State Indus. Ins. System v. United Exposition Services Co.

• Decision Date: 04 February 1993
• Docket Number: No. 22834,22834
• Citation: 846 P.2d 294,109 Nev. 28
• Parties: STATE INDUSTRIAL INSURANCE SYSTEM, an agency of the State of Nevada, Appellant, v. UNITED EXPOSITION SERVICES CO., Respondent.
• Court: Nevada Supreme Court

Page 294

846 P.2d 294

109 Nev. 28

STATE INDUSTRIAL INSURANCE SYSTEM, an agency of the State of

Nevada, Appellant, v. UNITED EXPOSITION SERVICES CO., Respondent.

No. 22834.

Supreme Court of Nevada.

Feb. 4, 1993.

[109 Nev. 29] R. Scott Young, Gen. Counsel, Carson City, and William A. Zeigler, Associate Gen. Counsel, Las Vegas, for appellant.

J. Michael McGroarty, Las Vegas, for respondent.

OPINION

SPRINGER, Justice.

In an administrative review, the trial court held that when an employer fails to follow the appeal procedures provided in NRS 616.5412, ¹ the employer may still seek a later review of an employee's permanent partial disability award by recourse to NRS 616.392, which provides for an appeal from a "written decision of an employee of the system relating to employers' account." This was error because NRS 616.5412 provides the exclusive procedure for the appeal of disability adjudications and because NRS 616.392 is clearly inapplicable to this case.

The dissenting justice is appropriately concerned about the manner in which the State Industrial Insurance System ("SIIS") handled this claim, but this concern should not distract the court from its clear duty to decide the narrow issue presented by this appeal. The issue before us is whether an employer has administrative appeal rights in a contested worker disability case that go beyond the procedures provided in NRS 616.5412. The answer is, "no."

The legislature has set up the administrative appeals process articulated in NRS 616.5412 for claims relating to SIIS decisions granting or denying benefits to an injured worker. NRS 616.5412 provides that any person who is "aggrieved by ... [a] determination of an insurer" may appeal from the determination by "filing a request for a hearing before a hearing officer." Any such request must be filed within sixty days after the written determination was mailed. An employer is an "aggrieved person" under NRS 616.5412, and this provision provides an exclusive avenue of appeal from SIIS decisions granting or denying benefits. If employers had the right to bypass the NRS 616.5412 hearing process and file an additional or alternative appeal with the SIIS Manager, this would seriously complicate and interfere with the unitary appeals system provided for in the statute for reviewing disability awards and could place an intolerable burden on the SIIS Manager.

In the present case, the facts are not in dispute, and we are presented with only the one legal issue, an issue which relates to the interpretation of statutory provisions. Questions of law are reviewed de novo. See, e.g., Arizona Bd. of Regents v. Phoenix Newspapers, 167 Ariz. 254, 806 P.2d 348 (1991); M.S. v. People, 812 P.2d 632 (Colo.1991); Crocker Nat'l Bank v. San Francisco, 49 Cal.3d 881, 264 Cal.Rptr. 139, 782 P.2d 278 (1989). "[A] reviewing court may undertake independent review of the administrative construction of a statute." American Int'l Vacations v. MacBride, 99 Nev. 324, 326, 661 P.2d 1301, 1302 (1983). We have thus undertaken an independent review of the mentioned statutory provisions and conclude that an employer has no appeal rights in the case of a disability award other than those provided by NRS 616.5412.

In the present case, United failed to appeal under NRS 616.5412 from a SIIS decision to pay a claimant a permanent partial disability award and to appeal from a second SIIS decision to provide the claimant with rehabilitation benefits, even though SIIS notified United that it could appeal from both of these decisions. Instead, United waited more than a year and then requested a hearing with the SIIS Manager pursuant to NRS 616.392. NRS 616.392(1) authorizes the SIIS Manager to hear certain types of complaints relating to an employer's account and states the following:

1. Any party aggrieved by a letter issued pursuant to NRS 616.288 ² or a written decision of an employee of the system relating to employers' accounts, including but not limited to matters concerning audits and the classification of risks, may appeal from the letter or decision by filing a notice of appeal with the manager within 30 days after the date of the letter or decision.

The only conceivable avenue for administrative review by United under NRS 616.288 would on appeal be from "a written decision of an employee of the system relating to employers' accounts." We cannot identify in this record any written decision by an SIIS employee relating to United's accounts. United did receive a copy of a letter dated January 17, 1989, in which the claimant was offered an award and advised the claimant that the employer "had the right to appeal this decision." It is hard to give much credence to the argument that this "decision" is one "relating to [United's] accounts." Although it could be argued that an award of benefits to an injured employee might increase the premiums paid by an employer to SIIS, SIIS's decisions regarding benefits awards do not "relate" to an employer's "accounts" within the meaning of NRS 616.392(1); and NRS 616.392(1) does not convey authority to the SIIS Manager to review such awards. ³

As SIIS benefits awards do not fall within the ambit of NRS 616.392(1), we conclude that the SIIS Manager lacked authority to hear United's appeal. We therefore reverse the district court judgment. United's SIIS account shall reflect SIIS's benefit awards to Quaney.

ROSE, C.J., and YOUNG, J., concur. ⁴

STEFFEN, Justice, dissenting:

With a degree of reluctance stemming from a realization that the legislature is best suited to deal with unanticipated contingencies that may seriously impact the enormously encumbered State Industrial Insurance System ("SIIS" or "the System"), I nevertheless register my dissent in the name of fundamental fairness.

At the outset, SIIS concedes that it owes a duty of good faith and fair dealing to its policyholders (the employers of Nevada who are mandated by statute to participate in the State Industrial Insurance System) and injured workers. In administering the State Industrial Insurance System, SIIS, through its manager, determines and fixes the premium rates of employer-policyholders in order to "rate each individual risk more equitably, predicated upon the basis of the employer's individual experience." NRS 616.380(1)(a) (emphasis added).

It is apparent from the language of the quoted statute that the manager is enjoined to determine and fix the rate of an employer's premiums based upon considerations of equity and the premium-paying employer's individual claim experience. There is no provision in the industrial insurance statutes for the manager determining an employer's premium rates based upon whatever the System or the manager "can get away with." Equity and actual, individual claim experience are the twin determinants of an employer's adjusted premium rates.

In the instant case, at least three factors seem clear. First, SIIS paid, and thereafter charged or will charge to United's account, $17,000 in rehabilitation costs for training Quaney to be a truck driver, despite the fact that he had been a professional truck driver for seventeen years. Second, despite medical findings that Quaney's industrial injury only temporarily aggravated a non-industrial degenerative joint disease in the lumbar spine, SIIS gave Quaney a permanent partial disability (PPD) award without even apportioning the award. Third, both the rehabilitation award and the PPD award reflect either a gross dereliction of duty by the System or a frightening degree of irresponsibility.

Simply stated, the position asseverated by SIIS is that United had no right to rely on the substantive or procedural propriety of the System's claims dispositions, and since United failed to appeal Quaney's rehabilitative and PPD awards to the Nevada Department of Administration hearing and appeals officers, all further avenues of relief are foreclosed. I would agree with SIIS if United had sought belatedly to merely reargue the weight of the evidence as a means of reducing Quaney's award. What United did was rely on the System's good faith determination of Quaney's entitlements under the law. United had no inclination to challenge, through appeal or otherwise, Quaney's right to receive a lawful and proper rehabilitative and PPD award.

It was only after United's counsel attempted to ascertain why United's industrial insurance premium rates were skyrocketing that the facts of the instant case came to light. Having discovered that SIIS was charging to United's account rehabilitative and PPD payments to and on behalf of Quaney...