Special Fund Div. v. Industrial Com'n of Arizona

• Decision Date: 30 August 1994
• Docket Number: CA-IC,No. 1,1
• Citation: 897 P.2d 643,182 Ariz. 341
• Parties: SPECIAL FUND DIVISION, Petitioner, v. INDUSTRIAL COMMISSION OF ARIZONA, Respondent, Department of Corrections, Respondent Employer, State Compensation Fund, Respondent Carrier, Janet K. Morin, Respondent Employee. 92-0154.
• Court: Arizona Court of Appeals

Page 643

897 P.2d 643

182 Ariz. 341

SPECIAL FUND DIVISION, Petitioner, v. INDUSTRIAL COMMISSION OF ARIZONA, Respondent Department of Corrections, Respondent Employer State Compensation Fund, Respondent Carrier Janet K. Morin, Respondent Employee.

No. 1 CA-IC 92-0154.

Court of Appeals of Arizona Division 1, Department D.

Aug. 30, 1994.

Reconsideration Denied Dec. 20, 1994.

Review Denied June 29, 1995.

[182 Ariz. 342] Industrial Com'n of Arizona, Special Fund Div. by Laura L. McGrory and Michael A. Mosesso, Phoenix, for petitioner.

Industrial Com'n of Arizona by Anita R. Valainis, Chief Counsel, Phoenix, for respondent.

Long, Lester & Lundmark by James B. Long, Phoenix, for respondents Employer and Carrier.

Robert E. Wisniewski, Phoenix, for respondent Employee.

OPINION

McGREGOR, Judge.

The Special Fund Division (Special Fund) challenges the Arizona Industrial Commission's (Commission) order rearranging Janet K. Morin's (applicant) permanent disability benefits and apportioning liability for these benefits between itself and the State Compensation Fund (carrier). The Special Fund asserts that the administrative law judge lacked jurisdiction to apportion applicant's rearranged permanent disability benefits because carrier failed to comply with the notice requirement in Arizona Revised Statutes Annotated ("A.R.S.") section 23-1065 subd. D (Supp.1993). The Special Fund also argues that, if jurisdiction existed, the administrative law judge erred in determining that applicant's preexisting physical impairment constitutes "a hindrance or obstacle to employment or to obtaining reemployment" and in finding that applicant's employer had "knowledge" of her preexisting permanent impairment. Because we conclude that carrier's failure to comply with the notice requirement in section 23-1065 subd. D is not a jurisdictional defect and the record supports the administrative law judge's finding that applicant's impairment constitutes a hindrance or obstacle to her reemployment and that her employer knew about her impairment, we affirm the award.

I.

On September 8, 1989, while working as a correctional service officer for the Department of Corrections (DOC), applicant tripped over a curb and injured her lower back. Applicant's injury ultimately required surgery to repair a herniated disc at L5-S1. Carrier accepted applicant's claim for workers' compensation benefits on October 30, 1989. On February 12, 1990, applicant returned to DOC on a regular work status.

On March 13, 1990, carrier closed applicant's claim, finding that applicant suffered a permanent impairment but recommending a "no loss" award because she returned to work without a reduction in her earning capacity. Carrier subsequently filed a notice of permanent disability and request for determination of benefits, using Industrial Commission Form 107. Carrier did not indicate on Form 107 that it planned to request apportionment pursuant to section 23-1065, subd. C. On May 17, 1990, the Commission issued a no loss award, which became final without protest from applicant.

Meanwhile, applicant's symptoms recurred and on June 20, 1990 her doctor placed her on a "no work" status until July 13, 1990. After unsuccessfully attempting to return to work, applicant resigned from DOC on July 19, 1990. She then filed petitions with carrier to reopen and to rearrange her September 1989 claim. Following carrier's denial of both petitions, applicant filed a request for hearing with the Commission. At a hearing on April 1, 1990, applicant abandoned her request for reopening and proceeded with her claim for rearrangement. Carrier requested a continuance to allow it to notify the Special Fund of its intent to claim apportionment pursuant to section 23-1065, subd. C. Carrier notified the Special Fund on June 11, 1991.

Carrier based its claim for apportionment on injuries applicant sustained during her previous career in the military. While in the Air Force, applicant injured her left knee in 1959, reinjured it in 1977, and underwent left knee surgery for a prepatellar cyst in January 1982. She also injured her right knee in 1961, and a physician diagnosed right knee chondromalacia by 1963. In addition, applicant injured her lower back, which required a laminectomy and disc surgery in June 1962 for a herniated disc at L5-S1. Although applicant returned to regular duty following each of these injuries, when she retired she received a Veterans Administration service-connected disability rating of 60 percent, one component of which was a 10 percent rating for degenerative joint disease of the lumbosacral spine, left knee, and right foot. ¹

The Special Fund responded to carrier's notice by asserting, as an affirmative defense, that carrier's delayed notice barred its claim for apportionment. The Special Fund also requested and received a continuance to prepare its defense. Pending the apportionment hearings, both parties conducted independent medical examinations to evaluate applicant's preexisting impairment.

During the apportionment hearing, applicant testified and both parties presented testimony from a medical examiner and a labor market specialist. On May 26, 1992, the administrative law judge issued an award rearranging applicant's permanent disability benefits and apportioning liability for her stipulated loss of earning capacity between the Special Fund and carrier. Rather than making specific findings of fact or conclusions of law, the administrative law judge incorporated the carrier's post-hearing memorandum and on this basis concluded that the evidence satisfied each of the statutory requirements for apportionment. The administrative law judge affirmed without modification on administrative review. The Special Fund then brought this action. We have jurisdiction pursuant to A.R.S. sections 23-951 (1983) and 12-120.21, subd. B (1992) and Rule 10, Rules of Procedure for Special Actions.

II.

The Special Fund first asserts the administrative law judge lacked jurisdiction to apportion applicant's rearranged permanent disability benefits because carrier failed to comply with the notice requirement in A.R.S. section 23-1065, subd. D. Under section 23-1065, subd. D, a carrier "shall" notify the commission of its intent to claim apportionment within thirty days after it closes an applicant's claim with a finding that the applicant suffered a permanent impairment. ²

In reviewing an administrative law judge's decision, this court may draw its own legal conclusions in determining whether the Commission properly interpreted the law and applied it to the facts. See Hunt Bldg. Corp. v. Industrial Comm'n, 148 Ariz. 102, 105-06, 713 P.2d 303, 306-07 (1986). Our goal in interpreting statutes is to effectuate the intent of the legislature. State Compensation Fund v. Nelson, 153 Ariz. 450, 453, 737 P.2d 1088, 1091 (1987). The language of the statute provides the primary evidence of legislative intent. Id. We also infer intent from the statute's context, its effects and consequences, and its spirit and purpose. See City of Tucson v. Superior Court, 165 Ariz. 236, 240, 798 P.2d 374, 378 (1990). Although we draw our own legal conclusions, we give an agency's interpretation of a statute great weight. Capitol Castings, Inc. v. Arizona Dep't of Economic Sec., 171 Ariz. 57, 60, 828 P.2d 781, 784 (App.1992).

We conclude that the legislature did not intend that a carrier's failure to provide timely notice of its intent to claim apportionment would necessarily bar the carrier from asserting this claim at a later time. Section 23-1065, subd. D is silent regarding the consequence of failing to provide timely notice. We interpret this silence as evidence that the legislature did not intend us to construe the notice requirement in section 23-1065, subd. D as a jurisdictional prerequisite. If the legislature had intended to bar a carrier's claim for apportionment unless it provided notice of its intent to claim apportionment within thirty days of closing an applicant's claim, it could have expressed this intention unambiguously. ³

Our analysis of the purpose of the notification requirement in section 23-1065, subd. D also leads us to reject the Special Fund's position. The purpose of linking the notice of intent to claim apportionment with the Form 107 notice of permanent disability is to allow the Special Fund to participate in proceedings that affect its liability. In some instances, the approach urged by the Special Fund actually would frustrate its ability to participate at the time its interest becomes apparent. If a carrier must provide notice of an intent to claim apportionment in an apparent no loss award case, that notice would be the only notice received by the Special Fund, since nothing in the statute requires the carrier to again notify the Special Fund of its intent to claim apportionment if an applicant subsequently petitions to rearrange a claim. As a result, the Special Fund would not receive notice at the very time it needs an opportunity to participate in the proceedings.

The Special Fund argues that untimely notice can be prejudicial because the delay may prevent it from acquiring evidence to prepare its case. The Special Fund concedes, however, that the delay in this case did not prejudice its defense against carrier's claim for apportionment. Although we acknowledge that rearrangements may occur years after closure, we disagree that the appropriate remedy for possible prejudice to the Special Fund in some future case is to erect a universal bar to all requests for apportionment made more than thirty days after closure.

We also reject the Special Fund's argument that this interpretation conflicts with Arizona Administrative Code R4-13-132 (1993) ("Rule 132"). Rule 132 provides that if the carrier does not give the required notice, "the Commission shall not be bound by the testimony and evidence presented at a hearing as it relates to the imposition of liability...