Country Wide Truck Service v. Industrial Com'n of Arizona

• Citation: 181 Ariz. 410,891 P.2d 877
• Decision Date: 28 July 1994
• Docket Number: No. 2,CA-IC,2
• Parties: COUNTRY WIDE TRUCK SERVICE, Petitioner Employer, The Travelers Insurance Co., Petitioner Carrier, v. The INDUSTRIAL COMMISSION OF ARIZONA, Respondent, Galen Walker, Respondent Employee, SPECIAL FUND DIVISION, Respondent Party in Interest. 93-0034.
• Court: Court of Appeals of Arizona

Page 877

891 P.2d 877

181 Ariz. 410

COUNTRY WIDE TRUCK SERVICE, Petitioner Employer, The Travelers Insurance Co., Petitioner Carrier, v. The INDUSTRIAL COMMISSION OF ARIZONA, Respondent Galen Walker, Respondent Employee SPECIAL FUND DIVISION, Respondent Party in Interest.

No. 2 CA-IC 93-0034.

Court of Appeals of Arizona Division 2, Department A.

July 28, 1994.

Review Denied March 21, 1995.

Steven C. Lester, P.C. by Steven C. Lester, Phoenix, for petitioner employer and petitioner carrier.

Anita R. Valainis, Chief Counsel, Indust. Com'n of Arizona, Phoenix, for respondent.

Special Fund Div. by Laura L. McGrory, Phoenix, for respondent real party in interest.

OPINION

LIVERMORE, Presiding Judge.

In this workers' compensation case Country Wide Truck Service and its carrier, The Travelers Insurance Co., seek to set aside an Industrial Commission award denying apportionment. The pertinent facts are as follows.

Galen Walker has a long and complicated history of neck and back problems beginning in the early 1970s and including a spinal fusion and multiple cervical fusions. His problems were aggravated in 1987 when an industrial injury in Texas led to hospitalizations, nerve freezing procedures, and a 100 percent disability rating. While working for Country Wide Truck Service in June 1989, Walker again injured his neck and back when boxes he was unloading fell on him. Surgery was performed in September, and on November 8, he was released for light work. On November 27 he sustained an injury to his left shoulder.

Walker's claim for workers' compensation for this last injury was accepted and eventually closed with an unscheduled permanent impairment. The carrier requested a hearing to determine the amount of benefits due and whether apportionment pursuant to A.R.S. § 23-1065(C) was applicable. Prior to hearing the parties stipulated to Walker's loss of earning capacity and to the fact that he had a preexisting non-industrial permanent impairment of greater than 10 percent. The only remaining issue was whether the carrier was entitled to apportionment pursuant to A.R.S. § 23-1065(C). The Special Fund having been joined as a party, hearings were held at the close of which the administrative law judge (ALJ) issued an award denying apportionment. The award was affirmed and supplemented upon administrative review and this request for special action review followed. For the reasons set forth below, we set aside the award.

Arizona's apportionment law was enacted to promote the hiring of handicapped workers by relieving the employer of increased compensation liability resulting from the combination of preexisting impairments and industrial injuries. Salt River Project v. Industrial Commission, 172 Ariz. 477, 482, 837 P.2d 1212, 1217 (App.1992); A. Larson, Workmen's Compensation Law § 59 (1992). Employers who meet the conditions of A.R.S. § 23-1065(C) are reimbursed from a second injury fund maintained by the Industrial Commission as the Special Fund and financed by a premium tax imposed on insurance carriers and self-insured employers. In pertinent part, A.R.S. § 23-1065(C) provides as follows:

In claims involving an employee who has a preexisting physical impairment which is not industrially-related and ... is of such seriousness as to constitute a hindrance or obstacle to employment or to obtaining reemployment if the employee becomes unemployed, and the impairment equals or exceeds a ten per cent permanent impairment ... and the employee thereafter suffers an additional permanent impairment not of the type specified in § 23-1044, subsection B, the claim involving the subsequent impairment is eligible for reimbursement, as provided by subsection D of this section, under the following conditions:

* * * * * *

2. The employer establishes by written records that the employer had knowledge of the permanent impairment at the time the employee was hired, or that the employee continued in employment after the employer acquired such knowledge.

3. The employee's preexisting impairment is due to one or more of the following:

* * * * * *

(y) Ruptured intervertebral disk.

In denying apportionment, the ALJ determined that Walker's impairment did not constitute a hindrance to his employment or reemployment because it never caused him to be denied a job nor prevented him from doing his pre-impairment job as a truck driver. Country Wide argues that this subjective approach defeats apportionment's purpose of providing employers an incentive to hire the handicapped. It urges instead adoption of a more objective approach which looks not to the particular individual's ability to maintain employment, but rather to the nature of the preexisting impairment and the likelihood that an employer would be less likely to hire someone with such an impairment than one without.

A matter of first impression in Arizona, this issue has been addressed by courts in other jurisdictions which, like ours, based their apportionment provisions on that of the Model Workmen's Compensation and Rehabilitation Law. See Salt River Project, 172 Ariz. at 480, 837 P.2d at 1215. We find particularly persuasive the reasoning of the Alaska Supreme Court in Employers Commercial Union Insurance Group v. Christ, 513 P.2d 1090, 1093 (Alaska 1973):

In interpreting the Alaska statute we must keep in mind the policy underlying second injury fund systems. It is...