Veco, Inc. v. Wolfer, 7205
| Decision Date | 25 January 1985 |
| Docket Number | No. 7205,7205 |
| Citation | 693 P.2d 865 |
| Parties | VECO, INC., Appellant, v. Donald WOLFER and Home Insurance Company, Appellees. |
| Court | Alaska Supreme Court |
Phillip J. Eide, Ely, Guess & Rudd, Anchorage, for appellant.
William M. Erwin, Anchorage, for appellee Donald Wolfer.
Marilyn J. Kamm, Lane, Powell, Barker & Hicks, Anchorage, for appellee Home Ins. Co.
Before RABINOWITZ, C.J., and BURKE, MATTHEWS, COMPTON and MOORE, JJ.
This appeal involves a dispute between an insurance carrier and a company it formerly insured over which of them will pay workers' compensation benefits to Donald Wolfer. The carrier provided workers' compensation insurance to Wolfer's employer when he was originally injured in 1979. Wolfer allegedly aggravated his injury in 1980 while working for his employer, then self-insured.
Veco, Inc. (Veco) employed Donald Wolfer as a carpenter and heavy machinery operator at Prudhoe Bay in 1979. Wolfer injured his back on December 20, 1979, when he slipped and fell on the ice outside the carpenter's shop at the ARCO base camp. After the fall, Wolfer suffered extreme pain in his lower back, was unable to work, and returned home to Kenai on a regular tour of rest on December 23, 1979. At the time of Wolfer's injury, Home Insurance Company (Home) carried Veco's workers' compensation insurance.
Wolfer's back pain subsided during his two week stay in Kenai. However, his back began to bother him again when he returned to the North Slope in January 1980, especially when he was required to do heavy lifting. As a result, he was evacuated to Anchorage on February 13, 1980, where Declan Nolan, M.D., an orthopedic surgeon, diagnosed lumbar disc syndrome, recommended bed rest, and prescribed physical therapy. Dr. Nolan treated him from February 19, 1980 until March 20, 1980.
After three physicians recommended that Wolfer be released for work in March 1980, he began work in Veco's Anchorage yard on May 23, 1980, operating heavy machinery and doing mechanical work. Wolfer testified that during the summer of 1980, he continued to suffer intermittent flare-ups of back and neck pain, especially after operating heavy equipment for long hours.
After a temporary layoff in September, Wolfer returned to work for Veco on October 23, 1980. He testified that his duties this time involved some heavy work but mostly supervision of a yard crew. On October 26, 1980, while tightening an overhead bolt on a hydraulic transporter, Wolfer felt pain and numbness throughout his right side, lost strength in his right arm and leg and collapsed to the ground after losing motor control. Wolfer left work immediately and filed a Report of Occupational Injury or Illness the next day, in which he stated:
Tightening a 2 1/2 bolt on transporter and pulled something in my back. Happens of [sic] and on every so often under hard labor since December 20/79.
Veco was self-insured for its workers' compensation liability at the time of the October 1980 incident.
Wolfer returned to work again on October 28, 1980 and continued working until he was laid off on November 27, 1980. He testified that after the October 1980 incident his back pain was much worse and he did no more heavy labor.
After he was laid off in November 1980, Wolfer moved to Hawaii where he experienced back pain after swimming on December 4, 1980. He consulted James E. Baum, D.O., who referred him to George Siu, M.D., a neurologist. Wolfer mentioned only the December 1979 fall in relating his medical history to Dr. Baum and Dr. Siu. Both physicians believed that Wolfer's description of his December 1979 fall was consistent with his chronic back condition.
Wolfer filed a claim for disability benefits on December 22, 1980. The Alaska Workers' Compensation Board held a hearing on Wolfer's claim and on November 10, 1981, issued a written decision and order, directing Home to pay temporary total disability compensation to Wolfer from February 13, 1980 to March 20, 1980. The board concluded that Wolfer had established a preliminary link between his employment in December 1979 and his initial disability, and applied the presumption of compensability against Home. The board found, however, that Home had produced substantial evidence that Wolfer was not totally disabled after March 20, 1980, and rejected Wolfer's claim for benefits through May, 1980.
The board also concluded that Wolfer had established preliminary links between both the December 1979 and October 1980 injuries and his subsequent disability in November 1980. It concluded that neither Home nor Veco produced substantial evidence to rebut the presumption that each incident was a substantial factor in causing Wolfer's disability. Applying the last injurious exposure rule, the board found Veco liable for all benefits to be paid to Wolfer after November 28, 1980.
On December 8, 1981, Veco appealed the board's decision to the superior court, claiming that Home should be liable for benefits to be paid during the second period of disability. The superior court affirmed the board's ruling. We now reverse.
Veco argues that the presumption of compensability should not apply to a dispute between an insurance carrier and its former insured. In Ketchikan Gateway Borough v. Saling, 604 P.2d 590 (Alaska 1979), we applied the presumption of compensability and the last injurious exposure rule to a dispute between two employers. 1 We recognized that applying both the presumption and the last injurious exposure rule to disputes involving successive employers might be inequitable to subsequent employers in some cases. 604 P.2d at 598. Nevertheless, we believed that the advantages of applying both the presumption and the rule outweighed the disadvantages. We also recognized the mitigating effect of AS 23.30.205, the second injury fund. 2
In Providence Washington Insurance Co. v. Bonner, 680 P.2d 96 (Alaska 1984), we extended the Saling rationale and applied the presumption of compensability to a dispute between successive insurance companies. Justice Rabinowitz noted in concurrence, "The rule adopted today will simplify proceedings before the board and thus reduce the hazards inter-insurer disputes pose for the injured worker." Bonner, 680 P.2d at 100 (Rabinowitz, J. concurring). Veco's attempt to distinguish this case from Bonner is unpersuasive.
We are not presented with the case in which application of both the presumption and the rule would leave an injured employee uncompensated. As a self-insured employer in October 1980, Veco was required to prove its financial ability to pay compensation directly. AS 23.30.075(a). Nor is this a case in which the unwary insured was surprised by an ambiguous or opaque policy exclusion. In fact, we see no reason why Veco should not be treated as a subsequent insurer in this case.
Moreover, applying the presumption and the rule to a dispute between a carrier and its former insured has two advantages. First, they establish a clear standard for determining liability for a formerly disabled employee's subsequent disability. This helps insurance carriers and employers alike to estimate the risks assumed by each. As Justice Rabinowitz noted, it also reduces the hazards posed by inter-insurer disputes to injured workers. Second, this avoids treating employees of a self-insured employer differently from similarly situated employees of an employer with outside insurance. If the presumption and the rule did not apply in these cases, disabled employees of a self-insured employer would likely receive lower benefits based on wages at the time of the initial disability, rather than wages at the time of the last injury. Thus, since salary usually increases over time, applying the presumption and the rule preserves equity among similarly situated employees and furthers the humanitarian goals of the Worker's Compensation Act. 3
Veco's second claim is that the superior court applied the wrong standard of review in affirming the board's finding that Veco did not produce substantial evidence to rebut the presumption of compensability. Specifically, Veco objects to the following language from the decision on appeal:
The Board's decision is reasonable, is supported by substantial evidence in the record, and is not an abuse of discretion. Kodiak Western Alaska v. Harris Flying Service, 592 P.2d 1200 (Alaska 1979).
If the superior court applied the Kodiak Western Alaska standard of review in the present case, then there was error. In Kodiak, which reviewed a transportation commission decision, we approved use of the "reasonable basis" standard of review. 4 We stated:
We use the "reasonable basis" standard of review for questions involving agency expertise or fundamental policy considerations. Under this standard deference will be given to the agency's determination so long as it is reasonable, supported by the evidence in the record as a whole and there is no abuse of discretion.
Kodiak Western Alaska, 592 P.2d 1200 (Alaska 1979).
Here, the board's decision involved agency expertise and is ostensibly within the rule of Kodiak Western Alaska. However, in workers' compensation cases, we have held that:
The question of whether the quantum of evidence is substantial is a legal question. Therefore, we must independently review the evidence to determine whether the Board erred in concluding that there was no substantial evidence to overcome the presumption of compensability.
Fireman's Fund American Insurance Cos. v. Gomes, 544 P.2d 1013, 1015 (Alaska 1976). (Footnotes omitted). See also Miller v. ITT Arctic Services, 577 P.2d 1044, 1046 (Alaska 1978). ("Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support [the board's] conclusion.") Thus the court must independently examine the sufficiency of the employer's evidence when reviewing a Workers'...
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