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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Harris v. M-K Rivers (3/14/2014) sp-6876

Harris v. M-K Rivers (3/14/2014) sp-6876

        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, email  



WILLARD HARRIS,                                    )  

                                                   )        Supreme Court Nos. S-14254/14262 

                    Appellant and                  ) 

                    Cross-Appellee,                )        Alaska Workers' Compensation  

                                                   )        Appeals Commission No. 09-027  

         v.                                        )  

                                                   )        O P I N I O N  

M-K RIVERS and ACE                                 )  

INDEMNITY INSURANCE                                )        No. 6876 - March 14, 2014  

COMPANY,                                           )  


                    Appellees and                  ) 

                    Cross-Appellants.              )  


                 Appeal  from  the  Alaska  Workers'  Compensation  Appeals  

                 Commission, Laurence Keyes, Commissioner Chair.  

                 Appearances:  Mark Choate, Choate Law Firm LLC, Juneau,  

                 and J. John Franich, Franich Law Offices LLC, Fairbanks, for  


                 Appellant/Cross-Appellee.    Robert  J.  Bredesen,  Russell,  

                 Wagg,        Gabbert        &     Budzinski,         Anchorage,          for  


                 Before:  Fabe, Chief Justice, Winfree, Stowers, Maassen, and  


                 Bolger, Justices.   

                 FABE, Chief Justice.  


                 After a 1976 work-related motor vehicle accident, the worker was left a  

paraplegic.      He  suffered  a  number  of  medical  complications  related  to  his  injuries.  


----------------------- Page 2-----------------------

In 2007 his employer controverted some aspects of his medical care, and he filed a  


written  workers'  compensation  claim.                       Shortly  before  the  hearing  on  the  claim,  the  


employer withdrew most of its controversions.   The Alaska Workers' Compensation  


Board decided that some of the controversions were frivolous, unfair, or in bad faith.  It  


imposed  a  statutory  penalty  and  reported  its  findings  about  frivolous  or  unfair  

controversions to the Alaska Division of Insurance.  The employer appealed, and the  


Alaska  Workers'  Compensation  Appeals  Commission  reversed  the  Board  in  part,  


deciding as a matter of law that the Board could not impose a penalty for some of the  

controversions.  The Commission decided that other appeal points were moot.  The  


worker appeals the Commission's decision reversing the penalties and some attorney's  


fees; the employer cross-appeals the Commission's decisions about preservation of the  


controversion issues and mootness.  We affirm in part, reverse in part, and remand to the  

Commission with instructions to remand to the Board.  


                    In  October  1976  Willard  Harris  suffered  a  spinal  cord  injury  in  a  


work-related motor vehicle accident; he has used a wheelchair since the accident.  Not  


long after the accident he developed heterotopic ossification in his hips, which caused  


                                                                     His knees, ankles, and toes are also fixed.  

them to be "fixed in 35 degrees of flexion." 

Harris is diabetic and suffers from hypertension, chronic bed sores, and sleep apnea.  As  


a  result  of  the  spinal  cord  injury,  Harris  has  difficulty  maintaining  a  correct  body  

temperature. He is subject to many infections, including osteomyelitis, a bone infection  


that is related to "chronic bacterial growth on his wounds."  His care is understandably  




                    Heterotopic ossification is extraskeletal bone formation, usually in muscle  

or other soft tissue.  

                                                                -2-                                                             6876  

----------------------- Page 3-----------------------


complex.  Harris lives in the San Francisco Bay area, where he has lived for more than  

20 years.  

                    Because of Harris's fused hips, he is unable to transfer as easily as most  


paraplegics  and  cannot  spend  much  time  in  his  wheelchair  because  he  cannot  be  


positioned in the same way that other paraplegics can.  He has several medical beds.  At  


the time of his deposition in 2008, he had two beds in his home, one for sleeping and one  


"for  daily  living  skills,"  in  addition  to  one  in  his  van  for  use  when  traveling  long  


distances.  The type of bed Harris uses is important to his skin care:   Some beds are  

better  able  to  prevent  formation  of  bed  sores  and  promote  their  healing,  but  Harris  

indicated  that  no  bed  is  perfect  for  him.    The  specialized  beds  Harris  requires  are  

expensive, costing over $50,000.  

                    Harris and his employer, M-K Rivers, have entered into several partial  


settlements since the accident.  In 1998, he and the employer entered into a stipulation  


in which the employer accepted the compensability of his diabetes.  In the stipulation,  


the employer agreed to pay for 24-hour-a-day attendant care and a personal trainer "if  


deemed reasonable and necessary pursuant to the Alaska Workers' Compensation Act."  

The stipulation also said that the employer had "authorized the services of a non-medical  

fitness facility" and "stipulated and agreed that such care is appropriate, reasonable and  


necessary pursuant to the Alaska Workers' Compensation Act."  The parties agreed that  


alternative medical treatment, "including Chinese herbs and acupuncture, [was] not in  


issue" at the time; it was "left open pursuant to the Alaska Workers' Compensation Act."  


                    At some point in the early 2000s, the insurance carrier suggested to Harris  


that he consider a global settlement of his claim.  Harris told the adjuster he would want  


too much money, but they agreed to have a care planner write a life plan  outlining  

                                                                -3-                                                         6876

----------------------- Page 4-----------------------


Harris's future medical care needs.   Beginning in 2005 a series of disagreements arose,  


and the employer set up an employer's independent medical evaluation (EIME) with  

Dr.  Nichole  Chitnis  in  2006.    Dr.  Chitnis  noted  that  Harris  "has  maintained  a  very  

positive outlook, in spite of numerous difficult situations in the last 30 years and has  


taken  extremely  good  care  of  himself"  and  "has  surrounded  himself  with  good  


caretakers."  She stated that Harris's routine medical care was "appropriately managed"  


by his various doctors and listed prescription medications Harris was taking, including  


Vasotec.   Dr. Chitnis suggested a few changes to Harris's care:  She recommended  

decreasing the frequency of his acupuncture treatments (for neck pain) and massage  

therapy  (for  muscle  spasticity);  she  also  thought  that  Harris  did  not  need  to  see  a  


nutritionist monthly and that some of the supplements he was taking were not essential  


to his care.  Dr. Chitnis did not give an opinion about any prescription medication or the  


compensability of Harris's ancillary conditions, such as hypertension, and she said she  

did "not have enough experience to recommend one bed over the other."  


                     After Dr. Chitnis's report, M-K Rivers controverted the following as not  


reasonably necessary: nutritional consultant services, many supplements, and a physical  


therapist assistant for in-home exercises (except for "short periods of time for acute flare  

ups only").  It also reduced the frequency of covered acupuncture treatments, massage  

therapy, and personal trainer services.  Finally, it controverted payments related to "a  

temperature  controlled  environment,"  asserting  that  this  issue  was  part  of  an  earlier  

partial compromise and release agreement.  

          2          The  insurance adjuster testified that the care plan was also used to                                         set  


          3          Vasotec is used to treat hypertension.  

                                                                 -4-                                                               6876  

----------------------- Page 5-----------------------

                    About a week after this controversion, one of Harris's physicians prescribed  


a Clinitron bed for wound care for a three-month trial; the prescription noted that Harris  


might purchase the bed if it was effective.  M-K Rivers controverted the Clinitron bed;  

the  controversion  notice  said  that  according  to  Dr.  Chitnis's  EIME  report  Harris's  


"current bed was strongly recommended by his physicians" and that the employer would  


"agree to the rental/purchase of the Beriatric bed frame, welding of the trapeze bar, silk  


long johns as necessary and cushion covers as needed."  The controversion notice gave  

no other reason for denying a Clinitron bed.  


                    A prehearing conference was held in April 2007 regarding the benefits that  


had been denied in the controversions.   According to the employer, it  did  not  have  


adequate information from Harris's physicians about his needs.  Harris's attorney agreed  


to provide medical information to the employer and file a workers' compensation claim  

for any benefits the employer still denied.  


                    Harris submitted a letter dated May 17, 2007, and signed by Andrew J.  


Ross, M.D., one of his treating physicians, setting out "the list of medical prescriptions  

Willard Harris Jr. will require for the rest of his life."  The letter said that the Clinitron  

bed had "the unanimous approval of at least five doctors that it is medically necessary."  

It also asked that Harris's diabetes and hypertension medication coverage be reinstated.  


                    On June 1, 2007, Harris filed a workers' compensation claim for "[u]nfair  


or frivolous controvert" as well as for a number of benefits that had been controverted.  


M-K Rivers answered and filed another controversion.  The controversion and answer  

both disputed the compensability of Harris's diabetes, hypertension, and sleep apnea.  

Harris amended his claim at a September 2007 prehearing conference to include the  


Clinitron bed and the "[n]ature & extent of attendant care."  The request for a Clinitron  


bed  was  later  withdrawn,  and  a  request  for  an  Ortho  Hillrom  bed  was  added  at  a  

March 2009 prehearing conference.  

                                                               -5-                                                         6876

----------------------- Page 6-----------------------

                   At  some  point  Harris's  condition  deteriorated;  after  his  deposition  in  

January  2008,  the  parties  informed  the  Board  they  planned  to  "set  up  a  team  of  

physicians" to evaluate Harris's condition and make recommendations about needed  

treatment.    The  parties  did  not  reach  an  agreement  at  that  time,  but  after  deposing  


Dr. Yenjean Hwang, Harris's infectious disease doctor, in June 2009, the employer  

"determined that it would be appropriate to withdraw the controversions" that were based  

on Dr. Chitnis's report.  Several issues remained in dispute, including administrative  


costs, dentistry related to sleep apnea, transportation, heating and cooling needs, unfair  

and frivolous controversions, a petition to compel,4 and attorney's fees.  


                   The Board held a hearing on July 2, 2009.  At the beginning of the hearing  


the chair asked the parties what was still in dispute because he had stepped in at the last  


minute to preside at the hearing and was not familiar with the record.  Harris's attorney  

said the carrier had withdrawn its controversions of many of the items listed as contested  

in the prehearing conference memo, but said that "the controversion process has caused  


injury to Mr. Harris."  Harris's attorney later said they would "talk today about how his  

physical condition has deteriorated . . . since the controversions."  When M-K Rivers's  


attorney listed the remaining issues, he said, "Unfair and frivolous controversion is still  

at issue."  

                   Harris presented his own testimony and testimony from five witnesses.  

M-K Rivers presented the testimony of Patricia Mackay, the insurance adjuster.  Most  


of the testimony was related to Harris's medical needs, not the controversions that are  

the  subject  of  this  appeal.    M-K  Rivers  asked  the  adjuster  about  a  prescription  for  

Vasotec that Harris said had recently been denied:  



                   The petition to compel discovery was related to documentation of Harris's  

payments to his caregivers.  

                                                             -6-                                                          6876  

----------------------- Page 7-----------------------

                   Q:        There was a discussion about the refusal to authorize  

                   the hypertension medication?  

                   A:        Right.  

                   Q:        Did you actually file a controversion or just . . . .  


                   A:        No, I just - no.  It comes through what - our third- 

                   party  administrator  medication  dispenser  company  for  a  

                    'script, and  it came through as a new prescription for that  

                   medication and was written by Dr. Ross.  I had nothing to go  


                   on.  It said it was for hypertension, and so  you can either  


                   accept or approve or whatever, and - or deny, and I hit the  


                   deny button, because I had nothing to substantiate it.  

                   Harris's attorney also asked the adjuster about the Vasotec prescription:  

                   Q:        When  you  decided  recently  to  not  pay  the  Vasotec  

                   prescription - you're aware that Mr. Harris is hypertensive,  



                   A:        Well, I am now.  

                   Q:        Well, you've been paying for hypertension medication  

                   for him for 10 years.  

                   A:        I   don't   recall   if   I   have   or   not.      Bazillions   of  

                   medications come in on him.  

Harris   also   presented   copies   of   receipts   for   expenses   which   he   claimed   were  


compensable, including some prescription expenses.  

                   The Board decided many issues in favor of Harris, including a ruling that  



the heating and cooling costs were compensable.   The Board found that the adjuster's  


testimony that she had not controverted the hypertension medication was not credible.  



                   The Board denied Harris's request for dental care related to his sleep apnea,  

most transportation costs, and some "administrative costs."  

                                                            -7-                                                       6876  

----------------------- Page 8-----------------------


Using the test set out in Harp v. ARCO Alaska, Inc. ,  the Board decided that some of the  

controversions were in bad faith because the adjuster did not have adequate evidence in         

her possession at the time of the controversions to justify them.                                        Specifically, the Board  

said that the controversion of the Clinitron bed was not in good faith because the adjuster   

had no evidence on which to base the controversion; the Board assessed a penalty "on   

the value of a Clinitron bed as of the controversion date."  It also determined that the  


controversion of treatment for diabetes, sleep apnea, and hypertension was in bad faith  

and therefore unfair and frivolous.  The Board said Harris was entitled to a penalty "on  


the value of . . . any hypertension and sleep apnea treatments due and owing as of the  


date  of  its  controversion  and  on  any  [treatments]  not  timely  paid  through  the  date  

Employer withdrew its controversion."  The Board also ordered that M-K Rivers could  

not in the future "unilaterally controvert or terminate diabetes treatment and care" or  


attendance at a non-medical fitness facility; instead, if it wanted to discontinue these  

treatments in the future, it needed to petition the Board to modify the 1998 stipulation.  


                      M-K Rivers appealed to the Commission, raising a number of issues.  The  


Commission affirmed in part and reversed in part; it also decided that an issue related to  


the diabetes controversion was moot.  It remanded the issue of attorney's fees because  

it  had  reversed  part  of  the  Board's  decision.    It  affirmed  the  Board's  decisions  that  


occupational therapy, an orthotic device, resistance exercise equipment, and heating and  

cooling costs were compensable.  

                      The  Commission  looked  at  the  controversions  of  the  bed  and  diabetes  


treatment.  M-K Rivers questioned whether the controversions of the Clinitron bed and  

diabetes  treatment  were  properly  before  the  Board:  According  to  M-K  Rivers  the  

prehearing conference summaries "gave no indication" that these controversions were  

           6          831 P.2d 352, 355 (Alaska 1992).  

                                                                     -8-                                                                   6876  

----------------------- Page 9-----------------------

at issue.  The Commission determined that the issues were properly before the Board but  


determined that no penalties were owed.  The Commission decided that because the  

prescription  for  the  bed  was  never  actually  filled  and  the  request  for  the  bed  was  

subsequently  withdrawn  (and  another  bed  substituted  for  it),  no  compensation  was  

"owing" under the statute and thus no penalty was due.  It likewise reasoned that no  


penalty was due for the diabetes controversion, even though M-K Rivers admitted that  

the  controversion  was  a  "mistake,"  because  "no  bills  were  presented  for  payment."  


Based on its determination that no penalty was due, the Commission decided that the  

other questions about the controversions were  moot.  

                   The Commission also "reverse[d] the board to the extent that its order  


appeared to erroneously foreclose M-K Rivers from asserting any defense to diabetes  


treatment and attendance at a non-medical fitness facility without first petitioning for  

relief  from  the  1998  stipulation."    Its  ruling  was  based  on  Summers  v.  Korobkin  

Construction, where we required the Board to decide the compensability of a claim even  



though  no  specific  benefits  were  at  issue  at  the  time  of  the  hearing  request. 

Commission remanded the case to the Board for reconsideration of attorney's fees in  

light of its decision.  

                   Harris   appeals   the   Commission's   reversal   of   (1)   penalties   for   the  


controversions, (2) the Board's order about future diabetes controversions, and (3) the  

attorney's fees award.   M-K Rivers cross-appeals two issues:  (1) whether the Board  


erred in finding that two controversions were filed in bad faith, unfairly, or frivolously;  


and   (2)   whether   the   Commission   erred   in   not   deciding   issues   related   to   the  

controversions, determining instead that the issues were moot.  

          7        814 P.2d 1369, 1372-73 (Alaska 1991).  

                                                            -9-                                                        6876  

----------------------- Page 10-----------------------



                    In    an    appeal      from      the    Alaska       Workers'        Compensation            Appeals  


Commission,  we  review  the  Commission's  decision.     We  apply  our  independent  



judgment to questions of law that do not involve agency expertise.                                  Interpretation of a  


statute is a question of law to which we apply our independent judgment; we interpret  

the statute according to reason, practicality, and common sense, considering the meaning  


                                                                                              "Determining whether  

of the statute's language, its legislative history, and its purpose. 

an employer controverted a claim in good faith requires resolving questions of fact."11  


We independently review the Commission's conclusion that substantial evidence in the  


record supports the Board's factual findings, which "requires us to independently review  


the record and the Board's factual findings."                         


          A.        The Controversion Issue Was Properly Before The Board.  

                    M-K Rivers argues here that the Board violated its due process rights by  


finding that it had unfairly or frivolously controverted the prescription for the Clinitron  


bed and treatment for diabetes, hypertension, and sleep apnea and by assessing a penalty  


related  to  these  controversions.    According  to  M-K  Rivers,  "the  Board  raised  these  

          8         Shehata v. Salvation Army, 225 P.3d 1106, 1113 (Alaska 2010) (citing   

Barrington v. Alaska Commc'ns Sys. Grp., Inc. , 198 P.3d 1122, 1125 (Alaska 2008)).  

          9         Id.  

          10        Grimm  v.  Wagoner,  77  P.3d  423,  427  (Alaska  2003)  (quoting  Native  

 Village of Elim v. State, 990 P.2d 1, 5 (Alaska 1999)).  

          11        Bailey v. Tex. Instruments, Inc. , 111 P.3d 321, 324 (Alaska 2005).  

          12        Smith v. CSK Auto, Inc., 204 P.3d 1001, 1007 (Alaska 2009).  

                                                            -10-                                                       6876

----------------------- Page 11-----------------------

penalty and bad faith controversion claims sua sponte."  The Commission decided that  

the controversion claims had been adequately preserved for the Board hearing.  


                    We  agree  with  the  Commission  that  the  issue  was  properly  before  the  

Board, and as a result, we conclude that the Board did not violate M-K Rivers's due  

process rights.  Two controversions were filed before Harris filed his written workers'  

compensation claim: the controversion that included nutritional supplements and the  


controversion of the Clinitron bed.  When Harris filed a written workers' compensation  

claim on June 1, 2007, he listed these two controversions in the section of the form  


entitled "Reason for filing claim."   "Unfair & frivolous controversion" is listed as an  

issue  in  all  of  the  prehearing  conference  summaries.    Nothing  in  the  prehearing  


conference summaries indicated  that the request for a finding of unfair or frivolous  


controversion on any controversion was withdrawn, even though the request for the bed  


itself had been withdrawn.  The Commission correctly recognized that a claim for unfair  


or frivolous controversion of a benefit is an issue distinct from the benefit itself, even  

though the issues can be related.  


                    Additionally,           Harris      listed      the    controversions            in    his     prehearing  


memorandum before the Board, and M-K Rivers's attorney told the Board that "[u]nfair  


and  frivolous  controversion  is  still  at  issue"  when  the  Board  chair  inquired  at  the  


beginning of the hearing.  M-K Rivers included an argument about unfair or frivolous  


controversion in its closing brief, arguing that the adjuster had properly relied on the  


EIME  opinion  when  filing  controversions.                          None  of  these  arguments  excluded  the  


Clinitron bed or treatment for diabetes, sleep apnea, and hypertension from the claim for  


unfair and frivolous controversion. We therefore conclude that the Board did not violate  


M-K Rivers's due process rights when it considered and made findings about all of the  


                                                              -11-                                                         6876

----------------------- Page 12-----------------------


          B.	       The  Commission  Erred  In  Holding  As  A  Matter  Of  Law  That  No  

                    Penalty Was Due.  



                    Relying on AS 23.30.155(e),                   the Board imposed a penalty on the value  

of the Clinitron bed as of the date of the prescription and also imposed penalties on "any  

hypertension  and  sleep  apnea  treatments  due  and  owing  as  of  the  date  of  its  

controversion and on any not timely paid through the date [M-K Rivers] withdrew its  


controversion."  It also imposed a penalty on any unpaid diabetes treatments pursuant to  


AS  23.30.155(f),  which  governs  penalties  related  to  Board-ordered  benefits.    The  

Commission reversed the Board's order with respect to the penalties on two different  


grounds.    First,  the  Commission  said  that  no  medical  bills  for  Harris's  diabetes,  

hypertension, or sleep apnea treatment were "presented for payment and not paid" so that  

no  penalty  could  be  imposed  even  though  M-K  Rivers  had  acknowledged  that  the  

controversion for these conditions was "a mistake."  The Commission also decided that  

penalties could not be imposed on the value of the Clinitron bed because there was no  

"compensation owing, much less a late payment."  


                    Harris appeals the Commission's decision reversing the penalty awards,  

arguing  that  we  should  apply  the  policy  rationale  used  in  Childs  v.  Copper  Valley  

          13	       AS 23.30.155(e) provides:  


                             If any installment of compensation payable without an  


                    award  is  not  paid  within  seven  days  after  it  becomes  


                    due, . . . there shall be added to the unpaid installment an  


                    amount   equal   to   25   percent   of   the   installment.      This  


                    additional amount shall be paid at the same time as, and in  


                    addition to, the installment, unless [a controversion] notice is  

                    filed  .  .  .  or  unless  the  nonpayment  is  excused  by  the  

                    board . . . .  

                                                             -12-	                                                      6876

----------------------- Page 13-----------------------

Electric Association 14 and hold that penalties can be imposed when an employer lacks   

a good faith basis to controvert prescribed medical treatment even if no bill has yet been  

presented for payment.  He contends that the controversion of the bed prevented him  

from getting needed medical care, particularly in light of its high cost:  He argues that  

few workers' compensation recipients can afford "a bed costing tens of thousands of  


                    We decided in Harp v. ARCO Alaska, Inc . that "[a] controversion notice  

                                                                                                                     15   We  

must be filed in good faith to protect an employer from imposition of a penalty." 

set  out  an  objective  standard  to  determine  an  employer's  good  faith:                                      "For  a  

controversion  notice  to  be  filed  in  good  faith,  the  employer  must  possess  sufficient  


evidence in support of the controversion that, if the claimant does not introduce evidence  

in opposition to the controversion, the Board would find that the claimant is not entitled  


to benefits."         In Harp , we examined the reasons the employer gave in the controversion  


notice for contesting benefits and the evidence it had in support of these reasons; we held  


that the employer did not have enough evidence in its possession when it controverted  


benefits to avoid a penalty because the evidence it had was "at best, neutral evidence"  

                                                                   17   Harp does not require an inquiry into  


that the employee was not entitled to benefits.  

          14        860 P.2d 1184, 1192 (Alaska 1993).

       831 P.2d 352, 358 (Alaska 1992).  

          16       Id. (citing Kerley v. Workmen's Comp. Appeals Bd. , 481 P.2d 200, 205  

(Cal. 1971)).  

          17       Id.  

                                                            -13-                                                       6876

----------------------- Page 14-----------------------



the motives of the controversion's author.                           We have never overruled Harp , and it is still  

the law.   

                     In Childs v. Copper Valley Electric Association we interpreted the workers'  

compensation statute to include medical benefits in those benefits that are subject to a  



penalty under AS 23.30.155(e).                        We decided that giving the insurer "an incentive" to  


pay medical bills promptly weighed in favor of construing the act to include medical  

benefits in the definition of "compensation" that can be subject to a penalty.20  


                     We have also held that "a controversion that does not delay payment, even  


                                                                                                   In Sumner v. Eagle Nest  

if made in bad faith, does not provide the basis for a penalty." 


Hotel the employer filed a controversion of a lump-sum permanent partial impairment  


(PPI)  payment  on  August  9,  but  then  paid  the  claim  on  August  21  after  receiving  

                                                                         22  The Board decided that the August 21  

clarification about the rating of the impairment. 

payment was timely and did not make a finding about whether the controversion was  

made in good faith.23  Sumner argued that "bad faith warrants the imposition of a penalty  

           18        In its decision in this case, the Commission stated that a penalty is due when         

a  controversion  is  filed  in  bad  faith  or  is  frivolous  or  unfair,   and   that  a  bad  faith  

controversion  "lacks  any  legal  basis"  or  is  "designed  to  mislead  or  deceive  the  

employee."  (Emphasis in original.)  

           19        860 P.2d 1184, 1192 (Alaska 1993).  

           20        Id.  

           21        Sumner v. Eagle Nest Hotel, 894 P.2d 628, 631 (Alaska 1995).  

           22        Id. at 629.  

           23        Id. at 630.  

                                                                 -14-                                                           6876

----------------------- Page 15-----------------------

regardless of the promptness of payment"; we rejected his argument because there was   

no delay in payment.24  

                         Alaska  Statute  23.30.155(e)  requires  imposition  of  a  penalty  when  


compensation is not paid within seven days after it becomes "due."   Installments of  


                                                                                                                            We must determine  

compensation must be paid on a schedule set out in the statute. 

when medical care becomes "due" such that an employer may be subject to a penalty  


when its controversion was not filed in good faith under Harp .  


                         We interpret statutes according to reason, practicality, and common sense,  

considering  the  meaning  of  the  statute's  language,  its  legislative  history,  and  its  



purpose.             A penalty provision has been part of the workers' compensation statute since  


 1959.           There  is  no  statutory  definition  of  "due"  in  either  the  Alaska  Workers'  

Compensation Act or AS 01.10.060, so the term is construed according to its common  



meaning.               Webster's Dictionary defines "due" first as "[p]ayable immediately or on  


                                                                              OWING ."              Black's Law Dictionary has two  

demand" and then as "[o]wed as a debt:  

similar, relevant meanings: "[i]mmediately enforceable "     

and "[o]wing or payable; constituting a debt ."                                                                            30  

            24           Id. at 632.

             25          AS 23.30.155(b).

            26           Grimm  v.  Wagoner,  77  P.3d  423,  427  (Alaska  2003)  (quoting  Native

 Village of Elim v. State, 990 P.2d 1, 5 (Alaska 1999)).  

             27          Ch. 193,  13(5)-(6), SLA 1959.  

             28          AS 01.10.040(a).  

             29          WEBSTER 'S II  NEW COLLEGE DICTIONARY 356 (3d ed. 2005).  

            30           BLACK 'S LAW DICTIONARY 574 (9th ed. 2009).  

                                                                             -15-                                                                       6876

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The  Commission's   interpretation  appears  to  use  the  second  meaning  because  it  

interpreted the statute to require presentation of a bill; its discussion also uses the word  


"owing."  The Board's interpretation is closer to the first meaning of "due" because it  


assessed a penalty on the value of the bed as of the date of the controversion, implying  

that the bed should have been available to Harris then.  


                   The  Alaska  Workers'  Compensation  Act  sets  up  a  system  in  which  


                                                                                                                   If the  

payments are made without need of Board intervention unless a dispute arises. 

employer disputes payment, it is required to file a timely controversion notice.32                                   The  

purpose of the act is "to ensure the quick, efficient, fair, and predictable delivery of  

indemnity  and  medical  benefits  to  injured  workers  at  a  reasonable  cost  to  the  



employers . . . subject to [it]."           The workers' compensation system also recognizes that  

it is appropriate to require an employer, who gets the benefit of protection from tort  



liability by participating in the system,               to bear the cost of a worker's injury, rather than  


impose that cost on the general public.                     Under this compensation system, payments  


"due" under the act are more appropriately characterized as "[p]ayable immediately or  

on demand," not "[o]wed as a debt."36  

         31        AS 23.30.155(a).

         32        AS 23.30.155(d).

         33        AS 23.30.001(1) (emphasis added).

         34        See AS 23.30.055 (providing that workers' compensation is the exclusive

remedy unless employer does not "secure payment of compensation").  

         35        See  Wright  v.  Action  Vending  Co.,   544  P.2d  82,  86-87  (Alaska  1975)  

(quoting  1  ARTHUR  LARSON ,   WORKMEN 'S  COMP .   LAW    2.20  (1972))  (describing  

purpose of workers' compensation laws).  

         36        See WEBSTER 'S, supra note 29, at 356.  

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                   We have previously recognized the importance of medical care in workers'            

compensation cases.  In Summers  v. Korobkin Construction, we held that "an injured  

worker who has been receiving medical treatment should have the right to a prospective  



determination of compensability,"                    noting that "[i]njured workers must weigh many  

variables before deciding whether to pursue a certain course of medical treatment or  

related  procedures.    A  salient  factor  in  many  cases  will  be  whether  the  indicated  


                                                                We later construed the penalty provision in  

treatment is compensable under [the act]." 

AS 23.30.155 as including medical benefits because the threat of a penalty gives the  


insurer "an incentive" to pay medical bills promptly.                           The same policy consideration  


applies here.  Without the possibility of a penalty, an insurer would be able to controvert  


expensive medical care for no reason and escape without sanction, even when the care  

is critical to an employee's health.  

                   Our construction of the statute as permitting imposition of a penalty on a  

medical  benefit  that  has  been  prescribed  but  not  yet  paid  is  supported  by  our  prior  


decisions, caselaw from other states, and the Board's regulation interpreting another  

statutory subsection.  In Hammer v. City of Fairbanks , we considered imposition of a  

penalty and held that PPI became due when the employer received a rating from the  


employee's doctor.     Because the employer only wrote a letter to the doctor seeking  


clarification of the rating, but did not file a notice of controversion or pay within the time  

          37       814 P.2d 1369, 1372 (Alaska 1991).  

          38       Id.  

          39       Childs v. Copper Valley Elec. Ass'n, 860 P.2d 1184, 1192 (Alaska 1993).  

          40       953 P.2d 500, 506 (Alaska 1998).  

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required,  we  held  that  the  employer  had  to  pay  a  penalty  on  the  PPI  amount. 


Analogously, medical benefits become due for purposes of controversion and penalties  

when the employer has notice they have been prescribed by a doctor.  Additionally, a  

controversion  of  medical  benefits  that  is  not  made  in  good  faith  delays  receipt  of  a  


benefit.    In  our  view,  Sumner 's  holding  supports  imposition  of  a  penalty  when  a  

controversion delays medical care that is reasonable and necessary.42  

                    When  the  Board  finds  that  an  employer  has  unfairly  or  frivolously  

controverted "compensation due," AS 23.30.155(o) says that the Director of the Division  

of Workers' Compensation must notify the Division of Insurance.  In its regulations, the  


Board has interpreted "compensation due" in AS 23.30.155(o) to mean  "the benefits  


sought by the employee, including . . . medical . . . benefits . . . whether paid or unpaid  


at the time the controversion was filed."                       Although we do not decide here whether a  


controversion that is not made in good faith under Harp  is always frivolous or unfair  


under  AS  23.30.155(o),  both  the  Board  and  the  Commission  linked  the  penalty  


provisions of AS 23.30.155(e)-(f) to the unfair or frivolous controversion provision of  

AS 23.30.155(o).  

                    Courts from other states have imposed a penalty when an employer's action  

delayed prescribed medical care.  The Louisiana Court of Appeal held that a penalty  


should be imposed on an insurer when its decision to have prescriptions filled by a mail  

          41        Id. at 506-07.  

          42        See Sumner v. Eagle Nest Hotel, 894 P.2d 628, 631 (Alaska 1995) ("[A]   

controversion that does not delay payment, even if made in bad faith, does not provide   

the basis for a penalty.").  

          43        8 Alaska Administrative Code (AAC) 45.182(e) (2012) (emphasis added).  

                                                             -18-                                                        6876

----------------------- Page 19-----------------------



order pharmacy resulted in a delay in delivery of the prescribed drugs.                                         The workers'  


compensation statute provided that the employer had to provide necessary drugs for  


treatment, and the court interpreted the statute as requiring that "those necessary drugs  

                                 45    The  court  held  that  the  employer  "effectively  denied  [the  

be  provided  timely."       

employee]  the  drugs  needed  for  his  compensable  injury  by  denying  the  timely  


availability  of  those  prescription  drugs"  and  remanded  the  case  for  imposition  of  a  


                    The Pennsylvania Commonwealth Court upheld the imposition of a penalty  

against an employer when an employee was unable to obtain her prescription medication  

                                                                                                                          47  The  


after the employer's insurer cancelled her prescription card without explanation. 

court  decided  that  a  penalty  could  be  imposed  even  though  the  employee  had  not  


presented a bill for reimbursement because the employer had set up a system for her to  


get the medication and then unilaterally terminated it.48  

                    The  most  closely  analogous  case  to  the  present  case  is  also  from  


Pennsylvania.    The  Pennsylvania  Commonwealth  Court  decided  that  a  penalty  was  


appropriate  when  an  insurer  refused  to  pre-certify  back  surgery  and  failed  to  file  a  


"[utilization review] determination petition" prior to its refusal.                                   The worker's back  

          44        Sigler v. Rand, 896 So. 2d 189, 198 (La. App. 2004).

          45        Id. (citing LA .  REV .   STAT .  ANN .  23:1203(A)).

          46        Id. at 198-99.

          47        Brenner v. Workers' Comp. Appeal Bd. (Drexel Indus.)                               , 856 A.2d 213, 216  

(Pa. Commw. 2004).  

          48        Id.



                    McLaughlin v. Workers' Comp. Appeal Bd. (St. Francis Country House) ,  


                                                               -19-                                                         6876

----------------------- Page 20-----------------------

injury had been found compensable, but at the time of the surgery request, the employer   

refused to pre-certify it because its doctor contended the employee had fully recovered   


from the work-related injury.                      The worker was unable to have the surgery after the  



insurer refused to authorize it.                 The administrative law judge imposed a penalty of 20%  


of the claimant's compensation for more than a year, from the date of the scheduled  

                                                                             52  The insurer argued on appeal that  


surgery to the date of the administrative decision.  

a penalty could be assessed only when it failed to pay a bill that had been presented for  



payment.             Calling  the  employer's  argument  "disingenuous,"  the  court  disagreed  

because the insurer's "own action effectively prevented Claimant from receiving the  

recommended treatment in the first place"; it thus upheld the penalty.54  

                     The  argument  rejected  by  the  Pennsylvania  court  is  similar  to  the  


Commission's view in this case that no penalties could be imposed on the improper  


controversion of the Clinitron bed because "no bills were presented for payment."  But  


a rule that a penalty can be imposed only when a bill is presented for payment can result  


in an insurer never being penalized for issuing a controversion that is not made in good  

faith because the worker may not be able to afford the treatment on his own.  Such a  

controversion could prevent an injured worker from receiving the treatment, so there  

would never be a bill to present for payment.  The Commission's construction of the  

          49         (...continued)

808 A.2d 285, 290 (Pa. Commw. 2002).

          50        Id. at 287.  

          51        Id.  

          52        Id. at 288.  

          53        Id. at 288-89.  

          54        Id. at 289-90.  

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----------------------- Page 21-----------------------

statute  is  contrary   to   the  statute's  purpose  of  providing  "quick,  efficient,  fair,  and  

predictable delivery" of medical benefits to a claimant.55  And if an employer can choose  

to controvert, without good reason, treatment that it has been providing for years, as M-K  


Rivers did here with Harris's hypertension medication, and does not suffer a penalty, it  


has no incentive to consider carefully whether it should controvert.  We therefore hold  


that  the  Commission  erred  in  deciding  that  as  a  matter  of  law  no  penalty  could  be  


imposed for the bad faith controversion of the Clinitron bed.  


                    The Commission also concluded that no penalty could be imposed for the  


controversion of treatment for diabetes, hypertension, and sleep apnea, in spite of M-K  

Rivers's concession that this controversion was "a mistake," because "no bills were  


presented for payment."   In its brief before us, M-K Rivers asserts that the adjuster  


"continued to pre-authorize . . . blood pressure medication (Vasotec) before, during, and  


after the time the mis-drafted controversion notice was filed."  Our review of the record  


does not support this contention.  The adjuster testified at the July 2009 Board hearing  


that she had denied the Vasotec prescription sometime before the hearing and that as of  


the hearing date the medication had not been paid for.  She said that she would pay for  


it after the hearing.  In addition, Harris submitted documentary evidence at the hearing  


that included medical bills he had paid and for which he sought reimbursement.  Among  


the expenses were receipts for prescriptions tied to treatment for insomnia, which the  

record shows was "secondary to his underlying sleep-disordered breathing," or sleep  

apnea.  It  is  unclear  from  the  record  whether  other  related  treatment  was  denied  or  



                    M-K Rivers advances several arguments in its brief before us about why  


a penalty on the controversion of the bed was unfounded.  It does not, however, contest  

          55        AS 23.30.001(1).  

                                                               -21-                                                             6876  

----------------------- Page 22-----------------------


the fact that Dr. Chitnis's report did not give an opinion about the type of bed Harris  


needed:  Her report said that she did "not have enough experience to recommend one bed  


over the other." Besides relying on Dr. Chitnis's opinion, the controversion of the bed  


said that the insurer would "agree to the rental/purchase of the Beriatric bed frame," but  


                                                                                                   It is unclear from the  

a Beriatric bed frame is not mentioned in Dr. Chitnis's report. 

record whether the employer provided a Clinitron bed or some other type of medical bed  


to Harris during the course of these proceedings.                              


                    Because  the  factual  record  is  unclear,  we  remand  this  issue  to  the  


Commission, with instructions to remand to the Board. Harris is free to pursue a penalty  


on the controversion of the bed or other treatment items that were unpaid because of the  


controversion,  and  the  Board  can  determine  what  penalty  is  due  on  the  improperly  

controverted prescriptions or treatments.  

          C.	       Future  Claims  For  Diabetes  Treatment  And  Non-Medical  Fitness  

                    Facility Attendance  


                    As  part  of  its  decision,  the  Board  ordered  that  M-K  Rivers  could  not  

"unilaterally controvert or terminate diabetes treatment and care, or [Harris's] attendance  


at a non-medical fitness facility, without first filing a petition seeking relief."  Its order  

was based on the parties' 1998 stipulation that (1) Harris's diabetes was compensable;  

          56        The record contains many documents related to Harris's beds, beginning  

in 2005.  There are at least three prescriptions from 2007 in the record for a Clinitron  


bed, including a detailed one from Dr. Ross. In March 2007 Dr. Julie Hyman of Stanford  


Hospital wrote a letter saying that "the Clinitron bed" was medically necessary; the letter  


shows it was faxed to the adjuster.  



                    At the hearing M-K Rivers asked one of Harris's doctors if the doctor was  


"aware that Mr. Harris did, in fact, get a bed after [the doctor's] deposition."  The doctor  

was deposed in January 2008, but a copy of the entire deposition is not in the record.  

The first indication that Harris was withdrawing the request for a Clinitron bed was a  


prehearing conference summary from April 7, 2008.  

                                                              -22-	                                                        6876

----------------------- Page 23-----------------------

(2) M-K Rivers would pay for "past and continuing diabetes treatment and care"; and   

(3) use of a non-medical fitness facility was "appropriate, reasonable and necessary  

pursuant to the Alaska Workers' Compensation Act."  

                   The  Commission  interpreted  this  part  of  the  Board's  order  as  broadly  

prohibiting any future controversions of diabetes treatments or attendance at a non- 

medical  fitness  facility.    Consequently  the  Commission  decided  that  the  Board  had  


exceeded its authority and reversed the Board "to the extent that its order appeared to  


erroneously foreclose M-K Rivers from asserting any defense to diabetes treatment and  


attendance at a non-medical fitness facility without first petitioning for relief from the  

1998 stipulation."  Harris appeals this part of the Commission's decision, contending that  

the Commission's order would permit the insurer to controvert the compensability of  

Harris's diabetes again.  


                   The  two  agency  decisions  call  for  minor  clarification.    In  its  order,  it  

appears  that  the  Board  wanted  to  prevent  M-K  Rivers  from  again  unilaterally  


controverting the compensability of Harris's diabetes.  Because the parties entered into  

a stipulation about the compensability of the diabetes in 1998 and filed the stipulation  


                                                                                             M-K Rivers preserved  

with the Board, the stipulation had the effect of a Board order.  

defenses such as the reasonableness or necessity of a particular diabetes treatment in this  


stipulation, but it agreed that the condition itself was compensable.  Yet in June 2007  


M-K Rivers claimed that Harris's diabetes was not a compensable condition; it did not  


limit its controversion to a specific diabetes treatment.  We have held that "the employer  


or insurer must petition the Board for rehearing or modification of its order on the basis  

          58       8 AAC 45.050(f) (2012).  

                                                           -23-                                                          6876  

----------------------- Page 24-----------------------

of 'a change in conditions' " if payments are being made pursuant to a Board order.59  


Because the compensability of the diabetes was part of a Board order, M-K Rivers was  

required  to  petition  the  Board  for  modification  of  the  order  in  order  to  contest  the  


                                                                     The  Board  correctly  prohibited  M-K  

continuing  compensability  of  the  condition. 

Rivers from unilaterally controverting the compensability of Harris's diabetes in the  

future.  The same is true of Harris's use of a non-medical fitness facility.  M-K Rivers  


stipulated that use of such a facility was "appropriate, reasonable and necessary," so M-K  


Rivers cannot unilaterally controvert use of the facility on this basis.                           It can, however,  

controvert the reasonableness or necessity of a proposed treatment or medication for  

diabetes.  It appears that the Commission understood the Board's order in this way.  

         D.        Attorney's Fees  

                   Harris appeals the Commission's reversal of the Board's attorney's fees  


award.  Because we are reversing the main parts of the  Commission's decision that  

Harris appealed to us, we vacate the Commission's decision about attorney's fees and  


reinstate the Board's award.  In addition, the Commission should award Harris fees on  

remand related to his appeal there.  

         59        Underwater  Constr.,  Inc.  v.  Shirley,  884  P.2d   156,  161  (Alaska  1994)  

(quoting AS 23.30.130(a)).  

         60        See id.  



                   It is unclear to what extent use of a non-medical fitness facility was an issue  

prior to the hearing.  M-K Rivers controverted medical costs "other than those that are  

reasonable and necessary and/or as outlined by Dr. Chitnis in her reports."  Dr. Chitnis  


may not have been aware of the stipulation because her report indicated that a "[g]ym  

program may not be considered absolutely essential."  She nonetheless recommended  

continuing it because of the benefits Harris got from the exercise.  

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----------------------- Page 25-----------------------

V.          CONCLUSION  

                       We AFFIRM the Commission's decision that the controversion issue was     

properly  before  the  Board.    We  REVERSE  the  Commission's  decision  regarding  


penalties, and REMAND with instructions to remand to the Board.  We VACATE the  

Commission's reversal of the Board's award of attorney's fees, reinstate the Board's  

award,  and  REMAND  to  the  Commission  to  award  fees  for  Harris's  appeal  in  the  


                                                                       -25-                                                                 6876

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