Kiltow v. SAIF Corp. (In re Comp. of Kiltow)

• Jurisdiction: Oregon
• Parties: In the Matter of the Compensation of Gaylen J. Kiltow, Claimant. Gaylen J. KILTOW, Petitioner, v. SAIF CORPORATION and Portland Disposal & Recycling, Inc., Respondents.
• Citation: 351 P.3d 786,271 Or.App. 471
• Docket Number: 1103049,A152007.
• Court: Oregon Court of Appeals
• Decision Date: 03 June 2015

271 Or.App. 471

351 P.3d 786

In the Matter of the Compensation of Gaylen J. Kiltow, Claimant.

Gaylen J. KILTOW, Petitioner

v.SAIF CORPORATION and Portland Disposal & Recycling, Inc., Respondents.

1103049

A152007.

Court of Appeals of Oregon.

Argued and Submitted May 7, 2014.

Decided June 3, 2015.

Ronald A. Fontana, Portland, argued the cause for petitioner. With him on the briefs was Ronald A. Fontana, PC.

Julie Masters, Eugene, argued the cause and filed the brief for respondents.

Before DUNCAN, Presiding Judge, and EGAN, Judge, and LAGESEN, Judge.^*

Opinion

EGAN, J.

Claimant seeks review of an order of the Workers' Compensation Board (the board). Claimant was injured at work and the employer's insurer, SAIF Corporation, accepted a claim for a combined condition—a work-related foot injury and pre-existing diabetes. SAIF later denied the claim, asserting that claimant's work injury ceased to be the major contributing cause of his combined condition. Claimant successfully argued that his diabetes was not a pre-existing condition that combined with his foot injury; rather, his was only a work-related foot injury. After a hearing, claimant obtained an ALJ order to that effect that became final. Regardless of that order, on reconsideration of the rating of claimant's permanent disability and his amount of compensation, the Appellate Review Unit of the Workers' Compensation Division of the Department of Consumer and Business Services (the ARU) determined that claimant's diabetes remained an accepted part of his claim. Subsequently, the board concluded that claimant's diabetes was not a part of his compensable injury. On judicial review, claimant now assigns error to the board's order, arguing that the board erred because—despite claimant's successful argument that his diabetes was not a pre-existing condition—the resulting order of the ALJ did not have the effect of removing claimant's diabetes from the claim. Claimant also argues that the ARU's order precludes this court from reaching the merits of this case.¹ On that issue, SAIF responds that the ARU's order was not preclusive, because the ARU's determination is not the sort of determination that has a preclusive effect. We affirm.

Claimant's procedural arguments both present questions of law. We review the board's order for errors of law. Liberty Northwest Ins. Corp. v. Stapleton,

192 Or.App. 312, 314, 84 P.3d 1116 (2004).

The facts are procedural. SAIF accepted claimant's claim as a combined condition—a “foot ulcer, plantar, left second metatarsal head area with subsequent cellulitis and abscess formation combined with type II diabetes mellitus.” Some months later, after determining that the work injury was no longer the primary cause of claimant's condition, SAIF issued a combined condition denial and closed the claim. At a hearing on that closure, claimant argued that his condition was not a combined condition because his diabetes was a “predisposition” not a “preexisting condition.” ALJ Fulsher agreed and issued an order stating “[t]he denial * * * is set aside and the claim is remanded to SAIF for processing in accordance with the law.” There was no appeal of ALJ Fulsher's order. In response, SAIF issued a modified notice of acceptance informing claimant that his claim remained “open and accepted for: [f]oot ulcer, plantar, left second metatarsal head area with subsequent cellulitis and abscess formation.” Claimant took no action in response to the modified notice of acceptance.

Some months later, SAIF issued a new notice of closure. Claimant requested reconsideration, disputing the rating of his permanent disability and the amount of compensation. Irrespective of claimant's arguments and ALJ Fulsher's order, the ARU entered an order on reconsideration setting aside the notice of closure as premature, stating that “[i]t is noted [ALJ Fulsher's] Opinion and Order contains a discussion about the conditions not really combining; however, that discussion does not negate the fact that [SAIF] accepted the ‘combined with type II diabetes mellitus ’ condition in this claim.” Consequently, the ARU reasoned that SAIF was required to present evidence that claimant's diabetes was medically stationary before closing the claim. SAIF requested a hearing on the ARU's order on reconsideration, then withdrew the request and allowed the order to become final before issuing a new notice of closure that slightly increased claimant's whole person impairment and work disability awards. Claimant requested reconsideration of that notice of closure. The ARU issued a second order on reconsideration finding that closure was premature for the same reasons stated in its first order on reconsideration. SAIF requested a hearing on the ARU's second order on reconsideration.

At that hearing, claimant argued that the doctrine of issue preclusion prevented SAIF from relitigating whether the ARU erred in its first order by including type II diabetes among the accepted conditions for which closing information was required. ALJ Rissberger ruled that issue preclusion did not apply and determined that SAIF complied with ALJ Fulsher's order when it issued the modified notice of acceptance. Claimant appealed that order to the board, and the board's order affirming ALJ Rissberger's order is now before us.

On judicial review, claimant argues that we cannot reach the merits of the question whether the claim was prematurely closed, nor could ALJ Rissberger or the board, because the ARU's first order on reconsideration became final when SAIF allowed the statutory period for challenging it to elapse and, therefore, issue preclusion bars any further consideration of whether claimant's type II diabetes is a part of the claim. Claimant also argues that issues decided in the ARU's first order on reconsideration are outside the scope of the board's review of the ARU's second order on reconsideration.² We conclude that issue preclusion does not apply to an order of the ARU rescinding a notice of closure as premature and that the merits of this case are within the scope of our review of the board's order.

“Issue preclusion arises in a subsequent proceeding when an issue of ultimate fact has been determined by a valid and final determination in a prior proceeding.” Nelson v. Emerald People's Utility Dist.,

318 Or. 99, 103, 862 P.2d 1293 (1993). The rules of issue preclusion apply to workers' compensation proceedings, where those rules “ ‘facilitate prompt, orderly and fair problem resolution.’ ” Drews v. EBI Companies, 310 Or. 134, 142, 795 P.2d 531 (1990) (quoting North Clackamas School Dist. v. White, 305 Or. 48, 52, 750 P.2d 485, modified, 305 Or. 468, 752 P.2d 1210 (1988) ). However, even a final determination is not conclusive when, by provision of a statute or valid rule of the body making the final determination, that determination does not bar another action or proceeding on the same transactional claim. Id. at 141, 795 P.2d 531.

In support of their respective arguments regarding issue preclusion, both SAIF and claimant rely on Drews. SAIF relies on Drews for the proposition that the ARU's order is not the sort of order to which courts give preclusive effect, and claimant relies on it for the proposition that final orders are preclusive. As we explain below, claimant's reliance is misplaced, because Drews holds that some orders, although “final,” are not preclusive. The ARU's determination that closure is premature is just such an order.

In Drews, the claimant sustained a compensable injury in 1980. Following the injury, the employer reported a wage to the insurer that was less than the claimant's actual wage, and the insurer used that incorrect wage rate to calculate the claimant's total temporary disability payment (TTD). Id. at 136, 795 P.2d 531. A determination order awarding time loss issued in 1981. The claimant, who did not notice the discrepancy in wages, did not request a hearing. Id.

In 1984, the claimant sought benefits for an aggravation and had additional surgery. Id. The insurer denied the claim, but a referee issued an order holding that the requested surgery was compensable and awarding TTD for a period beginning after the new surgery and continuing to a particular end date. Id. at 137, 795 P.2d 531. A determination order issued on October 7, 1985, awarding TTD on the aggravation claim to a specific date. The claimant filed a request for hearing, seeking payment of additional TTD and increased permanent partial disability. Id. It was at that point that the claimant discovered that his employer had reported his wage incorrectly in 1980, and that his TTD payments in 1984 and 1985 were based on that incorrect wage report. The claimant notified the insurer, requesting payment at the proper rate, and amended his hearing request to include the issue of his wage rate. Id. At the hearing, the referee found that the 1984–85 wage rate was incorrect, and assessed a penalty against the insurer for not correcting the wage rate after receiving the claimant's notification of the error. Id. The insurer then requested reconsideration, and the referee amended the order, removing the penalty after concluding that the issue of the claimant's wage rate was not before him, because that issue “could have been raised in [a] prior * * * hearing[.]” Id. The board affirmed the referee's order on reconsideration. Id. at 138, 795 P.2d 531.

On review, we reversed and remanded the board's order, reasoning that the board was not precluded from considering the wage issue in the context of the aggravation claim. Drews v. EBI Companies, 96 Or.App. 1, 4, 771 P.2d 285 (1989). The Supreme Court affirmed our decision, holding that neither issue nor claim preclusion barred consideration of the wage issue with respect to the aggravation claim. Drews, 310 Or. at 138, 795 P.2d 531. After establishing that the claim before the court was the claimant's 1984 claim for aggravation—not his 1980 injury claim—the court concluded that “no finality has yet...