Compensation of Townsend, Matter of, 79-00826

• Decision Date: 27 October 1982
• Docket Number: No. 79-00826,79-00826
• Citation: 60 Or.App. 32,652 P.2d 828
• Parties: In the Matter of the COMPENSATION OF William TOWNSEND, Claimant. William TOWNSEND, Petitioner-Cross-Respondent, v. ARGONAUT INSURANCE COMPANY and O.A.M. Pole & Piling, Respondents-Cross- Petitioners. ; CA A23849.
• Court: Oregon Court of Appeals

Page 828

652 P.2d 828

60 Or.App. 32

In the Matter of the COMPENSATION OF William TOWNSEND, Claimant William TOWNSEND, Petitioner-Cross-Respondent, v. ARGONAUT INSURANCE COMPANY and O.A.M. Pole & Piling Respondents-Cross- Petitioners.

No. 79-00826; CA A23849.

Court of Appeals of Oregon.

Argued and Submitted July 8, 1982.

Decided Oct. 27, 1982.

Michael Wasserman, Salem, argued the cause for petitioner-cross-respondent. With him on the briefs were Rolf Olson, and Olson, Hittle & Gardner, Salem.

Katherine H. O'Neil, Portland, argued the cause for respondents-cross-petitioners. With her on the briefs was Schwabe, Williamson, Wyatt, Moore & Roberts, Portland.

Before RICHARDSON, P.J., and THORNTON and VAN HOOMISSEN, JJ.

RICHARDSON, Presiding Judge.

Claimant appeals an order of the Workers' Compensation Board approving denial of responsibility for claimant's ankylosing spondylitis. Employer and its compensation carrier, Argonaut Insurance Company (Argonaut), cross-appeal, seeking reversal of an increase in the award by determination order for unscheduled permanent partial disability resulting from a 1972 compensable back injury. We affirm.

Claimant sustained a compensable injury to his back in March, 1972, when he was struck on his lower back by a pole. He was diagnosed as suffering a contusion of the sacrum and lumbar area, chronic lumbosacral strain and a compression fracture of a vertebra. He had had no problems with his back before the injury. In July, 1977, after his claim was reopened, he was examined by Dr. Edward Rosenbaum, a rheumatologist, who diagnosed ankylosing spondylitis, a form of rheumatoid arthritis of the spine. The relation of the spondylitis to the 1972 injury is at issue in this case.

Citing Dr. Rosenbaum's diagnosis, Argonaut denied responsibility for "further medical or compensation benefits * * * in connection with this claim." The denial was interpreted as a total denial and held unreasonable by a referee in December, 1977. The issue of the relationship between claimant's original injury and the ankylosing spondylitis was explicitly held open.

In September, 1977, claimant was hospitalized for severe back pain. A few weeks after the hospitalization, another rheumatologist, Dr. Moore reported to claimant's attorney:

" * * * I would have to favor trauma occurring during that accident as the major cause of the patient's back pain. I am sure that the ankylosing spondylitis has been a contributing factor and I am sure it accounts for some of the patient's stiffness and for some of the chronicity of his pain syndrome. On the other hand, I suspect strongly that the patient would never have had incapacitating back pain had he not had the trauma in 1972. * * * "

He also noted that it is not uncommon for ankylosing spondylitis to be asymptomatic before a back trauma. The following month he wrote a "clarification," stating that claimant's ankylosing spondylitis "flared as a direct result of the trauma he incurred in 1972" and that he "would therefore attribute whatever pain he has at the present time resulting from the spondylitis to be a consequence of that trauma."

By stipulation and order dated September 18, 1978, claimant's claim was reopened as of September, 1977. In December, 1979, the parties entered into a stipulation that ordered Argonaut to comply with the previous stipulation and "continue to pay compensation until closure is authorized," as well as medical expenses.

In July, 1979, claimant was examined by Orthopaedic Consultants, who diagnosed ankylosing spondylitis and chronic low back strain and indicated that the spondylitis was unrelated to the 1972 injury. In July, 1980, Argonaut requested another opinion from Dr. Rosenbaum. On the basis of his July, 1977, examination and a review of subsequent medical reports, Dr. Rosenbaum said that claimant was suffering from ankylosing spondylitis that was unrelated to his injury. Argonaut issued a partial denial with respect to benefits for disability resulting from the spondylitis. A hearing was held, after which the referee approved the partial denial and made a permanent partial disability award of 75% unscheduled low back disability. The Board affirmed and adopted the referee's opinion and order. Claimant appeals the partial denial, and Argonaut cross-appeals with respect to the extent of disability.

Claimant contests Argonaut's right to issue a denial, as well as the denial's merits. Claimant argues that Argonaut waived its right to deny the compensability of his ankylosing spondylitis by failing to issue a denial within the statutory time period specified in ORS 656.262(6). That section provides:

"Written notice of acceptance or denial of the claim shall be furnished to the claimant by the insurer * * * within 60 days after the employer has notice or knowledge of the claim. * * * "

However, the penalty for a late denial is not a waiver of the right to deny; the penalty is specified in ORS 656.262(9). ¹ The Oregon Supreme Court, in Norton v. Compensation Department, 252 Or. 75, 79, 448 P.2d 382 (1968), stated:

" * * * [I]n the absence of express legislative direction to ignore notice of denial made more than 60 days, we would not apply that sanction * * *."

Claimant also maintains that Argonaut has waived its right to deny compensability of his ankylosing spondylitis by paying benefits after the disease was diagnosed. The Oregon Supreme Court has recently stated that, under what is currently ORS 656.262(8), ² an employer is not estopped to deny liability after paying compensation if the denial is based on a defense other than lack of notice. Frasure v. Agripac, 290 Or. 99, 619 P.2d 274 (1980). Claimant urges us to distinguish Frasure on the ground that the denial in that case was the result of a complete change in medical opinion as to whether the injury was new or an aggravation of an old one. However, we have applied Frasure without interpreting its holding to be so limited. Saxton v. Lamb-Weston, 49 Or.App. 887, 621 P.2d 619 (1980), rev. den. 290 Or. 727 (1981); Babb v. SAIF, 49 Or.App. 707, 619 P.2d 1362 (1980). It does not make a difference whether we consider this case in terms of waiver or estoppel; the effect of applying either doctrine would be to subvert the purpose of the workers' compensation system by encouraging the withholding of benefits.

Relying on Clinkenbeard v. SAIF, 44 Or.App. 583, 605 P.2d 1390 (1980), claimant also contends that Argonaut is foreclosed from denying the compensability of his ankylosing spondylitis because of the stipulations entered into in 1978 and 1979 after Argonaut knew the...