2011-145. State of Alaska Workers' Compensation Benefits Guaranty Fund Appellant vs. Charles G. West Alaska Open Imaging Center and Midway Auto Park Sales and Rentals Appellees.

• Case Date: January 20, 2011
• Court: Alaska

Alaska Workers Compensation Decisions 2011. Workers' Compensation Appeals Commission 2011-145. State of Alaska Workers' Compensation Benefits Guaranty Fund Appellant vs. Charles G. West Alaska Open Imaging Center and Midway Auto Park Sales and Rentals Appellees Alaska Workers' Compensation Appeals CommissionState of Alaska, Workers' Compensation Benefits Guaranty Fund, Appellant, vs. Charles G. West, Alaska Open Imaging Center, and Midway Auto Park Sales and Rentals, Appellees.Decision No. 145 January 20, 2011AWCAC Appeal No. 10-004AWCB Decision Nos. 10-0006 and 10-0007AWCB Case No. 200817952Final Decision Final decision on appeal of Alaska Workers' Compensation Board Decision No. 10-0006 and Decision No. 10-0007, issued on January 15, 2010, by southcentral panel members William J. Soule, Chair, Janet Waldron, Member for Industry, and Patricia Vollendorf, Member for Labor. Appearances: Daniel S. Sullivan, Attorney General, and Rachel L. Witty, Assistant Attorney General, for appellant, State of Alaska, Workers' Compensation Benefits Guaranty Fund; Robert A. Rehbock, Rehbock and Rehbock, for appellee, Charles G. West; appellees, Alaska Opening Imaging and Midway Auto Park Sales and Rentals, did not participate in appeal proceedings. Commission Proceedings: Appeal filed January 28, 2010, with motion for partial stay pending appeal; opposition filed February 10, 2010; motion for stay heard on February 17, 2010; Order on Motion for Stay issued March 11, 2010; briefing completed October 7, 2010; oral argument was not requested by either participating party.Appeals Commissioners: David Richards, Stephen T. Hagedorn, Laurence Keyes, Chair. By: Laurence Keyes, Chair. 1. Introduction. One of the 2005 amendments to the Alaska Workers' Compensation Act (Act), AS 23.30.001 - AS 23.30.395, was the passage of AS 23.30.082. In enacting AS 23.30.082, the Alaska legislature established the workers' compensation benefits guaranty fund (Fund).(fn1) The Fund provides compensation and benefits to injured employees whose employers fail to pay them compensation and benefits. Following the first hearing leading to this appeal, the Alaska Workers' Compensation Board (board) awarded compensation and benefits to the appellee, Charles G. West (West), on West's claim against his uninsured employer, Midway Auto Park Sales and Rentals (Midway).(fn2) Midway did not pay the benefits awarded by the board. After another hearing, the board issued a Final Decision and Order (FDandO) in which it construed AS 23.30.082 as requiring the Fund, the appellant, to pay West the compensation and benefits awarded him against Midway, including attorney fees, penalties, and interest.(fn3) The same day, the board issued a Supplementary Final Order Declaring Amount of Default (SFO), in which it found Midway to be in default in the amount of $66,583.42, plus undetermined prejudgment interest on certain medical benefits.(fn4) The primary issue in this appeal is whether the Fund is liable to West for attorney fees, penalties, and interest. The commission agrees with the board that attorney fees and interest are among the compensation and benefits the Fund owes West. However, we disagree with the board that the Fund is liable for the penalties assessed against Midway. A secondary issue is when does the Fund's liability for West's compensation and benefits attach? We conclude that the Fund's liability arose once Midway failed to pay the awarded benefits, West filed a claim against the Fund for payment of those benefits, and Midway had no defenses to the claim that the Fund could have asserted. 2. Factual background and proceedings. Following a hearing on May 21, 2009, the board issued a final decision on West's claim against Midway.(fn5) The board found that West was an employee of Midway on October 17, 2008,(fn6) the date that West suffered a covered injury when he slipped and fell on steps on Midway's premises.(fn7) The board also found that Midway did not have workers' compensation insurance when it employed West.(fn8) The board awarded West temporary total disability (TTD) benefits, certain medical benefits, interest, various penalties, attorney fees in the amount of $15,624.25, and legal costs of $531.74.(fn9) These rulings were not appealed. West did not file a lawsuit against Midway for his injuries.(fn10) On July 2, 2009, he sought an order that the Fund pay him the benefits he was awarded against Midway in West I.(fn11) In its answers,(fn12) the Fund took the position that there was no finding by the board that Midway was in default, and that until a supplementary order of default was issued, the Fund was not "duly authorized"(fn13) to pay West's claim.(fn14) The Fund also asserted it was not liable for attorney fees, penalties, and interest on his claim. The board held a hearing on September 23, 2009.(fn15) No witnesses testified.(fn16) The record was left open for supplemental briefing until October 9, 2009.(fn17) The board issued two decisions as a result of this hearing, the FDandO in West II and the SFO in West III.(fn18) In West II, the board concluded that: 1) "[t]he Fund's obligation to pay Employee's benefits arises at the same time an uninsured employer's obligation to pay benefits arises, with or without an award[;]" 2) "[t]he Fund must pay all compensation and benefits to which Employee is entitled with and without an award[;]" and 3) West was "entitled to an additional award of penalty, interest, and . . . attorney's fees and costs against [Midway]."(fn19) The board also concluded that West was entitled to a supplementary order declaring the amount of Midway's default.(fn20) The board's conclusions in West II are the subject of this appeal by the Fund.(fn21) 3. Standard of review. The issues presented in this appeal require the commission to interpret AS 23.30.082. Interpretation of a statute is a question of law to which the commission applies its independent judgment.(fn22) 4. Discussion. a. Applicable law. The Fund contends that the board was mistaken in its interpretation of AS 23.30.082, where the board members interpreted the statute to require the Fund to pay attorney fees, penalties, and interest to West. West maintains that the board correctly interpreted the statute in concluding that the Fund is liable for attorney fees,(fn23) penalties,(fn24) and interest.(fn25) In the process of interpreting AS 23.30.082, we must determine whether attorney fees, penalties, and interest are "compensation and benefits," within the meaning of the statute. Second, the commission must decide at what time the Fund becomes liable for payment of a claim. The Alaska Supreme Court has not had occasion to interpret AS 23.30.082. However, following its lead, we are to interpret AS 23.30.082 "according to reason, practicality, and common sense, considering the meaning of the statute's language, its legislative history, and its purpose."(fn26) Subsection (c) of AS 23.30.082(fn27) provides that an employee whose employer fails to meet the requirements of AS 23.30.075 and fails to pay "compensation and benefits" due the employee, has a claim for payment against the Fund. While this language indicates that an employee can file a claim against the Fund for compensation and benefits that the employer fails to pay, AS 23.30.082 does not specify what is included in "compensation," or what is included in "benefits," for purposes of Fund payment of a claim. Moreover, we note that 1) the Act's definition of "compensation" as "the money allowance payable to an employee . . . as provided for in this chapter,"(fn28) is broadly worded, and 2) the term "benefits" is not defined in the Act, although it is used throughout the Act in a variety of contexts. See, e.g., AS 23.30.001(1),(fn29) AS 23.30.010 (coverage for compensation or benefits), AS 23.30.030(4) (insurer liability for benefits), AS 23.30.041 (reemployment benefits), AS 23.30.095 (medical and related benefits), and AS 23.30.224 (coordination of benefits). Our consideration of statutory language in construing AS 23.30.082 is not necessarily restricted to the language of that statute, or interpreting the meanings of the terms "compensation" or "benefits." The Alaska Supreme Court "construes statutes in pari materia where two statutes were enacted at the same time, or deal with the same subject matter."(fn30) Statutes in pari materia are to be construed together.(fn31) Several sections of the Act, AS 23.30.082, AS 23.30.075, and AS 23.30.045 among them, are in pari materia because they deal with the same subject matter, namely employer or Fund liability for compensation and benefits. These statutes should be construed together. First, AS 23.30.075(a), which is expressly referenced in AS 23.30.082(c), requires an employer to "either insure and keep insured for the employer's liability under" the Act, or demonstrate "the employer's financial ability to pay directly the compensation provided for." In other words, under subsection .075(a), an employer must either have insurance, or the financial ability to pay the "compensation" for which it is liable under the Act. The "compensation" for which an employer is liable is set forth in AS 23.30.045(a). This subsection states in relevant part that "[a]n employer is liable for and shall secure the payment to employees of the compensation payable under AS 23.30.041, . . . 23.30.095, 23.30.145, and 23.30.180 - 23.30.215." Furthermore, although AS 23.30.045(a) cites these statutes as providing for...