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Olsen Logging and Cigna v. Silver Bay Logging (7/30/93), 856 P 2d 1155
<![CDATA[
Notice: This is subject to formal correction before
publication in the Pacific Reporter. Readers are
requested to bring typographical or other formal errors
to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, in order that
corrections may be made prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
OLSEN LOGGING COMPANY and )
CIGNA COMPANIES, ) Supreme Court No. S-4804
)
Appellants, )
) Trial Court No.
v. ) 1JU-90-449 Civil
)
DAVID B. LAWSON, SILVER ) O P I N I O N
BAY LOGGING CO., and ALASKA )
TIMBER INSURANCE EXCHANGE, )
)
Appellees. ) [No. 3988 - July 30, 1993]
______________________________)
Appeal from the Superior Court of the
State of Alaska, First Judicial District,
Juneau,
Larry Zervos, Judge.
Appearances: BethAnn Boudah Chapman,
Mala J. Reges, Faulkner, Banfield, Doogan &
Holmes, Juneau, for Appellants. Patrick E.
Murphy, Batchelor, Murphy & Brinkman, Juneau,
for Appellee David B. Lawson. Paul M.
Hoffman, Robertson, Monagle & Eastaugh, P.C.,
Juneau, for Appellees Silver Bay Logging and
Alaska Timber Insurance Exchange.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton and Moore, Justices.
MATTHEWS, Justice.
INTRODUCTION
David Lawson suffered two serious on-the-job injuries,
one in 1969 and one in 1984, while working for different
employers. He is now apparently totally and permanently
disabled. This case involves the allocation of responsibility
for Lawson's disability between his two former employers.
FACTS AND PROCEEDINGS
In November of 1969, while working as a rigging slinger
for Olsen Logging Company, Lawson was hit in the head by a choker
bell and suffered a severe skull fracture. Surgery was required
to relieve an extensive subdural hematoma. Upon his release from
the hospital six weeks after the accident, doctors observed that
Lawson was "fully independent"with a "notably short attention
span and impaired memory."
Lawson began receiving temporary total disability
benefits and was placed in a vocational rehabilitation program in
a community college. In January of 1971 Lawson's neurosurgeon,
Dr. Tytus, determined that Lawson's neurological condition had
stabilized and recommended that Lawson "be evaluated for
permanent partial disability purposes." The following month, Dr.
Berens examined Lawson and concluded that "his disability amounts
to 15% of the maximum allowable for unspecified disability."
Alaska Pacific Assurance Company (ALPAC), Olsen's insurer,
terminated Lawson's temporary total disability payments in mid-
February, and in March paid Lawson an advance of $1000.
In 1972 Lawson withdrew from his vocational rehabili
tation program. He returned to work for Olsen as a "safety man"
for a brief period, but was released because "[Olsen] was too
small of an outfit for a safety man." Afterwards, Lawson logged
for another company for two to three months, returning the
following year for a period of three to six months.
In early 1973, Lawson, represented by counsel,
considered a draft compromise and release suggested by ALPAC.
Several medical evaluations were completed at this point. Dr.
Tytus determined that Lawson was not totally disabled but had a
30% permanent partial disability. Dr. Rynearson, a psychiatrist,
found no psychiatric abnormality while Lawson's psychologist, Dr.
Lamphere, completed a psychological evaluation and described
Lawson as "confused and perplexed."
Lawson signed the compromise and release on May 3,
1973. The Alaska Workers' Compensation Board (Board) approved
the settlement a few days later. The agreement awarded Lawson
$7,104.19 in exchange for a release of further disability compen
sation. The parties specifically agreed that Lawson "[was] not
permanently and totally disabled as a result of the covered
accident."
In February of 1974, Lawson went to Dr. Leo complaining
of poor judgment and reactions. Lawson reported six accidents in
six months. Dr. Leo observed that Lawson acted like "a 12-14
year old." Also in 1974 the Social Security Administration
determined that Lawson was disabled due to "chronic organic brain
syndrome following [his] severe head injury" and secondary
psychiatric disorders. From 1975 through 1978 there was no
evidence that Lawson worked.
Lawson returned to logging in 1979 when "[he] just got
tired of not being out there." From 1979 until September 1984 he
worked in a series of jobs with seasonal periods of unemployment.
Because the two calendar years immediately prior to the
claimed injury are the base years for computing the gross
earnings of an injured employee, AS 23.30.220(a)(1), we note
Lawson's earnings for 1982 and 1983 in some detail. Lawson was
unemployed from January through May and in October of 1982. He
worked as a logger for four different employers during the six
months of 1982 in which he did not collect unemployment. He
earned $11,135.97. In 1983 Lawson earned wages of $14,458.21
while logging for two employers.1 Lawson collected unemployment
compensation for three weeks during 1983.
In 1984 Lawson was unemployed from January 1 through
May 14. In his employment that followed until his injury on
September 15, 1984, he earned some $11,093.
Between 1979 and 1984 Lawson suffered a number of
injuries while logging. In April of 1980 he suffered a compres
sion fracture of a vertebrae and fractured ribs when he was
struck by a falling sapling. On July 23, 1981, he sustained a
contusion of the left ankle. In 1983, he suffered a low back
injury in May, on July 20th a chain saw kicked back and cut his
leg, and on August 23rd he fell and suffered a back injury. On
July 7, 1984, he suffered a shoulder injury when a snag fell,
hitting him, and two weeks later he was cut on the left wrist by
a chain saw.2
On September 15, 1984, while working for Silver Bay
Logging, Lawson injured his back when he fell approximately
eleven feet onto a root wad. When Lawson was unable to return to
work because of back pain, he filed an application for adjustment
of claim with the Board, seeking permanent and total disability
compensation from Silver Bay. Silver Bay joined Olsen as a
party. Lawson amended his petition to assert a claim against
Olsen and ALPAC to set aside the 1973 compromise and release.
After a hearing the Board set aside the compromise and
release and ordered Olsen to pay Lawson permanent total
disability "with credit for disability compensation paid." In
addition, Olsen was ordered to reimburse Silver Bay's insurer for
compensation payments made by Silver Bay. Olsen appealed to the
superior court which upheld the Board's decision. This appeal
followed.
Two major questions are presented:
(1) Did the Board err in setting aside the compromise
and release?
(2) Did the Board err by failing to apply the last
injurious exposure rule to Lawson's 1984 injury?
We answer each of these questions in the affirmative.
DISCUSSION
A. Set-Aside of the 1973 Compromise and Release
1. Grounds relied on by the Board in
setting aside the 1973 compromise and
release.
The Board concluded that the test for setting aside
releases in common law personal injury cases expressed by this
court in Witt v. Watkins, 579 P.2d 1065 (Alaska 1978), should be
applied in workers' compensation cases. Under Witt a release may
be set aside if the releasor at the time of signing the release
did not intend to discharge the disability which was subsequently
discovered. The Board quoted the following excerpt from Witt:
The test should be whether, at the
time of signing the release, the releasor
intended to discharge the disability which
was subsequently discovered. Relevant to the
determination of this question are all of the
facts and circumstances surrounding execution
of the release. Also relevant to the
determination is whether a reasonable person
in the position of the releasor under the
circumstances then existing would have had
such an intent.
. . . .
Niceties of distinction between the
extent of a known injury or a difference in
the character of the injury should not be
determinative. In either event, the decision
as to whether the release is enforceable
should hinge on whether the releasor, at the
time of signing the release, intended to
discharge the disability which was
subsequently discovered.
. . . .
Once the party relying on a release
establishes that it was given with an under
standing of the nature of the instrument, the
burden is on the releasor to show by clear
and convincing evidence that the release
should be set aside. Factors that may be
considered are the manner in which the
release was obtained -- including whether it
was hastily secured at the instigation of the
releasee; whether the releasor was at a
disadvantage because of the nature of his
injuries; whether the releasor was
represented by counsel; whether he relied on
representations of the releasee or a
physician retained by the releasee and
whether liability was seriously in dispute.
The relative bargaining positions of the
parties and the amount to be paid should also
be considered.
Id. at 1068-70 (emphasis added) (footnotes omitted).
The Board found that Lawson understood the nature of
the instrument which he signed. It also found, however, that he
lacked judgment and foresight because of his brain injury, and
was in a relatively weak bargaining position because of his
financial distress and his inability to provide for his family.
Finally, the Board found that Lawson was unable to discern any
alternative other than agreeing to the settlement as temporary
total disability had been discontinued in 1971 and, although he
was represented by an attorney, the attorney was a Washington
attorney who may not have been familiar with Alaska workers'
compensation law. The Board also noted that the amount of the
settlement, $7,100, "was insignificant in relation to [Lawson's]
disability and his earnings at the time of injury." Noting these
facts, the Board concluded:
[W]e find that Employee did not intend
to discharge the disability which was sub
sequently discovered. In the C&R the parties
agreed Employee was not permanently totally
disabled. Employee was working as a logger,
with apparent success, at the time the C&R
was signed. It was not until January 1989
that comprehensive neuropsychological testing
revealed that Employee suffers from learning
and memory deficits and from right hand
psychomotor slowing, rendering Employee
unable to work safely as a logger.
Employee's "disability"for the purposes of
the Alaska Workers' Compensation Act, is his
learning deficit. Employee could not have
intended to release that disability, because
that disability was not recognized.
The Board also concluded as an alternative ground for
setting aside the compromise and release that the parties had
made a mutual mistake of fact in that both Lawson and ALPAC
believed that Lawson was not permanently totally disabled at the
time of the compromise and release.
2. Does the Board have authority to
set aside a compromise and release on the
basis of mistake?
Alaska Statute 23.30.012 governs the compromise and
release of workers' compensation claims. That statute provides
that settlement agreements are not valid until they are approved
by the Board. Upon approval by the Board, settlement agreements
have the same legal effect as awards, except that they are more
difficult to set aside:
If approved by the board, the agreement
is enforceable the same as an order or award
of the board and discharges the liability of
the employer for the compensation
notwithstanding the provisions of AS
23.30.130 [modification of awards], 23.30.160
[assignment and exemption of claims], and
23.30.245 [invalid agreements].
AS 23.30.012.
The Board has the authority to modify awards on its own
initiative or upon application of any party for a change in
conditions or because of "a mistake in its determination of a
fact." This power, however, is subject to a time limit of "one
year after the date of the last payment of compensation benefits
. . . ." AS 23.30.130(a). The power to modify awards for
changed conditions or mistakes of fact expressed under subsection
.130 does not, however, extend to settlements. Subsection .012
provides that approved settlement agreements discharge the
liability of the employer for compensation notwithstanding
subsection .130. This is, therefore, an expression of
legislative intent that approved agreements may not be modified
because of mistakes of fact.3 On this ground we conclude that
the Board erred in setting aside the compromise and release on
unilateral and mutual mistake grounds.4
B. Application of the Last Injurious Exposure Rule to
Lawson's 1984 Injury
In Ketchikan Gateway Borough v. Saling, 604 P.2d 590
(Alaska 1979), we adopted the last injurious exposure rule, which
holds that when an employee suffers successive injuries while
working for different employers, both of which contribute to the
employee's disability, full liability is imposed on the later
employer. Id. at 595.
Two determinations must be made under the last
injurious exposure rule in order to impose liability on the
second employer:
(1) whether employment with the
subsequent employer "aggravated, accelerated,
or combined with"a pre-existing condition;
and, if so, (2) whether the aggravation,
acceleration, or combination was a "legal
cause" of the disability, i.e., "a
substantial factor in bringing about the
harm."
United Asphalt Paving v. Smith, 660 P.2d 445, 447 (Alaska 1983)
(quoting Saling, 604 P.2d at 597, 598).
The Board found that the last injurious exposure rule
was not applicable in this case because Lawson was permanently
totally disabled "at all times after his 1969 head injury."
Therefore the Board concluded that his 1984 back injury while
working for Silver Bay "could not be a substantial factor in his
disability."
In Estate of Ensley v. Anglo Alaska Construction, Inc.,
773 P.2d 955 (Alaska 1989), we were presented with a case in
which the worker was unable to continue to work for two
independent reasons. The worker had suffered a work-related
injury and was also unable to continue working because of
treatment necessitated by cancer. The Board held that
compensation should be terminated as of the time the worker began
cancer treatment, reasoning that because the illness prevented
the worker from further work, the work-related injury could not
be the cause of the worker's continuing disability. Id. at 957.
We rejected this rationale and held that where there are
concurrent causes of disability, the fact that one cause would be
independently sufficient to cause the disability does not mean
that the work-related injury is not also a cause of the
continuing disability. We stated:
The medical records indicate that Ensley
suffered from two independent conditions -
one work-related and one not - either of
which would have prevented him from working.
We believe the Board erred in ignoring
Ensley's . . . loss of earning capacity due
to the work-related back injury. The fact
that Ensley also suffered a concurrent . . .
loss of earning capacity due to the cancer
does not destroy the causal link between the
work injury and his . . . loss of earning
capacity.
Id. at 958.
In Estate of Ensley we relied on a Washington case,
Shea v. Department of Labor and Industries, 529 P.2d 1131 (Wash.
Ct. App. 1974). Shea suffered from a non-work-related condition
which rendered him totally and permanently disabled. He also
suffered from an on-the-job work injury which arguably was also
sufficient to disable him. The Department of Labor took the
position that the earlier non-work-related disability prevented
Shea from collecting benefits for the work-related disability.
Id. at 1133. The Washington Court of Appeals reversed for
reasons which we expressed in Estate of Ensley as follows:
In rejecting the department's position
that the nonwork-related disability prevented
an award of disability compensation, the
court relied upon the notion that the
compensation act was designed to provide
benefits "not only to workmen with no prior
physical or mental impediments, but also to
workmen who may be afflicted with preexisting
physical or mental infirmities or
disabilities." Secondly, the court stated
that "the remedial and beneficial purposes of
the act should be liberally construed in
favor of workmen and beneficiaries."
Estate of Ensley, 773 P.2d at 959 (quoting Shea, 529 P.2d at
1133). We agreed with the reasoning of the Shea court and
concluded that "the remedial policy of the Act is furthered by
providing compensation for . . . disabilities even when a con
current unrelated medical condition has also rendered the worker
unable to earn his or her normal wages." Id.
This case is factually similar to Ketchikan Gateway
Borough v. Saling, 604 P.2d 590 (Alaska 1979). Saling was
injured on the job in 1968 in an explosion which his employer
regarded as totally disabling. His employer voluntarily paid him
continuing compensation payments for permanent total disability.
In 1973 Saling went to work for a second employer, but continued
to receive total disability payments. In the summer of 1975 his
former employer learned that Saling was working and stopped
paying total disability payments. Six weeks later Saling
suffered another serious on-the-job injury. After the second
accident, he did not return to work. Id. at 592. Saling filed
compensation claims against both his employers, neither of whom
contested his contention that he was permanently totally
disabled. The Board found that his first employer was completely
responsible for Saling's disability because Saling was
permanently and totally disabled while he was working for his
second employer. Id. at 593. The Board relied on evidence from
two physicians who testified that Saling should not have been
working at his second job because it was too demanding for him in
view of his previous injuries. Id.
We rejected the Board's reasoning that because Saling
was already totally disabled, his second injury could not be
compensable:
The board's reasoning misinterprets
the concept of disability in Alaska worker's
compensation law. The Workmen's Compensation
Act defines "disability" as "incapacity
because of injury to earn the wages which the
employee was receiving at the time of injury
in the same or any other employment." AS
23.30.265(10). The primary consideration is
not the degree of the worker's physical
impairment, but rather the loss of earning
capacity related to that impairment. In
determining the extent of Saling's pre
existing disability, his demonstrated earning
capacity cannot be ignored. A review of the
record reveals no evidence that Saling failed
to perform his job duties satisfactorily.
When Saling's earning capacity at the time he
began work for the [second employer] is
compared with his present earning capacity,
it is obvious that a change has taken place.
We conclude, therefore, that the board's
finding of preexisting total disability is
not supported by substantial evidence.
Id. at 594 (citations omitted).
Saling is arguably distinguishable from the present
case because Saling was steadily employed after his first injury
whereas Lawson's subsequent employment was more sporadic.
Nonetheless, Lawson does not fit the mold of the "odd lot"worker
who is totally disabled despite his ability to obtain occasional
part-time employment. We have described such a worker as a
worker who, while not abjectly helpless, is unable because of
injuries
to perform services other than those
which are so limited in quality,
dependability or quantity that a reasonably
stable market for them does not exist. The
evidence here discloses that [the worker] is
a carpenter but is unable physically to
follow that trade. He is not qualified by
education or experience to do other than odd
jobs provided they are not physically taxing.
As the Supreme Court of Nebraska has pointed
out, the "odd job"man is a nondescript in
the labor market, with whom industry has
little patience and rarely hires. Work, if
appellee could find any that he could do,
would most likely be casual and intermittent.
J.B. Warrack Co. v. Roan, 418 P.2d 986, 988 (Alaska 1966) (foot
notes omitted).5
As an indication that Lawson was more than an "odd lot"
worker, we note that his average weekly wage computed for 1982
and 1983 is roughly $256, whereas the Board awarded him
compensation based on an average weekly wage in 1969 of $165.38.
We conclude, therefore, that in this case, as in Saling, the fact
that the employee was subsequently able to engage in remunerative
work must speak louder than the medical evidence that the worker
should not have been working in view of his prior injury.
The teaching of Estate of Ensley, Saling, and our other
last injurious exposure rule cases, considered together, is that
the Board should focus on the employee's most recent employment-
related injury in considering his claim for disability
compensation. The most recent injury must itself have caused, or
must have aggravated, accelerated, or combined with a prior
condition in such a way that it may be said to be a substantial
factor in bringing about the employee's current inability to
work. However, the Board should not find that a causal
relationship does not exist merely because a prior injury might
also suffice as a concurrent cause of the employee's current
disability.
CONCLUSION
The evidence supports Olsen's position that although
Lawson had a residual brain injury, he had a sound body and was
able to work as a logger. After his 1984 injury, Lawson's body
may no longer be sound and he may no longer be able to work as a
logger. The remedial and beneficial purposes of the Workers'
Compensation Act would not be served by concluding that Lawson's
1984 injury is uncompensable merely because he suffered from a
brain injury which was sufficient to cause his disability. The
Board erred when it concluded that Lawson's 1984 injury
necessarily was not a substantial cause of his disability because
he was already totally disabled by reason of the 1969 accident.
For the above reasons, the superior court's decision
affirming the Board's decision setting aside the compromise and
release is REVERSED. On REMAND, the superior court should order
the Board to reinstate the compromise and release. The superior
court's decision affirming the Board's conclusion that Lawson was
ineligible for compensation from Silver Bay because he was
already permanently and totally disabled is REVERSED. On REMAND
the superior court should remand this case to the Board with
instructions to determine whether Lawson's 1984 injury caused or
aggravated, accelerated, or combined with his prior condition to
produce his current disability.
_______________________________
1 In addition he logged as a contract cutter and earned some
$6,000 in profits. The Board, however, did not include this in
its calculations as to some extent the profit was chargeable to
the services of Lawson's wife and a friend.
2 Despite his accident proneness, apparently Lawson was
found to be a satisfactory employee by at least one of his
employers, as Reid Timber rehired him in three different years.
3 We note that even if we were to assume the application of
AS 23.30.130 to this case, modification would be barred because
it would take place some sixteen years after the one-year limit.
4 Under Civil Rule 60(b) mistake is a basis for setting
aside a final civil judgment. This is subject to a one-year
limitation. However, Civil Rule 60(b) also adverts to the
possibility of "an independent action to relieve a party from a
judgment . . . ." Not presented in this appeal is the question
whether an independent action might be maintained to relieve a
party of a Board approved settlement.
5 We have also noted Justice Cardozo's classic description
of the "odd lot"man:
He [the plaintiff] was an unskilled or
common laborer. He coupled his request for
employment with notice that the labor must be
light. The applicant imposing such
conditions is quickly put aside for more
versatile competitors. Business has little
patience with the suitor for ease and favor.
He is the "odd lot"man, the "nondescript in
the labor market." Work, if he gets it, is
likely to be casual and intermittent. . . .
Rebuff, if suffered, might reasonably be
ascribed to the narrow opportunities that
await the sick and halt.
Hewing v. Peter Kiewit & Sons, 586 P.2d 182, 187 (Alaska 1978)
(quoting Jordan v. Decorative Co., 130 N.E. 634, 635-36 (N.Y.
1921) (footnotes omitted) (citations omitted)).
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