Ohlmaier v. Industrial Com'n of Arizona, CV-88-0308-PR

• Decision Date: 11 July 1989
• Docket Number: No. CV-88-0308-PR,CV-88-0308-PR
• Citation: 161 Ariz. 113,776 P.2d 791
• Parties: Richard OHLMAIER, Petitioner, v. The INDUSTRIAL COMMISSION OF ARIZONA, Respondent, Arizona Feeds, Respondent Employer, Fireman's Fund, Respondent Carrier.
• Court: Arizona Supreme Court

Page 791

776 P.2d 791

161 Ariz. 113

Richard OHLMAIER, Petitioner, v. The INDUSTRIAL COMMISSION OF ARIZONA, Respondent Arizona Feeds, Respondent Employer Fireman's Fund, Respondent Carrier.

No. CV-88-0308-PR.

Supreme Court of Arizona, In Banc.

July 11, 1989.

Tretschok, McNamara & Clymer by Dale D. Tretschok, Tucson, for petitioner.

Catherine A. Fuller, Chief Counsel, Industrial Com'n of Arizona, Phoenix, for respondent.

Rabinovitz & Associates, P.C. by Bernard I. Rabinovitz, Tucson, for respondent Employer/Carrier.

CLABORNE, Judge.

Richard Ohlmaier, the petitioner employee, seeks review of an opinion of the court of appeals affirming an industrial commission award that found no permanent physical impairment as the result of an industrial injury. We must determine whether substantial justice, as set forth in the Workmen's Compensation Act, is accomplished when one administrative law judge hears medical testimony from one physician and then merely reviews a transcript of testimony given by two other physicians before two other administrative law judges in order to make an award concerning permanent physical disability. We have jurisdiction pursuant to the Arizona Constitution, art. 6, § 5(3) and A.R.S. §§ 12-120.24 and 23-948.

FACTUAL HISTORY

Richard Ohlmaier (Ohlmaier) sustained a low back injury in October 1983 while in the course of his employment. Respondent insurance carrier accepted Ohlmaier's compensation claim and terminated his benefits without permanent disability effective September 1985. Ohlmaier timely protested and hearings were set before an industrial commission administrative law judge. Administrative Law Judge Kurth presided over the first hearing in which the claimant and one physician testified. That hearing was in May 1986. The second hearing was conducted by a different administrative law judge in July 1986. The third hearing was The testimony of the three physicians conflicted. Although it appears the truthfulness of the physicians' testimony was unquestioned, their medical opinions concerning whether the medical condition of claimant was employment related were in conflict. Administrative Law Judge Kurth reviewed the transcripts, resolved the medical conflict, and held that "the applicant does not have a permanent impairment related to the industrial injury in question."

[161 Ariz. 115] conducted by a third administrative law judge in September 1986. The second and third hearings consisted only of the testimony of a physician at each hearing.

Before the first hearing, the petitioner's attorney objected to the hearings being conducted by three different administrative law judges. Petitioner offered to delay the hearings until Kurth or any other administrative law judge could hear the testimony of all the physicians. The objection was not honored. Objections by petitioner were again made at each of the other two hearings before the other two judges.

The petitioner sought review pursuant to A.R.S. §§ 23-943(H) and 23-951. The court of appeals affirmed the award. The court of appeals ruled that "substantial justice" as set forth in A.R.S. § 23-941(F) is achieved when the deciding administrative law judge does not observe the testimony of conflicting expert witnesses so long as the truthfulness of these witnesses is not critical to resolution. The court of appeals also held that the evidence taken by the three administrative law judges supported the award by Judge Kurth.

It is our belief that the court of appeals mischaracterized the problem. The court of appeals distinguished the facts in this case from Adams v. Indus. Comm'n, 147 Ariz. 418, 710 P.2d 1073 (App.1985) by commenting:

In contrast to Adams, the issue here does not involve the credibility of a testifying claimant and whether an injury took place. Rather, the unobserved testimony in this case involves conflicting medical opinions about whether an undisputed injury caused a permanent disability.

Ohlmaier v. Indus. Comm'n, 158 Ariz. 287, 291, 762 P.2d 574, 578 (App.1988). We believe the issue is broader. Not only is credibility a larger question than truthfulness, but also the quality of substantial justice demands a higher standard. The Workmen's Compensation Act contemplates standards for administering a vast and comprehensive program of industrial employee compensation. We also feel that once a judicial process is incorporated into such a system, that process must comport with substantial justice. When the administrative or managerial procedure ceases and the process of judicial fact finding occurs, then he who decides must hear.

Substantial justice certainly requires that one judge shall hear all conflicting evidence which may form the basis of a contested industrial award. Any evidence affecting a factual conclusion, whether appearance, demeanor, or the weight of one witness's testimony over another, should be heard by the one who is to decide the ultimate issues. Because we set aside the award on this basis, we do not reach the issue concerning whether the evidence found by Judge Kurth supports the award.

BACKGROUND

Before addressing the specific issue before us, we will briefly review the purpose of the workmen's compensation legislation.

The workmen's compensation laws were designed to shift the burden of work-related accidents and disease from the individual employee to society. Justice Lockwood in his dissent in Melendez v. Johns, 51 Ariz. 331, 348, 76 P.2d 1163, 1180 (1938), with his usual clarity, said:

[U]nquestionably the fundamental reason for compensation laws is to take the burden of loss by injury incurred in and as a result of employment from the individual and place it upon the community as a whole ...

Therefore, employees covered by workmen's compensation acts can obtain compensation even though the employer is not at fault and despite a common law defense. However, the amount of recovery is strictly governed by statute and rule. The benefits conferred are less than what might be awarded under traditional tort law. Both employer and employee gain and lose something by the shift to workmen's compensation. Our courts, in interpreting the Act, have consistently categorized the Act as remedial and the provisions of it "should be given a liberal construction, with a view of effectuating their evident purpose of placing the burden of injury and death upon industry." Nicholson v. Indus. Comm'n, 76 Ariz. 105, 108, 259 P.2d 547, 550 (1953).

Clearly the objective of modern workmen's compensation programs, including Arizona's, is to provide broad coverage for work-related injuries and diseases; substantial protection of interruption of workers' income; supplying sufficient medical care and rehabilitation services; and improving safety in the workplace. Davis, Arizona Workers' Compensation 8 (1980). In order to effectively deliver these objectives, Arizona provides a comprehensive system which is governed by constitution, statute and industrial commission rule. Ariz. Const. art. 18, § 8; A.R.S. §§ 23-101 to 1091 (1983).

Administrative law judges were placed into this system to hear contested claims by workers, the employer or the commission itself. An infinite variety of subjects ranging from employee coverage, the nature and extent of industrial injury, temporary or permanent loss of income, to temporary or permanent impairment of physical or mental faculties can be the basis of such a contested claim. This contested hearing process is governed by A.R.S. §§ 23-941, 23-943 and the administrative hearing rules of the commission. See Rules of Procedure for Workmen's Compensation Hearings Before the Industrial Commission of Arizona, R. 4-13-101 through 163.

In 1973, the Arizona legislature amended the method of adjudicating contested claims and provided the opportunity for review of an administrative law judge's decision. That review is by the same administrative law judge who heard the contested claim. A.R.S. § 23-943(H); Koval v. Indus. Comm'n, 23 Ariz.App. 277, 532 P.2d 549 (1975). The award is then final. No longer does the commission itself review awards. Id. 23 Ariz.App. at 279, 532 P.2d at 551. To obtain relief from the award, the aggrieved party must petition the court of appeals for review. A.R.S. § 23-943(H).

THE NATURE AND QUALITY OF A CONTESTED INDUSTRIAL INJURY CLAIM

With this background we now ask: What is the nature of the hearing allowed by the statute and what is the essential quality of that proceeding?

Although the process by which a claim is advanced in a workmen's compensation case may be different from the rules of procedure in superior court, both must observe the same fundamental principles of justice. Travelers Ins. Co. v. Indus. Comm'n, 18 Ariz.App. 28, 499 P.2d 759 (1972); Mutual Benefit Health & Accident Ass'n v. Neale, 43 Ariz. 532, 33 P.2d 604 (1934).

A claimant has an absolute right to have an opportunity to present his case fully and freely before an impartial tribunal, i.e., to have his day in court. Salmi v. Indus. Comm'n, 3 Ariz.App. 411, 415 P.2d 126 (1966); Martin v. Indus. Comm'n, 88 Ariz. 14, 352 P.2d 352 (1960). The impartiality of an administrative law judge is guarded by statute and rules just as assiduously as in superior court. A.R.S. § 23-941(I) and (J); Rule 10, Arizona Rules of Criminal Procedure; Rule 42(f), Arizona Rules of Civil Procedure.

The rules of procedure governing contested claims are not substantially different than in any other judicial forum. See Rules of Procedure for Workmen's Compensation Hearings Before the Industrial Commission of Arizona. The rules regarding preparation for and the conduct of a contested claim provide that: Depositions may be taken (R. 4-13-142); interrogatories may be used (R. 4-23-144); sanctions may be imposed for violation of procedural rules (R. 4-13-142, 145, 157); "interested" parties may be joined (R. 4-13-150); burden of proof may be evaluated (R. 4-13- 148); admissibility of certain types of...