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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Bailey v. Texas Instruments Inc. (4/22/2005) sp-5889

Bailey v. Texas Instruments Inc. (4/22/2005) sp-5889

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 
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                                   )	Supreme Court No. S-11293		
		Appellant,		)
                                   )	Superior Court No.
      v.					)	4FA-02-02735 CI
formerly GEOPHYSICAL		)
SERVICES, INC., and			)	[No. 5889 - April 22, 2005]
                  Appellees.		)    	

Appeal from the Superior Court of the State of Alaska, Fourth 
Judicial District, Fairbanks, Charles R. Pengilly, Judge.

Appearances: Paul B. Eaglin, Eaglin Law Office, Fairbanks, 
for Appellant.  Randall J. Weddle and Jeffrey D. Holloway, 
Holmes Weddle & Barcott, Anchorage, for Appellees.

Before:  Bryner, Chief Justice, Matthews, Eastaugh, Fabe, and 
Carpeneti, Justices.

            BRYNER, Chief Justice.


            In 1997, 1999, and 2001, Walter Bailey filed workers? compensation claims 
for medications to treat a work-related back injury.  His employer, Geophysical Services, 
contested the claims, and the workers? compensation board dismissed them because 
Bailey failed to request a hearing within two years after Geophysical Services 
controverted his 1997 claim.  We affirm the board?s order dismissing the earlier claims 
but reverse as to the 2001 claim.  Bailey?s 2001 claim sought compensation for later 
medical services than his earlier claims and could not have been filed with those claims, 
so it was subject to its own statute of limitations.  Because Bailey asked for a hearing in 
2002, less than two years after filing his 2001 claim, that claim was not time-barred and 
should not have been dismissed.
            Walter Bailey fell and injured his lower back in May 1981 while pulling 
cable as an employee of Geophysical Services, Inc. (Geophysical).   Geophysical 
accepted Bailey?s workers? compensation claim and paid medical and time-loss benefits 
over the next seven years.  Then a dispute arose concerning the extent of Bailey?s 
disabilities and his ability to return to work.  The parties reached a settlement in 1988. As 
part of the settlement, Bailey waived all non-medical claims against Geophysical but 
preserved his right to claim future medical benefits; Geophysical reserved the right to 
contest any future medical claims.

            After settling with Bailey, Geophysical continued paying for medical care 
and medication related to his injury for nine more years.  His treatment included 
hydrotherapy and physical therapy, as well as narcotics and benzodiazepines to manage 
pain.  In early 1997 several Fairbanks pharmacies submitted claims to Geophysical for 
Bailey?s prescription medication.  Geophysical controverted those claims.  It did not 
challenge the compensability of his underlying injury; instead, relying on the results of an 
independent medical examination, Geophysical claimed that Bailey no longer needed 
narcotics and benzodiazepines and could be treated with non-steroidal anti-inflammatory 
            Soon after Geophysical filed its notice of controversion, Bailey applied to 
the workers? compensation board for an adjustment of his claim, seeking to compel 
Geophysical to pay for his prescriptions.  On October 2, 1997, Geophysical again 
controverted Bailey?s claim.
            On October 1, 1999, not quite two years after the second controversion, 
Bailey filed another claim, contesting Geophysical?s continuing refusal to pay the 1997 
pharmacy bills.  Geophysical controverted this claim on October 13, 1999.  In addition to 
the arguments it raised in its previous controversion notices, Geophysical contended that 
Bailey?s claim was time-barred because he had not requested a hearing within two years 
of the 1997 controversion.
            Two months later the board held a prehearing conference.  The hearing 
officer assumed that Bailey?s 1999 claim amended his 1997 claim.  Because the hearing 
officer recognized that Bailey was not represented by an attorney and might not have 
understood the two-year statute of limitations for requesting a hearing, she explained that 
Bailey needed to request a hearing within two years.  In addition, she apparently restarted 
the statute-of-limitations clock, giving Bailey two years from the October 13 
controversion to submit his request for a hearing.

            About eighteen months later, in May 2001, Bailey filed another claim.  In 
this claim he sought payment for medical expenses he had incurred since 1997.  He also 
pressed claims for breach of contract, mental duress, and physical pain.  Geophysical 
controverted this claim soon after it was filed.  Fourteen months later, in July of 2002, 
Bailey filed a request for a hearing.  The board set the case for a hearing, and the parties 
agreed that only Bailey?s claims for medical benefits would be considered.
            After holding the hearing, the board dismissed Bailey?s claims.  The board 
treated Bailey?s 1999 and 2001 claims as merging with his 1997 claim and determined 
that all three claims were time-barred under AS 23.30.110(c) because Bailey failed to 
request a hearing within two years of Geophysical?s 1997 notice of controversion.  In 
reaching this conclusion, the board reasoned that Bailey?s 1999 and 2001 claims merely 
restated his 1997 claim and were thus governed by the original statute of limitations.
            Bailey, still pro se, appealed to the superior court.  Shortly before the due 
date of his opening brief, Bailey hired a lawyer who filed a brief that raised several 
arguments not raised before the board and not included in Bailey?s statement of points on 
appeal.  He argued that AS 23.30.110(c)?s time limit  for requesting a hearing did not 
apply to claims for medical benefits, that the statutory time limit was unconstitutionally 
vague, that it violated his rights to equal protection and substantive and procedural due 
process, that the board misapplied the doctrine of res judicata, and that Geophysical had 
acted in bad faith in controverting his claims.
            The superior court affirmed the board?s decision, ruling that Bailey had 
waived these issues by failing to raise them before the board or include them in his 
statement of points on appeal and that the issues lacked merit in any event. 
            Bailey appeals, renewing these claims.
      A.	Standard of Review

            This appeal requires us to review the workers? compensation board?s 
administrative decision to dismiss Bailey?s claims.  Although the superior court also 
reviewed the board?s decision, ?[w]hen the superior court acts as an intermediate court of 
appeal in an administrative matter, we independently review and directly scrutinize the 
merits of the board?s decision.?  
            The proper application of a statute of limitations involves questions of law 
that do not require agency expertise.   We review such questions under the substitution of 
judgment standard.   The constitutionality of a statute and the meaning of statutory terms 
also involve questions of law to which we apply our independent judgment.  
            Determining whether an employer controverted a claim in good faith 
requires resolving questions of fact.  We review these questions under the substantial 
evidence standard.   Under the substantial evidence standard, ?[f]actual findings will be 
upheld so long as there is ?such relevant evidence as a reasonable mind might accept as 
adequate to support a conclusion.? ? 

      B.	Application of AS 23.30.110(c)
            The board found that Bailey?s claim was time barred by AS 23.30.110(c) of 
the workers? compensation act.  Subsection .110(c) gives claimants two years to request a 
hearing after an employee controverts a claim:
Before a hearing is scheduled, the party seeking a hearing 
shall file a request for a hearing together with an affidavit 
stating that the party has completed necessary discovery, 
obtained necessary evidence, and is prepared for the 
hearing. . . . If  the employer controverts a claim on a board-
prescribed controversion notice and the employee does not 
request a hearing within two years following the filing of the 
controversion notice, the claim is denied. 
Bailey argues that both as a matter of statutory interpretation and as a matter of 
constitutional law the time limits of AS 23.30.110(c) cannot be applied to his claims. 
Before addressing these arguments, however, we must consider the preliminary question 
of whether the undisputed facts of the case would support a dismissal under subsection 
.110(c), even if the provision applies to Bailey?s claim and is constitutionally valid.
            Bailey filed three claims for medical benefits.  In the first claim, filed in 
1997, Bailey objected to Geophysical?s controversion of claims that had been submitted 
by his pharmacies.  The second claim, filed in 1999, renewed Bailey?s 1997 claim.  In the 
third claim, filed in 2001, Bailey sought compensation for medical expenses incurred 
after 1997.  Bailey also pressed claims for breach of contract, for mental duress, and for 
physical pain.

            The board held that the only claim that mattered for purposes of the two-
year statute of limitations was Bailey?s 1997 claim, finding that his two later claims 
merged with the 1997 claim because they were ?for the same benefits originally sought.? 
Because Geophysical controverted Bailey?s 1997 claim on October 2, 1997, the board 
reasoned that subsection .110(c) required him to request a hearing by October 2, 1999. So 
the board concluded that his claims should be dismissed.
            We agree that Bailey?s 1997 and 1999 claims were properly dismissed.  But 
we conclude the board should not have dismissed Bailey?s 2001 claim.
            Normally, Bailey?s failure to request a hearing on his 1997 claim by October 
2, 1999 would require that this claim be dismissed.   But at the 1999 prehearing 
conference, the hearing officer treated Bailey?s 1999 claim as an amendment of the 1997 
claim and, to avoid any possible confusion on the issue, apparently gave Bailey two more 
years from the October 13, 1999, controversion to request a hearing.  As a result, Bailey 
had until October 13, 2001, to request a hearing on the 1997 and 1999 claims.  
Nonetheless, Bailey failed to request a hearing until July 5, 2002, well past the two-year 
statute of limitations.  If subsection .110(c) applies to these claims and is valid, both 
Bailey?s 1997 and 1999 claims were properly dismissed.
            Bailey?s 2001 claim, in contrast, should not have been dismissed.   The 2001 
claim sought compensation for medical expenses ? physician services and prescription 
medications ? that were incurred after Bailey filed his 1997 claim.  Bailey did not 
simply re-file the 1997 claim in 2001; rather, he sought compensation for different 
expenses.  Because the 2001 claim was independent of the 1997 and 1999 claim, and 
because Bailey requested a hearing less than two years after Geophysical controverted his 
2001 claim, the claim is not time-barred.

            It is true that Bailey apparently sought the same type of medication in each 
of his claims. But the fact that Geophysical succeeded in controverting the 1997 
pharmacy bills because Bailey failed to file a timely request for a hearing does not mean 
that Bailey can never again claim reimbursement for narcotics or benzodiazepines.  Under 
the terms of the 1988 settlement, Bailey reserved the right to claim future medical 
benefits and Geophysical reserved the right to controvert those claims as they were filed.  
Geophysical based its 1997 controversion on a report by an independent medical 
examiner who merely thought that Bailey?s condition did not need to be treated with 
narcotics and benzodiazepines at the time of the independent medical exam.  The 
independent examiner?s report nowhere indicated that those medications were 
categorically inappropriate for Bailey?s condition or that Bailey would never again need 
to use them in the future.  Thus, even assuming that a dismissal under subsection .110(c) 
might have a preclusive effect in some situations, here the 1997 and 1999 controversions 
do not preclude Bailey from bringing future claims for narcotics and benzodiazepines.  
            In summary, if the two-year time limit in subsection .110(c) applies in this 
case and is valid, Geophysical successfully controverted Bailey?s 1997 and 1999 claims 
and Bailey may not seek compensation for the pharmacy bills in those claims or for any 
other related expenses that he could have included in these earlier claims.  But Bailey 
remains free to claim (and Geophysical remains free to controvert) compensation for 
subsequent medical care and medications, including prescriptions for narcotics and 
benzodiazepines.  Bailey?s 2001 claim did precisely that.  Because Bailey requested a 
hearing on the 2001 claim well within the two-year statute of limitations, his 2001 claim 
could not be dismissed under subsection .110(c).

      C.	Applicability and Validity of Subsection .110(c)


            So far, our analysis has assumed that subsection .110(c) is valid and applies 
to medical claims.  Bailey raises a number of challenges to subsection .110(c), arguing 
that it does not apply to medical claims and that it is constitutionally infirm.  These 
challenges require only cursory discussion; for the reasons set out in the margin, we find 
them to be lacking merit.   We thus hold that subsection .110(c) governs Bailey?s 
medical claims and is constitutionally valid as applied to these claims.
            We AFFIRM the board?s dismissal of Bailey?s 1997 and 1999 claims.  We  
REVERSE the board?s dismissal of his 2001 claim and REMAND for further proceedings 
on that claim.
          	Geophysical Services is the predecessor in interest to the current defendant, 
Texas Instruments.  At the time of most of the proceedings of this case, Geophysical 
Services? workers? compensation insurance adjuster was Crawford & Co.  The current 
insurer and co-defendant is Continental Insurance Co.  For clarity, we refer to the 
defendants as Geophysical throughout this opinion. 
          	Alyeska Pipeline Serv. Co. v. DeShong, 77 P.3d 1227, 1231 (Alaska 2003).
          	Law Offices of Steven D. Smith, P.C. v. Borg-Warner Sec. Corp., 993 P.2d 
436, 443 (Alaska 1999).
          	Holding v. Municipality of Anchorage, 63 P.3d 248, 250 (Alaska 2003).
          	Id.; Northern Alaska Envtl. Ctr. v. State, Dep?t of Natural Res., 2 P.3d 629, 
633 (Alaska 2000) (holding that ?[w]e review [an] agency?s interpretation of . . . non-
technical statutory terms under the substitution of judgment standard?).
          	See, e.g., Williams v. Abood, 53 P.3d 134, 146-47 (Alaska 2002) (upholding 
the board?s determination that an employer?s controversion was in good faith because the 
board had substantial evidence to justify its determination); Dougan v. Aurora Elec. Inc., 
50 P.3d 789, 795 (Alaska 2002) (same).
          	Dougan, 50 P.3d at 793 (quoting Grove v. Alaska Constr. & Erectors, 948 
P.2d 454, 456 (Alaska 1997)).
          	AS 23.30.110(c), supra at 6.
          	The board?s reliance on our opinion in Robertson v. American Mechanical, 
Inc., 54 P.3d 777 (Alaska 2002) is misplaced.  Robertson addressed claims that should 
have been brought together.  But Bailey?s 2001 claim involved expenses that he did not 
incur until after he filed his 1997 claim.  He could not have brought the 2001 claim in 
          	The specific challenges Bailey raises and our resolution of them are as 
(a)	Bailey argues, relying on Jonathan v. Doyon Drilling, 
Inc., 890 P.2d 1121 (Alaska 1995), that the time limits of AS 
23.30.110(c) do not apply to medical claims because AS 
23.30.105(a) does not apply to medical claims.  We disagree.  
Bailey?s reliance on Jonathan is misplaced.  In Jonathan, we 
recognized that subsections .105(a) and .110(c) create 
separate time limits governing different aspects of a workers? 
compensation proceeding.  Assuming subsection .105(a) does 
not apply to medical claims (an issue we do not decide here), 
we find no persuasive reason to conclude that subsection 
.110(c) does not extend to medical claims.
(b)	Bailey argues that AS 23.30.110(c) violates his rights 
to substantive due process and equal protection.  Both claims 
are premised on his assertion that requiring employees to 
prosecute their claims within a specified time frame is 
arbitrary, serves no rational purpose, and arbitrarily 
discriminates against claimants.  We see no merit in these 
assertions.  The law commonly imposes a burden of 
proceeding on a claimant.  Here Bailey is the claimant.  Under 
Alaska?s workers? compensation laws, when an employee 
files a claim, the employer is required to controvert or pay.  
AS 23.30.095(l) & (m).  If the employer fails to pay or 
controvert, it loses its right to controvert and may be subject 
to a penalty.  AS 23.30.155(c), (e), & (f).  Moreover, the 
employer may not controvert the employee?s claim without 
having a good faith basis to do so.  Harp v. ARCO Alaska, 
Inc., 831 P.2d 352, 358 (Alaska 1992).  Once an employer 
controverts a claim, the burden shifts to the employee to 
prosecute the claim promptly.  When viewed as a whole, these 
requirements are rational because they promote the core 
purpose of the workers? compensation act: to establish a 
quick, efficient, and fair system for resolving disputes.  Ch. 
79, ? 1, SLA 1988.  In the context of the system as a whole, it 
is hardly unreasonable to impose the burden of proceeding on 
a claimant after the employer has filed a formal controversion.
(c)	Bailey next asserts that AS 23.30.110(c), as applied to 
him, violates his right to procedural due process.  To the 
extent that Bailey bases his argument on issues of inadequate 
or misleading notice or statutory vagueness, his claims lack 
merit even assuming deficiencies in the written notices he 
received.  Our review of the record satisfies us that the 
specific advice he received from the hearing officer at the 
1999 prehearing conference adequately informed him of his 
obligation to request a hearing within two years.  Since he 
filed his request for a hearing more than two years after 
receiving that advice, any deficiencies in previous written 
notices had no effect on his claims. 
      To the extent that Bailey?s procedural due process 
claims are based on the assertion that the board should have 
scheduled a hearing sua sponte under AS 23.30.155(h), the 
argument is meritless.  Subsection .155(h) at most gives the 
board discretion to act sua sponte in setting a claim for 
hearing without a request.  Bailey has not shown any 
circumstances demonstrating that the board?s failure to 
schedule a hearing was an abuse of discretion.
(d)	Finally, Bailey argues that Geophysical acted in bad 
faith when it controverted his claims.  But the medical opinion 
of the independent medical examiner, who expressly stated 
that Bailey did not need narcotics and benzodiazepines, would 
have sufficed to allow Geophysical to prevail at a hearing if 
the opinion remained uncontradicted.  The opinion of the 
independent medical examiner is thus sufficient reason under 
Harp, 831 P.2d at 358, for a good-faith controversion. 

	-11-	5889