Morgan v. Stimson Lumber Co.

• Decision Date: 06 May 1980
• Citation: 288 Or. 595,607 P.2d 150
• Parties: In the Matter of the Compensation of Charlotte MORGAN, Claimant, Petitioner, v. STIMSON LUMBER COMPANY, Employer, Respondent. WCB 77-2922; CA 11451; SC 26190.
• Court: Oregon Supreme Court

Page 150

607 P.2d 150

288 Or. 595

In the Matter of the Compensation of Charlotte MORGAN Claimant, Petitioner, v. STIMSON LUMBER COMPANY, Employer, Respondent.

WCB 77-2922; CA 11451; SC 26190.

Supreme Court of Oregon.

Argued and Submitted Jan. 7, 1980.

Decided Feb. 26, 1980.

Rehearing Denied May 6, 1980.

See 610 P.2d 830.

R. Kenney Roberts, Portland, argued the cause for respondent. On the brief were Steven R. Reinisch, Lang, Klein, Wolf, Smith, Griffith & Hallmark, Portland.

David W. Hittle, Salem, argued the cause for petitioner. With him on the brief were Dye & Olson, Salem.

[288 Or. 596-A] Before DENECKE, C. J., and TONGUE, HOWELL, LENT, LINDE and PETERSON, JJ.

LINDE, Justice.

The issue to be decided is whether the Workers' Compensation Board exceeded its statutory authority when it ordered an employer to pay a claimant a 10 percent penalty and attorney fees for delaying or refusing prompt payment or decision of a claim by failing to honor the claimant's request for certain documents pursuant to a Board rule.

The rule in question, OAR 436-83-460, provides:

"Upon demand of any claimant requesting a hearing, the DRE/SAIF and its representatives shall within 15 days of mailing said demand furnish to claimant or his representative, without cost, copies of all medical and vocational reports and other documents relevant and material to the claim which are then or come to be in the possession of the DRE/SAIF or its representatives, except that evidence offered solely for impeachment need not be so disclosed. Failure to comply with this section may be considered unreasonable delay or refusal under ORS 656.262(8)."

The issue arises from an aggravation claim filed by the claimant after a determination order closed her earlier claim for temporary total disability benefits. The aggravation claim itself was not decided because the referee concluded that the original claim was closed prematurely. Only the award of penalty compensation and attorney fees is in dispute.

Claimant presented her claim to the employer's insurance carrier by letter of March 1, 1977. The insurance company denied the claim on April 28. In a letter of May 4, 1977 to the insurance carrier, claimant's attorney requested copies of all medical and rehabilitation records, letters, forms, and other documents relating to the claim. The request was repeated on June 22. No documents were mailed in response to either of these claims.

The Board's referee in the claim proceeding concluded that there was no excuse for the failure to comply with claimant's request for documents within 15 days. Finding imposition of a penalty and attorney fees "appropriate for the unreasonable act" of disregarding the obligation to provide claimant copies of the requested documents, the referee awarded claimant 10 percent additional compensation and $350 in additional attorney fees. The Board adopted the referee's order.

In its petition for judicial review, the employer asserted two objections to the order: First, that OAR 436-83-460, quoted above, is not a valid rule, and second, that in failing to provide the information requested by the claimant the employer, or its insurance carrier, had not unreasonably delayed or refused payment of the claim. The Court of Appeals accepted the employer's argument against the validity of the Board's rule. It apparently did not consider it necessary thereafter to consider the second issue, and that issue is not before us. Having allowed review to consider whether the Board's rule exceeded its authority, we conclude that it did not. We therefore reverse the Court of Appeals and reinstate the Board's order.

The issue of the Board's authority divides into two parts. It clarifies the analysis to examine the two sentences of OAR 436-83-460, set out above, as two separate provisions. The first question is whether the Board had authority to require prompt compliance with a claimant's request for the documents listed in the first sentence of the rule in preparation for a hearing. The second question is whether the Board had authority to consider noncompliance a form of unreasonable delay within the statutory sanctions provided for such delay, as stated in the second sentence of the rule.

The Workers' Compensation Law, ORS 656.001 to 656.794, gives the Board authority to adopt rules of practice and procedure in connection with hearing and review proceedings. ORS 656.726(5) provides:

"The board may make and declare all rules and regulations which are reasonably required in the performance of its duties, including but not limited to rules of practice and procedure in connection with hearing and review proceedings and exercising its authority under ORS 656.278. Such rules may provide for informal prehearing conferences in order to expedite claim adjudication, amicably dispose of controversies, if possible, narrow issues and simplify the method of proof at hearings. The rules shall specify who may appear with parties at prehearing conferences and hearings. ORS chapter 183 is applicable whenever specific procedures covering rulemaking are not provided for in ORS 656.001 to 656.794."

The discovery provision embodied in the first sentence of OAR 436-83-460 plainly is a rule of practice and procedure to expedite the effective disposition of claims for which the Board is responsible. The employer does not really deny this. It does not contend that the regulation is not a rule of practice or procedure within the authority granted by ORS 656.726(5) standing alone. Rather, it argues that the Board's authority is confined by the presence in the statute of another section which expressly requires that medical and rehabilitation reports furnished to the Evaluation Division of the Workers' Compensation Department be made available to the claimant or the employer upon request. ORS 656.268(2). ¹

The argument is unpersuasive. There is no reason to believe that by including one provision for access to relevant reports in the statute the legislature meant to restrict the power it had otherwise given the Board to facilitate expeditious claims procedure by requiring prehearing disclosure of information. More plausibly, the statutory provision simply shows that the legislature recognized a need to assure at least the degree of access provided in ORS 656.268(2), without considering or awaiting what the Board might require by its rules. It would turn the legislature's apparent purpose on its head to read ORS 656.268(2) as if it meant to enact a limitation on required prehearing disclosure. We conclude that the rule stated in the first sentence of OAR 436-83-460 was within the Board's rulemaking authority under ORS 656.726(5).

The employer's second attack on the rule is that the statute does not delegate to the Board authority to create financial penalties. The Court of Appeals accepted this contention in holding that the Board had exceeded its rulemaking authority. The court quoted Ore. Newspaper Pub. v. Peterson, 244 Or. 116, 123, 415 P.2d 21 (1966), for the proposition that "an administrative agency must, when its rule-making power is challenged, show that its regulation falls within a clearly defined statutory grant of authority."

Such abstract statements about the nature and scope of delegated authority gain meaning from the context in which they appear. In the Oregon Newspaper Publishers Association case, the State Board of Pharmacy had promulgated a rule prohibiting pharmacists to advertise prescription drugs. The rule was a major, substantive intervention into the market place for medicines, affecting consumers and advertising media, including plaintiffs in that case, as well as the regulated pharmacists, and possibly reaching to the constitutional limits of regulation. Cf. Va. Pharmacy Bd. v. Va. Consumer Council, 425 U.S. 748, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976). It was not merely a means chosen in administering a program concededly assigned to the Board but an important extension of regulation in a controversial area. The court held that the Board could not undertake this unless it could show that it was carrying out a policy entrusted to it by the politically responsible Legislative Assembly in the authorizing statute. The majority found nothing in the legislation to suggest that advertising was contemplated as a subject of regulation by the Board. 244 Or. at 124, 415 P. 21.

In U. of O. Co-Oper. v. Dept. of Rev., 273 Or. 539, 542 P.2d 900 (1975), the court similarly recited in general terms that agencies are restricted to the powers granted them by statute, and that the agency may not by its rules alter or enlarge the statute. That was a tax case, in which the taxpayer claimed that a rule of the Department of Revenue interpreted a particular tax exemption too narrowly. The court's opinion stated:

"The Department of Revenue cannot rewrite the law, it can only fill in the interstices in the legislation to aid in the accomplishment of the statute's purposes. Van Ripper v. Liquor Cont. Com., 228 Or. 581, 591, 365 P.2d 109 (1961). The exemption given by ORS 317.080(4) cannot be eliminated in effect by an administrative regulation. The Department of Revenue has exceeded its authority in...