Beckler v. North Dakota Workers Compensation Bureau, 870145

• Decision Date: 01 February 1988
• Docket Number: No. 870145,870145
• Citation: 418 N.W.2d 770
• Parties: Troy A. BECKLER, Appellant, v. NORTH DAKOTA WORKERS COMPENSATION BUREAU, Appellee.
• Court: North Dakota Supreme Court

Page 770

418 N.W.2d 770

Troy A. BECKLER, Appellant, v. NORTH DAKOTA WORKERS COMPENSATION BUREAU, Appellee.

Civ. No. 870145.

Supreme Court of North Dakota.

Feb. 1, 1988.

Dietz & Little, Bismarck, for appellant; argued by Kathryn L. Dietz. Appearance by Stephen D. Little.

Dean J. Haas (argued), Asst. Atty. Gen., N.D. Workers Compensation Bureau, Bismarck, for appellee.

MESCHKE, Justice.

Troy Beckler appealed a North Dakota Workers Compensation Bureau decision terminating his disability benefits. The district court affirmed. We hold that the Bureau's pretermination procedures did not accord Beckler due process, and we reverse.

On April 26, 1983, Beckler suffered a work-related injury to his right wrist, initially diagnosed as a severe sprain. The Bureau paid Beckler's medical expenses and paid him disability benefits for one week until he returned to work. During the next two years Beckler continued to experience pain in his wrist. In April 1985, Dr. Miller diagnosed Beckler as having carpal tunnel syndrome. The Bureau accepted Dr. Miller's determination that the 1983 injury caused the carpal tunnel syndrome and continued to pay Beckler's medical expenses, including carpal tunnel release surgery on August 9, 1985. The Bureau also paid disability benefits from August 1, 1985, through February 5, 1986. After surgery, Beckler complained that he continued to have pain, numbness, and abnormal sensations in his right hand.

On January 9, 1986, Dr. Miller examined Beckler and reported "no objective findings of abnormality" and "work simulator therapy suggests his function is good." Dr. Miller's report did not specifically say that Beckler could return to work. At the Bureau's request, Leon Keller, a registered physical therapist, examined Beckler on February 5 and reported that Beckler "was ready to return to work immediately."

After receiving Keller's report, the Bureau informed Beckler on February 12 that the evidence on file established that he was capable of returning to work on February 5 and that the Bureau was terminating his disability benefits effective February 5, 1986.

On March 5, 1986, Beckler consulted Dr. Dahl, whose diagnosis included his impression that Beckler probably suffered from reflex sympathetic dystrophy type syndrome. Dr. Dahl opined that Beckler "should return to work at full time activity," but cautioned that if pain persisted a further opinion might be necessary. On March 10 Beckler asked the Bureau to authorize evaluation by a specialist in pain-induced disability. He also requested reinstatement of disability benefits and determination of permanent partial disability.

On April 1, 1986, the Bureau told Beckler that, based on two medical reports indicating that it would be in his best interest to return to work and use his hand as much as possible, there was no change in its decision to deny him further disability benefits.

On April 2, 1986, Beckler requested a formal hearing and renewed his demand for evaluation by a specialist in pain-induced disability. The Bureau referred Beckler to a neurologist, Dr. Ketroser, for examination on April 23. After reviewing all the medical records, including Dr. Dahl's diagnosis about reflex sympathetic dystrophy type syndrome, Dr. Ketroser reported that Beckler demonstrated a "normal objective evaluation with normal strength, reflexes, and range of motion" but that Beckler described pain in his right hand. Dr. Ketroser did not mention Dr. Dahl's diagnosis. Dr. Ketroser opined that Beckler could "safely perform any and all work activity on a full time basis without restrictions."

On May 17, 1986, Beckler began working with Schaufbauer Construction but on June 16 he quit after experiencing severe pain in his right wrist, requiring treatment at an emergency room. On August 4 Beckler began working part-time with Dependable Business Machines and later became a full-time employee there.

On June 30, 1986, the Bureau issued a written order denying Beckler "benefits over and above those previously awarded and paid" for his injury. ¹ Beckler petitioned for rehearing, seeking disability benefits from February 5 through May 17 and from June 16 through August 4. He also renewed his request for evaluation for chronic pain syndrome. The Bureau granted Beckler a formal evidentiary hearing and also suggested that Dr. Ketroser's deposition be taken to clarify whether the pain experienced by Beckler would permit him to work. However, the Bureau denied Beckler's request for an independent evaluation because he had "already been evaluated by a number of physicians with no disagreement about diagnosis."

The Bureau held the evidentiary hearing on December 18, 1986 and on February 10, 1987, formally affirmed its earlier order denying further disability benefits. The district court affirmed the Bureau's decision.

Beckler contends that the Bureau's retroactive termination of disability benefits deprived him of due process under the Fourteenth Amendment of the United States Constitution and Article 1, Section 12 of the North Dakota Constitution. He argues that he was not given notice and opportunity to be heard before being deprived of a constitutionally protected interest. He thus asserts that he is entitled to disability benefits for those periods that he did not work after February 5, 1986.

The Bureau responds that, pursuant to NDCC 28-32-08, ² NDAC 92-01-02-03 and 92-01-02-04, and Davis v. North Dakota Workmen's Compensation Bureau, 317 N.W.2d 820 (N.D.1982), it may use an "informal hearing" to terminate benefits without providing pretermination notice to the claimant.

NDAC 92-01-02-03 says:

"Informal hearing. Upon receipt of a claim, the bureau shall investigate the claim, review the file and make a determination. Such action shall constitute an informal hearing. Pursuant to North Dakota Century Code section 28-32-08, no notice of such hearing need be given. Any decision arrived at, as a result of an informal hearing, shall be made pursuant to North Dakota Century Code section 28-32-13." [Emphasis added.]

NDAC 92-01-02-04 says:

"Rehearing--Formal hearing. Following an informal hearing, the bureau may set a rehearing on the claim pursuant to North Dakota Century Code section 28-32-14. Such a rehearing shall be a formal hearing on the claim."

In Steele v. North Dakota Workmen's Compensation Bureau, 273 N.W.2d 692 (N.D.1978), we held that whenever the Bureau initially disallows a claim after an "informal hearing," the claimant, upon request, is entitled to an evidentiary hearing, whether designated as a formal hearing or rehearing, if there is a dispute about material facts. However, Steele, supra, dealt with an initial determination of a claim and not a termination of existing benefits.

In Davis v. North Dakota Workmen's Compensation Bureau, supra, the claimant contended that the Bureau improperly denied him a hearing before terminating his benefits. In Davis the Bureau made an informal determination pursuant to NDAC 92-01-02-03, and thereafter the claimant chose to appeal rather than request an evidentiary hearing. We held that because the claimant chose to appeal he could not claim he was improperly denied a formal hearing. The claimant did not argue that the Bureau's pretermination procedures denied him due process. Davis is therefore not determinative of this case.

The Bureau nevertheless asserts that its pretermination procedures did not deny Beckler due process because he had a subsequent formal hearing and because he could receive retroactive payments, citing Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). We disagree.

The Fourteenth Amendment places procedural constraints on governmental decisions depriving individuals of interests enjoying the status of "property." Protected interests in property derive from an independent source, such as a state statute or rule entitling an individual to benefits. E.g., Board of Regents of State Colleges v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). We think it is clear that, under our state statutes, the continuing right to disability benefits under the Worker's Compensation Act is a "property" right protected by the Due Process Clause. The Bureau does not contend otherwise. Cf. Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976) [continuing right to Social Security disability benefits is property interest within the meaning of the Due Process Clause of the Fifth or Fourteenth Amendment]; Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970) [continuing right to welfare benefits is property interest within the meaning of the Due Process Clause of the Fourteenth Amendment].

Our analysis therefore focuses on the process due Beckler before the Bureau may terminate his disability benefits. Due process does not insist upon inflexible procedures uniformly applicable to every imaginable situation. But, minimum components of due process mandate that, except in unusual circumstances, a deprivation of liberty or property be preceded by some form of notice of the contemplated action and an opportunity for a hearing appropriate to the nature of the case. Memphis Light, Gas & Water Division v. Craft, 436 U.S. 1, 98 S.Ct. 1554, 56 L.Ed.2d 30 (1978); Mathews v. Eldridge, supra; Goss v. Lopez, 419 U.S. 565, 95 S.Ct. 729, 42 L.Ed.2d 725 (1975); Goldberg v. Kelly, supra; see Friendly, "Some Kind of Hearing," 125 U.Pa.L.Rev.1267 (1975).

In Mathews v. Eldridge, supra, 424 U.S. at 335, 96 S.Ct. at 903, 47 L.Ed.2d at 33, the United States Supreme Court outlined three factors to be weighed in determining the specific dictates of due process:

"First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function...