search the entire site.
or go to the recent opinions, or the chronological or subject indices.
Wells v. Swalling Construction (8/15/97), 944 P 2d 34
Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
VYRON C. WELLS, )
) Supreme Court No. S-7509
) Superior Court No.
v. ) 3AN-95-417 CI
SWALLING CONSTRUCTION ) O P I N I O N
COMPANY, INC., and WAUSAU )
INSURANCE COMPANY, ) [No. 4866 - August 15, 1997]
Petition for Review from the Superior Court of
the State of Alaska, Third Judicial District, Anchorage,
Donald D. Hopwood, Judge.
Appearances: Joseph A. Kalamarides,
Kalamarides & Associates, Anchorage, for Petitioner. Robert J.
McLaughlin, Mann, Johnson, Wooster & McLaughlin, P.S., Tacoma,
Washington, for Respondents.
Before: Compton, Chief Justice, Matthews,
Eastaugh, Fabe, and Bryner, Justices.
At issue in this petition for review is the rate at which
the petitioner, Vyron C. Wells, is entitled to receive workers'
compensation benefits. The Alaska Workers' Compensation Board
(Board) determined that Wells's benefits should be calculated based
on an injury he suffered to his right knee in 1986. The superior
court, rejecting the Board's application of the last injurious
exposure rule, reversed the Board, determining that Wells should
receive a lower benefit rate based on an injury to his left knee in
1989. We reverse the superior court, holding that although the
last injurious exposure rule does not apply, the Board did not err
in determining that Wells is entitled to benefits at the rate
established for his 1986 injury.
II. FACTS AND PROCEEDINGS
Wells suffered five on-the-job injuries while working for
Swalling Construction Co., Inc., between 1957 and 1989. The
details of the last two injuries, one to each knee, are the key
facts in this case. In April 1986 Wells injured his right knee
when he stepped into a hole and fell. To treat this injury, his
physician, Dr. David E. Karges, attempted to decompress the knee
cap joint by removing a piece of the patella. After recovering
from the surgery, Wells returned to work without restriction in
December 1987. However, in an examination seven months after the
surgery, Dr. Karges noted that the knee remained symptomatic.
In September 1989 Wells tripped and injured his left
knee. He again went to Dr. Karges for treatment. Dr. Karges
diagnosed the knee as "sprained with possible minimal avulsion of
the quadriceps tendon." While seeing Dr. Karges about the left
knee, Wells spoke with him about continuing problems with the right
knee. Dr. Karges concluded that the surgery he performed on
Wells's right knee in 1987 "hadn't really helped him that much."
On October 12, 1989, Dr. Karges performed a total replacement of
the right knee. He also performed diagnostic arthroscopy of
Wells's left knee, but did not provide any treatment for it. He
testified at his deposition that while the arthroscopy of the left
knee revealed "early arthritic changes", there was "no evidence of
any mechanical or ligamentous problem." Wells did not return to
work after his knee replacement operation.
After the initial operation on Wells's right knee,
Swalling Construction and Wausau Insurance Co. (collectively,
Swalling Construction), compensated Wells at a temporary total
disability rate of $885.20 per week for about thirty-three weeks in
1987 and about twelve weeks in 1989. After the total replacement
of the right knee, Swalling Construction terminated payments based
on the 1986 injury and began making payments of $562.49 per week
based on the temporary total disability rate for the 1989 injury.
Wells filed applications with the Board for adjustment of his claim
to "establish the correct compensation rate"for his disability.
Before the Board, Wells argued that his disability was
caused by the 1986 injury, while Swalling Construction argued that
it was caused by the 1989 injury. The Board, applying the "last
injurious exposure rule,"ruled in favor of Wells. After
determining that Wells had rebutted the presumption that his
disability was caused by the 1989 injury, the Board concluded that
Swalling Construction failed to "prove all elements of its claim
by a preponderance of the evidence"and ordered Swalling
Construction to pay benefits "as they existed on April 30, 1986."
It also ordered Swalling Construction to pay Wells's attorney's
fees and costs.
Swalling Construction appealed. The superior court
reversed the Board's decision and remanded for redetermination of
attorney's fees. The superior court concluded that the Board erred
in determining that Wells had successfully rebutted the presumption
that his disability was caused by the 1989 injury. It also
determined that the Board incorrectly applied the last injurious
exposure rule. Wells petitioned to this court for review.
III. DISCUSSION [Fn. 1]
The issue in this case is whether Wells will receive
disability benefits based on his 1986 injury or his 1989 injury.
If his benefit rate is based on the 1986 injury, that rate will be
governed by the version of the workers' compensation laws in effect
prior to the 1988 amendments and computed according to Wells's
higher earnings during 1985 and 1986. If his benefit rate is based
on the 1989 injury, it will be governed by the law in effect in
1989 and computed according to his lower earnings in 1987 and 1988.
The Board and the superior court analyzed this dispute by
applying the "last injurious exposure rule." The last injurious
exposure rule, announced in Ketchikan Gateway Borough v. Saling,
604 P.2d 590 (Alaska 1979), imposes full liability for a disability
on the employer at the time of the most recent injury that bears a
causal relation to the disability. Saling, 604 P.2d at 595; see
also Parker Drilling Co. v. Wester, 651 P.2d 842, 843-44 (Alaska
1982) (applying the rule to successive insurers). By adopting this
rule, we sought to avoid the problems of "apportionment,"the
frequently complex and lengthy process of dividing liability among
successive employers. Saling, 604 P.2d at 598.
Apportionment unfairly places the burden of adjusting
each employer's share of the liability on the disabled employee
rather than the parties actually disputing the successive employers
or insurers. See id.; see also Providence Washington Ins. Co. v.
Bonner, 680 P.2d 96, 100 (Alaska 1989) (Rabinowitz, J.,
concurring). It also may prevent workers from receiving adequate
compensation when previous insurers or employers are outside the
state or insolvent. 4 Arthur Larson & Lex K. Larson, The Law of
Workmen's Compensation sec. 95.12, at 17-155 & n.9 (1996).
in cases not involving successive employers or insurers, these
concerns are irrelevant.
Moreover, imposing the rule in such cases would be less
equitable than it was in Saling. In Saling, we recognized that
"[i]n many cases [the rule] will operate to impose a
disproportionately higher burden of liability upon the last
employer." 604 P.2d at 598. We also noted, however, that "[t]he
rule will operate in those same cases to create a windfall to
previous employers,"id., and that employers may be partially
reimbursed by the second injury fund [Fn. 3] for the increased
liability caused by "the combined effects of the preexisting
condition and the subsequent work-related aggravation." Id. at
597. Applying the rule in this case, and thus arbitrarily basing
Wells's benefit rate on his last injury, would impose inequities on
Wells similar to those imposed on successive employers, as
discussed in Saling. However, workers like Wells, in contrast to
successive employers, can neither receive a "windfall"nor apply
for reimbursement from the second injury fund.
In light of these considerations, we conclude that the
last injurious exposure rule is not applicable to cases involving
disabilities caused by successive injuries if the employer and the
insurer are the same at the time of the relevant injuries. While
application of the rule in such cases might provide simplicity of
administration and help workers obtain "a swift and inexpensive
recovery,"the inequities inherent in such an application of the
rule outweigh any benefits. See id. at 597-98. Therefore, we hold
that it was error for the Board and the superior court to apply the
rule in this case.
Despite this error, the Board properly applied the
"substantial factor"test to resolve the question whether Wells
should receive compensation based on his 1989 injury or his 1986
injury. The parties agree that the benefit rate should be
calculated based on Wells's earnings at the time of either the 1986
or the 1989 injury. This is in accordance with the provisions in
the Alaska Workers' Compensation Act that "spendable weekly wage"
and hence, weekly benefit rate, must be computed with reference to
the employee's earnings at "the time of injury." AS 23.30.220(a).
Although the act does not specify which injury in a series of
injuries should be the basis for the rate calculation, we conclude
that the injury used for this purpose must, at a minimum, be a
legal cause of the disability. [Fn. 4] This conclusion is
supported by the act's definition of "disability"as the
"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 23.30.395(10) (emphasis added). Furthermore,
there would be no reason to assign such importance to the date of
an injury that was not a legal cause of the compensable disability.
For a causal factor to be a legal cause, it must be a
substantial factor in bringing about the harm. Fairbanks N. Star
Borough v. Rogers & Babler, 747 P.2d 528, 532 (Alaska 1987). Thus,
an injury is not a legal cause of a disability unless the
disability would not have happened "but for"the injury and
reasonable persons would regard the injury as a cause and attach
responsibility to it. See id. This is the "substantial factor
test"the Board ultimately used to determine that the 1989 injury
was not a legal cause of the disability. Therefore, the Board's
error in applying the extra analytical steps of the last injurious
exposure rule was harmless. See id., at 530-31 (holding that the
Board's error in discussing the statutory presumption of
compensability was harmless because the presumption "dropped out"
of the analysis once the Board found the presumption rebutted).
Having decided that the Board applied the proper test, we
turn to Swalling Construction's alternative argument that the
Board's decision was not supported by substantial evidence. [Fn. 5]
The only medical testimony before the Board was the deposition of
Dr. Karges. Swalling Construction relies largely on Dr. Karges's
affirmative response to the following question by Swalling
When you look at the entire patient, not just
the component parts, would you agree with the following statement:
That the left knee problem when combined with the right knee
problems, the right shoulder problems and the right foot problems,
that all of those combine to make him disabled from his
Dr. Karges also agreed that the "combination of factors is a
substantial, that's an important or significant, reason for his
disability." However, contrary to Swalling Construction's
assertions, these statements do not indicate that Dr. Karges
believed that the injury to Wells's left knee was a substantial
factor in causing the disability; they indicate merely that he
thought that all of Wells's injuries combined, including the injury
to his right knee, were a substantial factor in his disability.
This testimony is thus entirely consistent with a belief that the
injury to the left knee by itself was not a substantial factor in
causing the disability. See United Asphalt Paving v. Smith, 660
P.2d 445, 447 (Alaska 1983) (stating that although subsequent
injury aggravated pre-existing injury, the later injury was not
necessarily a substantial factor in causing disability).
Indeed, Dr. Karges's testimony supports the Board's
finding that the injury to the left knee was not a substantial
factor. He stated that at the time of the total knee replacement,
Wells's left knee showed "no evidence of any mechanical or
ligamentous problem." Dr. Karges also stated that he "would have
to honestly say that if he had nothing else going on that he might
well work with [the left knee injury]." And Dr. Karges agreed that
the left knee injury "in and of itself would not be the type of
injury that would necessarily end someone's construction career."
Moreover, Dr. Karges focused on the right knee injury and
subsequent total knee replacement as the cause of Wells's
disability. For example, counsel for Wells asked Dr. Karges if
Wells could perform work in which he would be required "to be on
uneven ground, slippery ground, icy ground, going up and down
ladders, overhead work, bending, doing things on his knees,
twisting his body, carpentry work, pile driving, operating small
machinery and labor work." Dr. Karges responded that "[a]fter
[Wells] had his total knee he should not do those things."
This undisputed testimony provides substantial evidence
to support the Board's conclusion that the injury to Wells's left
knee is not a legal cause of his disability. Therefore, we affirm
the Board's order that Swalling Construction must pay Wells his
"benefits as they existed on April 30, 1986, the date he injured
his right knee."[Fn. 6]
For the above reasons, we hold that the Board did not err
in determining that Wells's workers' compensation benefit rate
should be calculated based on his 1986 injury to his right knee.
Therefore, we REVERSE the decision of the superior court and REMAND
with the order to reinstate the decision of the Board.
We review the Board's rulings on questions of law using our
independent judgment and review its factual determinations to
determine if they are supported by substantial evidence. Cluff v.
NANA-Marriott, 892 P.2d 164, 168 n.3 (Alaska 1995). We give no
deference to the superior court acting as an intermediate court of
appeal. Brown v. State, Workers' Compensation Bd., 931 P.2d 421,
423 (Alaska 1997).
The parties assume that this is the correct analysis, and we
therefore do not address its merits.
The second injury fund is established and administered under
AS 23.30.040 and AS 23.30.205.
We do not reach the issue of which injury should be used for
the calculation when more than one injury is a substantial factor
in the disability.
Swalling Construction also challenges the Board's conclusion
that Wells successfully rebutted the statutory presumption of
compensability and its application of the substantial factor test
in the context of the last injurious exposure rule. Because we
decide that the last injurious exposure rule does not apply to this
case, we need not address these arguments.
Swalling Construction does not dispute that the Board, in
light of its decision, properly awarded Wells attorney's fees and
costs. Therefore we also affirm that portion of its order.