Walker v. Providence Health Sys. Or. (In re Comp. of Walker)

• Decision Date: 30 January 2013
• Docket Number: 0906234,A148304.
• Citation: 254 Or.App. 676,298 P.3d 38
• Parties: In the Matter of the Compensation of Joy M. Walker, Claimant. Joy M. WALKER, Petitioner, v. PROVIDENCE HEALTH SYSTEM OREGON, Respondent.
• Court: Oregon Court of Appeals

254 Or.App. 676

298 P.3d 38

In the Matter of the Compensation of Joy M. Walker, Claimant.Joy M. WALKER, Petitioner,

v.PROVIDENCE HEALTH SYSTEM OREGON, Respondent.

0906234; A148304.

Court of Appeals of Oregon.

Argued and Submitted March 28, 2012.

Decided Jan. 30, 2013.

Ronald A. Fontana, Portland, argued the cause and filed the briefs for petitioner.

Theodore P. Heus argued the cause for respondent. With him on the brief was Scheminske & Lyons, LLP.

Before ORTEGA, Presiding Judge, and SERCOMBE, Judge, and HADLOCK, Judge.

HADLOCK, J.

Claimant seeks review of a Workers' Compensation Board order, challenging two of the board's determinations: (1) that claimant is not entitled to penalties under ORS 656.268(5)(d) for the self-insured employer's de facto refusal to close her claim, and (2) that claimant is not entitled to attorney fees under ORS 656.382(1) for employer's allegedly unreasonable resistance to paying compensation. “We review the board's decision for substantial evidence and errors of law, and to determine whether the board's analysis comports with substantial reason.” SAIF v. Ramos, 252 Or.App. 361, 363, 287 P.3d 1220 (2012). For the reasons set out below, we reverse and remand.

Although the issues presented in this case are narrow, the underlying procedural history is somewhat complicated and has led to several petitions for judicial review and one published opinion from this court. Providence Health System v. Walker, 252 Or.App. 489, 289 P.3d 256 (2012)( Walker II ). The history of the claim begins in April 2004, when “claimant, who worked as a certified nursing assistant in an elder-care facility, filed a workers' compensation claim with employer,” reporting symptoms of, among other things, acute anxiety. Id. at 490, 289 P.3d 256. Psychiatrist Lynn Friedman evaluated claimant in July 2004 and began treating her later that summer.

Employer denied claimant's claim in May 2004. An administrative law judge (ALJ) set aside that denial, the board affirmed the ALJ's order, and, on judicial review, this court affirmed the board's decision. Joy M. Walker, 58 Van Natta 11 (2006), aff'd without opinion, Providence Health System v. Walker, 210 Or.App. 466, 151 P.3d 960 (2007)( Walker I ).

In 2007, employer accepted “anxiety with depression.” Claimant then requested that the acceptance be modified to include major depression and panic disorder without agoraphobia, which employer treated as a request to accept an omitted condition and denied. An ALJ set aside the denial of “major depressionand panic disorder” in a 2008 order and the board affirmed on March 23, 2009.¹

Claimant requested claim closure in late March 2009, based on the board's March 23 order and Friedman's reports. Employer issued a Notice of Refusal to Close in early April 2009, explaining that it needed to schedule an independent closing evaluation to determine the extent of any permanent impairment associated with claimant's accepted condition. That same month, employer notified claimant of an independent medical examination (IME) with psychologist Jack Davies.

Two days after it issued the Notice of Refusal to Close, employer modified its acceptance of claimant's claim to include “disabling anxiety and depression and acute major depression and panic disorder.” Claimant objected to the acceptance of “acute major depression and panic disorder,” arguing that employer needed to accept “major depression and panic disorder” as previously ordered by the board. Claimant also objected to the scheduled IME, requesting that employer close the claim based on Friedman's existing reports.

At her attorney's instruction, claimant did not attend the IME scheduled in April 2009. Employer then submitted a request to suspend claimant's benefits based on her failure to attend that IME. The Workers' Compensation Division (WCD) denied employer's request in May 2009, reasoning that employer had failed to comply with applicable administrative rules.

Employer then rescheduled the IME, arranging for claimant to see Davies in June 2009. Claimant's attorney told claimant not to attend that examination either, asserting that Davies was not authorized to conduct IMEs pursuant to ORS 656.325. Claimant did not attend the June IME, and employer again requested suspension of her workers' compensation benefits. On July 6, 2009, WCD suspended claimant's benefits, finding that her explanation for the failure to attend the June IME was unreasonable. That suspension order provided, in part:

“The suspension shall continue until such time as the worker has notified the insurer of agreement to be examined and, in fact, submits to an examination by a physician designated by them.

“If the worker has not made an effort to have compensation benefits reinstated within 60 days of the date of this order, the insurer may close the claim. This order will then terminate upon closure of the claim.”

Claimant requested a hearing regarding the suspension order.²

Meanwhile, Friedman performed a new closing examination at the request of claimant's attorney, and she reported the results of that examination on September 24, 2009. On September 30, claimant requested claim closure based on that report. Employer did not issue a notice of closure or notice of refusal to close the claim within 10 days of claimant's request as required by ORS 656.268(5)(b), which provides:

“If the insurer or self-insured employer has not issued a notice of closure, the worker may request closure. Within 10 days of receipt of a written request from the worker, the insurer or self-insured employer shall issue a notice of closure if the requirements of this section have been met or a notice of refusal to close if the requirements of this section have not been met.”

Indeed, employer did not issue a notice of closure until November 5, 2009. In that notice, employer stated that the claim had been reopened to process new conditions and was being closed at that point “pursuant to Order Suspending Compensation Pursuant to ORS 656.325 dated 7–6–09.”

The November 2009 notice of closure stated that claimant was not entitled to permanent disability “under the provisions of this administrative closure.” Claimant requested reconsideration of that notice and, on reconsideration before the Appellate Review Unit of the WCD, claimant was awarded 35 percent permanent partial disability based on Freidman's report.

Claimant requested a hearing regarding employer's allegedly unreasonable refusal to close the claim within 10 days, seeking the assessment of penalties under ORS 656.268(5)(d) and attorney fees under ORS 656.382. ³ A hearing was held before an ALJ and, in written closing arguments, employer conceded that its decision not to close the claim within 10 days of claimant's September 30, 2009, request constituted a de facto “refusal to close” for purposes of ORS 656.268(5)(d). Employer argued, however, that its conduct had not been unreasonable because it had insufficient information to close the claim, Friedman had rendered inconsistent opinions about claimant's impairment, and claimant had not attended the scheduled IME.

The ALJ concluded that claimant was not entitled to a penalty or attorney fees. Claimant sought board review of the ALJ's order, arguing that employer had acted unreasonably in de facto refusing to close her claim by October 10, 2009—10 days after her September 30 closure request—because it had sufficient information on which to base claim closure. In addition, claimant asserted, the July 6, 2009, suspension order “did not have the [effect] of suspending employer's obligation to process the claim.” To the contrary, claimant argued, the suspension order provided another trigger for claim closure because “OAR 436–060–0095(11) actually required employer to close the claim within sixty days of the issuance of the suspension order.” ⁴ Accordingly, claimant concluded, the suspension order did not negate the requirement that employer close the claim by October 10, 2009 (within 10 days of claimant's request), because the suspension order itself required employer to close the claim by September 4 (60 days after the July 6 suspension order issued).

In response, employer argued to the board that it “lacked sufficient information to determine permanent disability related to the newly accepted conditions.” Employer also argued that it “had a legitimate doubt as to its liability due to the * * * July 6, 2009 suspension order, which remained in effect at the time of claimant's September 30, 2009 request for closure.” Finally, employer argued, no penalty could be awarded in any event, as the penalty for unreasonable refusal to close a claim is “25 percent of all compensation determined to be then due the claimant” and, at the time of the eventual November 5, 2009, notice of closure, no compensation was “due” because the notice “did not award any permanent disability.” According to employer, “[b]ecause no compensation was payable under the November 5, 2009 Notice of Closure, there can be no penalty assessed in this case,” even though 35 percent permanent partial disability was awarded on reconsideration.

In the order that is the subject of this judicial review proceeding, the board affirmed the ALJ's order denying claimant's request for a penalty and attorney fees, citing two bases for its decision. First, the majority opinion focused on the September 2009 suspension order, ultimately holding that employer had not acted unreasonably in refusing to close the claim because, the board concluded, employer could have a “legitimate doubt” regarding when an insurer or self-insured employer must close a claim after a claimant's benefits have been suspended. In addition, the board concluded that no penalty could be due in any event, as an ORS 656.268(5)(d) penalty equals 25 percent of the compensation “then due” when a notice of closure or notice of refusal to close is issued, and employer had determined in the November 5, 2009,...