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Unisea, Inc. v. De Lopez

Supreme Court of Alaska

February 8, 2019

SOFIA MORALES de LOPEZ, Appellee and Cross-Appellant.

          Appeal from the Alaska Workers' Compensation Appeals Commission No. 16-011.

          Constance E. Livsey, Barlow Anderson LLC, Anchorage, for Appellants/Cross-Appellees.

          Selena Hopkins-Kendall and Eric Croft, The Croft Law Office, Anchorage, for Appellee/Cross-Appellant.

          Before: Bolger, Chief Justice, Winfree, Stowers, Maassen, and Carney, Justices.




         The primary issue in this workers' compensation appeal is the answer to this question: When must an employer pay compensation related to permanent partial impairment ratings if doctors in different medical specialities provide different dates of medical stability and separate impairment ratings for injuries to different body systems arising out of one work-related accident?

         An employer asked medical specialists to evaluate a worker with injuries to different body systems arising out of one work-related accident. The doctors gave two separate opinions, almost a year apart, about final medical stability and relevant permanent impairment ratings in their separate specialities. The employer paid no compensation based on the impairment ratings until almost three months after the second impairment rating. The worker asked the Alaska Workers' Compensation Board to order a penalty for late payment of impairment-related compensation benefits, but the Board agreed with the employer that no impairment-related compensation was payable until the employer obtained a combined impairment rating. The Alaska Workers' Compensation Appeals Commission reversed the Board's decision, concluding that initial impairment-related compensation was payable upon notice of the first impairment rating and further impairment-related compensation was payable upon notice of the second impairment rating.

         The employer appeals. For the reasons that follow, we affirm the Commission's decision.


         A. The Claimant's Injury

         In June 2013 Sofia Morales de Lopez, age 54, was employed by Unisea, Inc. as a fish sorter at a Dutch Harbor processing plant. While working she fell about 15 feet from a platform onto a concrete floor and suffered several fractures. After stabilizing in Unalaska, she was medivaced to Anchorage; she received medical treatment there for a few weeks before returning home to California, where she was in a rehabilitation facility for several months. In addition to her orthopedic problems, she developed depression and post-traumatic stress disorder (PTSD) symptoms. Morales's treating psychiatrist later diagnosed her with PTSD; Unisea's psychiatrist thought she did not meet the full criteria for PTSD.

         B. Relevant Statutory Sections And Related Workers' Compensation

         Because this appeal raises issues related to workers' compensation benefits paid under several interrelated statutory sections, we describe the statutory framework here to provide a better understanding of this case's factual development.

         1. Temporary total disability compensation

         Temporary total disability (TTD) compensation is payable while a worker temporarily is totally disabled by a work-related injury; disability is defined as "incapacity because of injury to earn the wages which the employee was receiving at the time of injury."[1] A worker's TTD eligibility ends at the date of medical stability.[2] Medical stability is statutorily defined as

the date after which further objectively measurable improvement from the effects of the compensable injury is not reasonably expected to result from additional medical care or treatment, notwithstanding the possible need for additional medical care or the possibility of improvement or deterioration resulting from the passage of time.[3]

         2. Reemployment benefits

         An injured worker also may be eligible for reemployment benefits, as set out in AS 23.30.041, if a work-related injury results in certain permanent impairments preventing return to the worker's prior employment.[4] The reemployment process is intended to provide the injured worker training for alternative remunerative employment.[5] If the injured worker is unable to return to the worker's prior employment for 90 consecutive days, the Reemployment Benefits Administrator[6] is required to evaluate whether the worker is eligible for reemployment benefits.[7] Eligibility requires a doctor's prediction that the injured worker will have "permanent physical capacities that are less than the physical demands" of the worker's job at the time of injury (as described in a specific U.S. Department of Labor reference book) or any other job the worker had in the ten years preceding the injury.[8] An injured worker initially found eligible for reemployment benefits may later be found ineligible if, "at the time of medical stability, no permanent impairment is identified or expected."[9]

         In 2005 the legislature created a new and alternative job dislocation benefit for injured workers who qualify for reemployment benefits but who do not want to engage in the reemployment process.[10] The job dislocation benefit is a fixed amount based on the worker's permanent partial impairment (PPI) rating; the maximum job dislocation benefit is $ 13, 500.[11] Reemployment benefits, in contrast, include formulation of and payment for an approved reemployment plan[12] along with stipend benefits to the injured worker if other specified benefits, including PPI compensation, end during the plan's implementation.[13] An injured worker found eligible for reemployment benefits must select one of the two options - the job dislocation benefit or the reemployment benefits - within 30 days of the eligibility notification.[14]

         3. PPI compensation

         Alaska Statute 23.30.190 authorizes PPI compensation; subsection (a) provides:

In case of impairment partial in character but permanent in quality, and not resulting in permanent total disability, the compensation is $177, 000 multiplied by the employee's percentage of permanent impairment of the whole person. The percentage of permanent impairment of the whole person is the percentage of impairment to the particular body part, system, or function converted to the percentage of impairment to the whole person as provided under (b) of this section. The compensation is payable in a single lump sum, except as otherwise provided in AS 23.30.041, but the compensation may not be discounted for any present value considerations.

         Alaska Statute 23.3 0.190(b) requires using a specific medical reference, the American Medical Association Guides to the Evaluation of Permanent Impairment (the Guides), to calculate compensation: "All determinations of the existence and degree of permanent impairment shall be made strictly and solely under the whole person determination as set out in [the Guides], except that an impairment rating may not be rounded to the next five percent." Subsection .190(d) requires the Board to update the Guides as new editions are issued. PPI is not linked to medical stability in the statute.

         The sixth edition of the Guides was adopted by the Board in January 2008.[15] The Guides has consistently evaluated different organs and body systems separately, using medical testing and examination to estimate the extent a particular organ or body system impairment limits a person's activities of daily living.[16]

         An evaluation using the Guides is done when the injured worker reaches maximum medical improvement (MMI), defined as

[t]he point at which a condition has stabilized and is unlikely to change (improve or worsen) substantially in the next year, with or without treatment. While symptoms and signs of the condition may wax and wane over time, further overall recovery or deterioration is not anticipated. However, both the name given to and exact definition of this status vary depending on the jurisdiction. Among the numerous synonyms for MMI are . . . medical stability . . . .[17]

         The Guides's MMI definition differs from AS 23.3 0.3 95's definition of medical stability because the MMI definition centers on a condition's stabilization, not on whether further medical care would lead to objectively measurable further improvement from "the effects of the compensable injury."[18] Because a single work-related injury can affect more than one body system or cause more than one condition, medical stability and MMI may not always be coextensive. And the MMI definition does not indicate that all separate conditions need to have stabilized before any single condition can be evaluated using the Guides.

         A rating of an organ or body system under the Guides generally shows how the loss affects the whole person, even though ratings are performed on organs or body systems separately.[19] The Guides also provides a method for combining different body system impairments, set out in both the text and the Combined Values Chart appendix.[20] Essentially the greatest impairment value is combined with the next largest remaining value by looking to where the numbers intersect on a chart.[21] "The method of combining impairments is based on the idea that a second or a succeeding impairment should apply not to the whole but only to the part that remains after the first and other impairments have been applied."[22] The Combined Values Chart's values are derived from a mathematical formula; using the Chart requires that each organ system's impairment "must first be expressed as a whole person impairment percent."[23]

         The Guides sets out a three-step rating process consisting of "clinical evaluation, analysis of the findings, and discussion of how the impairment rating was calculated."[24] According to the Guides, "[t]he first 2 steps must be performed by a licensed physician, and if the clinical findings are fully described, any knowledgeable observer may check the findings against the Guides'[s] criteria."[25] The Guides also "emphasize [s]" that "nonphysician evaluators may analyze an impairment evaluation to determine if it was performed in accordance with the Guides."[26]

         C. Morales's Claim Process And Administrative Proceedings

         The day after Morales's June 2013 injury, Unisea began paying her TTD compensation; it continued to do so through early August 2015, when it controverted the TTD compensation for reasons unrelated to this appeal.

         In October 2013 Unisea initiated the reemployment process paperwork, notifying the Reemployment Benefits Administrator that Morales had been totally unable to return to her employment for 45 consecutive days.[27] After Morales remained unable to return to her work for 90 consecutive days, an eligibility evaluation was ordered in California. Reemployment Benefits Administrator staff wrote to Morales, with a copy to Unisea, telling her she was eligible for reemployment benefits and within 30 days she needed to choose whether to go through the reemployment process or receive a job dislocation benefit. Morales had not yet been rated for a permanent impairment, and a rating would have been necessary to calculate the job dislocation benefit.[28] Morales returned the signed and notarized form electing the job dislocation benefit, and Unisea was served a copy of the form in April 2014. At no time did Unisea contest Morales's entitlement to reemployment benefits in general or the job dislocation benefit in particular.

         In early November 2014 Morales traveled to Seattle for an employer's medical evaluation (EME) by a panel of three doctors - a neurologist, an orthopedist, and a psychiatrist - all working for the same organization. The psychiatrist gave an opinion that the work injury was the substantial cause of her psychiatric condition, but he did not think her psychiatric condition was medically stable. The other two doctors evaluated Morales's physical condition and determined that her orthopedic problems caused by the accident were medically stable. Using the Guides, they rated her as having a 5% whole person permanent impairment. In February 2015, relying on the orthopedic and neurology EME report, Unisea controverted further medical care for Morales's neck, back, and right foot conditions, as well as any related personal-attendant care. The controversion notice mentioned neither PPI compensation nor the job dislocation benefit. Unisea continued paying Morales TTD compensation, now based solely on her psychiatric condition.

         Morales - representing herself- filed her first workers' compensation claim in June 2015, seeking continued medical care and other benefits. Later that month Unisea filed its first medical summary with the Board, listing the two November 2014 EME reports.[29] Unisea answered Morales's claim, admitting that she was entitled to continued TTD compensation and psychiatric care but denying that she was entitled to continued physical medical care. In early August Morales obtained the counsel who would ultimately represent her before the Board. About the same time, Unisea scheduled a second psychiatric EME, but Morales did not attend. In September Morales filed a compensation claim for continued medical costs, continued TTD compensation (which Unisea had discontinued when Morales did not attend the second psychiatric EME[30]), penalties for Unisea's late payments, [31] interest, and attorney's fees.

         Morales attended a second psychiatric EME in November 2015; the EME psychiatrist determined her psychiatric condition was medically stable and rated her as having a resulting 10% impairment. Unisea later communicated with the EME psychiatrist - although the communication itself is not in the record - seeking clarification of the November 2015 rating. In a February 8, 2016 addendum the psychiatrist explained that the 10% psychiatric impairment was a whole person rating that, when combined with the 5% orthopedic impairment, would be a 15% whole person impairment rating. On February 17 Unisea then paid Morales a job dislocation benefit and PPI compensation based on the 15% permanent impairment rating.

         In March Morales filed a compensation claim for penalty and interest on the PPI payment. She also sought a Board ruling invalidating her job dislocation benefit election because of Unisea's delay in paying her that benefit. Unisea's controversion response covered all of Morales's requests:

The [employee] signed an Election to Waive Reemployment Benefits and Receive a Job Dislocation Benefit Instead form on 03/03/14. Payment has been issued. ... No penalty is owed on PPI payments as the [employer] & carrier did not have a completed combined whole body rating until the report... dated February 8, 2016 was provided to the carrier.
The [employee] was not entitled to receive her job dislocation benefit until after she was medically stable & rated for her whole body PPI.

         The Board held two hearings and issued three decisions, one on reconsideration, related to Morales's claims. No witnesses testified at either hearing. The first hearing primarily concerned a penalty on Morales's PPI compensation. Unisea relied on a Commission decision, Lowe's HIW, Inc. v. Anderson[32] to argue that it had timely paid PPI compensation, in part because it had continued to pay TTD compensation after receiving the orthopedic impairment rating. Morales contended that Anderson did not apply to her case. She argued that Unisea should have paid her lumpsum PPI compensation related to the 5% orthopedic impairment rating within weeks of receiving the EME report and should have paid her the remaining 10% PPI compensation after the November 2015 psychiatric EME report. Unisea maintained that it was justified in waiting until February 2016, when it received the addendum from its EME psychiatrist showing the combined whole person impairment rating.

         The Board first decided that no penalty was owed on the PPI compensation payment. The Board reasoned that PPI compensation should be paid in a single lump sum and that Unisea did not have "a true 'whole person' rating" until the February 2016 addendum from the EME psychiatrist. The Board also reasoned that because TTD compensation is "not payable after the date of medical stability" and because Morales was paid TTD compensation from June 24, 2014 through August 7, 2015, Unisea "was not obligated under the Act to issue [Morales] a PPI benefit concurrently with ongoing TTD payments." Morales asked the Board to reconsider its decision; the Board denied reconsideration.

         The Board's second hearing considered the job dislocation benefit. Morales sought a ruling from the Board that Unisea's delay in paying the job dislocation benefit made her election invalid, thus freeing her to pursue reemployment benefits. Alternatively she asked the Board to consider a penalty on the job dislocation benefit.

         The Board decided there had been no undue delay in paying the job dislocation benefit even though the delay "was unusually long." The Board thought delay in paying job dislocation benefits was common "because of the difference between the statutory requirements for eligibility for reemployment benefits and the calculation of the amount of the dislocation benefit." According to the Board's analysis, job dislocation benefit payment is dependent on a PPI rating that includes all conditions; because the Board earlier had decided that Unisea did not have a complete PPI rating until February 2016, the Board decided the job dislocation benefit was timely paid.

         Morales separately appealed the Board's decisions to the Commission; the Commission consolidated the appeals.

         The Commission first considered the job dislocation benefit and decided that Unisea had not timely paid that benefit. The Commission looked at the language of AS 23.30.041(g), requiring payment to an employee "who has been given a [PPI] rating by a physician," and decided that Unisea was required to pay Morales at least an initial payment after the first PPI rating by the EME doctors. The Commission indicated its decision was based in part on Unisea's failure to controvert, writing, "Perhaps, more importantly, Unisea never bothered to tell Ms. Morales why it was not paying the dislocation benefit."

         The Commission next discussed PPI compensation and decided that Unisea also had not timely paid that compensation. The Commission considered statutory language in the Alaska Workers' Compensation Act, our decisions in Sumner v. Eagle Nest Hotel[33] and Hammer v. City of Fairbanks, [34] and information in the Guides. The Commission decided that nothing in the Guides requires all body systems or organs to reach MMI at the same time for a final PPI rating. The Commission decided that under our precedent PPI compensation became due when Unisea received the EME reports with the impairment ratings. The Commission distinguished its Anderson decision by interpreting it to apply only to claimants actively engaged in the reemployment process. Finally, the Commission agreed with the Board that Morales could not rescind or otherwise avoid the consequence of her election to receive a job dislocation benefit in lieu of reemployment benefits and that Unisea was "not estopped from relying on the Election Waiver by Ms. Morales."

         Unisea appeals the Commission's decision about the timeliness of Unisea's PPI compensation and job dislocation benefit payments. Morales cross-appeals the Commission's decision that she cannot avoid her job dislocation benefit election.

         III. ...

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