Norgard v. Rawlinsons and New System Laundry

• Decision Date: 19 September 1977
• Citation: 30 Or.App. 999,569 P.2d 49
• Parties: In the Matter of the Compensation of Minnie NORGARD, Claimant, Respondent, v. RAWLINSONS & NEW SYSTEM LAUNDRY, Employer, Appellant.
• Court: Oregon Court of Appeals

Page 49

569 P.2d 49

30 Or.App. 999

In the Matter of the Compensation of Minnie NORGARD Claimant, Respondent, v. RAWLINSONS & NEW SYSTEM LAUNDRY, Employer, Appellant.

Court of Appeals of Oregon.

Argued and Submitted Aug. 22, 1977.

Decided Sept. 19, 1977.

Philip A. Mongrain, Beaverton, argued the cause and filed the brief for appellant.

Alan M. Scott, Portland, argued the cause for respondent. With him on the brief was Galton & Popick, Portland.

Before SCHWAB, C. J., and TANZER and RICHARDSON, JJ.

SCHWAB, Chief Judge.

The issue in this workers' compensation appeal is whether an insurer acts unreasonably, under ORS 656.262(8), thereby subjecting it to the payment of penalties by refusing to pay "compensation" consisting of medical expenses, pending review of a referee's decision when the relevant rule of law is uncertain.

Claimant was injured in an industrial accident in April 1969. The insurer accepted claimant's claim at that time. It was later apparently closed. Subsequently, in January 1974, claimant was hospitalized for low back pain which she contended was compensable as an exacerbation of her original injury. In January 1975, the insurer denied the claim. Claimant filed a request for hearing challenging the denial and in August 1975 a referee of the Workers' Compensation Board held the claimant's low back condition compensable. The insurer thereafter filed a timely request for review of the referee's determination to the Board.

Claimant requested that the insurer pay her medical expenses pending determination of the insurer's request for review. In January 1976, insurer informed the claimant by letter that it would not pay her medical expenses "since we are appealing (your) case."

ORS 656.313(1) provides:

"Filing by an employer * * * of a request for review or court appeal shall not stay payment of compensation to a claimant."

ORS 656.005(9) states that " 'Compensation' includes all benefits, including medical services, provided for a compensable injury to a subject workman * * *." The insurer's refusal to pay claimant's medical expenses pending review was based on the Workers' Compensation Board's interpretation of ORS 656.005(9) and ORS 656.313(1) in In the Matter of the Compensation of William R. Wood, WCB No. 69-319 (July 30, 1971). In Wood, the Board held that medical expenses were not "compensation" within the meaning of ORS 656.313(1). Claimant, on the other hand, requested payment of her medical expenses in reliance on Marion County Circuit Court's decision in In the Matter of the Compensation of Betty Rivera, WCB Case No. 74-2377 (November 3, 1975) which also involved the same insurer as in the instant case. There the trial court rejected the interpretation of the Board in Wood and found that payment of medical expenses pending review was required by ORS 656.005(9) and ORS 656.313(1). Insurer does not deny having knowledge of this decision.

After receipt of the insurer's letter rejecting her request for immediate payment of medical expenses, claimant filed another request for hearing before the referee seeking imposition of a penalty and attorney fees under authority of ORS 656.262(8), which provides:

"If the fund or direct responsibility employer or its insurer unreasonably delays or unreasonably refuses to pay compensation * * * the fund or direct responsibility employer shall be liable for an additional amount up to 25 percent of the amounts then due plus any attorney fees which may be assessed under ORS 656.382."

Before a referee heard this matter the Board, in February 1976, upheld the compensability of claimant's low back condition. This decision was appealed by the insurer to the Multnomah County Circuit Court, which upheld the Board's decision. Thereafter, the insurer promptly paid claimant's medical expenses.

In July 1976, a hearing referee heard the claim for imposition of a penalty and found that the insurer's actions in not paying claimant's medical expenses from August 1975 to April 1976 was not unreasonable under ORS 656.262(8). The Board affirmed this decision in January 1977. Claimant appealed the Board's decision to the Multnomah County Circuit Court. In April 1977, the circuit court reversed the Board and awarded a penalty and attorney fees to the claimant.

Insurer contends that its reliance on the Board decision in Wood was proper and no basis exists for an award of a penalty and attorney fees. Claimant argues that insurer's unreasonable conduct was its reliance on a Board decision rather than the decision of the circuit court in Rivera in refusing to pay her medical expenses pending review of her claim. Additionally, claimant contends that the decision of this court in February 1977, Wisherd v. Paul Koch Volkswagen, 28 Or.App. 513, 559 P.2d 1305, Sup.Ct. review denied (1977), finding that medical expenses were compensation for purposes of ORS 656.313 establishes the unreasonableness of insurer's conduct.

The Workers' Compensation Board has statutory authority to review decisions of referees in workers' compensation cases. ORS 656.295. Before the effective date...