compensation and provided medical care, including back surgery. Dennis later went to work for the Department of Corrections (the Department) as a correctional officer. Before he had attended the correctional officer academy, he reported he injured his back moving eggs on February 21, 2006. Of this injury, Kenneth U. K. Leung, M.D., reported:
I operated on this gentleman in 2000 for an L5-S1 disk herniation. He did quite well after that, but about a year ago he started having pain every time he became active. Also, he is signed up to be a correctional officer and is scheduled to go to the Academy in Anchorage, but unfortunately in January and February he started getting worse, especially on February 21. He was [sic] picked up some boxes and immediately had severe pain down his right leg. He has had pain, numbness and weakness ever since. . . . He is not getting any better and is getting worse.(fn2)
The board reported that Dr. Leung added the employee's condition had "been coming on for awhile, but the incident of lifting in February caused the acute symptoms requiring more intervention."(fn3) The Department of Corrections paid Dennis temporary disability compensation and medical benefits until it controverted all benefits on April 10, 2006 after an employer medical evaluation by Chester S. McLaughlin, M.D. The report said:
I believe it is highly unlikely that a low back injury occurred on 2/21/06. It is my impression that his present status is due to gradual worsening of the degenerative changes at the L5-S1 level, this in combination with the epidural fibrosis of the S1 nerve root on the right, which was reported after the claimant had surgery to the low back.
. . . his employment did not bring about the employee's present condition.(fn4)
The Department now contends that its employment was not the substantial cause of Dennis's disability or need for medical treatment. Dennis filed a claim for workers' compensation against the Department of Corrections and, shortly afterwards, a claim against Earthworks.(fn5) The Department and Earthworks both denied liability. At a pre-hearing conference, Dennis's two claims were joined. Dennis asked for an order directing the Department to pay compensation and benefits under AS 23.30.155(d). The parties agreed that Dennis's request for compensation under AS 23.30.155(d) should be heard by the board. The board's decision. The board's decision extensively reviewed the arguments presented by the parties, which we will not summarize here. The board restated the Department's position as suggesting "that the Board must analyze the situation under the three part presumption analysis before awarding interim benefits to the employee."(fn6) (Emphasis added.) The board rejected this argument. Based on the last injurious exposure rule, and the use of the word "may" in AS 23.30.155(d), the board reasoned that "if the presumption is triggered by the employee's work for the last employer, the last injurious exposure doctrine applies and we need not proceed to the final steps of the presumption analysis until a hearing on the merits of the case."(fn7) The board rejected the Department's argument that it would be inequitable and contrary to the intent of AS 23.30.155(d) if it were required to pay interim benefits and be unable to seek remuneration if Earthworks were to prevail on its statute of limitation defense.(fn8) The board said:
The Board finds this argument presupposes that the State is also found not to be liable. We find this argument is simply overreaching. The State's argument, if accepted would render AS 23.30.155(d) meaningless where any insurer raised an absolute defense regardless of the merits of that defense.(fn9)
The board determined it should "examine the controversion by the more recent employer or insurer when determining whether to award interim benefits."(fn10) (Emphasis added.) Citing Grady v. Harding Lawson Assoc.,(fn11) the board examined whether the Department of Corrections raised "defenses . . . which take the claim outside the scope of the Act" and found that it did not.(fn12) The board found that Dennis had raised the presumption of compensability against the Department of Corrections. The board went further to state that "the probative value of the evidence to date is somewhat limited," and to advise the parties that "we find it does not suffice as an explanation that eliminates all possibilities that the current condition is connected to the 2006 injury."(fn13) However, the board concluded, "the matter presently before the board . . . is not to conclusively determine whether the [Department of Corrections] is or is not liable, but only whether there is a possibility of liability."(fn14) The board examined whether there was sufficient evidence in the present record to "support a denial of interim benefits" on the basis of a valid defense by Earthworks.(fn15) The board determined that "there is insufficient evidence in the record, as yet, to find these defenses meritorious."(fn16) The board then concluded that the Department "is required to provide interim benefits to the employee."(fn17) Arguments on the motion for extraordinary review. The Department of Corrections argues that the commission should allow extraordinary review because the board's errors regarding the impact of the amendment of AS 23.30.010(a) on the employer's obligation to pay temporary benefits under AS 23.30.155(d) otherwise will likely evade review. It argues review of the board's decision involves an important question of law, which, if resolved now, will materially advance termination of the litigation. Finally, the Department argues that postponement will work a hardship because, if the Department is not liable for benefits, and Earthworks statute of limitations defense is upheld, then the Department will be unable to obtain reimbursement of the amounts it paid to Dennis. The Department of Corrections argues that the board placed "unwonted emphasis" on the testimony of witnesses before the Legislature in concluding that the last injurious exposure rule is intact after amendment of AS 23.30.010, because the testimony offered by...

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