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Leslie Cutting Inc. et al v. Bateman (6/5/92), 833 P 2d 691
Notice: This is subject to formal correction
before publication in the Pacific Reporter.
Readers are requested to bring typographical
or other formal errors to the attention of
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that corrections may be made prior to
THE SUPREME COURT OF THE STATE OF ALASKA
LESLIE CUTTING, INC., LONG )
ISLAND DEVELOPMENT, REID ) Supreme Court No. S-4390
TIMBER, INC., and ALASKA ) Superior Court No.
TIMBER INSURANCE EXCHANGE, ) 1JU-90-100 Civil
v. ) O P I N I O N
CHARLES H. BATEMAN, )
) [No. 3848 - June 5, 1992]
Appeal from the Superior Court of the
State of Alaska, First Judicial District,
Larry R. Weeks, Judge.
Appearances: Mala J. Reges, James R.
Webb, Faulkner, Banfield, Doogan & Holmes,
Juneau, for Appellants. T. G. Batchelor,
Batchelor, Murphy & Brinkman, Juneau, for
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton and Moore, Justices.
Leslie Cutting, Inc., Long Island Development, Reid
Timber, Inc., (Employers) and Alaska Timber Insurance
Exchange (ATIE) appeal the superior court's reversal of
the Alaska Workers' Compensation Board's (Board) denial
of benefits to Charles Bateman. The Board determined
that Bateman's claim was barred by the statute of
limitations. The superior court reversed the Board on
alternative grounds. We affirm the judgment of the
superior court. I. FACTUAL AND PROCEDURAL BACKGROUND
Charles H. Bateman was working as a logger when he
contracted an allergy to frullania, a lichen common in
forests. The allergy, also known as "hemlock
poisoning," resulted in outbreaks of eczematous
dermatitis. The symptoms included open, weeping sores
on exposed areas of the body, hands, head and face.
Bateman's symptoms first appeared in 1983. Bateman
filed a Report of Occupational Injury or Illness at
that time. Bateman received medical advice from a
number of doctors1 and lost little work time in 1983
because of his condition.
In 1984 Bateman's condition recurred in a worsened
state and he filed a new Report of Injury. Bateman was
examined by Dr. David Johnson who referred Bateman to
Dr. Charles J. Hammer in Seattle. Dr. Hammer diagnosed
eczematous dermatitis caused by the frullania allergy.
Dr. Hammer prescribed a topical hydrocortisone cream as
treatment, but stated that the rash could only be
prevented by work in an environment free from
Bateman received temporary total disability
compensation from February 9, 1984 through June 9,
1984. ATIE2 referred Bateman to vocational
rehabilitation services. Terry McCarron, a vocational
rehabilitation counselor with Collins & Associates,
Inc., found that Bateman had no transferable skills
outside of logging and working with wood products,
except for his military leadership experience.
McCarron anticipated placement in a federal or state
agency and recommended an on-the-job training program.
Bateman agreed to pursue employment alternatives.3 He
initially found work as a crew boss in a tree thinning
operation. With assistance from the State of Alaska,
Department of Education, Division of Vocational
Rehabilitation (DVR), Bateman obtained tree thinning
contracts from the U.S. Forest Service and hired
loggers to perform the cutting. McCarron approved of
this type of work on a trial basis, but wrote Bateman
and warned him to remove himself from the forest if the
problems recurred.4 McCarron closed Bateman's file on
the basis that Bateman was now his own employer and had
decided to formulate his own rehabilitation program.
Bateman's compensation pay was terminated because he
had returned to work.
Bateman was unable to keep a steady work force to
maintain his contract work and took a job as a winter
caretaker of a logging camp. When the camp reopened,
Bateman again took a job as a logger, which involved
steady exposure in the woods. In 1986 Bateman's
dermatitis recurred in full and he filed his third
Report of Injury. Bateman eventually saw Dr. John
Bocachica,5 who prescribed a regimen of oral and
topical medications which could control but not
eliminate the dermatitis. Bateman lost little work
time because of this outbreak and no disability
compensation was paid.
Bateman, able to control the dermatitis with the
medication, increased his work time in the woods. The
medications, however, became less effective over time,
causing Bateman to increase his dosage.
In March 1989 Bateman suffered another serious outbreak
and saw Dr. Albert Maling of Craig, to obtain a new
prescription for the medications. Dr. Maling informed
Bateman that the medications he had been taking,
including steroidal creams and pills, were extremely
dangerous when taken over extended periods and in the
high doses Bateman needed for the drugs to be
effective. Bateman filed his fourth Report of Injury
on May 1, 1989. Attached to the report was the
recommendation of Dr. Maling that Bateman "be placed on
disability and that vocational rehabilitation be
instituted." Bateman had not worked since he suffered
a recurrence of the dermatitis on April 18.
Bateman requested and was granted a rehabilitation
evaluation. Bateman was again examined by Dr. Hammer.
Dr. Hammer found that Bateman had "a zero percent
impairment . . . and should have no difficulty as long
as he avoids contact with Frullania." ATIE paid
temporary total disability payments to Bateman for the
period of April 20, 1989 through September 13, 1989,
but controverted additional compensation based on Dr.
Hammer's finding of no permanent disability. Bateman
was also denied reemployment benefits by the
Rehabilitation Benefits Administrator because he had no
permanent physical impairment.
On September 29, 1989, Bateman filed an Application for
Adjustment of Claim, seeking vocational rehabilitation
and other benefits. ATIE denied the claim asserting,
among other defenses, that the statute of limitations
had run on Bateman's claim. ATIE claimed that since
Bateman's injury and disability occurred in 1984, the
two year period provided in the Alaska Workers'
Compensation Act, AS 23.30.150,6 had expired. The
Board ruled that Bateman's injury was not a latent
defect and that his claim was otherwise barred by the
statute of limitations.7
Bateman appealed the Board's decision to the superior
court. AS 22.10.020(d); Alaska Appellate Rule
602(a)(2). The superior court reversed the Board,
concluding that as a matter of law, Bateman either did
not have a disability in 1984 or did not know the
extent and nature of the disability and its relation to
his employment. ATIE appeals.
A. STANDARD OF REVIEW
This court will independently review the merits of an
administrative determination. No deference is given to
the superior court's decision when that court acts as
an intermediate court of appeal. Tesoro Alaska
Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903
(Alaska 1987). This court will substitute its judgment
for that of the Board in reviewing questions of law and
statutory interpretation. Phillips v. Houston
Contracting, Inc., 732 P.2d 544, 546 (Alaska 1987).8
B. TWO YEAR LIMITATIONS PERIOD
The statute of limitations in the Alaska Workers'
Compensation Act allows disabled workers two years from
when they have "knowledge of the nature of [their]
disability and its relation to [their] employment" to
file a claim. AS 23.30.105(a). Bateman was fully
aware in 1984 that his injury was debilitating when
present and could only be prevented by avoiding contact
with the woods. However, Bateman did not learn that
his allergy was not controllable until March 1989.
This appeal thus turns on one issue: does a disabled
worker know the "nature"of the disability and the
relationship of the disability to the worker's
employment when the worker reasonably but erroneously
believes the injury is controllable by medication?
We conclude that the answer is no. The Alaska Workers'
Compensation Act defines "disability" as "incapacity
because of injury to earn the wages which the employee
was receiving at the time of injury in the same or any
other employment." AS 23.30.265(10). The inquiry into
disability focuses on the loss of earning capacity and
not on the actual medical impairment. Cortay v. Silver
Bay Logging, 787 P.2d 103, 105 (Alaska 1990). Thus it
follows logically that one does not know the nature of
one's disability and the relationship of the disability
to one's employment until one knows of the disability's
full effect on one's earning capacity. The mere
awareness of the disability's full physical effects is
ATIE contends that Bateman was disabled in 1984 because
he collected temporary total disability and his
condition had matured at that time. We are not
persuaded, however, that Bateman had knowledge of the
nature of his disability and its relationship to his
employment before 1989. It was not until Bateman
learned that he could not treat the allergy with
medicine that he was fully aware of its economic
impact. Until then he reasonably believed that he
could control the condition so that his earning
capacity was not affected. He accomplished this by a
combination of medication and limited exposure to the
woods. In fact, Bateman followed this routine, found
his own employment and was able to work until the
medication became ineffective.
Bateman's belief that he could control his condition
was reasonable. The recommendations Bateman received
from the doctors and his counselors were far from
clear. Bateman's doctors told him that working in the
woods would aggravate his problem. They did not tell
him that such exposure was untreatable.9 McCarron was
similarly ambiguous in his recommendations. It was not
until Dr. Maling told Bateman that Bateman's course of
action was life-threatening10 that Bateman's belief
Bateman did not have knowledge of the nature of his
disability until he discovered that it was no longer
safely treatable with medication. It was at that point
that he was first fully aware of the nature of his
disability and the allergy's bearing on his employment.
Until then, he reasonably believed he could still earn
his customary wages by treating the dermatitis
outbreaks. Thus the two year statute of limitations
period did not begin to run until September 1989.
The judgment of the superior court reversing the Board
1. On June 22, 1983, Dr. W. H. Anthes diagnosed contact
dermatitis. On September 9, 1983, Dr. Michael Cusack
diagnosed infected eczema. On October 3, 1983, Dr.
Arthur N. Wilson, Jr. diagnosed eczematoid dermatitis.
2. At the time, Bateman was employed by Long Island
Development, Reid Timber, Inc. and Silver Bay Logging.
Later, Bateman was employed by Island Logging, Inc.,
Reid Timber, Inc. and Leslie Cutting, Inc. All the
employers, except Island Logging, were insured by ATIE.
However, Island Logging and its insurer, Providence
Washington Insurance Company, were not joined in this
suit. Therefore we refer to all the appellants
collectively as ATIE.
3. McCarron's report indicates that Bateman expressed some
interest in marine engine repair and that Bateman would
see if he could set up an on-the-job-training program.
4. Bateman claims that he did report a recurrence to ATIE
when he was forced to expose himself to frullania more
frequently than he had originally planned. However,
Bateman was told by ATIE that he could not get in touch
with McCarron or receive additional benefits because
Bateman was working again.
5. Before filing the Report for Injury, Bateman was
examined by Dr. Kim Smith.
6. Sec. 23.30.105. Time for filing of claims.
(a) The right to compensation for
disability under this chapter is barred
unless a claim for it is filed within two
years after the employee has knowledge of the
nature of the employee's disability and its
relation to the employment and after
disablement. However, the maximum time for
filing the claim in any event other than
arising out of an occupational disease shall
be four years from the date of injury, and
the right to compensation for death is barred
unless a claim therefor is filed within one
year after the death, except that if payment
of compensation has been made without an
award on account of the injury or death, a
claim may be filed within two years after the
date of the last payment of benefits under AS
23.30.180, 23.30.185, 23.30.190, 23.30.200,
or 23.30.215. It is additionally provided
that, in the case of latent defects pertinent
to and causing compensable disability, the
injured employee has full right to claim as
shall be determined by the board, time
There was some dispute whether Bateman came under the
act's 1984 or 1989 provisions. The section quoted
above contains the 1988 amendments. However, these
changes do not affect Bateman's case.
7. The Board stated two independent grounds for barring
Bateman's claim. First, the Board found that Bateman
was "fully aware of the nature of his condition, its
relation to working in the woods, and that he was
disabled by it"more than two years before he filed the
claim in September 1989. His claim was thus barred by
the first sentence of AS 23.30.105(a). Second, the
board found that the present claim was barred by the
second sentence of AS 23.30.105(a) which provides that
"if payment of compensation has been made without an
award on account of injury or death, a claim may be
filed within two years after the date of the last
payment." Since Bateman had collected temporary total
disability compensation in 1984, the provision applied.
The superior court below and the parties in their
briefs before this court discuss only the first ground
and the absence of a latent defect. Presumably, the
second ground was recognized as plainly incorrect
because it does not apply to "occupational diseases."
AS 23.30.105(a). See 1B Arthur Larson, The Law of
Workmen's Compensation 41.62(a), at 7-589 (1991)
(noting that an allergy is an occupational disease if
it was brought on by conditions of employment).
8. Both parties seem to frame the Board's decision as a
determination of law. However, the key determination
is when Bateman had knowledge of the nature of his
disability and the relationship of his disability to
his employment. This determination is a finding of
fact. We will uphold the Board's findings of fact if
they are supported by substantial evidence. Childs v.
Kalgin Island Lodge, 779 P.2d 310, 313 (Alaska 1989).
9. Dr. Bocachica, for example, was willing to prescribe
medication to treat Bateman's condition.
10. According to Bateman, Dr. Maling told him, "Why don't
you just carry a gun in the woods with you and shoot
yourself?" in reference to Bateman's high dosages of
medications. Even Dr. Maling, however, only concluded
that Bateman "may be unable to continue [his]