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

• Decision Date: 03 July 1995
• Docket Number: CA-IC,No. 1,1
• Citation: 184 Ariz. 363,909 P.2d 430
• Parties: SPECIAL FUND DIVISION, Petitioner, v. INDUSTRIAL COMMISSION OF ARIZONA, Respondent, Pete King Corporation, Respondent Employer, Argonaut Insurance Co., Respondent Carrier. 93-0174.
• Court: Arizona Court of Appeals

Page 430

909 P.2d 430

184 Ariz. 363

SPECIAL FUND DIVISION, Petitioner, v. INDUSTRIAL COMMISSION OF ARIZONA, Respondent Pete King Corporation, Respondent Employer Argonaut Insurance Co., Respondent Carrier.

No. 1 CA-IC 93-0174.

Court of Appeals of Arizona Division 1, Department C.

July 3, 1995.

Reconsideration Denied Aug. 4, 1995.

Review Denied Jan. 17, 1996. ^*

[184 Ariz. 364] The Industrial Com'n of Ariz., Special Fund Div. by Laura L. McGrory, Phoenix, for petitioner.

Anita R. Valainis, Chief Counsel, The Industrial Com'n of Ariz., Phoenix, for respondent.

Steven C. Lester, P.C. by Steven C. Lester, Phoenix, for respondents Employer and Carrier.

OPINION

McGREGOR, Judge.

This is a special action review of an Arizona Industrial Commission Decision Upon Review granting apportionment under Ariz.Rev.Stat.Ann. ("A.R.S.") section 23-1065.C between Respondent Carrier Argonaut Insurance Co. (Argonaut) and the Special Fund Division (petitioner). ¹ The primary issue is whether an employer who acquires knowledge of an employee's non-industrial, preexisting physical impairment after the date of the industrial injury is entitled to reimbursement from the Special Fund Division. We conclude knowledge acquired after the date of industrial injury does not satisfy the requirement of section 23-1065.C.2 and set aside the decision upon review.

I.

On December 2, 1986, Respondent Employee Sam Sandoval (claimant) injured his lower back while working for Respondent Employer Pete King Corporation (Pete King). Claimant filed a claim for workers' compensation benefits, which Argonaut, as Pete King's insurer, accepted. Pete King continued to employ claimant after this industrial injury. At the end of 1987, claimant returned to work on a part-time basis and, in early 1988, returned to work full-time. He continued to work for Pete King until he retired on February 28, 1989.

While processing claimant's industrial injury claim during his period of continued employment after the December 2 injury, Argonaut acquired documents allegedly sufficient to establish its knowledge of claimant's preexisting hand and wrist arthritis. ² The administrative law judge ultimately agreed that documents acquired by the date-of-injury employer after the industrial injury and during continued employment satisfy the requirements of A.R.S. section 23-1065. Petitioner then brought this special action to challenge the administrative law judge's interpretation of section 23-1065.C.2.

II.

For cases involving an employee with a non-industrial preexisting physical impairment, A.R.S. section 23-1065 establishes a special fund to provide reimbursement for claims against the employer (or its insurance carrier) for an industrial injury. The legislature enacted this apportionment law "to promote the hiring of handicapped workers by relieving the employer of increased compensation liability resulting from the combination of preexisting impairments and industrial injuries." Country Wide Truck Service v. Industrial Comm'n, 181 Ariz. 410, 410, 891 P.2d 877, 877 (App.1994).

Section 23-1065.C establishes a number of conditions that must be met before a claim is apportioned between the special fund and the employer. All parties agree that the facts of this action meet most conditions of the statute: petitioner stipulated that claimant suffered bilateral hand and wrist arthritis before the industrial injury, that this arthritis caused a permanent impairment rating ten percent or greater under the American Medical Association Guides, and that it constituted a hindrance or obstacle to employment or to reemployment. See A.R.S. § 23-1065.C.

The dispute between Argonaut and petitioner is whether the employer presented proof "by written records that the employer had knowledge of the permanent impairment at the time the employee was hired, or that the employee continued in employment after the employer acquired such knowledge," as required by section 23-1065.C.2. ³

A.

Statutory interpretation is a question of law, which we review de novo. Parker v. Vanell, 170 Ariz. 350, 351, 824 P.2d 746, 747 (1992). Our goal in interpreting statutes is to give effect to the legislative intent. 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 purpose of a statute. Sellinger v. Freeway Mobile Home Sales, Inc., 110 Ariz. 573, 575, 521 P.2d 1119, 1121 (1974).

The written records requirement of section 23-1065.C serves two purposes:

First, it helps to ensure that Fund reimbursement furthers the statutory purpose by providing evidence that the employer actually knew of the employee's preexisting impairment; it protects the Fund against spurious or collusive claims. Second, it obviates the necessity of litigating the question of whether the employer had knowledge of the preexisting condition.

Sea-Land Services, Inc. v. Second Injury Fund, 737 P.2d 793, 795 (Alaska 1987) (citations omitted).

Section 23-1065.C.2 requires a written record of a permanent impairment under either of two conditions. The first requires the employer to have a written record of the employee's permanent impairment "at the time the employee was hired." This condition can refer only to the period before the industrial injury: a worker presumably cannot sustain a compensable injury until the employer hires him. See 1A Arthur Larson, The Law of Workmen's Compensation § 26.21 (1994). The alternative condition requires that written records establish "that the employee continued in employment after the employer acquired such knowledge." Contrary to Argonaut's assertion that the statutory language unambiguously applies both to pre-injury and to post-injury knowledge, we conclude that the statutory language itself does not disclose whether the legislature intended to include only knowledge acquired before the industrial injury or whether the legislature also intended to include knowledge acquired after the industrial injury.

To support its argument that we should afford the statutory language a broad interpretation, Argonaut cites Lasiter v. Industrial Comm'n, 173 Ariz. 56, 839 P.2d 1101 (1992). In Lasiter, the supreme court interpreted A.R.S. section 23-1062.A to provide an injured worker coverage for reasonable and necessary medical expenses, notwithstanding the worker's possible failure to satisfy the notice requirement of this subsection. ⁴ Id. at 63, 839 P.2d at 1108. The court emphasized the constitutional mandate for workers' compensation benefits and the remedial nature of the Workers' Compensation Act. In commenting on the remedial nature of the Act, the court noted that it "must be construed liberally to effect its purpose of compensating employees for their industrial injuries." Id. (emphasis added). Thus, the court refused to deny benefits to an injured worker absent express language mandating the denial. Id. ( citing Marriott Corp. v. Industrial Comm'n, 147 Ariz. 116, 121-22, 708 P.2d 1307, 1312-13 (1985)). Because section 23-1062.A does not expressly state that an employee forfeits compensation benefits by failing to provide the employer adequate notice, the court concluded that notice is not a condition for recovering reasonable and necessary medical expenses. Id.

We agree with petitioner that Lasiter is inapposite. Unlike section 23-1062.A, which affects the availability of medical benefits to injured workers, section 23-1065.C affects an injured worker's benefits not at all. Instead, section 23-1065.C only apportions responsibility for permanent disability benefits between the employer and the Special Fund Division. See A.R.S. § 23-1065.C.4; see also Schuff Steel Co. v. Industrial Comm'n, 181 Ariz. 435, 443-44, 891 P.2d 902, 910-11 (App.1994) (distinguishing special fund statutes that provide benefits to injured workers). The question answered by section 23-1065.C is not whether an injured worker recovers benefits, but whether the employer (or its insurance carrier) can obtain reimbursement from the special fund for the benefits to which the injured worker is entitled. Thus, section 23-1065.C neither impacts the primary purpose underlying workers' compensation--to compensate employees for their industrial injuries--nor fulfills a constitutional mandate.

Furthermore, unlike section 23-1062.A, which does not expressly require notice as a condition to recover medical expenses, section 23-1065.C does expressly require compliance with the written records requirement as a condition to a claim for apportionment. ⁵

Consequently, Lasiter does not support Argonaut's argument that we must interpret section 23-1065.C.2 broadly.

B.

Argonaut alternatively argues that we should resolve any ambiguity in its favor because the broad interpretation it urges furthers the statutory purpose of encouraging employers to employ handicapped workers. The administrative law judge agreed, concluding that "the clause in Sec. 1065(C) allowing qualifying knowledge to occur after hire, during continuing employment, goes beyond that laudable intent to discourage not only discriminatory hiring but discriminatory discharge."

We agree that the purpose of apportioning liability for benefits through section 23-1065.C is to encourage employers to employ workers despite knowledge of their handicaps. Special Fund Div. v. Industrial Comm'n, 182 Ariz. 341, 344-45, 897 P.2d 643, 646-47 (App.1994); see also 2 Larson, supra, § 59.31.a. We also agree that the statute intends to encourage employers both to hire workers with knowledge of their impairments and to retain workers after acquiring this knowledge. Indeed, the statute expressly makes apportionment available if "the employee continued in employment after the employer acquired such knowledge." A.R.S. § 23-1065.C.2. Recognizing those purposes, however, does not answer whether the legislature intended to permit an employer to qualify for...