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Williams v. Abood (8/16/2002) sp-5607
Williams v. Abood (8/16/2002) sp-5607
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
BRUCE WAYNE WILLIAMS, )
) Supreme Court No. S-9806/9836
Appellant/Cross-Appellee, )
) Superior Court No.
v. ) 3AN-99-03331 CI
)
PATRICK ABOOD, d/b/a KNIK ) ) O P I N I O N
SWEEPING COMPANY and )
PROVIDENCE WASHINGTON ) ) [No. 5607 - August
16, 2002]
INSURANCE, insurer, )
)
Appellees/Cross-Appellants. )
________________________________)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Sen K. Tan, Judge.
Appearances: Charles W. Coe, Law Offices of
Charles W. Coe, Anchorage, for
Appellant/Cross-Appellee. Patricia L. Zobel
and John D. Harjehausen, DeLisio Moran
Geraghty & Zobel, Anchorage, for
Appellees/Cross-Appellants. Toby N.
Steinberger, Assistant Attorney General,
Anchorage, and Bruce M. Botelho, Attorney
General, Juneau, for Appellee State of
Alaska, Department of Labor, Workers
Compensation Board.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
CARPENETI, Justice.
I. INTRODUCTION
Bruce Wayne Williams sustained a knee injury while
working as a driver of a street sweeper for Knik Sweeping Company
on August 21, 1992. The Workers Compensation Board resolved
several disputed issues; Williams appealed the boards decision
to the superior court. Williams appeals several aspects of the
superior courts decision affirming the boards rulings, and Knik
cross-appeals the decision by the superior court to remand the
issue of attorneys fees for Williamss first attorney, Darryl
Jones, to the board. We affirm the board in all respects.
II. FACTS AND PROCEEDINGS
A. Facts
On August 21, 1992, Bruce Williams injured his left
knee while on the job driving a street sweeper for Patrick Abood,
d/b/a Knik Sweeping Company.1 Immediately after the accident,
Williams received emergency care and subsequently began seeing
Dr. Robert Gieringer. Williams underwent several arthroscopic
surgeries, including a patellectomy2 and reconstruction on
January 20, 1994. During this surgery, Williamss patella was
wired together. Knik accepted the workers compensation claim and
provided medical benefits and Temporary Total Disability (TTD) at
a rate of $162.39 per week.
Williamss compensation rate was determined using the
version of AS 23.30.220(a)(1) in effect at the time of Williamss
injury. The compensation rate was based on wage and tax records
provided by Williams for 1990 ($5,133.00) and 1991 ($19,758.75),
yielding gross weekly earnings of $249.00. Dr. Gieringer found
that Williams was medically stable on April 5, 1994 and that he
had a Permanent Partial Impairment Rating (PPI) of eighteen
percent. Williams was released to return to work, and Knik paid
him a lump-sum of $21,098.60 in PPI benefits on April 13, 1994.
Williams changed doctors and started treatment with Dr.
David A. McGuire. On May 9, 1995 Williams underwent another
surgery to remove the wire around his patella. Knik reinstated
TTD benefits effective May 9, 1995. Williams continued to be in
pain, and underwent yet another surgery in which Dr. Harold Dunn
performed a total knee replacement on March 5, 1997. Williams
also underwent interdisciplinary physical rehabilitation and
narcotics weaning at the University of Utah from March 1, 1997 to
May 7, 1997.
On May 27 Williams was admitted to Providence Alaska
Medical Centers mental health unit for suicidal ideation.
Williams was released from this facility on June 9, 1997 by his
treating psychiatrist, Dr. Cleve R. Shirey. Dr. Shirey diagnosed
Williams with major depression, pain disorder, cannabis abuse,
iatrogenic narcotic dependency,3 personality disorder not
otherwise specified, several psycho-social and physical problems,
and a global assessment of functioning4 (GAF) rating of seventy.
On June 4 there was a teleconference between the parties, their
attorneys, and the health-care professionals in charge of
Williamss care to coordinate narcotic pain management. Everyone
involved agreed to wean Williams off narcotics, as much as
possible, through a series of blind pain cocktail dosages.
Williams hired attorney Darryl Jones to represent him
in a variety of claims against Knik. On July 2 the parties
entered into a Partial Compromise and Release that was approved
by the Workers Compensation Board and signed by Williams and both
attorneys. The compromise and release identified disputes
between the parties over medical travel expenses, prescription
reimbursement, payment for a Jacuzzi, lounge chair, and sauna,
penalties for bad faith controversion, and interest. The
compromise and release waived Williamss claims for medical
benefits, travel expenses, penalties, interest, and frivolous
controversion prior to July 1, 1997 in exchange for $9,000 plus
$1,150 in reasonable attorneys fees.
Also on July 2 Williams and his attorney signed a
separate Release and Settlement Agreement dealing with issues of
bad faith. In the release and settlement, Williams released Knik
from all claims of bad faith under statute and tort law for
actions through July 2, 1997 in exchange for $11,500 and $1,350
in attorneys fees.
On July 28 Dr. Dunn released Williams to vocational
rehabilitation and Knik requested reemployment benefits for
Williams under AS 23.30.041. Dr. Dunn prescribed a home gym and
physical therapy for Williams on November 11. On December 19
Knik controverted the home gym as excessive due to the
prescription of physical therapy and an already-provided exercise
bicycle and Jacuzzi. However, Knik subsequently provided the
home gym when Dr. Dunn indicated that Williams should be
transitioned from formal physical therapy to a home exercise
regimen.
On November 21 Williams was treated at Central
Peninsula General Hospital by Dr. Robert Ledda after falling on
black ice and injuring his back, buttocks, and left knee.
However, a report by Dr. Ledda stated that the treatment was of
the right knee. Knik received a bill for treatment of the right
knee that was not accompanied by a medical record. Knik
controverted the bill, as treatment of the right knee was not
related to any employment-related injury.
On February 24, 1998 rehabilitation specialist Robert
Sullivan determined that Williams met all the reemployment
eligibility requirements in AS 23.30.041 but recommended that the
reemployment benefit file be closed based on two considerations.
First, Williams wrote a letter on February 22 declining
reemployment benefits and requesting $10,000 in lieu of training.
Second, Dr. Shirey, Williamss treating psychiatrist, stated in
February 1998 that Williams was unable to be gainfully employed
at that time. In response, the Reemployment Benefits
Administrator closed the reemployment file and Knik
recharacterized Williamss benefits from TTD to Permanent Total
Disability (PTD) benefits on March 24.
B. Proceedings
On March 31, 1998 Williams filed a petition with the
board requesting a variety of benefits. The issues were amended
in a series of prehearing conferences. The board heard Williamss
claims and listened to a plethora of witnesses at the hearing on
November 5 and 6, 1998, in connection with Williamss compensation
claims. Charles W. Coe took over as Williamss attorney for the
hearing because Jones was to be a witness at the hearing on the
issue of setting aside the compromise and release. The board
also heard evidence on the value of services rendered by Jones on
behalf of Williams. Specifically, Jones submitted an affidavit
prepared by Williamss wife containing a spreadsheet of the hours
Jones expended on Williamss claims. Jones also orally
supplemented his affidavit during the hearing, submitted a
corrected affidavit on November 4, 1998, and filed a third
affidavit on November 9. Knik objected to the consideration of
the affidavits filed on November 4 and November 9 since the
preconference order directed Coe to serve the affidavits no later
than October 28.
The board denied and dismissed many of Williamss claims
including: that he was entitled to PTD benefits from August 21,
1992 through March 23, 1998; that the compensation rate should be
adjusted under AS 23.30.220; that the compromise and release
should be set aside; that Knik unfairly or frivolously
controverted claims under AS 23.30.155(d) and (o); and that
Williams was entitled to additional penalties under AS
23.30.155(e).
The board awarded Williams $6,046 for Coes attorneys
fees plus $570 in costs. Coe was awarded half of the claimed
attorneys fees because Williams prevailed on relatively few
issues at the hearing. The board found that one-half of the
claimed fees was reasonable when taking into account the
complexity of the claims, the large number of claims addressed,
and the benefit to Williams in the partially successful
prosecution of the claims. The board found that full costs were
reasonable.
The board also awarded Williams the statutory minimum
attorneys fees for Joness services and $450 for Joness testimony
as a witness. The board did not consider the November 4, 1998
affidavit because it was submitted in violation of the
preconference order requiring affidavits to be filed by October
28. The board also did not consider the November 9 affidavit.
The board ruled that this affidavit was submitted after the board
closed the record for the hearing. Finally, the board found that
the listings in the affidavit filed on October 28 were not clear
enough to make a well-supported award of fees.
Williams filed a motion for reconsideration, asking the
board to reconsider the rulings on the claims that were denied
and dismissed and the award of attorneys fees for the services of
both Coe and Jones. Williams also argued that he was denied his
right to due process because a videotape of the proceedings shows
that one of the panel members was asleep during testimony and
arguments. Williams does not identify which panel member he
claims fell asleep during the proceeding. The board issued an
Interlocutory Decision and Order finding that the parties had a
full opportunity to present evidence at the hearing for the
boards consideration. However, the board did retain jurisdiction
over the motion for thirty days in order to review the videotape.
The board then issued a Final Decision and Order on
Reconsideration finding that a review of the videotape showed
that all three members of the panel were actively participating
in the hearing and that there was no evidence that one member was
asleep.
Williams appealed the boards decision to the superior
court. He challenged the boards decision regarding the issues of
recharacterization of benefits to PTD, a compensation rate
adjustment, unfair controversion, additional penalties, and the
attorneys fees awarded for both Coes and Joness services. In
addition, Williams also appealed the boards denial of his motion
for reconsideration, claiming that a panel member was sleeping at
various times of the proceeding and that the board did not give
due consideration to the evidence presented. The superior court
affirmed the decision of the board on all issues except for the
award of attorneys fees to Jones. With respect to Joness
attorneys fees, the superior court held that the board erred in
not considering Joness amendment to his affidavit and his
supplemental affidavit. The superior court found that the policy
consideration of making attorneys fees fully compensatory and
reasonable so that injured workers would be able to find
competent counsel necessitated that the board take these
affidavits into account. Accordingly, it remanded the matter so
that the board could review the late-filed affidavits before
formulating its attorneys fee award.
Williams appeals the superior courts ruling. Knik has
filed a cross-appeal claiming that the superior court improperly
remanded the issue of Joness fees back to the board for
consideration of the late-filed affidavits.
III. STANDARD OF REVIEW
When the superior court acts as an intermediate court
of appeal in an administrative matter, we independently review
and directly scrutinize the merits of the boards decision.5 In
questions of law involving the agencys expertise, the rational
basis standard will be applied and the agencys determination will
be deferred to so long as it is reasonable.6 The rational basis
standard is applied where the agencys expertise is involved or
where the agency has made a fundamental policy decision.7 We
will substitute our own judgment for questions of law that do not
involve agency expertise or where the agencys specialized
knowledge and experience would not be particularly probative as
to the meaning of the statute.8 We will adopt the rule of law
that is most persuasive in light of precedent, reason, and
policy.9
Factual findings made by the board are reviewed under
the substantial evidence standard.10 Factual findings will be
upheld so long as there is such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.11
A compromise and release is interpreted in the same
manner as any other contract.12 We review the interpretation of a
contract de novo when the underlying facts are undisputed.13
However, we review a contract under the substantial evidence
standard when the issue is the intent of the parties when forming
the contract.14
Unless statutory interpretation is required, we review
an award of attorneys fees by the board under the abuse of
discretion standard.15 The award of attorneys fees should be
upheld unless it is manifestly unreasonable.16
IV. DISCUSSION
A. The Superior Court Erred in Remanding the Issue of Joness
Attorneys Fees for Consideration of the Late-Filed Affidavits.
A. We consider first Kniks cross-appeal. We do this because it
raises a threshold issue that affects our jurisdiction over the
entire case. Knik claims on cross-appeal that the superior court
erred in remanding the issue of Williamss attorneys fees to the
board for consideration of affidavits excluded at the hearing.
When a superior court acts as an intermediate appellate court, a
decision reversing and remanding an agency ruling for further
adjudication is not a final judgment.17 However, we have the
discretion to treat this as a petition for review pursuant to
Appellate Rule 402.18 And we have, in appropriate cases, reached
the merits of a case by treating an otherwise premature appeal as
a petition for review.19 We may review a non-final judgment when
postponement of review will result in unnecessary expense or
delay.20 Because we conclude below that the superior court erred
in remanding this issue, we will treat this appeal as a petition
for review in order to avoid unnecessary delay.
The board decided not to consider affidavits filed by
Jones on November 4 and November 9, 1998 because they were filed
late. On October 14, 1998, the board had issued a prehearing
conference order specifically directing that affidavits
concerning attorneys fees and costs be filed and served no later
than October 28. The board held Jones to the terms of the
prehearing order and did not consider the affidavits filed and
served after the October 28 deadline. The board did consider
Joness affidavit filed on October 28 but found this affidavit to
be largely undecipherable and, to the extent it could be
deciphered, inaccurate.
The board held Jones to the prehearing order, which it
had the authority to do.21 We have held that the board has
discretion to exercise reasonable control over its proceedings to
ensure the orderly administration of justice.22 While there is a
policy in favor of making attorneys fees in workers compensation
cases fully compensatory, the policy does not relieve an attorney
from following the procedural rules for obtaining compensation.
Jones filed the second affidavit one day before the hearing and
the third affidavit after the hearing was over. No reasons have
been offered by Jones or Williams as to the reasons for the late
filing. And it hardly seems fair to give the employer one day to
look over six years of attorneys fees and then to allow another
affidavit after the record for the hearing has closed. Jones was
on notice as to the requirements for filing his affidavit and the
board acted within its discretion to hold him to those
requirements. As for the affidavit filed by Jones on
October 28, 1998, it contains illegible handwritten notes, it
shows no total number of hours expended, and the entries are not
in chronological order, among other problems. The board cannot
be expected to decipher it. Although the board may not
arbitrarily deny attorneys fees, the one affidavit filed in
compliance with the boards order is incomprehensible.
In sum, the board did not abuse its discretion in
awarding Williams the statutory minimum in attorneys fees for
Joness representation. It was entitled to reject the late-filed
affidavits, and the one timely affidavit did not establish the
case for more.
B. The Superior Court Did Not Err in Affirming the Boards
Decision Denying Williamss Claim for PTD Benefits from August 21,
1992 through March 23, 1998.
A. Williams claims that he was totally and permanently disabled
from the day of the accident. Williams alleges that the board
failed to apply to his claims the presumption that injuries are
compensable. We disagree.
Under the Workers Compensation Act, there is a
presumption in favor of compensability.23 We have held that the
presumption includes claims for PTD benefits.24 Williams received
benefits for the entire period of August 21, 1992 through March
23, 1998 and the only question is at what point his loss of
earning capacity became permanent.
The only evidence Williams provided that he was
permanently disabled from the date of injury was his own
testimony. However, the board found Williams not to be a
credible witness and [t]he board has the sole power to determine
the credibility of a witness.25 Also, Williams offered no
concrete medical evidence that he was permanently disabled as of
the date of his injury.
Williamss claim that the board failed to apply the
statutory presumption to his PTD claim is incorrect. In its
Final Decision and Order, the board clearly applied the
presumption to Williamss claim. In fact, the board set out the
case law behind the presumption in an extended discussion. The
board went on to find that Williams did not establish the
necessary link for the presumption to attach. Finally, the board
assumed that he did establish the link and analyzed the matter as
the law requires. First, the Board found that prior to Dr.
Shireys evaluation on February 10, 1998, none of Williamss
doctors stated that he was permanently disabled and unable to
return to work. The Board also found that Williams was released
to work on April 5, 1994 by Dr. Gieringer and released to seek
reemployment training on July 28, 1997 by Dr. Dunn. These
findings are supported by the record. Finally, there is also
various medical evidence in the record to show that, before March
23, 1998, the doctors were optimistic that Williams would not be
permanently disabled. The board applied the presumption
properly.
C. The Superior Court Did Not Err in Affirming the Boards
Decision Denying Williamss Claim for a Compensation Rate
Adjustment.
Williams argues that the board erred in denying him a
compensation rate adjustment. He claims that the information
relied on by the board in determining his compensation rate was
inaccurate. Alaska Statute 23.30.220(a) governs the calculation
of a compensation rate.26
The board relied on Williamss W-2 statements for 1990,
1991, and 1992. Williams argues that his W-2s were an inaccurate
predictor of his earning capacity. Williams claims that he
worked for Patrick Abood on several jobs in which the wages were
not accurately reported to the Internal Revenue Service and that
he had additional sources of income. Because Williams believes
that the W-2 forms do not accurately reflect his earnings while
employed by Knik, Williams states that the board should have used
his hourly rate times forty hours per week and then taken his
additional income into account. However, there was sufficient
evidence for the board to find that Williamss W-2 forms were an
accurate predictor of his lost earning capacity.
Williamss W-2s indicate income of $5,133.00 in 1990,
$19,758.75 in 1991, and $9,766.75 in 1992. The board found that
the earnings reported on his W-2s were consistent with the
earnings that Williams reported in his income tax returns and
what he reported to his claims adjuster, George Klim. Williams
provided no documentation of any additional wages. The board
also found that Williamss Employment Security Division records
for 1992 show that Williams collected unemployment benefits in
1992 for about six out of the eight months prior to his injury.
The boards findings are supported by substantial
evidence in the record. First, Williamss tax returns report the
same amounts as reported by Knik on the W-2 forms. Second,
George Klim testified at the board hearing that Williams never
stated that he had additional sources of income and that, if he
had, his rate would have been adjusted accordingly. Williams
stated in a form sent to the Department of Labor that his
earnings for the two years prior to the injury were $24,892,
which is exactly the sum of the income reported on his W-2 forms
for 1990 and 1991 as rounded to the nearest dollar. The boards
findings are also supported by Williamss Employment Security
Division records for 1992 because they show that he had no source
of income during that year other than his job with Knik. The
only evidence offered to support additional earnings is testimony
by Williams, and, as stated above, the board found Williams not
to be a credible witness. The board therefore had substantial
evidence to find that Williamss W-2 forms were an accurate
predictor of his earning capacity.
Williams additionally argues that application of AS
23.30.220(a) led to an incorrect compensation rate, relying on
Gilmore v. Alaska Workers Compensation Board.27 In Gilmore, we
found that the version of AS 23.30.220 in effect at the time of
Williamss injury was unconstitutional under the equal protection
clause as applied to that case.28 Former AS 23.30.220(a)(1)
required that the gross weekly earnings of an employee present in
the labor market for six months or more were to be calculated
according to a mechanical formula that took gross wages over a
two-year period and divided this sum by 100.29 This formula was
applied regardless of how many weeks the employee actually worked
during the period, and Gilmore had actually worked only thirty-
nine weeks in the preceeding 100.30 We held that this mechanical
application violated Gilmores equal protection rights because, as
applied to him, the benefit level bore no more than a
coincidental relationship to the goal of compensating injured
employees for their actual loss.31 In Thompson v. United Parcel
Service,32 we explained our ruling in Gilmore. Thompson was
injured two weeks after involuntarily changing from full-time
work to part-time work. Under AS 23.30.220(a) her gross weekly
earnings were based on her full-time pay because Thompson filed
an application for adjustment to increase her compensation rate
by having her earnings from her previous full-time job included
and her application was granted. Her employer claimed that this
change in her status required that the board deviate from the
statutory formula used to determine the rate of pay to which an
injured party is entitled.33 We rejected that argument and held
that the statutory formula in AS 23.30.220(a) must be used to
calculate the employees gross weekly earnings.34 We made clear
that departure from the statutory formula must be based on
substantial evidence supporting the conclusion that past wage
levels will lead to an irrational workers compensation award.35
Specifically, there must be substantial evidence that past wages
are an inaccurate predictor of loss due to injury.36 We stated
that the inquiry is not to determine whether the statutory
application led to a fair result, but whether the formula
accurately predicted what the employee would have earned had he
or she not been injured.37
Since Williams is the party asking for a deviation from
AS 23.30.210(a), he must present substantial evidence that the
use of past wages will lead to an irrational workers compensation
award. Williams cites testimony in support of his claim that he
made more than his W-2 forms reflect. However, the testimony
cited does not constitute substantial evidence that use of his
past wages will lead to an irrational workers compensation award.
Williams cites Patrick Aboods testimony that checks were written
out to Williamss girlfriend instead of Williams, but Abood
testified that the income reflected in the check was still
attributed to Williams in his W-2 forms. Williams claims that he
did work around Aboods house that he was paid for, but Abood
testified that Williams did the work as a favor to Abood, and
Abood never paid Williams for this work. Williams also states
that his income from his mobile home business should have been
taken into account. However, the supplemental income and loss
form filed with the IRS by Williams in 1991 shows that the mobile
home business was operating at a loss.
Next, Williams cites the testimony of a friend who also
worked for Knik, Daniel Neisinger, to support Williamss claim
that he worked more than what was reflected on his W-2 forms.
Neisinger testified that he believed that Williams worked more
than Neisinger did and that Neisingers personal income in 1990
was $19,633. Neisinger also testified that Knik made errors in
the W-2 form sent to the IRS for Neisingers earnings in 1990 and
1991 and that Williams did some work around Patrick Aboods house.
But the board explicitly found that it could not accord any
substantial weight to Mr. Neisingers testimony, pointing to
documentary evidence that refuted it. Moreover, Neisingers
testimony appears to be mere speculation about what Williams
earned while working for Knik; it is not based on first-hand
knowledge. The boards decision to discount Neisingers testimony
was not clearly erroneous. The only other evidence offered by
Williams is his own testimony.
Williams also claims that the board erred in failing to
apply the presumption in favor of compensability 38 to his claim
for a compensation rate adjustment. Applying the presumption of
compensability would be inconsistent with our holding in Gilmore.
As discussed above, the board must use the formula in
AS 23.30.220(a) to calculate an employees gross weekly earnings
unless there is substantial evidence supporting the conclusion
that past wage levels will lead to an irrational workers
compensation award.39 Here, Williams had the burden of proving
that the statute was an inaccurate predictor of his future
earnings loss due to injury. Williams did not satisfy that
burden. Applying the presumption to a claim for a compensation
rate adjustment would be in conflict with the rule requiring
substantial evidence to be presented before the board can deviate
from the statutory formula. Thus, Williams is not entitled to a
compensation rate adjustment under any theory argued.
D. The Superior Court Did Not Err in Affirming the Boards
Decision Denying Williamss Request To Set Aside His Partial
Compromise and Release.
A. Williams claims that the board erred in failing to set aside
the compromise and release that was entered into on July 2, 1997.
A compromise and release approved by the board is enforceable the
same as an order or award of the board and discharges the
liability of the employer for the compensation.40 Williams gives
two reasons why the compromise and release should be set aside.
First, Williams claims that he was mentally incompetent when he
signed the release. Second, Williams claims that the compromise
and release does not cover penalties for late payment on medical
bills. We discuss these two claims separately.
1. The board did not err in finding Williams mentally
competent.
Williams argues that he was so medicated and
psychologically unstable at the time he signed the compromise and
release that he could not be expected to overcome the pressure
put on him by Knik to sign the agreement. The board found, by a
preponderance of the available evidence, that Williams was
mentally competent at the time he signed the agreement. The
boards findings were supported by substantial evidence. Dr.
Chandler testified that people who are on oral narcotics for many
months, as Williams was, are usually functional and able to make
decisions. Dr. Shirey, Williamss treating psychiatrist,
testified that Williams was able to handle his own affairs upon
his release from the hospital on June 8, 1997. Also supporting
the boards findings is the fact that Williams was represented by
counsel when he signed the agreement. Williams offers no medical
testimony to support the claim that he was mentally incompetent.
Therefore, the board did not err in finding Williams mentally
competent when he signed the compromise and release.
Williams also claims that Knik procured the compromise
and release through duress. Williams generally claims that he
did not understand the extent to which he was releasing his
claims. In Olsen Logging Co. v. Lawson,41 we held that the board
cannot set aside a compromise and release on the basis of
unilateral and mutual mistake grounds.42 We also stated that a
compromise and release, once approved by the board, is very
difficult to set aside.43 Accordingly, that Williams did not
understand the extent to which he was releasing his claims even
if true is not a basis for setting aside the compromise and
release. We have held that the board can set aside a compromise
and release for fraud.44 However, Williams offers no specific
evidence that Knik acted intentionally.45 The board found that
Knik made good faith controversions and had sufficient evidence
for a difference of opinion with Williams. Therefore, there was
no evidence of fraud or duress and, thus, no reason to set aside
the compromise and release.
2. The board did not err in finding that the
compromise and release covered penalties for late
payment of medical bills.
Williams claims that the board erred in finding that
the compromise and release released Knik from all pre-July 1,
1997 penalties. Williams claims that the parties did not intend
to release Knik from all penalties when the agreement was signed,
only those penalties relating to the specific issues addressed by
the agreement. A compromise and release is interpreted in the
same manner as any other contract.46 Because this issue presents
a factual question what the parties intended when they entered
into the compromise and release the substantial evidence
standard is used in reviewing the boards findings.
Broad language in settlement agreements implies that
all claims are settled; the parties must specifically state
claims that are not settled.47 Section 8 of the compromise and
release contains language that releases the employer and the
carrier from any and all liability arising out of or in any way
connected with the issues listed above. The use of such broad
language contemplates the settling of all disputes the parties
may have. The issue of penalties and interest was contested by
the parties at the time the parties entered into the compromise
and release. It is incongruous for the parties to use such broad
language and settle for a total sum of $20,500 while intending
for certain issues to remain contested. Also, the compromise and
release listed penalties and interest as separate issues, which
could reasonably be read to mean that the parties were settling
their disputes over all penalties and interest prior to July 2,
1997. Therefore, there was substantial evidence to support the
boards finding that the compromise and release covered penalties
on untimely paid medical benefits. Because substantial evidence
supported the board, we uphold its decision.
E. The Superior Court Did Not Err in Affirming the Boards
Decision Denying Williamss Claim for Additional Penalties under
AS 23.30.155(e).
A. Williams claims that the carrier delayed in paying medical
bills to the point of delinquency, and is therefore liable for
penalties. He notes that many medical bills were controverted
because of a lack of documentation or failure to supply necessary
information by the medical providers, and asserts that this
delinquency caused him severe emotional stress. He argues that
if he had been made aware of the documentation problems within a
reasonable time he would have been able to aid in their
resolution and thereby avoid the stress he claims he suffered.48
Medical bills for an employees treatment must be paid
by the employer within fourteen days after the date on which the
employer received the bill and a completed report.49 Alaska
Statute 23.30.155 provides for a late penalty on all compensation
not paid within seven days after it has become due unless the
employer has filed a notice of controversion and notified the
employee of the controversion.50 We have held that medical
benefits are considered compensation for the purpose of
AS 23.30.155.51 Therefore, the employer is liable for penalties
on any medical bills not paid within twenty-one days after
receipt of the bill and a completed report.
Williams contends that under 8 AAC 45.082(d)(1) an
employer must notify an employee fourteen days after the bill is
received if this bill will not be paid, even if nonpayment is
because a completed report has not been received. Williams
argues that an employer should also be liable for penalties when
it fails to give notice to the employee that a report was not
received from the medical provider. The board found this reading
of 8 AAC 45.082(d)(1), which it termed novel, to be wrong because
it read subsection (d)(1) in isolation and without reference to
the rest of subsection (d). The board found that payment is not
due until the completed medical record is received and that no
notice of delay or refusal to pay is due until fourteen days
after the bill and the completed medical report are received by
the employer.
Since this regulation involves the expertise of the
board in determining when compensation benefits are due, the
boards findings are reviewed under a rational basis standard.52
We have held that a rational basis standard is applied when the
agency is making law by creating standards to be used in
evaluating the case before it and future cases. 53 We uphold the
boards findings because its interpretation is a reasonable one.
First, the fourteen-day time period establishing a payment due
date under 8 AAC 45.082(d) does not start to run until a
completed report is received.54 This implies that the employer
does not have to take action on the bill until a completed report
is received. Second, penalties under AS 23.30.155(e) are imposed
solely for failure to make payment within seven days after
payment is due; there is no mention of a penalty for failure to
notify.55 Therefore, the board did not err in finding that
Williams was not entitled to penalties under AS 23.30.155(e).
F. The Superior Court Did Not Err in Affirming the Boards
Decision Denying Williamss Claims that Knik Unfairly or
Frivolously Controverted Benefits.
A. An employee is entitled to penalties on compensation due if
compensation is not properly controverted by the employer.56
Williams claims that the board erred in finding that Knik
properly controverted his claims. We have held that an employer
must have sufficient evidence in order to make a good faith
controversion.57 Specifically, there must be reliance by the
insurer on responsible medical opinion or conflicting medical
testimony.58 The board had substantial evidence to find that Knik
did not unfairly or frivolously controvert benefits after July 2,
1997.59
First, the board found that Knik had specific evidence
to controvert Williamss treatment at Central Peninsula Hospital
on January 28, 1998. Christine Preston, Kniks claim
representative, testified that the only treatment notes she
received on the hospital bill indicated that treatment was for
the right knee due to a fall. This evidence is confirmed by an
evaluation report. Since Williamss work-related injury was to
his left knee, there was a sufficient medical basis to
controvert. Therefore, the board did not err in finding that
Knik did not act in bad faith.
Second, the board found that Knik had specific evidence
to controvert the home gym prescribed for Williams on November
25, 1997. The board found that there was reasonable medical
evidence that the same doctor was simultaneously, inconsistently,
prescribing formal physical therapy in a clinic. This conclusion
is supported by the prescriptions for both the home gym and
physical therapy. This finding is also supported by the
testimony of Carol Jacobsen, a rehabilitation specialist working
at the request of the insurance company. Thus, there was
substantial evidence that Knik did not unfairly or frivolously
controvert this claim.
G. The Superior Court Did Not Err in Affirming the Boards
Decision Awarding Only One-Half of Coes Attorneys Fees to
Williams.
A. Williams claims that the board erred in awarding
him one-half of Coes actual fees. The board felt that one-half
of Coes actual fees was reasonable under AS 23.30.145(b) and 8
AAC 45.180.60 The board found that Williamss case was
complicated, extremely confusing, and tenaciously litigated. The
board also found that Coe devoted an exceptional number of hours
to Williamss case in order to attend the hearing and replace
Jones, who testified at the hearing. However, the board found
that Williams prevailed on relatively few issues. Taking into
account the large number of issues addressed, the complexity of
these issues, and the benefit to Williams in partially successful
prosecution of his claims, the board found that one-half of Coes
actual fees was reasonable.
We have held that awards of attorneys fees under AS
23.30.145 should be fully compensatory and reasonable, in order
that injured workers have competent counsel available to them.61
However, this does not mean that an attorney representing an
injured employee in front of the board automatically gets full,
actual fees. We held in Bouse v. Firemans Fund Insurance Co.
that an employee is entitled to full reasonable attorneys fees
for services performed with respect to issues on which the worker
prevails.62 In that case, the board found that Bouse was not
entitled to 100 percent of his attorneys fees because he did not
prevail on all issues and instead awarded him half of his
attorneys fees.63 We upheld the boards findings because the
claims on which Bouse did not prevail were worth as much as the
claims on which he prevailed.64
Here, the board weighed the nature, length, and
complexity of Coes services with the number of issues on which
Williams actually prevailed as required under the law.65 Williams
prevailed on his claims for medical benefits for treatment at
Central Peninsula Hospital on November 21, 1997 with related
costs and reimbursement for additional medical transportation
costs. Williams also obtained interest on these claims.
However, Williams did not prevail on his claims for PTD benefits,
a compensation rate adjustment, the setting aside of the
compromise and release, additional penalties, and unfair or
frivolous controversions. Also, the board found that it did not
have jurisdiction to award civil penalties or criminal sanctions
against Knik. The board did not abuse its discretion when
awarding Williams one-half of Coes actual attorneys fees.
Therefore, we uphold the award of one-half of Coes attorneys
fees.
H. The Superior Court Did Not Err in Finding that a Panel
Members Alleged Misconduct Did Not Violate Williamss Due Process
Rights.
A. Williams claims that his due process rights were
violated when his case was decided by a panel that contained a
member he claims fell asleep during the hearing. Williams also
claims that sleeping during the hearing by a panel member
violated his due process rights. Williams offers the videotape
of the hearing as proof that a panel member slept during the
hearing. Williams never specifically named nor otherwise
identified any particular panel member as the one that slept.
Our review of the videotape failed to reveal any evidence of a
sleeping panel member. Without more evidence or, at the very
least, disclosure of the identity of the alleged sleeping board
member, Williams has no claim for relief. Moreover, failure to
make the appropriate objection during the hearing waives the
right to appeal procedural errors.66 Therefore, by not producing
sufficient evidence and by failing to raise the issue of the
allegedly sleeping board member at the hearing, Williams has
waived the issue.
I. The Superior Court Did Not Err in Affirming the Boards
Decision To Deny Williamss Petition for Reconsideration.
Williams claims that the board did not give due
consideration to any of the evidence presented by Williams in his
petition for reconsideration. Under 8 AAC 45.150, the board has
discretion to decide whether it will examine previously submitted
evidence but must give due consideration to any petition for
reconsideration.67 The board found that the record was fully
developed and that the case was fully and capably argued by both
parties. The board exercised its discretionary authority to
grant a limited review in order to view the videotape of the
alleged sleeping panel member. After each panel member
independently viewed the videotape the board found that all three
panel members were actively following the testimony, discussion
and argument of the hearing. The board gave due consideration to
Williamss petition for reconsideration and the denial of the
petition was not an abuse of discretion.
V. CONCLUSION
The decision of the superior court was not a final
judgment because the superior court remanded the issue of Joness
fees to the board for further proceedings. However, we treat
this appeal as a petition for review under Appellate Rule 402 and
resolve all issues presented in the case. We AFFIRM the superior
court in all respects save one: We REVERSE its ruling that the
board abused its discretion by excluding the two affidavits filed
late by Jones and hold that the board did not err in refusing to
consider late affidavits under the pre-hearing order. On all of
the other issues raised in this appeal, we AFFIRM the decision of
the superior court.
_______________________________
1 For the purpose of clarity, the employer and the
insurance company will collectively be referred to as Knik.
2 A patellectomy is the excision, or removal, of the
patella, commonly referred to as the kneecap. Stedmans Medical
Dictionary 1149 (25th ed. 1990).
3 Iatrogenic narcotic dependency is narcotic dependency
resulting from the use of prescribed drugs.
4 Global assessment of functioning measures a patients
psychological, social, and occupational functioning on a
hypothetical continuum of mental health-illness. American
Psychiatric Association, Diagnostic and Statistical Manual of
Mental Disorders 34 (4th ed. Text revisions 2000).
5 DeYonge v. NANA/Marriott, 1 P.3d 90, 94 (Alaska 2000);
Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896,
903 (Alaska 1987).
6 Tesoro Alaska Petroleum Co., 746 P.2d at 903.
7 Id.
8 Id.
9 Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).
10 DeYonge, 1 P.3d at 94.
11 Grove v. Alaska Constr. & Erectors, 948 P.2d 454, 456
(Alaska 1997) (quoting Miller v. ITT Arctic Servs., 577 P.2d
1044, 1046 (Alaska 1978)).
12 Cameron v. Beard, 864 P.2d 538, 545 (Alaska 1993)
(citing Schmidt v. Lashley, 627 P.2d 201, 204 n.7 (Alaska 1981)).
13 Oaksmith v. Brusich, 774 P.2d 191, 195 (Alaska 1989).
14 Id.
15 Bouse v. Firemans Fund Ins. Co., 932 P.2d 222, 241
(Alaska 1997).
16 Id. (citing Bailey v. Litwin Corp., 780 P.2d 1007, 1011
(Alaska 1989)).
17 City of North Pole v. Zabek, 934 P.2d 1292, 1295
(Alaska 1997) (citing City and Borough of Juneau v. Thibodeau,
595 P.2d 626, 629 (Alaska 1979)).
18 Zabek, 934 P.2d at 1296.
19 See id.; see also Waldroup v. Lindman, 28 P.3d 293, 301
(Alaska 2001) (stating that we choose to treat it as if it were
raised by a petition for review and review its merits to avoid a
possible future appeal on this issue).
20 Alaska R. App. P. 402(b)(1).
21 8 Alaska Administrative Code (AAC) 45.065 states in
relevant part:
(c) After a prehearing the board or designee
will issue a summary of the actions taken at
the prehearing, the amendments to the
pleadings, and the agreements made by the
parties or their representatives. The summary
will limit the issues for hearing to those
that are in dispute at the end of the
prehearing. Unless modified, the summary
governs the issues and the course of the
hearing.
22 Lajiness v. H.C. Price Constr. Co., 811 P.2d 1068, 1069
n.2 (Alaska 1991).
23 AS 23.30.120 states in relevant part:
(a) In a proceeding for the enforcement of a
claim for compensation under this chapter it
is presumed, in the absence of substantial
evidence to the contrary, that
(1) the claim comes within the
provisions of this chapter
24 Meek v. Unocal Corp., 914 P.2d 1276, 1279-80 (Alaska
1996).
25 AS 23.30.122.
26 The version of AS 23.30.220(a) in effect on the date of
Williamss injury stated in relevant part:
(a) The spendable weekly wage of an injured
employee at the time of an injury is the
basis for computing compensation. It is the
employees gross weekly earnings minus payroll
tax deductions. The gross weekly earnings
shall be calculated as follows:
(1) the gross weekly earnings are
computed by dividing by 100 the gross
earnings of the employee in the two calendar
years immediately preceding the injury;
(2) if the employee was absent from the
labor market for 18 months or more of the two
calendar years preceding the injury, the
board shall determine the employees gross
weekly earnings for calculating compensation
by considering the nature of the employees
work and work history, but compensation may
not exceed the employees gross weekly
earnings at the time of the injury.
27 882 P.2d 922 (Alaska 1994).
28 Id. at 929.
29 Id. at 924.
30 Id.
31 Id. at 928.
32 975 P.2d 684 (Alaska 1999).
33 Id. at 685-87.
34 Id. at 689.
35 Id.
36 Id.
37 Id.
38 AS 23.30.120(a)(1).
39 Thompson, 975 P.2d at 689.
40 AS 23.30.012.
41 856 P.2d 1155 (Alaska 1993).
42 Id. at 1159 (holding that AS 23.30.012 is an expression
of legislative intent that approved agreements may not be
modified because of mistakes of fact.).
43 Id. at 1158.
44 Blanas v. Brower Co., 938 P.2d 1056, 1060-62 (Alaska
1997).
45 Barber v. Natl Bank of Alaska, 815 P.2d 857, 862
(Alaska 1991) (listing requisite elements for fraud cause of
action).
46 Cameron v. Beard, 864 P.2d 538, 545 (Alaska 1993)
(citing Schmidt v. Lashley, 627 P.2d 201, 204 n.7 (Alaska 1981)).
47 See Martech Constr. Co., Inc. v. Ogden Envtl. Servs.,
Inc., 852 P.2d 1146, 1152 (Alaska 1993) (stating that the
agreement indicates a complete washing of the hands between the
parties using as soap blatantly broad language to cover all
possible causes of action and that although the [claim] was not
specifically discharged, neither was it specifically reserved as
an independent claim.).
48 The briefs do not make clear whether the controverted
penalties and interest are before or after July 2, 1997.
Williams is not entitled to any penalties or interest for late-
paid medical benefits prior to July 2, 1997, regardless of the
theory argued, because these claims were released under the
compromise and release.
49 The version of 8 AAC 45.082(d) in effect during the
relevant time period states in relevant part:
(d) Medical bills for an employees treatment
are due and payable within 14 days after the
date the employer received the medical
providers bill and a completed report on form
07-6102. . . .
(1) a medical bill or if the medical
bill is not paid in full as billed, the
employer shall tell the employee and medical
provider in writing the reasons for not
paying all or a part of the bill or the
reason for delay in payment within 14 days
after receipt of the bill and completed
report on form 07-6102.
50 AS 23.30.155 states in relevant part:
(b) The first installment of
compensation becomes due on the 14th day
after the employer has knowledge of the
injury or death. On this date all
compensation then due shall be paid.
Subsequent compensation shall be paid in
installments, every 14 days, except where the
board determines that payment in installments
should be made monthly or at some other
period.
. . . .
(d) . . . If the employer controverts the
right to compensation after payments have
begun, the employer shall file with the board
and send to the employee a notice of
controversion within seven days after an
installment of compensation payable without
an award is due. . . .
(e) If any installment of compensation
payable without an award is not paid within
seven days after it becomes due, as provided
in (b) of this section, there shall be added
to the unpaid installment an amount equal to
25 percent of it. This additional amount
shall be paid at the same time as, and in
addition to, the installment, unless notice
is filed under (d) of this section or unless
the nonpayment is excused by the board after
a showing by the employer that owing to
conditions over which the employer had no
control the installment could not be paid
within the period prescribed for the payment.
51 Childs v. Copper Valley Elec. Assn, 860 P.2d 1184, 1192
(Alaska 1993).
52 Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746
P.2d 896, 903 (Alaska 1987) (quoting Earth Resources v. State
Dept of Revenue, 665 P.2d 960, 964 (Alaska 1983)).
53 Id.
54 8 AAC 45.082(d).
55 AS 23.30.155(e).
56 AS 23.30.155.
57 Harp v. Arco Alaska, Inc., 831 P.2d 352, 358 (Alaska
1992).
58 Id. (quoting Stafford v. Westchester Fire Ins. Co. of
New York, 526 P.2d 37, 42 (Alaska 1974), overruled on other
grounds, Cooper v. Argonaut Ins. Companies, 556 P.2d 525 (Alaska
1976)).
59 Controversions occurring prior to July 2, 1997 are
covered by the compromise and release and, therefore, may not be
raised in this appeal.
60 AS 23.30.145(b) states:
(b) If an employer fails to file timely
notice of controversy or fails to pay
compensation or medical and related benefits
within 15 days after it becomes due or
otherwise resists the payment of compensation
or medical and related benefits and if the
claimant has employed an attorney in the
successful prosecution of the claim, the
board shall make an award to reimburse the
claimant for the costs in the proceedings,
including a reasonable attorney fee. The
award is in addition to the compensation or
medical and related benefits ordered.
8 AAC 45.180 states in relevant part:
(d) The board will award a fee under AS
23.30.145(b) only to an attorney licensed to
practice law under the laws of this or
another state.
. . . .
(2) In awarding a reasonable fee under
AS 23.30.145(b) the board will award a fee
reasonably commensurate with the actual work
performed and will consider the attorneys
affidavit filed under (1) of this subsection,
the nature, length, and complexity of the
services performed, the benefits resulting to
the compensation beneficiaries from the
services, and the amount of benefits
involved.
61 Childs v. Copper Valley Elec. Assn, 860 P.2d 1184, 1190
(Alaska 1993) (emphasis in original) (citing Cortay v. Silver Bay
Logging, 787 P.2d 103, 108 (Alaska 1990)).
62 Bouse v. Firemans Fund Ins. Co., 932 P.2d 222, 241
(Alaska 1997).
63 See id. at 241.
64 See id. at 241-42.
65 AS 23.30.145(b) and 8 AAC 45.180(d)(2).
66 See Williams v. Util. Equip., Inc., 837 P.2d 1112, 1116-
1117 (Alaska 1992) (stating that Williams waived his objections,
despite the protective order, when he did not make specific
objections as the testimony was presented); Far N. Sanitation,
Inc. v. Alaska Pub. Utils. Commn, 825 P.2d 867, 873 n.8 (Alaska
1992) (stating that the conclusion that Far Norths failure to
object or raise the point before the Alaska Public Utilities
Commission constitutes waiver, because any other result would
inevitably create an incentive for dilatory failure to assert
error); Gilbert v. State, 598 P.2d 87, 92 (Alaska 1979) (stating
that [w]here the error is not obvious or immediately apparent we
should abstain from a full-scale examination of it, for the basic
rule is that failure to object to offered evidence waives the
objection); McGee v. State, 614 P.2d 800, 803-04 & n.6 (Alaska
1980) (holding that failure to make timely objection at trial to
introduction of evidence concerning a lineup, waived defendants
argument that photographic identification procedure was so
impermissibly suggestive and unreliable as to violate due process
of law).
67 8 AAC 45.150 states in relevant part:
(f) In reviewing a petition for a rehearing
or modification the board will give due
consideration to any argument and evidence
presented in the petition. The board, in its
discretion, will decide whether to examine
previously submitted evidence.
