Yarnell v. City Roofing, Inc., 14400

• Decision Date: 18 April 1991
• Docket Number: No. 14400,14400
• Citation: 812 P.2d 1199,8 Haw.App. 543
• Parties: Richard YARNELL, Claimant-Appellant, v. CITY ROOFING, INC., and Industrial Indemnity Company, Employer, Insurance Carrier-Appellees, and Special Compensation Fund, Appellee.
• Court: Hawaii Court of Appeals

Page 1199

812 P.2d 1199

8 Haw.App. 543

Richard YARNELL, Claimant-Appellant, v. CITY ROOFING, INC., and Industrial Indemnity Company Employer, Insurance Carrier-Appellees and Special Compensation Fund, Appellee.

No. 14400.

Intermediate Court of Appeals of Hawai'i.

April 18, 1991.

Syllabus by the Court

1. Appellate review of the findings of the Labor and Industrial Relations Appeals Board (Appeals Board) is governed by the clearly erroneous standard. The appellate court cannot set aside the Appeals Board's findings except where there is not substantial evidence in the record to support those findings or we are left with the definite and firm conviction that a mistake has been made.

2. The Appeals Board's legal conclusions are freely reviewable.

3. Under the "odd-lot doctrine," where an employee receives a work related permanent partial disability which combined with factors such as age, education, and experience renders the employee, in fact, unable to obtain employment, the employee is entitled to be treated as being permanently totally disabled. Total disability may be found in the case of workers who, while not altogether incapacitated for work, are so handicapped that they will not be employed regularly in any well known branch of the labor market. The essence of the test is the probable dependability with which claimant can sell his services in a competitive labor market, undistorted by such factors as business booms, sympathy of a particular employer or friends, temporary good luck, or the superhuman efforts of the claimant to rise above his crippling handicaps.

An employee has the burden of establishing prima facie that he falls within the odd-lot category.

4. Once an employee shows prima facie that he falls within the odd-lot category, the burden shifts to the employer to prove the availability of steady work. There is no presumption that, merely because the employee is able to do light work, appropriate employment is regularly available to him.

5. Decisions of the Director of the Department of Labor and Industrial Relations (Director) are final and conclusive between the parties unless either party appeals to the Appeals Board within twenty days of the Director's decision. However, superfluous findings within the decision shall not be accorded finality.

6. While the doctrine of res judicata applies to administrative proceedings, it should be applied with flexibility.

7. The doctrine of res judicata should be qualified or rejected when its application would contravene an overriding public policy or result in manifest injustice. Fundamental fairness requires that claims in administrative proceedings be determined on their facts, not on legal technicalities.

Jeffrey M. Taylor, Honolulu, for claimant-appellant.

Susan Y.M. Chock (Leroy T. Kuwasaki, Jr., on the brief, Law Office of Leroy T. Kuwasaki, Jr., of counsel), Honolulu, for employer-appellee and Ins. carrier-appellees.

Robyn M. Kuwabe, Deputy Atty. Gen. (Wayne A. Matsuura, Deputy Atty. Gen., on the brief), Dept. of Labor & Indus. Relations, Honolulu, for Special Compensation Fund.

Before BURNS, C.J., and HEEN and TANAKA, JJ.

HEEN, Judge.

Claimant-Appellant Richard Yarnell (Yarnell) appeals from the December 7, 1989 Decision and Order (Order) of the Labor and Industrial Relations Appeals Board (Appeals Board). The Order affirmed the decision of the Director (Director) of the Department of Labor and Industrial Relations (DLIR) that Yarnell was permanently and partially disabled at the level of 50% of the whole man. We vacate the Order and remand the case to the Appeals Board for further proceedings consistent with this opinion.

I.

On April 16, 1974, while employed by City Roofing, Inc. (City Roofing), Yarnell sustained a lower back injury. Four days later, City Roofing terminated Yarnell "for continued absenteeism." On April 24, 1974, Yarnell filed a claim for workers' compensation benefits. In its report of industrial injury, City Roofing denied liability for Yarnell's injury.

During the summer of 1974, three doctors examined Yarnell, two on behalf of City Roofing's insurance carrier, Industrial Indemnity Co. (Industrial). All three doctors found that Yarnell had a degenerative disc at L5-S1, and a problem with his right ankle. On August 22, 1974, following an August 13, 1974 hearing, the Director issued a decision holding City Roofing and Industrial liable for temporary total disability (TTD) in the amount of $112.50 per week from April 25, 1974.

Further medical tests in early 1975 confirmed the degenerative disc diagnosis, but the examining doctors expressed a reluctance to operate at that time, due to Yarnell's mental outlook. On April 2, 1975, Doctor George Schnack (Dr. Schnack), a psychiatrist, examined Yarnell. He concluded that "Yarnell does have a depressive reaction resultant from his back condition[.]"

In July 1975, Doctor Ralph Cloward (Dr. Cloward), a neurosurgeon, examined Yarnell and recommended surgery. In September 1975, Dr. Cloward removed the L5-S1 disc from Yarnell's back and replaced the disc with four bone grafts.

On October 4, 1975, Dr. Schnack reported that Yarnell sought his help in obtaining vocational rehabilitation. On the same date, Dr. Schnack diagnosed Yarnell as having pseudopsychopathic schizophrenia.

In early 1976 Yarnell attempted vocational rehabilitation. On January 8, 1976, Dr. Schnack reported that Yarnell was giving his counselors "a terrible time." On February 16, 1976, Dr. Cloward reported that Yarnell had enrolled in the Cannon School of Business, "but he did so poorly he was advised to go to McKinley High School and take a refresher course. [Yarnell] decided this was too much for him[.]"

On March 30, 1976, Dr. Cloward released Yarnell from his care and gave him a back-to-work slip effective April 1, 1976. Two days later, Dr. Schnack reported that Yarnell was getting worse from a psychiatric standpoint. He wrote that Yarnell was "very upset over Dr. Cloward's insistence he should return to work, and confused over what to do about vocational rehabilitation." Shortly thereafter, on April 17, 1976, Dr. Schnack wrote that "it is now my considered opinion that ... Yarnell is a Borderline Schizophrenic[,]" and that "Yarnell episodically has secondary psychotic symptoms, such as hallucinated voices, depersonalization, and possible paranoid and somatic delusions."

On November 29, 1976, Industrial unilaterally terminated Yarnell's TTD. However, at a hearing before the Disability Compensation Division (DCD) of the DLIR on June 21, 1977, Industrial agreed to restore Yarnell's TTD, retroactive to November 30, 1976. The Director issued an order to this effect on November 1, 1977, and Industrial appealed the order.

On August 30, 1977, Yarnell underwent a myelogram at Hawthorne Community Hospital in Hawthorne, California. Doctor Milton Avol (Dr. Avol) performed the test, which "revealed evidence of a large midline disc herniation at the L-4, 5 level." On November 7, 1978, Dr. Avol operated on Yarnell, performing a laminectomy and foraminotomy at L4-5 and L5-S1.

The Appeals Board heard Industrial's appeal of the November 1, 1977 order on January 21 and April 1, 1981. On September 11, 1981, the Appeals Board issued a Decision and Order which concluded that Yarnell was temporarily and totally disabled from April 25, 1974, to January 20, 1981. The Appeals Board also concluded that Yarnell sustained a permanent partial disability amounting to 25% of the whole man and 5% of the right foot, and found City Roofing liable for this disability. Although the Special Compensation Fund (Fund) was not a party to Industrial's appeal, Industrial argued that the Fund should be liable for Yarnell's benefits. However, the Fund was held not to be liable on the basis that there was insufficient evidence to establish that Yarnell suffered from a ratable permanent disability prior to his employment with City Roofing. See Hawaii Revised Statutes (HRS) § 386-33 (1985). The September 11, 1981 decision was not appealed by any party.

On September 17, 1981, Dr. Schnack wrote that,

from a psychiatric standpoint, I believe that I can say with virtually total assurance, Mr. Yarnell will never again return to work[.] ... [H]e is now psychiatrically unemployable.

Yarnell continued to have problems with his back. On June 28, 1982, he filed an Application to Reopen his workers' compensation claim, on the ground of a change in his physical condition. On July 15, 1982, the Director granted Yarnell's application, pursuant to HRS § 386-89(c) (1985). The Director scheduled a hearing for September 30, 1982. On November 8, 1982, the Director issued a decision reinstating Yarnell's TTD from October 1, 1982. The Director did not decide the issues of permanent partial disability and disfigurement.

On January 20, 1983, Yarnell was examined by Doctor Henry Dodge (Dr. Dodge), a neurosurgeon in Los Angeles, California. Dr. Dodge recommended further surgery on Yarnell's back. On March 17, 1983, he and Doctor Robert Watanabe (Dr. Watanabe) operated. Dr. Dodge performed a lumbar laminectomy with nerve root decompression, and Dr. Watanabe performed a lumbar spine fusion from L4-S1 with a bone graft. During the surgery, the doctors discovered a previously undetected fracture of Yarnell's pars interarticularis at L4-5 on the right, which they felt was causing most of Yarnell's pain, which Yarnell "[c]ertainly ... was not imagining[.]"

In April 1983, Industrial attempted to set up vocational rehabilitation for Yarnell with Professional Rehabilitation Services in Los Angeles. Yarnell rejected the services. At about the same time, Doctor Oscar Thomsen (Dr. Thomsen) of Los Angeles became Yarnell's treating psychiatrist. On December 5, 1983, Doctor Alvin Turken (Dr. Turken) of Culver City, California, became Yarnell's treating physician. After his first examination, Dr. Turken stated that Yarnell "[h]as lost at least three-quarters of...