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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Kim v. Alyeska Seafoods, Inc. (12/05/2008) sp-6325

Kim v. Alyeska Seafoods, Inc. (12/05/2008) sp-6325, 197 P3d 193

     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,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA

NGHI KIM, )
) Supreme Court No. S- 12754
Appellant,)
) Alaska Workers Compensation
v. ) Appeals Commission No. 06- 026
)
ALYESKA SEAFOODS, INC. and ) O P I N I O N
ALASKA NATIONAL INSURANCE)
CO., ) No. 6325 - December 5, 2008
)
Appellees.)
)
          Appeal  from  the Alaska Workers Compensation
          Appeals Commission, Kristin Knudsen, Chair.

          Appearances:  James R. Walsh, Law  Office  of
          James  R.  Walsh,  Lynnwood, Washington,  and
          Michael  J. Schneider, Law Offices of Michael
          J. Schneider, Anchorage, for Appellant.  Kara
          Heikkila,  Holmes Weddle & Barcott,  Seattle,
          Washington, for Appellees.

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

          WINFREE, Justice.

I.   INTRODUCTION
          After leaving his job, an employee alleged that he  had
injured   his   back   during  his  employment.    The   employer
controverted   benefits  and  the  employee   filed   a   workers
compensation  claim  with the Alaska Workers Compensation  Board.
The  employer  controverted the compensation  claim.   A  workers
compensation statute states that if an employee does not  request
a  hearing  within  two years of a notice of  controversion,  the
employees   claim  is  denied.   Two  days  before   the   second
anniversary of the controversion of his claim, the employee filed
a  motion for a continuance, requesting more time to prepare  for
hearing.   The  employer  then  petitioned  for  denial  of   the
compensation  claim as time-barred.  The Board did not  expressly
rule  on the employees motion, but granted the employers petition
and  denied  the employees compensation claim, finding  that  the
employee had failed to timely file a hearing request.  The Alaska
Workers  Compensation  Appeals  Commission  affirmed  the  Board.
Because  the relevant statutory language for requesting a hearing
is  directory  rather than mandatory, substantial  compliance  is
sufficient to toll the time-bar, and the Board has discretion  to
extend  the  deadline for good cause.  We therefore  reverse  and
remand for further proceedings.
II.  FACTS AND PROCEEDINGS
          Nghi  Kim worked for Alyeska Seafoods, Inc. in a surimi
plant in Unalaska from January to March 2002.  He returned to his
home  in  Washington in mid-March 2002 and gave  notice  in  mid-
August  that he had suffered a back injury on February 25,  2002.
After  Alyeska  controverted workers compensation  benefits,  Kim
filed a workers compensation claim for temporary total disability
benefits,  medical and transportation costs, and  attorneys  fees
and  costs.   Alyeska  controverted Kims  compensation  claim  on
December 17, 2003, with a Board-prescribed notice.
          On  December  15,  2005,  two days  before  the  second
anniversary of Alyeskas controversion of his compensation  claim,
Kim  filed  a motion for a continuance supported by a declaration
from his attorney that Kim was not ready for a hearing and needed
more  time to prepare his case.  The attorney asserted  that  Kim
face[d]  a  significant  language barrier  interfering  with  his
ability  to  prepare  his  case  for  hearing  and  requested   a
continuance  pursuant to AS 23.30.110 for further  discovery  and
preparation of the case.1
          Alyeska  did  not  respond directly  to  Kims  motion.2
Instead,  on  January  3,  2006, Alyeska  filed  a  petition  and
supporting  memorandum for denial of Kims  claim  as  time-barred
under  AS 23.30.110(c), arguing that Kim had not filed a  request
and  an  affidavit of readiness for a hearing on his compensation
claim.   In  response, Kims attorney explained why he  could  not
sign  a truthful affidavit of readiness for hearing on Kims claim
and  asked  the  Board to treat the motion for continuance  as  a
constructive request for a hearing.
          Alyeska filed an affidavit of readiness for hearing  on
its  petition to deny Kims compensation claim.  At a  pre-hearing
conference,  the  parties  agreed to submit  the  dispute  for  a
hearing  on written briefing.  Although the Boards representative
noted  both  Kims motion for a continuance and Alyeskas  petition
for denial of Kims claim, Alyeskas petition was identified as the
issue for the hearing.  Kim filed a hearing brief and declaration
by  his  attorney regarding the basis for the continuance motion.
After  reviewing the parties briefs, the Board decided that  oral
arguments would be useful.
          The Board ultimately found Kims claim time-barred.   On
appeal  the  Commission  affirmed  the  Board,  concluding   that
substantial evidence in the record supported the finding that Kim
          had failed to file a request for hearing within two years of the
controversion  of  his claim.  It construed  AS  23.30.110(c)  to
require  denial  of  the  claim,  and  further  determined   that
substantial evidence supported an implicit finding by  the  Board
that  Kim  had  failed  to present evidence justifying  equitable
relief from a dismissal.
III. STANDARD OF REVIEW
          Because  the Commissions decisions represent the  final
administrative  action in a workers compensation  case  and  have
precedential value for the Board and the Commission, and  because
the questions presented are questions of law not involving agency
expertise,   we   review  the  Commissions   decision.3    Proper
application  of a statute of limitations presents a  question  of
law  to  which we apply our independent judgment.4  Applying  our
independent  judgment, we adopt the rule  of  law  that  is  most
persuasive in light of precedent, reason, and policy.5
IV.  DISCUSSION
          The  first and last sentences of AS 23.30.110(c) govern
the  manner by which hearings are requested before the Board  and
the consequences of failure to prosecute 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.[6]
          The   first  sentence  of  the  subsection   sets   out
prerequisites  for scheduling a hearing:  a party must  submit  a
request for hearing with an affidavit swearing that the party  is
prepared  for  a  hearing.7  The last sentence of the  subsection
specifies  when a claim is denied for failure to  prosecute:   if
the  employee  does  not request a hearing within  two  years  of
controversion,  the claim is denied.8  The Commission  recognized
that  [t]he  lack  of  reference to the  affidavit  in  the  last
sentence  of  section 110(c), coupled with the use  of  the  verb
request, hints that filing a hearing request without an affidavit
will  toll the time-bar.  The Commission nonetheless held that  a
Board regulation requiring an affidavit to request a hearing  was
a  reasonable interpretation of subsection .110(c) and  that  the
Board  could reasonably require an affidavit to toll the time-bar
of  subsection  .110(c).9   But  because  a  statutory  dismissal
results  from  failing  to request a hearing,  rather  than  from
failing  to  schedule  one,  it was error  to  conclude  that  an
affidavit of readiness was required to request a hearing and toll
the  time-bar.   We  conclude  that strict  compliance  with  the
affidavit  requirement is unnecessary because subsection  .110(c)
is directory, not mandatory.
          Subsection .110(c) is a procedural statute that sets up
the  legal  machinery  through which a  right  is  processed  and
          directs  the claimant to take certain action  following
controversion.10  A party must strictly comply with a  procedural
statute  only  if  its  provisions are  mandatory;  if  they  are
directory,  then  substantial  compliance  is  acceptable  absent
significant  prejudice to the other party.11  In South  Anchorage
Concerned  Coalition,  Inc.  v.  Municipality  of  Anchorage,  we
examined  a  municipal  ordinance with language  similar  to  the
language  in  subsection .110(c).12  In that case, we  determined
that  the ordinance was directory, not mandatory, so that  strict
compliance  with  the  ordinance was not required.13   We  stated
there:
          A  statute is considered directory if (1) its
          wording    is    affirmative   rather    than
          prohibitive; (2) the legislative  intent  was
          to  create guidelines for the orderly conduct
          of   public   business;  and   (3)   serious,
          practical  consequences would  result  if  it
          were considered mandatory.[14]
          
          We  conclude  that  the language of subsection  .110(c)
satisfies  these criteria and hold its provisions are  directory.
First,  the  language of subsection .110(c) is  affirmative,  not
prohibitive.15  The first sentence of the statute directs a party
to file a request for a hearing with an affidavit of readiness to
schedule a hearing, but it does not say what a party or the Board
should not do.  The last sentence of the subsection also gives an
affirmative directive, rather than a prohibition, simply  stating
that a claim is denied if the employee does not request a hearing
within two years following a notice of controversion.
          Second, the legislature added the affidavit requirement
to create procedural guidelines for the orderly conduct of public
business.   Although  the  last sentence  of  subsection  .110(c)
imposes  a penalty on a claimant for failing to meet the deadline
to request a hearing, legislative history supports the conclusion
that  the primary purpose of requiring an affidavit was to create
guidelines  for  the orderly conduct of public  business.16   The
House  Judiciary Committees sectional analysis of the legislation
reenacting subsection .110(c) to include an affidavit requirement
stated  that  this  subsection was meant  to  address  delays  in
getting disputed cases before the Board and the [B]oards problems
in timely docketing cases for hearing.17
          Finally,  this  case  aptly  demonstrates  the  serious
consequences of a conclusion that the affidavit requirement is  a
mandatory  component of a request for a future hearing   a  party
who  wants  to  request a future hearing, but is  for  legitimate
reasons  unable  to truthfully state readiness for  an  immediate
hearing, faces denial of workers compensation benefits.
          Alyeska argues that construing the statute to toll  the
time-bar when a hearing request is filed without an affidavit  of
readiness  will  make  subsection  .110(c)  ineffective  by   not
requiring claimants to prosecute their claims in a timely manner.
Alyeska  suggests a claimant could request a hearing to toll  the
time-bar  and then simply never schedule one, thus rendering  the
statute  meaningless.  The Commission similarly expressed concern
          that construing the statute in this manner would undermine the
statutory  purpose  of  requiring claimants  to  prosecute  their
claims promptly.
          Yet  the Commission has noted that the [B]oard  is  not
without power to excuse failure to file a request for hearing  on
time  when the evidence supports application of a recognized form
of  equitable  relief.18  In Tonoian v. Pinkerton  Security,  the
Commission suggested several legal reasons why delay by a pro  se
litigant  might be excused.19  And in Omar v. Unisea,  Inc.,  the
Commission  remanded the case to the Board to  consider  whether,
among  other  things,  the circumstances as  a  whole  constitute
compliance  with the requirements of [AS] 23.30.110(c) sufficient
to  excuse any failures . . . to comply with the statute.20  From
these  decisions, it appears that the Commission  and  the  Board
already exercise some discretion and do not always strictly apply
the statutory requirements.  This approach is consistent with the
notion that a statute of limitations defense is disfavored.21
          In  holding that subsection .110(c) is directory, we do
not  suggest  that  a  claimant can simply ignore  the  statutory
deadline  and  fail to file anything.22  A determination  that  a
statute is directory instead permits substantial compliance  with
statutory  requirements,  rather than  strict  compliance.23   We
construe  subsection  .110(c) to require  filing  a  request  for
hearing   within  two  years  of  the  date  of   the   employers
controversion  of  a claim.  If within that two-year  period  the
claimant is unable to file a truthful affidavit stating  that  he
or  she  actually is ready for an immediate hearing, as  was  the
case here, the claimant must inform the Board of the reasons  for
the inability to do so and request additional time to prepare for
the  hearing.   Filing the hearing request and  the  request  for
additional   time   to   prepare  for  the  hearing   constitutes
substantial  compliance and tolls the time-bar  until  the  Board
decides  whether  to give the claimant more time  to  pursue  the
claim.24  If the Board agrees to give the claimant more time,  it
must specify the amount of time granted to the claimant.  If  the
Board  denies the request for more time, the two-year time  limit
begins  to run again, and the claimant has only the remainder  of
that  time  period to file the paperwork necessary to request  an
immediate hearing.25
          We  are troubled by Alyeskas assertion at oral argument
that  it  is  not  uncommon for a party to sign an  affidavit  of
readiness despite not actually being ready and that the  solution
for  a  claimant in Kims predicament is to file an  affidavit  of
readiness  for  hearing and then request  a  continuance  of  the
scheduled  hearing.  The lack of a Board regulation to deal  with
exceptional  circumstances, and the myriad reasons  why  a  party
might  not  be  able  to swear truthfully that  the  claimant  is
prepared  for  an immediate hearing despite conducting  discovery
and  obtaining  evidence, make strict adherence to  an  affidavit
requirement problematic.  A party or attorney should not be in  a
position of having to choose between perjury and relinquishing  a
valid claim.
          It  is  not  clear to us that a method  the  Board  has
apparently used to resolve this tension  permitting the filing of
          an affidavit of readiness on any issue no matter how small or
inconsequential26   solves the problem a party  or  attorney  may
face.   Nor  is  it  clear when the Board permits  less  orthodox
pleadings to toll the subsection .110(c) time-bar.  For  example,
the  Board decided in one case that an affidavit of readiness for
hearing  on  a  request for extension of time for a  hearing  was
sufficient   to   toll   the  time-bar  of   subsection   .110(c)
permanently.27  Although Kims request was titled differently,  he
too  requested  an  extension of time for a hearing.   The  Board
never ruled on the merits of Kims request, presumably because  he
did  not  file  an  affidavit of readiness with  the  motion  for
continuance.28   If so, this seems to place form  over  substance
(especially  when  the motion was discussed  at  the  pre-hearing
conference).29
          On  remand, the Board should fully consider the  merits
of  Kims  request for additional time and any resulting prejudice
to Alyeska.  If in its broad discretion the Board determines that
Kims  reasons  for  requesting additional time have  insufficient
merit, or that Alyeska would be unduly prejudiced, the Board  can
set  a  hearing  of  its own accord or require  Kim  to  file  an
affidavit  of  readiness  within two days   the  amount  of  time
remaining before the original two-year period expired.30
IV.  CONCLUSION
          We   REVERSE   and   REMAND  for  further   proceedings
consistent with this opinion.
_______________________________
     1    The relevant part of AS 23.30.110, Procedure on claims,
is as follows:

          (c)  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.  An opposing party shall have 10 days
          after  the  hearing request is  filed  to  file  a
          response.  If a party opposes the hearing request,
          the board or a board designee shall within 30 days
          of  the  filing of the opposition conduct  a  pre-
          hearing  conference and set a  hearing  date.   If
          opposition  is  not  filed,  a  hearing  shall  be
          scheduled no later than 60 days after the  receipt
          of  the hearing request. . . . After a hearing has
          been  scheduled, the parties may not stipulate  to
          change the hearing date or to cancel, postpone, or
          continue  the  hearing, except for good  cause  as
          determined  by  the board. . . . 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.
          
     2    The Boards regulations contemplate two kinds of filings
with the Board:  claims, which are written requests for statutory
workers compensation benefits; and petitions, which are all other
requests  for action by the Board.  8 Alaska Administrative  Code
(AAC) 45.050(a)-(b) (2004).  The Board evidently considered  Kims
motion  to  be  a  properly filed petition, because  it  was  not
returned.  See 8 AAC 45.050(b)(8) (Board will return petition not
in  accordance  with  regulations).   A  hearing  on  a  petition
generally will not be scheduled in the absence of a timely  filed
affidavit   of  readiness.   8  AAC  45.070(b).   Affidavits   of
readiness  for  hearing on petitions may not be filed  until  the
earlier  of  an answer to the petition or twenty days  after  the
petition  is filed.  8 AAC 45.070(b)(2).  However, the Board  may
schedule  a  hearing  on a petition even in  the  absence  of  an
affidavit of readiness.  8 AAC 45.070(b)(3).  Kim did not file an
affidavit of readiness for hearing on his motion.

     3    Barrington v. Alaska Commcn Sys. Group, Inc., ____ P.3d
____,  Op.  No.  6321  at 5 (Alaska October  24,  2008).   As  in
Barrington,  we decline to adopt here a general rule for  appeals
from  the  Commission about the standards we will use  to  review
other   types  of  rulings  that  may  be  presented  in  workers
compensation  appeals, such as factual determinations,  decisions
committed  to adjudicator discretion, or rulings on questions  of
law that involve agency expertise.  Id. at 6.  We also express no
opinion about whether we will review the Commissions decision  or
the Boards decision in other circumstances.  Id.

     4     Bailey v. Tex. Instruments, Inc., 111 P.3d 321, 323-24
(Alaska  2005)  (interpreting AS 23.30.110(c));  Tipton  v.  ARCO
Alaska, Inc., 922 P.2d 910, 912 n.1 (Alaska 1996) (same).

     5     Seybert v. Cominco Alaska Exploration, 182 P.3d  1079,
1089 (Alaska 2008).

     6     AS 23.30.110(c).  We have previously likened the time-
bar in subsection .110(c) to a statute of limitations because  it
denies  the benefits requested in a compensation claim.   Tipton,
922  P.2d   at 912 n.4 (citing Jonathan v. Doyon Drilling,  Inc.,
890  P.2d 1121, 1122 (Alaska 1995); Suh v. Pingo Corp., 736  P.2d
342,  346  (Alaska 1987)).  A statute of limitations  defense  is
disfavored,  and  we have previously held that provisions  absent
from subsection .110(c) should not be read into it.  Tipton,  922
P.2d  at  912-13 (rejecting employers argument that in  order  to
avoid the time-bar an employee must again request a hearing every
time a previously-requested hearing is cancelled).

     7    AS 23.30.110(c).

     8    Id.

     9    The Commission cited 8 AAC 45.070(b)(1), which provides
that  an affidavit of readiness is required to request a hearing.
We  note  that 8 AAC 45.070(b)(3) allows the Board to schedule  a
hearing  even  though  a  party fails to  file  an  affidavit  of
readiness.

     10    Pan Alaska Trucking, Inc. v. Crouch, 773 P.2d 947, 949
(Alaska 1989).

     11    S. Anchorage Concerned Coal., Inc. v. Mun. of Anchorage
Bd. of Adjustment, 172 P.3d 768, 772 (Alaska 2007) (citing In  re
Weiderholt, 24 P.3d 1219, 1233 (Alaska 2001)).

     12     172 P.3d at 772.  We quoted Anchorage Municipal  Code
21.30.050(B) in that case as follows:

          The appellant shall arrange for the preparation of
          the  transcript of the board hearing  by  a  court
          reporter  or  the  current  board  and  commission
          recording secretary and shall pay the cost of such
          preparation.    The  appellant  shall   file   the
          transcript  with  the  municipal  clerk.   If  the
          appellant  fails to file the transcript within  30
          days  of  the filing of the notice of appeal,  the
          appeal shall be automatically denied.
          
Id.

     13    Id.

     14    Id. (citing Weiderholt, 24 P.3d at 1233).

     15     This is in contrast to statutes of limitations, which
are  prohibitory.  For example, AS 09.10.010, General Limitations
on  Civil  Actions,  states, A person may not  commence  a  civil
action except within the periods prescribed in this chapter after
the  cause  of  action  has  accrued  .  .  .  .   See  also   AS
09.10.030.090.

     16    The claim denial penalty of subsection .110(c) predates
the  affidavit requirement.  See ch. 93,  12, SLA 1982;  ch.  79,
20, SLA 1988.

     17    House Judiciary Comm., Sectional Analysis, House Comm.
Substitute  for Comm. Substitute for Senate Bill (SB) 322  (L&C),
15th Leg., 2d Sess. at 8 (April 6, 1988).  In Bailey, we rejected
an   assertion   that  the  claim  dismissal  directive   of   AS
23.30.110(c)   violated  substantive  due   process   and   equal
protection  rights,  noting  that  the  statutory  provision  was
rationally   connected  to  the  core  purpose  of  the   workers
compensation  act:   to establish a quick,  efficient,  and  fair
system for resolving disputes.  111 P.3d at 325 n.10.

     18    Morgan v. Alaska Regl Hosp., AWCAC Decision No. 035 at
17-18  (February  28, 2007) (citing Tonoian  v.  Pinkerton  Sec.,
AWCAC Decision No. 029 at 11 (January 30, 2007)).

     19    Tonoian v. Pinkerton Sec., AWCAC Decision No. 029 at 11
(January 30, 2007).

     20     Omar v. Unisea, Inc., AWCAC Decision No. 053  at  7-8
(August 27, 2007).

     21    Tipton, 922 P.2d at 912-13.

     22     For  example, in Bailey two of the three  claims  for
benefits  filed  by the employee were denied under  the  two-year
time-bar because the employee failed to file anything regarding a
hearing.  111 P.3d at 324.

     23     Our  holding today is compatible with our holding  in
Summers  v. Korobkin Constr., 814 P.2d 1369, 1372 (Alaska  1991),
where we decided that AS 23.30.110(c) required the Board to  hold
a  hearing when one had been requested, i.e., that a hearing  was
mandatory and not discretionary.  Failing to hold a hearing would
not  amount  to compliance with the statute  it would  result  in
complete  noncompliance with it.  On the other  hand,  the  Board
might  still comply with the statute by holding a hearing  sixty-
two  days  after an affidavit of readiness is filed, rather  than
sixty days as stated in the statute.

     24    Cf. AS 23.30.110(h).  Under the facts and circumstances
of   this   case,  Kims  motion  for  a  continuance  constitutes
substantial compliance.

     25     This  is similar to the statutory framework governing
continuances  of scheduled hearings and running of the  time-bar.
See AS 23.30.110(h).

     26    See Lewis v. Windfall Gold Mining, AWCB Decision No. 92-
0028 at 3 (February 6, 1992) (holding that claimant only need  be
ready to prosecute some aspect of claim).

     27    Pool v. City of Wrangell, AWCB Decision No. 99-0097 at
2,  4  (April  29, 1999).  When the employee in  Pool  filed  her
request  for extension of time for hearing, no hearing  had  been
scheduled and the parties were involved in a protracted discovery
battle.  Id. at 2.

     28    At the hearing on Alyeskas petition to deny Kims claim
as  time-barred,  the Board chair asked Kim if he  had  filed  an
affidavit  of  readiness with his motion  for  continuance.   The
Board  chair  then  stated that because  Kim  had  not  filed  an
affidavit of readiness on the petition to continue . . . we  will
treat  the petition to continue as an opposition to the  petition
to dismiss.

     29     The Board had the authority to schedule a hearing  on
Kims  request  even  though  he had not  filed  an  affidavit  of
readiness.   See 8 AAC 45.070(b)(3).  It also had  the  power  to
relax  any regulatory deadlines or procedural requirements.   See
8 AAC 45.063(b), .195.

     30     The Commission stated that the Board implicitly found
Kim  had  not made diligent and timely efforts to prepare  for  a
hearing  on his compensation claim, and further found substantial
evidence  in the record to support what the [B]oard  meant.   The
Commission   concluded   that  Kim   therefore   had   shown   no
justification  for equitable tolling even if it were  applicable.
But  the Commission earlier stated that [t]he [B]oard noted  that
.  .  .  it  did not have discretion to excuse the employee  from
failure to file a request for hearing.  Because we hold that  the
Board  has  discretion to accept substantial compliance  with  AS
23.30.110(c)  to  toll its time-bar and to extend  the  time  for
filing  a  scheduling request for a hearing, we  remand  for  the
Boards  exercise of its discretion in this case.   If  the  Board
requires  Kim to file an affidavit of readiness within two  days,
the  Board  should clarify whether it must be  for  some  or  all
issues relevant to his claim.

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