Liberty Northwest Ins. Corp. v. Jacobson

• Decision Date: 03 November 1999
• Citation: 988 P.2d 442,164 Or. App. 37
• Parties: LIBERTY NORTHWEST INSURANCE CORPORATION and Wilson Construction Co., Petitioners, v. Gary Joe JACOBSON and Department of Consumer and Business Services, Respondents.
• Court: Oregon Court of Appeals

988 P.2d 442

164 Or. App. 37

LIBERTY NORTHWEST INSURANCE CORPORATION and Wilson Construction Co., Petitioners, v. Gary Joe JACOBSON and Department of Consumer and Business Services, Respondents.

(H97-113; CA A101800)

Court of Appeals of Oregon.

Argued and Submitted March 29, 1999.

Decided November 3, 1999.

Darren W. Lee, Eugene, argued the cause and filed the briefs for petitioners.

Julie Point argued the cause and filed the brief for respondent Gary Joe Jacobson.

Philip Schradle, Assistant Attorney General, waived appearance for respondent Department of Consumer and Business Services.

Before LANDAU, Presiding Judge, and LINDER and BREWER, Judges.

LINDER, J.

Employer petitions for judicial review of a final order of the director of the Department of Consumer and Business Services (DCBS) ordering that claimant is entitled to additional vocational training. On review, employer contends that the director applied an incorrect standard for her review and that some of her findings are not supported by substantial evidence. We review the director's final order "only for errors of law and substantial evidence." Lasley v. Ontario Rendering, 114 Or.App. 543, 547, 836 P.2d 184 (1992). See also ORS 656.283(2)(d) (judicial review of the director's order "shall be pursuant to ORS 183.310 to 183.550"). We affirm.

We take the following facts from the director's final order, later addressing employer's disagreements with some of the director's factual findings. Claimant, who was a journeyman electrical lineman, suffered a compensable back injury in July 1994. Eventually, following a series of hearings before and orders by DCBS, the claim was closed and claimant was awarded seven percent unscheduled permanent partial disability. Employer initially determined claimant to be ineligible for vocational assistance. Claimant, in response, sought DCBS review, which led to an order by the director that claimant was entitled to vocational assistance. Pursuant to that order, employer's insurer arranged for claimant to receive vocational training.

With regard to the vocational training that claimant received, the director found:

"Liberty [the insurer] assigned claimant's vocational training to Barbara Kronsteiner. Claimant and Ms. Kronsteiner agreed on a training goal of cost estimator. The program included training at the VoTech institution, which primarily offers construction training. Claimant's agreement on the training goal was a result of a representation by Ms. Kronsteiner that the training would help him return to the electrical field. She also represented that claimant would receive Auto CAD [computer assisted design] training. The materials provided by VoTech represented that the cost estimator training would include CAD training. [Claimant] did not receive the course outline until after he agreed with the vocational goal of cost estimator.

"Claimant began the training program September 3, 1996. Shortly thereafter, he began corresponding with Ms. Kronsteiner regarding his concerns about the VoTech program. On October 29, 1996, claimant indicated he was concerned about the pace of the program. On November 22, 1996, claimant indicated he didn't understand how the VoTech program would assist him in seeking employment in the electrical field. Ms. Kronsteiner told claimant to trust the program. In addition, she made one telephone call to an instructor regarding the pace of the course. She did not respond to claimant's comment about the lack of training for careers in the electrical field.

"Ms. Kronsteiner met with claimant on December 30, 1996. He again expressed his dissatisfaction with the training he received because he did not receive CAD training. Claimant finished the VoTech training on January 29, 1997.

"Thereafter, claimant applied for a position as an Engineering Technician with Northern Wasco County. He did not get the position because he was inadequately trained.

"Claimant requested a director's review because he believed the training was inadequate and did not prepare him to work in the electrical field. RRU [the rehabilitation review unit, which first reviewed this case for the Director] determined claimant's training was adequate and, therefore, he was not eligible for additional vocational assistance.

"Thereafter, claimant worked for a short period of time for Shari Services Inc., which is owned by Pat Ryan. The job was the result of contact by Ms. Kronsteiner. Claimant qualified as a preferred worker and the business received wage subsidies. Although hired to read blue prints, 25% to 33% of the time claimant acted as a receptionist. Paychecks were late and there was some question whether there were illegal activities. When claimant expressed concerns about the suitability of the job, Ms. Kronsteiner encouraged claimant to keep the job because she said it would be easier to get a job when he was working. Ms. Kronsteiner made no effort to determine whether claimant's concerns about the company were legitimate. Claimant left that employment after a dispute with Mr. Ryan."

(Record citations omitted.) The director concluded her findings with a finding that "[w]ithout the representations of Ms. Kronsteiner and VoTech, claimant would not have agreed with the training goal of cost estimator."

In challenging the director's order, employer first argues that the director failed to adhere to the pertinent standard of review, which is review for abuse of discretion. ORS 656.283(2)(c)(D). More specifically, employer urges that the director conducted a form of de novo review by "impermissibly substitut[ing] her judgment for that of the RRU."

A description of the statutory process for reviewing vocational assistance decisions, and of the administrative proceedings that underlie this appeal, aids in framing the issue. Under ORS 656.283(2)(b), if a worker is dissatisfied with an insurer's or employer's action regarding vocational assistance, the worker may apply to the director for administrative review of the action. If the parties cannot resolve the dispute by agreement, the director does so by way of a written order containing findings of fact and conclusions of law. Id. The director's order must be based on a record sufficient to permit further administrative review under the contested case hearing provisions in ORS 656.283(2)(c). Id. At that initial stage of review, the director is not obligated to hold a hearing. See Lasley, 114 Or.App. at 546,

836 P.2d 184 (so holding under an earlier but parallel version of the statute). A contested case hearing is available, however, if either party chooses to challenge the director's order. See ORS 656.283(2)(c).

Although review of the director's administrative order formerly was performed by an independent hearings officer, whose order in turn was subject to review by the Workers' Compensation Board,¹ the order now is subject to review "only by the director." ORS 656.283(2)(c). As under the former procedure, a contested case hearing is held by a hearings officer, who develops a factual record. See generally Lasley, 114 Or.App. at 547,

836 P.2d 184 (describing the contested case hearing). The grounds for modification of the director's prior order are limited, however, notwithstanding that it is the director herself who is responsible for the review:

"At the contested case hearing [which is then held], the decision of the director's administrative review shall be modified only if it:

"(A) Violates a statute or rule;

"(B) Exceeds the statutory authority of the agency;

"(C) Was made upon unlawful procedure; or

"(D) Was characterized by abuse of discretion or clearly unwarranted exercise of discretion."

ORS 656.283(2)(c).

Summarized, then, disputes regarding the provision of vocational assistance first go through a less formal "administrative" review that does not include a contested case hearing, but that results in a written order complete with findings of fact and legal conclusions. If that initial order is challenged, a contested case hearing is held. At that hearing, additional evidence may be adduced and additional findings of fact may be made. Colclasure v. Wash. County School Dist. No. 48-J, 317 Or. 526, 537, 857 P.2d 126 (1993). On review of her own initial "administrative review" decision, however, the director may modify the decision only for a limited number of reasons, including, as pertinent here, because of an abuse of discretion at the initial administrative review stage. ORS 656.283(2)(c). See also Lasley, 114 Or.App. at 546,

836 P.2d 184.

In this case, claimant objected to employer's decision that he needs no additional vocational assistance. The director delegated to the "rehabilitation review unit" (RRU) the responsibility for conducting the initial review of the matter and for issuing the initial written decision. After conducting a review, an RRU worker, as the director's designate, determined that claimant was not entitled to any more vocational assistance. Claimant sought review of that decision. In response, a "hearings judge" held a contested case hearing and issued a proposed final order, reaching the opposite conclusion. The director then issued a final order, which adopted the findings of fact made by the hearings judge.

In her final order, the director concluded that the initial RRU order represented an abuse of discretion because the RRU had not investigated whether the VoTech training program was misrepresented to claimant, as he contended. The director reasoned that "vocational assistance providers" are required to provide accurate, truthful information to claimants. Here, the director found that "there is a dispute over the representations made by Ms. Kronsteiner to the claimant regarding the claimant's career goal." The director resolved that dispute, deciding that in fact the program had been misrepresented to claimant and that claimant was entitled to additional vocational assistance due to the misrepresentations. The director...