Sines v. Appel

• Decision Date: 19 April 1982
• Docket Number: No. 13602,13602
• Citation: 103 Idaho 9,644 P.2d 331
• Parties: Wesley SINES, Claimant-Appellant, v. Gary APPEL, Employer, and Industrial Indemnity Company, Surety; and Industrial Special Indemnity Fund, State of Idaho, Defendants-Respondents.
• Court: Idaho Supreme Court

Page 331

644 P.2d 331

103 Idaho 9

Wesley SINES, Claimant-Appellant, v. Gary APPEL, Employer, and Industrial Indemnity Company, Surety; and Industrial Special Indemnity Fund, State of Idaho, Defendants-Respondents.

No. 13602.

Supreme Court of Idaho.

April 19, 1982.

Paul C. Keeton, Lewiston, for claimant-appellant.

Michael E. McNichols, Orofino, for defendants-respondents Gary Appel, employer, and Industrial Indemnity Co., surety.

Samuel Eismann, Coeur d'Alene, for defendant-respondent Industrial Special Indemnity Fund of the State of Idaho.

McFADDEN, Justice.

In October 1978 claimant Wesley Sines applied to the Industrial Commission for the modification of an award previously entered on January 6, 1978, by the Industrial Commission. The original award sought to be modified arose out of a compensation agreement entered into on December 27, 1977, between the claimant and the employer's surety, Industrial Indemnity. At this time, claimant had been represented by an attorney who subsequently died, and only after that did his present counsel commence representation of him and seek modification of the previously entered award.

The basis for the compensation agreement arose out of an industrial accident which occurred on September 23, 1975, at which time claimant was employed by Gary Appel at falling timber. On that date claimant stepped in a hole and fell, twisting his back. He was treated for this injury by Dr. Thurston of St. Maries, Idaho, and thereafter referred to Dr. Lynch and Dr. Cooke, both neurosurgeons of Spokane, Washington, as well as other physicians.

Beyond the impairment to his back arising from the industrial accident, the claimant's physical condition was also impaired by a preexisting disease-multiple sclerosis. The claimant has suffered from nuerological disorders associated with multiple sclerosis since 1963 and continues to suffer from those disorders presently.

In response to letters from the employer's surety, the aforementioned physicians all rated the extent of the claimant's disability. On July 6, 1977, Dr. Thurston rated the claimant as having a permanent partial disability equivalent to 20% of the whole man. In his report Dr. Thurston observed that the evaluation was complicated by the existence of disorders associated with multiple sclerosis. He also stated in his physician's final report that the claimant is unable to return to regular work primarily because of his multiple sclerosis. Dr. Cooke, in his letter of August 5, 1977 to the surety, also rated the claimant at 20% disability of the whole man as a result of the injury sustained in the industrial accident and opined that the claimant is totally disabled when the disorders associated with his multiple sclerosis are considered. Dr. Cooke doubted that the claimant could return to meaningful employment. Dr. Lynch, in his letter of October 17, 1977 to the surety, rated the claimant at 15% disability of the whole man. Dr. Lynch also made the following comment:

"I note that Dr. Cooke has given Mr. Sines a twenty percent disability rating based on his back injury. Certainly it is difficult to work out how much of his disability is due to his demyelinating process (destruction or removal of the myelin sheath of nerves) and how much is due to his back injury."

Based upon these evaluations, the claimant and the employer's surety in the compensation agreement settled upon the percentage figure of 17 1/2% disability of the whole man as the basis for computation of the award in the agreement, with payment subsequently being approved by the Commission by way of its order of January 6, 1978.

In his application for hearing and for modification, the claimant joined the Special Indemnity Fund of the State of Idaho (I.S.I.F.), asserting, inter alia:

"This application for hearing is brought for the purpose of modifying a certain compensation agreement signed by the claimant on December 27, 1977, and thereafter approved by the Commission. Based upon a change in condition in that the claimant is now and has been ever since the time of the accident a total permanent disability.

That this application for hearing joins the Industrial Special Indemnity Fund for the reason that a part of claimant's disability is related to the accident and a part is related to multiple sclerosis. The two causes have combined to render the claimant a total permanent disability. That the claimant is entitled to compensation from and after November 29, 1976, based upon the contention that claimant has never been able to return to work and never was properly rated for disability and on December 27, 1977, was entitled to a permanent total disability, part of which should be assessed against the employer and Industrial Indemnity Company and part against the Industrial Special Indemnity Fund of the State of Idaho."

The employer and his surety answered the claimant's application for hearing, denying that he was permanently disabled to the extent claimed, but admitting disability of 17 1/2% of the whole man, and also alleging that the claimant, the employer and surety had entered into a compensation agreement on December 27, 1977, which was approved; and further, that claimant had preexisting impairments and disabilities for which the employer and surety are not liable. It is to be noted in this regard that the employer did not execute the compensation agreement.

Industrial Special Indemnity Fund also filed its separate answer to the claimant's application for hearing, denying the claimant was totally disabled, denying any preexisting permanent physical impairment as defined by law, and also denying financial liability to any party.

A hearing was held by the Commission on April 23, 1979, at which time the Commission entered as exhibits Commission exhibit no. 1, the file of I.C. Claim No. 131308 (claimant's file before the Commission reflecting the compensation agreement and its approval, together with correspondence and various physicians' reports all relating to the claimant's injury of September 23, 1975); Commission exhibit no. 2 (the deposition of Dr. Lynch taken at the request of Industrial Indemnity Company, on February 19, 1979, prior to the hearing); and defendant's exhibit no. 3 (answers by claimant to defendant's interrogatories). In addition to the exhibits, the Commission also heard the testimony of claimant and Dr. Walter D. Thurston, claimant's attending physician.

The Commission entered its findings of fact and conclusions of law, and its order denying claimant's application for modification of the compensation agreement. Following this order claimant perfected this appeal.

The primary issue presented by appellant is that the Commission erred in refusing to grant a modification of the previous award as sought in his application for a hearing. Correlative to this basic issue is the question of whether the Commission erred in construing the provisions of I.C. § 72-719 ¹ in entering its conclusions of law.

It is well recognized that a compensation agreement approved by the Industrial Commission is equivalent to an award under the Idaho Workmen's Compensation Laws. I.C. § 72-711. Dep't of Finance v. Union Pac. R. Co., 61 Idaho 484, 104 P.2d 1110 (1940) (decided under provisions of I.C. § 72-602, as it existed in 1940, which statute was reenacted almost verbatim in 1971 and now appears as I.C. § 72-711). ² This court has held that except as provided by I.C. § 72-719 an award under the provisions of I.C. § 72-711 becomes final and conclusive if no appeal is taken (see also I.C. § 72-718). Blackburn v. Olson, 69 Idaho 428, 207 P.2d 1160 (1949).

Initially, under the foregoing finality rule, a question arises as to the effect of I.C. § 72-711 on the facts presented here. Reiterating the situation we are dealing with, the claimant and the employer's surety entered into a compensation agreement which was approved by the Industrial Commission. At that time, I.S.I.F. was not a party to the agreement. The record discloses that at the time the agreement was entered into, the Commission had before it the fact that in the opinions of the claimant's attending physician and one neurosurgeon that the claimant was totally disabled, yet the Commission on the basis of the agreement approved the award of 17 1/2% of the whole man, with no consideration given as to whether or not I.S.I.F. should be made a party. Under this state of facts, only the employee and the employer and his surety could rely upon the finality of that award under I.C. § 72-711 and 72-718. Res judicata is applicable only to the parties to that proceeding and their privies. Pocatello Industrial Park v. Steel West, Inc., 101 Idaho 783, 621 P.2d 399 (1980); Idaho State Univ. v. Mitchell, 97 Idaho 724, 552 P.2d 776 (1976). Thus, the I.S.I.F. cannot claim that approval of the compensation agreement foreclosed proceedings against it.

Prior to 1971, when I.C. § 72-719 was enacted, the only basis for a modification of an award was "on the ground of a change in condition." See I.C. § 72-607, as it existed prior to 1971; see also S.L. 1917, Ch 81, § 56, p. 252, and subsequent recodifications and amendments. However, the 1971 act, now in effect, provides for modification of awards and agreements on the following grounds:

"(1) .... (a) Change in the nature or extent of the employee's injury or disablement; or (b) Fraud."

and also provides that

"(3) The commission, on its own motion ... may review a case in order to correct a manifest injustice." I.C. § 72-719(1)(a), (b) and (3). (Emphasis added.)

The Commission recognized in its conclusions of law that claimant applied for a modification of a compensation agreement on the grounds of change of condition (I.C. § 72-719(1)(a)) and in order to correct a manifest injustice (I.C. § 72-719(3)). As to this later ground for modification, the Commission ruled:

"Since Claimant knew at the time he signed the Compensation Agreement he had multiple sclerosis, the...