Marriott Corp. v. Industrial Com'n of Arizona

• Citation: 147 Ariz. 116,708 P.2d 1307
• Decision Date: 28 October 1985
• Docket Number: No. 18085-PR,18085-PR
• Parties: MARRIOTT CORPORATION, Petitioner-Employer, Petitioner-Carrier, v. INDUSTRIAL COMMISSION OF ARIZONA, Respondent, Armida Godfrey, Respondent-Employee.
• Court: Arizona Supreme Court

Page 1307

708 P.2d 1307

147 Ariz. 116

MARRIOTT CORPORATION, Petitioner-Employer, Petitioner-Carrier, v. INDUSTRIAL COMMISSION OF ARIZONA, Respondent Armida Godfrey, Respondent-Employee.

No. 18085-PR.

Supreme Court of Arizona In Banc.

Oct. 28, 1985.

Reconsideration Denied Dec. 10, 1985.

Bury, Moeller & Humphrey by J. Michael Moeller and Kevin Miniat, Tucson, for petitioners, Marriott Corp

Dennis P. Kavanaugh, Chief Counsel, Indus. Com'n, Phoenix, for respondent, Indus. Comn.

Tretschok, McNamara & Clymer by Patrick R. McNamara, Tucson, for respondent employee, Godfrey.

Dee-Dee Samet, Tucson, for amici curiae Southern Arizona Worker's Compensation Attorney's Assn.

CAMERON, Justice.

This is a petition for review of an opinion and decision of the court of appeals setting aside an award made to Armida Godfrey (claimant) by the Industrial Commission of Arizona. Marriott Corporation v. Industrial Commission, 147 Ariz. 123, 708 P.2d 1314, (App.1985). We have jurisdiction pursuant to art. 6, § 5(3) of the Arizona Constitution, A.R.S. § 12-120.24 and Rule 23, Arizona Rules of Civil Appellate Procedure, 17A A.R.S.

The issues presented on review are:

I. Did the court of appeals lack jurisdiction to entertain the petition for special action due to petitioner's failure to join indispensable parties?

II. Did the court of appeals err in finding that an employee's deliberate material misrepresentation about her physical condition, in her application for employment, barred workers' compensation benefits?

The facts follow. In 1975, the claimant, while working as a maid for the Skyline Country Club (Skyline), sustained an industrial injury to her back. She filed a workers' compensation claim and was awarded benefits by Skyline's insurance carrier, Fireman's Fund Insurance Company (Fireman's). This claim was closed in 1979 with a finding of no permanent disability. This award was not protested.

In 1981, the claimant applied for a job as a maid with the petitioner, Marriott Hotel In 1982, while working for Marriott, the claimant suffered another injury to her back. Marriott denied her claim for compensation benefits, apparently because of the claimant's earlier misrepresentations. Claimant also petitioned Fireman's to reopen her previous claim, this request was refused. She timely sought hearings to protest both Marriott's denial of benefits and Fireman's refusal to reopen her previous claim. At the claimant's request, these hearings were consolidated.

[147 Ariz. 118] (Marriott), a self-insured Tucson employer. The claimant's application for employment was completed by Peggy O'Sullivan, Marriott's Personnel Director, apparently because of the claimant's inability to complete it herself. In response to a question about previous back problems or compensable claims, the claimant indicated that she had never injured her back or filed a compensable claim. The claimant was then hired by Marriott. O'Sullivan testified that had the claimant admitted her previous back injury and award, she would not have been hired for the particular position for which she applied.

Following the hearing, the Administrative Law Judge denied the claimant's petition to reopen her previous claim, but awarded her benefits for her later injury. He determined that her misrepresentation on the job application should not bar recovery of compensation benefits. Administrative review of this award was denied and Marriott petitioned the court of appeals for review by special action. The court of appeals set aside the award holding that such a deliberate misrepresentation could preclude recovery. The claimant petitioned this court for review of the decision and opinion of the court of appeals which we granted.

I JURISDICTION

The claimant contends that because her petition to reopen the prior injury claim and her petition for compensation for a new injury were consolidated before the Administrative Law Judge, the resulting single award denying the petition to reopen and granting benefits for the new injury made Skyline and Fireman's indispensable parties for the purpose of the special action. She concludes that the court of appeals lacked jurisdiction to entertain the special action, because the petitioner failed to join these parties. We agree.

The threshold question is whether Skyline and Fireman's were, in fact, indispensable parties to the special action. The test to be applied has been stated as: "[t]he necessity of making a party to a case below a party to the appeal depends upon whether he has an interest in opposing the object sought to be accomplished by the appeal." Dunn v. Law Offices of Ramon R. Alvarez, 119 Ariz. 437, 440, 581 P.2d 282, 285 (App.1978) (citations omitted). We believe that Skyline and Fireman's have such an interest.

Neither the court of appeals nor this court have broad discretion when reviewing a compensation award. A.R.S. § 23-951(D) states "[t]he court of appeals shall enter judgment either affirming or setting aside the award, order, or decision." Upon review, an appellate court may neither alter nor modify an award but is limited either to affirm or set aside the award. Glover v. Industrial Commission, 23 Ariz.App. 187, 188, 531 P.2d 563, 564 (1975). The setting aside of an award entitles the parties to a complete trial de novo. Id. Therefore, the court of appeals' decision would have the effect of enabling the claimant to demand again that Skyline and Fireman's reopen her previous injury claim. Under these circumstances, Skyline and Fireman's would have had "an interest in opposing the object sought to be accomplished by the appeal." Dunn, supra. In a case almost identical procedurally to the one now before us, the court of appeals stated that:

We ... conclude that when "consolidation" is made [of workers' compensation claims], a true joinder of the claims and parties is effected. More importantly, an adjudication of the joined claims results in a single award from which review must be taken. The "single award" concept is of crucial importance in Workmen's Compensation reviews as this court is strictly limited to either affirming an award of the Industrial Commission or setting it aside. A.R.S. §§ 12-120.21(A)(2) and 23-951(D). We may not modify, affirm in part, reverse in part, or reverse and remand the award with directions. Glover v. Industrial Commission, 23 Ariz.App. 187, 531 P.2d 563 (1975). Thus, on review, this court is without authority to consider a single portion of an award of the Industrial Commission, but must affirm the award as a whole or set aside the award as a whole. To set aside the consolidated award in this case, joined under Rule 50, would necessarily reexpose the State Compensation Fund to potential liability on a hearing de novo regarding the reopening claim. The State Fund, therefore, falls within the classic definition of an indispensable party. Town of Gila Bend v. Walled Lake Door Co., 107 Ariz. 545, 490 P.2d 551 (1971).

Associated Grocers v. Industrial Commission, 126 Ariz. 412, 414-15, 616 P.2d 87, 89-90 (App.1980).

Admittedly, the fact that Skyline and Fireman's were indispensable parties and not explicitly made parties to the special action is not always fatal, "[a] defect in identifying a party against whom an appeal is taken does not necessarily invalidate the appeal, particularly where the judgment being appealed is sufficiently identified and sufficient notice is given so that the putative appellee is neither misled nor prejudiced." Hopper v. Industrial Commission, 27 Ariz.App. 732, 737, 558 P.2d 927, 932 (1976) (citation omitted). In Hopper, failure to name a party in the caption of a petition for special action to review an Industrial Commission award did not deprive the court of appeals of jurisdiction where the omitted party was adequately identified by claim number and received sufficient notice of the appeal. In the instant case, Skyline and Fireman's were not identified by number and the certificate of mailing did not indicate that either Skyline or Fireman's were mailed copies of the petition for and writ of review. The judgment being appealed from was not sufficiently identified and the putative appellee was not given sufficient notice that review was being sought. Neither Skyline nor Fireman's were alerted to the need to participate in the special action. They do not then come under the Hopper exception to the general rule that they had to be named as a party and properly notified.

Skyline and Fireman's were indispensable parties to the special action. Since setting it aside would subject them to new demands by the claimant to reopen her previous claim, they were prejudiced by their inability to protect their interest in having the award affirmed. Thus the court of appeals should have dismissed the petition for special action for lack of jurisdiction. See Associated Grocers, supra; Hopper, supra.

II MISREPRESENTATIONS AS TO PHYSICAL CONDITION

The court of appeals decided the matter on the merits in a published opinion. Because we disagree with the conclusion of the court of appeals, we believe it appropriate to set forth our conclusion as to the law to be applied in fact situations of this kind.

The court of appeals held that a person who makes deliberate material misrepresentations about his or her health to a prospective employer may be denied compensation benefits for an industrial injury that is causally related to the undisclosed condition. Marriott Corporation v. Industrial Commission, 147 Ariz. 123, 708 P.2d 1314, (App.1985). In doing so, the court of appeals adopted the so called 'Larson Rule'. The Larson rule derives its name from the following passage in 1C Larson, Workmen's Compensation Law § 47.53 at 8-310 (1982):

[I]t has been held that employment which has been obtained by the making of false statements--even criminally false statements--whether by a minor or an adult, is still employment; that is, the technical illegality will not of...