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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Lindekugel v. George Easley Co. (9/10/99) sp-5176

Lindekugel v. George Easley Co. (9/10/99) sp-5176

     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.


JOHN LINDEKUGEL,              )
                              )    Supreme Court No. S-8417
             Appellant,       )
                              )    Superior Court No.
     v.                       )    3AN-96-07912 CI
                              )    [No. 5176 - September 10, 1999]
             Appellees.       )

          Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
                 Sigurd E. Murphy, Judge pro tem.

          Appearances:  William J. Soule, Law Office of
William J. Soule, Anchorage, for Appellant.  David W. Baranow, Law
Offices of David W. Baranow, Anchorage, for Appellees.  

          Before: Matthews, Chief Justice, Eastaugh, and
          Bryner, Justices.  [Fabe and Carpeneti,
Justices, not participating.]  

          EASTAUGH, Justice.

          We must decide here whether a permanent total disability
settlement disqualifies an employee from subsequent disability
claims.  We hold that it does not and therefore remand for further
consideration of the employee's claim. 
          John Lindekugel suffered two on-the-job injuries while
working for different employers.  In 1976 he was severely injured
while employed by Fluor Alaska (Fluor).  After multiple surgeries,
his physician deemed him permanently and totally disabled (PTD).
Lindekugel eventually settled a claim for workers' compensation
benefits with Fluor's insurers.
          He retired to his ranch in Montana, supporting himself
with the proceeds and interest of his settlement, and social
security, veteran's, and other benefits.  Two years later, a doctor
examined him for the social security administration and determined
that he could return to medium-duty carpentry.  As a result, the
federal government terminated his social security benefits and he
returned to Alaska to resume working.  
          On the sixth or seventh day of a new job with George
Easley Company (Easley), he suffered a fall.  He thereafter
underwent multiple additional surgeries.  He has not worked since
his fall at Easley, and the parties agree that he is now
permanently and totally disabled.  Lindekugel attributes his
disability to his fall at Easley, while Easley attributes it to his
original injury at Fluor.
          Lindekugel sought temporary or permanent total disability
payments from Easley. [Fn. 1]  The Alaska Workers' Compensation
Board denied his claim, determining that his symptoms were caused
by his injury at Fluor and not his fall at Easley.  The board also
determined that Lindekugel could not seek additional benefits after
receiving lifetime benefits for permanent disability, reasoning
that such an award would amount to payment for a "second lifetime."
The superior court upheld this decision.  Lindekugel appeals. [Fn.
     A.   Standard of Review
          Because the superior court acted as an intermediate court
of appeal, we accord no deference to its decision. [Fn. 3]  We will
affirm the board's factual determinations if they are supported by
substantial evidence [Fn. 4] and we will apply the "substitution of
judgment"test to questions of law not involving board expertise.
[Fn. 5]  To the extent that we deal with legal issues of first
impression, we will adopt the rule of law that is most persuasive
in light of precedent, reason, and policy. [Fn. 6]        
     B.   The Board Erred in Assuming the Impermissibility of
Successive Settlements.
          The board determined that Lindekugel's settlement with
Fluor barred his claim.  In doing so, the board assumed that a PTD
settlement automatically disqualifies any future claims:
"'Permanent means lasting the rest of claimant's life.'  In this
case, given that the employee has accepted a [Compromise & Release]
payment from Fluor covering the rest of his life, we find he cannot
expect to receive payment for a second lifetime from a second
employer."[Fn. 7] 
          The board misinterpreted the concept of permanent
disability as it is understood under the Alaska Workers'
Compensation Act. [Fn. 8]  In Ketchikan Gateway Borough v. Saling,
[Fn. 9] we implicitly read the Act to encompass a classification of
PTD that is subject to change. [Fn. 10]  We there rejected the
board's conclusion that a second employer could not be held liable
for an injury based in part on its finding that the employee was
permanently and totally disabled prior to his employment. [Fn. 11]
          We held that the board's reasoning misinterprets the
concept of disability in Alaska worker's compensation law. [Fn. 12] 
We noted that the 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."[Fn. 13] 
Accordingly, we recognized that "the primary consideration is not
the degree of the worker's physical impairment, but rather the loss
of earning capacity related to that impairment."[Fn. 14]  
          Based on loss of earning capacity, disability under the
Act further includes an educational component; we have held that an
employee who suffers a physical impairment can overcome a
concomitant loss of earning capacity through education or
vocational rehabilitation. [Fn. 15]  In fact, the Act expressly
provides for training and education of permanently impaired
employees to facilitate their reemployment. [Fn. 16]
          Although an employee will not be classified as PTD unless
his or her injury appears permanent, [Fn. 17] this classification
is not immutable.  To hold otherwise would be to conflict with the
language of the Act, [Fn. 18] with this court's precedent, [Fn. 19]
and with the United States Supreme Court's decision in Alaska
Industrial Board v. Chugach Electric Ass'n. [Fn. 20]
          Furthermore, prohibiting successive settlements would
undermine Alaska's policy of promoting reemployment of disabled
workers.  This policy is reflected in the creation of the second-
injury fund, which reimburses employers for compensation payments
made to previously injured workers. [Fn. 21] 
     C.   The Board's Error Was Not Harmless.
          We have considered whether it is appropriate to affirm 
the board's decision on the basis that any error in interpreting
the legal significance of Lindekugel's PTD settlement was harmless. 
The superior court determined that the board's consideration of the
proper legal standard for assessing Easley's liability neutralized
the effect of its error.  We agree with the superior court that the
board properly analyzed Easley's liability by applying the last
injurious exposure rule.  But because the board's decision leaves
unclear whether its analysis under the last injurious exposure rule
provided an independent basis for its decision denying Lindekugel's
claim, we cannot affirm it.
          The last injurious exposure rule provides the proper
standard for determining Easley's liability. [Fn. 22]   That rule
states that the employer at the time of a worker's most recent
injury is liable for the aggravation of an existing injury if the
most recent injury bears a causal relation to the disability such
that it constitutes the "last injurious exposure."[Fn. 23]  An
injury qualifies as a second injury if it aggravates, accelerates,
or combines with a pre-existing condition, and the aggravation is
a "legal cause"of the disability. [Fn. 24]
          The board concluded that Easley was not liable because
the fall at Easley did not aggravate Lindekugel's condition:
          [B]ased on Dr. Voke's [(the treating
          physician)] medical testimony, we find the
employee's claims for all benefits requested must also be denied.
. . . The defendants assert, and we find, the medical testimony and
opinions of Dr. Voke, that the October 1981 work for the employer
did not substantially aggravate the condition, are substantia[l]
evidence to overcome the presumption [that Lindekugel's fall at
Easley aggravated his injury].

          Although the board applied the last injurious exposure
rule, we cannot determine the extent to which the board based its
decision on its analysis under this standard.  The board's decision
seems heavily influenced by its presumption of disqualification. 
Because the board may have assessed the evidence, including Dr.
Voke's testimony, in light of its legal misapprehension that
Lindekugel's PTD status barred him from making a total disability
claim, we cannot say how the board would have assessed Lindekugel's
case without that legal error.  In fact, Dr. Voke himself appeared
to assume that a PTD rating necessarily described a status that,
once given, could never change.  Thus, in testifying before the
board, he categorically refused even to consider the possibility
that Lindekugel might be capable of returning to work.  If the
board relied on any such assumption in Dr. Voke's testimony, its
findings of fact tacitly must have incorporated the same legal
mistake reflected in the board's legal misinterpretation of the
concept of permanent disability.  It is therefore necessary to
remand the case for reconsideration.  Because its rejection of
Lindekugel's temporary total disability and medical claims was
based on the same erroneous assumption that flawed its PTD
analysis, the board should also reevaluate those claims on remand. 
          Because it was error for the board to base its decision
on the assumption that Lindekugel's first PTD settlement barred any
subsequent claims, and because the board's decision does not
clearly indicate that it denied Lindekugel's claim based
independently on its last injurious exposure analysis, we REMAND to
give the board an opportunity to reconsider Easley's liability.


Footnote 1:

     Although he did not seek compensation from Fluor at that time,
Lindekugel is currently pursuing a separate claim against Fluor. 
See Lindekugel v. Fluor Alaska, Inc., 943 P.2d 1307 (Alaska 1997).

Footnote 2:

     Providence Washington Insurance Company, Easley's insurer, is
also a party to this appeal.  Since Easley and Providence
Washington have filed a joint brief, we will not distinguish
between them in discussing their arguments.

Footnote 3:

     See Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746
P.2d 896, 903 (Alaska 1987).

Footnote 4:

     See Yahara v. Construction & Rigging, Inc., 851 P.2d 69, 72
(Alaska 1993).

Footnote 5:

     Municipality of Anchorage, Police & Fire Retirement Bd. v.
Coffey, 893 P.2d 722, 726 (Alaska 1995). 

Footnote 6:

     See Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).

Footnote 7:

     The board quoted Alaska International Constructors v. Kinter,
755 P.2d 1103, 1105 (Alaska 1988) (quoting  2 A. Larson, The Law of
Workmen's Compensation sec. 57.13, at 10-42 (1986)).  The board
interpreted this case to support the proposition that a PTD
settlement automatically precludes an employee from a second
disability claim.  Kinter does not support such a broad
proposition; it concerns the medical circumstances under which a
disability should be classified as permanent.  See id. 

Footnote 8:

     AS 23.30.005-.400.

Footnote 9:

     604 P.2d 590 (Alaska 1979).

Footnote 10:

     See id. at 593-98.

Footnote 11:

     See id.   

Footnote 12:

     See id. at 594.

Footnote 13:

     Id. (quoting AS 23.30.041(10)).

Footnote 14:


Footnote 15:

     See Meek v. Unocal Corp., 914 P.2d 1276, 1279 (Alaska 1996).

Footnote 16:

     See AS 23.30.041.

Footnote 17:

     See Kinter, 755 P.2d at 1102-03.  Because Lindekugel settled
his case with Fluor, the board never adjudicated his disability
status.  Instead Fluor and Lindekugel negotiated a settlement
amount apparently based partly on Dr. Voke's assessment that
Lindekugel's disability was permanent.  For purposes of our
discussion, this fact is immaterial.  The rationales underlying our
holding that an adjudicated designation of PTD does not disqualify
legitimate future claims apply with equal force where a PTD
settlement has been reached.

Footnote 18:

     By explicitly providing for compensation for PTD "during the
continuance of the total disability,"the Act implicitly recognizes
that the designation of permanence is subject to change.  See AS
23.30.180.  Dramatic improvements in an employee's condition would
change his or her classification, as would a demonstration of a
renewed earning capacity.  Cf. Underwater Constr., Inc. v. Shirley,
884 P.2d 156, 160-61 (Alaska 1994).  

Footnote 19:

     We rejected precisely this type of reasoning by the board in
Saling, 604 P.2d at 593-94.

Footnote 20:

     356 U.S. 320, 324 (1958) (holding that employee who received
statutory lump sum payment for PTD was entitled to additional
temporary total disability payments if there was continuing ability
to do work). 

Footnote 21:

     See AS 23.30.040, .205; see also Employers Commercial Union
Ins. Group v. Christ, 513 P.2d 1090, 1093 (Alaska 1973).

Footnote 22:

     See Saling, 604 P.2d at 595-98.

Footnote 23:

     United Asphalt Paving v. Smith, 660 P.2d 445, 447 (Alaska

Footnote 24: