Aranda v. Industrial Com'n of Arizona

• Decision Date: 12 September 2000
• Docket Number: No. CV-99-0405-T/AP., No. CV-99-0303-PR
• Parties: Guadalupe ARANDA, Petitioner, v. The INDUSTRIAL COMMISSION OF ARIZONA, Respondent, Classic Roofing, Inc., Respondent Employer, State Compensation Fund, Respondent Carrier. Remedytemp & Remedyperm, Petitioner Employer, State Compensation Fund, Petitioner Carrier, v. The Industrial Commission of Arizona, Respondent, Michael Everett, Respondent Employee.
• Court: Arizona Supreme Court

11 P.3d 1006

198 Ariz. 467

Guadalupe ARANDA, Petitioner, v. The INDUSTRIAL COMMISSION OF ARIZONA, Respondent, Classic Roofing, Inc., Respondent Employer, State Compensation Fund, Respondent Carrier.

Remedytemp & Remedyperm, Petitioner Employer, State Compensation Fund, Petitioner Carrier, v. The Industrial Commission of Arizona, Respondent, Michael Everett, Respondent Employee.

Nos. CV-99-0303-PR, CV-99-0405-T/AP.

Supreme Court of Arizona, En Banc.

September 12, 2000.

As Corrected on Denial of Reconsideration November 1, 2000.

Taylor & Associates, PLLC by Roger A. Schwartz, Phoenix, Attorneys for Aranda.

Anita R. Valainis, Chief Counsel, Industrial Commission of Arizona, James F. Crane, Chief Counsel, State Compensation Fund by James B. Stabler, Phoenix, Attorneys for Respondent Employer and Respondent Carrier.

James F. Crane, Chief Counsel, State Compensation Fund by Kenna Finch, Legal Department, Mark A. Kendall, Legal Department, Phoenix, Attorneys for Petitioner Employer and Carrier. Anita Valainis, Chief Counsel, Industrial Commission of Arizona, Ely, Bettini, Ulman, Insana & Turley by J. Wayne Turley, Phoenix, Attorneys for Respondent Employee.

OPINION

JONES, Vice Chief Justice.

¶ 1 We address two cases consolidated for review to determine the applicability of Arizona Revised Statutes Annotated (A.R.S.) § 23-1031¹ (Supp.1999), authorizing the suspension of workers' compensation benefits to individuals convicted of a crime and incarcerated. See Aranda v. Industrial Commission, 195 Ariz. 403, 989 P.2d 157 (App.1999), and RemedyTemp v. Industrial Commission, 1 CA-IC 99-0088, IC Claim No. 98162298731. In Aranda, we granted review from a decision of the court of appeals, and in Remedy Temp, because the same issue is raised, we granted a motion to transfer the case from the court of appeals. In each, we decide whether the statute was applied retroactively, and if so, whether retroactive application is permissible as a matter of law. We have jurisdiction pursuant to article VI, section 5(3) of the Arizona Constitution. In Aranda, jurisdiction is further predicated on Rule 8(b), Arizona Rules for Special Action, and in Remedy Temp, on Rule 19(a), Arizona Rules of Civil Appellate Procedure.

Facts and Procedural History

Aranda

¶ 2 Guadalupe Aranda sustained a compensable industrial injury on May 4, 1993, and the State Compensation Fund accepted his claim for benefits. In mid-February 1994, Aranda was arrested and incarcerated pending trial. He was convicted, and in March 1995, was sentenced to a period of incarceration.

¶ 3 On April 19, 1996, the Industrial Commission issued its Findings and Award for Unscheduled Permanent Partial Disability benefits. The parties stipulated to an award of $630.71 per month, which the Administrative Law Judge (ALJ) adopted. That award became final August 23, 1996.

¶ 4 In 1997, the Arizona Legislature enacted A.R.S. section 23-1031, with an effective date of December 1, 1997. On January 8, 1998, the State Compensation Fund ("State Fund") issued a Notice of Claim Status suspending benefits pursuant to section 23-1031, effective January 1, 1998. Aranda requested a hearing on the suspension. Following the hearing, the ALJ determined the State Compensation Fund "lawfully applied A.R.S. [§ 23-1031] to the facts of the present case." Aranda filed a timely request for review of the decision, which the Industrial Commission affirmed on July 29, 1998. The following day, Aranda filed a Petition for Special Action in the court of appeals, which affirmed the decision of the Industrial Commission. We granted review.

RemedyTemp

¶ 5 Michael Everett suffered a compensable head injury on July 21, 1991. The Industrial Commission entered its Findings and Award for Unscheduled Permanent Partial Disability benefits on January 24, 1994. The findings concluded that Everett had sustained a 43.94% loss of earning capacity, entitling him to compensation of $158.77 per month. In compliance with a child support order, one-half the compensation was paid to Everett's son.² Everett and his son received monthly compensation payments from 1994 into 1998.

¶ 6 Everett committed three criminal offenses in March and April 1997. Police arrested him in mid-April 1997. Everett pled guilty to three charges and was sentenced to a period of imprisonment in December 1997. The State Compensation Fund, pursuant to section 23-1031, suspended benefits payments to Everett effective May 1, 1998. The statute became effective prior to Everett's plea and sentencing but subsequent to the criminal offenses. Payments to Everett's son have continued pursuant to A.R.S. section 23-1031(B).

¶ 7 Everett requested a hearing, which was held in early 1999. The ALJ concluded that A.R.S. section 23-1031 did not apply to Everett's case because the statute expressed no intent to be applied retroactively and it embraced substantive rights. The ALJ further decided that the rights of the parties were fixed by the law which existed on the date of injury. Therefore, the ALJ set aside the suspension of benefits. The State Compensation Fund filed a Petition for Special Action in the court of appeals. Everett requested that this court review the case pursuant to Rule 19(a)(3), Arizona Rules of Civil Appellate Procedure, which provides for transfer of cases in these circumstances.

¶ 8 We granted review in Aranda and transfer in RemedyTemp to determine whether workers' compensation benefits are vested property rights and whether, as a matter of law, the lower courts correctly applied A.R.S. section 23-1031.

DISCUSSION

Retroactive Application

¶ 9 The issue is one of first impression regarding the applicability of A.R.S. section 23-1031 to pre-determined, final compensation awards by the Arizona Industrial Commission. The statute reads in relevant part:

§ 23-1031. Persons incarcerated; suspension of benefits

A. Except as provided in subsection B of this section, beginning on December 1, 1997, payment of compensation under this chapter shall be suspended during the period of time that the employee has either:

1. Been convicted of a crime and is incarcerated in any state, federal, county or city jail or correctional facility.

2. Been adjudicated delinquent and is incarcerated in any state, federal, county or city jail or correctional facility.

The Arizona Legislature enacted the statute in 1997. See Act of Apr. 28, 1997, Ch. 212, § 4, 1997 Ariz. Sess. Laws 1688, 1690. The effective date of its passage would have been July 21, 1997, but the legislature chose specifically to enact the later effective date of December 1, 1997.

¶ 10 Statutes must contain an express statement of retroactive intent before retroactive application may occur. See A.R.S. § 1-244; see also San Carlos Apache Tribe v. Superior Court, 193 Ariz. 195, 205, 972 P.2d 179, 189 (1999); Bush v. Industrial Comm'n, 136 Ariz. 522, 524, 667 P.2d 222, 224 (1983); Gallo v. Industrial Comm'n, 83 Ariz. 392, 396, 322 P.2d 372, 375 (1958). Here, the Legislature inserted a later effective date into the statute than would have existed under its passage date. Section 23-1031 gives no express statement of retroactive intent.

¶ 11 This court has previously created an exception to the general rule requiring express language of retroactivity. Enactments that are procedural only, and do not alter or affect earlier established substantive rights may be applied retroactively. See In re Shane B., 198 Ariz. 85, 87, 7 P.3d 94, 96 (2000); Bouldin v. Turek, 125 Ariz. 77, 78, 607 P.2d 954, 955 (1979). Even if a statute does not expressly provide for retroactivity, it may still be applied if merely procedural because litigants have no vested right in a given mode of procedure. See Allen v. Fisher, 118 Ariz. 95, 96, 574 P.2d 1314, 1315 (App.1977). We thus determine, as a threshold matter, whether A.R.S. section 23-1031 is procedural. If it is, it can be applied to suspend benefits in both cases at bench. If not, we move to the substantive issue.

¶ 12 In general, procedural law relates to the manner and means by which a right to recover is enforced or provides no more than the method by which to proceed. See State ex rel. Miller v. Beardsley Indus. Property, 173 Ariz. 19, 24, 839 P.2d 439, 444 (App.1992). Substantive law "creates, defines and regulates rights" while a procedural law establishes only "the method of enforcing such rights or obtaining redress." Hall v. A.N.R. Freight Sys., Inc., 149 Ariz. 130, 138, 717 P.2d 434, 442 (1986) (quoting Allen, 118 Ariz. at 96, 574 P.2d at 1315)).

Procedural or Substantive

¶ 13 Several procedural statutes have been enacted in the field of workers' compensation. See, e.g., A.R.S. §§ 23-908 (Supp. 1995) (requiring accident/injury reports); -1026 (1995) (compelling periodic medical exams); -1047(D) (1991) (requiring annual income reports); -1071 (1995) (requiring written Commission approval for absence from state in excess of two weeks). Each of these serves as a procedural device to facilitate the manner and means by which benefits are administered. They do not create, define, or regulate the right to receive benefits.

¶ 14 For example, claimants receiving permanent compensation benefits must report annual income on the award's anniversary date, see A.R.S. § 23-1047(D), failing in which, they receive notice that the report must be filed within thirty days. After thirty days, benefits may be suspended until the report is filed. See id. The goal of the statute is the efficient administration of benefits. See Pima County Bd. of Supervisors v. Industrial Comm'n, 149 Ariz. 38, 45, 716 P.2d 407, 414 (1986).

¶ 15 In contrast, section 23-1031 functions substantively to redefine, regulate, or even eliminate a claimant's legal authorization to receive benefits based on his incarcerated status. Reinstatement of benefits would occur only by release from prison. Clearly, this is a matter of substantive law.

¶ 16 Even so, a substantive legal right may be subject to...