Parra v. Pedus, Transcontinental Insurance Company

FILED BY CLERK
IN THE COURT OF APPEALS APR 28 2006
STATE OF ARIZONA
COURT OF APPEALS
DIVISION TWO DIVISION TWO
RITO PARRA, )
) 2 CA-IC 2005-0005
Petitioner Employee, ) DEPARTMENT B
)
v. ) OPINION
)
THE INDUSTRIAL COMMISSION OF )
ARIZONA, )
)
Respondent, )
)
PEDUS, )
)
Respondent Employer, )
)
TRANSCONTINENTAL INSURANCE )
COMPANY, )
)
Respondent Insurer. )
)
SPECIAL ACTION - INDUSTRIAL COMMISSION
ICA Claim No. 20032-060166
Insurer No. 3J469343 B7
LuAnn Haley, Administrative Law Judge
AWARD SET ASIDE
Les Gilbertson Tucson
Attorney for Petitioner Employee
The Industrial Commission of Arizona
By Laura L. McGrory Phoenix
Attorney for Respondent
Jones, Skelton & Hochuli, P.L.C.
By Gregory L. Folger and Lori L. Voepel Phoenix
Attorneys for Respondents
Employer and Insurer
E S P I N O S A, Judge.
¶1 Petitioner employee Rito Parra was working for respondent employer Pedus
when he sustained a work-related injury in July 2003. At that time, he was receiving
permanent partial disability benefits for a work-related injury he had sustained in 2000. The
Industrial Commission reduced Parra’s monthly temporary total disability benefits for the
2003 injury by more than the amount he was receiving for the 2000 injury. Parra requested
a hearing, arguing the Commission had improperly applied A.R.S. § 23-1044 to apportion
his benefits instead of calculating them under A.R.S. § 23-1045. The administrative law
judge (ALJ) rejected Parra’s claim, concluding that § 23-1044 had been properly applied.
The ALJ affirmed the award on administrative review, and this statutory special action
followed.
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Factual and Procedural Background
¶2 The parties stipulated that Parra had been injured in July 2000 and was
receiving $247 per month in permanent partial disability benefits as a result of that injury.
They further stipulated Parra had been injured a second time in July 2003 and was entitled
to temporary total disability benefits for that injury because he was unable to work.
¶3 The Industrial Commission calculated Parra’s average monthly wage at the
time of the second injury and then apportioned his benefits by subtracting an amount based
on the partial disability payment from the monthly wage and applying the statutory
percentage, determining the total at $377 per month. Parra requested a hearing, claiming the
Commission had improperly calculated and deducted his permanent partial disability benefits
from his average monthly wage. The ALJ expressly deferred to the Commission’s
calculations and relied on § 23-1044(E) in determining that the amount was correct.
Apportionment of Disability Benefits
¶4 Parra argues the Commission improperly calculated his temporary total
disability benefits under § 23-1044 instead of § 23-1045. The respondent insurer
Transcontinental counters that the ALJ’s conclusions are based on a reasonable interpretation
of the law and that § 23-1044 was properly applied. We review legal conclusions on
apportionment de novo. Special Fund Div. v. Ariz. Dep’t. of Transp., 198 Ariz. 224, 8 P.3d
412 (App. 2000).
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¶5 In Hardware Mutual Casualty Company v. Industrial Commission, 17 Ariz.
App. 7, 9-10, 494 P.2d 1353, 1355-56 (1972), Division One of this court listed the three
phases of a worker’s injury as follows:
(1) a period of temporary total physical incapacity during which
time his injuries would prohibit him from working at all; (2) a
period of temporary partial incapacity during which time his
ability to work, through treatment and convalescence, has
increased to a point where he may engage in some activity but
he has not progressed to the stage that he no longer needs
medical treatment; and (3) his condition has become medically
stationary, that is, his condition cannot be medically improved
to increase his activities and hence increase his earning capacity.
Based upon this three stage physical development, an injured
workman may be compensated correspondingly for
(1) temporary total disability (A.R.S. § 23-1045, subsec. A); (2)
temporary partial disability (A.R.S. § 23-1044, subsec. A); and
(3) permanent total or partial disability (A.R.S. §§ 23-1044,
subsecs. B, C; 23-1045, subsec. B).
The parties here stipulated that Parra was entitled to temporary total disability benefits for
the second injury. Thus, his compensation for that injury is governed by A.R.S.
§ 23-1045(A). See Hardware Mut.
¶6 “When the language of a statute is plain and unambiguous and conveys a clear
and definite meaning, courts must accept that meaning and enforce it.” McPeak v. Indus.
Comm’n, 154 Ariz. 232, 234, 741 P.2d 699, 701 (App. 1987). Section 23-1044 governs the
computation of partial disability benefits and takes into account the “wages which the injured
person is able to earn [after the injury].” § 23-1044(A); see also § 23-1044(C). And this
statute includes a specific provision for apportioning responsibility for successive industrial
injuries between employers. § 23-1044(E).
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¶7 Compensation for total disability is governed by § 23-1045, which provides
that “sixty-six and two-thirds per cent of the average monthly wage shall be paid during the
period of [temporary total] disability.” This section contains neither an apportionment
provision nor a provision for reducing total disability benefits by the amount of any prior
award for partial disability. “[M]onthly wage” is defined as “the average wage paid during
and over the month in which the employee is . . . injured.” A.R.S. § 23-1041(F). Section
23-1041(A) states: “Every employee of an employer within the provisions of this chapter
who is injured by accident arising out of and in the course of employment . . . shall receive
the compensation fixed in this chapter on the basis of such employee’s average monthly wage
at the time of injury.” See also Lowry v. Indus. Comm’n, 195 Ariz. 398, 989 P.2d 152 (1999)
(average monthly wage is based on all wages earned in thirty days prior to injury).
¶8 Transcontinental argues the ALJ’s determination was proper to prevent Parra
from recovering twice for the same loss of earning capacity, relying on Madrid v. Industrial
Commission, 178 Ariz. 606, 875 P.2d 839 (App. 1994). But that case involved a claimant
who simultaneously received total temporary disability benefits from two insurers, resulting
in compensation equal to twice his lost earning capacity. Division One of this court held
that the claimant could recover his total lost earning capacity, but no more, and that he “ha[d]
no standing to question how, as between the carriers, that compensation is paid.” Id. at 610,
875 P.2d at 843. Because the claimant would otherwise have continued receiving twice the
compensation he was entitled to under the statute, the court approved the apportionment of
his benefits. That situation does not exist here. Parra received total disability benefits
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governed by § 23-1045 from only one insurer and partial disability benefits governed by
§ 23-1044 from another. No one has suggested that his monthly compensation is more than
he is entitled to receive under each statute.
¶9 We find Special Fund, on which Parra relies, instructive. In that case, the court
explained that the claimant’s monthly wage after a successive injury was “already depressed
as a result of the [prior] injury” and “only part of Claimant’s ‘entire disability.’” 198 Ariz.
224, ¶ 23, 8 P.3d 412, 417, quoting § 23-1044(E). Parra was already receiving partial
disability benefits to compensate for his lost earning capacity attributable to the 2000 injury.
After his second injury, the Commission reduced his 2003 total disability compensation by
an amount greater than his partial disability benefits, effectively increasing the impact of the
2000 injury on Parra’s earning capacity.1 Because the Commission treated Parra’s 2003 lost
earning capacity as his total disability and attributed part of that loss to the 2000 injury,
precisely the same error made in Special Fund, Parra has received a total disability award
lower than that mandated by § 23-1045—66 2/3 percent of his average monthly wage at the
time of the second injury.2
1
The specific nature of these calculations is not apparent from the record.
Transcontinental attempted to subpoena the Commission employee who had calculated the
benefits, but the ALJ denied that request.
2
We note that, even had apportionment been applicable to Parra’s total disability
award, the Commission miscalculated the benefit amount. Arizona law requires that a
current monthly wage be “rolled back” to the date of the first injury, that is, adjusted to
account for inflation since the date of the injury. See Warren v. Indus. Comm’n, 202 Ariz.
10, ¶ 21, 39 P.3d 534, 538 (App. 2002) (when calculating lost earning capacity, “post-injury
earnings must be discounted for inflation since the date of injury”); Reavis v. Indus. Comm’n,
196 Ariz. 280, ¶ 11, 995 P.2d 716, 719-20 (App. 1999) (lost earning capacity award
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Failure to Conduct Independent Review
¶10 Parra also contends the ALJ failed to conduct the independent review required
by Arizona law and instead simply deferred to the Commission’s calculations.
Transcontinental argues the ALJ properly considered the calculations made by a Commission
employee and that, although it is error to require an ALJ to defer to such calculations, it is
not error for an ALJ to choose to do so. Transcontinental cites United Metro v. Industrial
Commission, 117 Ariz. 47, 49, 570 P.2d 818, 820 (App. 1977), to support its argument that
it is only error “to bind the hearing officer to blindly follow the initial wage determination.”
In that case, Division One stated: “The hearing officer must make the decision based upon
all of the evidence presented at the hearing. This is the only hearing in which all parties
participate and present evidence.” Id. Failing to do so, the court said, “would severely limit
any meaningful hearing under the provisions of A.R.S. § 23-941.” 117 Ariz. at 49, 570 P.2d
at 820.
¶11 We find Transcontinental’s argument unavailing under United Metro and in
light of Bratz v. Industrial Commission, 178 Ariz. 359, 873 P.2d 697 (App. 1994). In Bratz,
calculated based on wages “rolled back” to date of injury); Schneidewind v. Indus. Comm’n,
120 Ariz. 363, 364, 586 P.2d 208, 209 (App. 1978) (hearing officer properly reduces average
monthly wage “by an amount attributable to the general increase in wage levels”). The
Commission rolled forward Parra’s 2000 award for lost earning capacity into 2003 dollars.
The effect of this error reduced Parra’s total disability compensation for the 2003 injury by
$266 when he was only receiving $247 per month for the 2000 injury. But, for purposes of
apportionment, Parra’s 2003 average monthly wage should have been rolled back to its 2000
equivalent, so that the proportion of his lost earning capacity attributable to each injury
would be determined “by the same ‘yardstick.’” Warren, 202 Ariz. 10, ¶ 14, 39 P.3d at 536,
quoting Whyte v. Indus. Comm’n, 71 Ariz. 338, 344, 227 P.2d 230, 233-34 (1951).
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Division One relied on United Metro and held “[t]he ALJ must examine the wage records
and testimony, and render a decision regarding the claimant’s average monthly wage; this is
the final decision of the Commission.” 178 Ariz. at 360, 873 P.2d at 698. Here, it is
apparent the ALJ merely accepted the Commission’s calculations without conducting an
independent analysis. Transcontinental has cited no authority that permits an ALJ to simply
defer to determinations made by an employee of the Commission, and we have not found
any. See A.R.S. §§ 23-901 through 23-1091; Ariz. Admin. Code R20-5-101 through R20-5-
164. In fact, under A.R.S. § 23-1061(J), the ALJ was expressly required to “ investigate and
review” Parra’s claim that he was not receiving the benefits to which he was entitled.
¶12 Moreover, an independent analysis by an ALJ is necessary because Arizona
law is clear that the effect of filing a notice of hearing is to vacate the underlying award. See
Russell v. Indus. Comm’n, 104 Ariz. 548, 553, 456 P.2d 918, 923 (1969) (“The practice of
affirming findings set aside by the granting of a hearing or rehearing is a source of procedural
confusion and should not continue. The Commission in such cases has nothing to affirm.”),
overruled on other grounds by Parsons v. Bekins Freight, 108 Ariz. 130, 493 P.2d 913
(1972); see also Santiago v. Indus. Comm’n, 193 Ariz. 369, ¶ 4, 972 P.2d 1005, 1006 (App.
1998) (“Claimant timely protested the Commission’s award. This protest nullified the
Commission’s award.”); Bratz, 178 Ariz. at 361, 873 P.2d at 699, (“‘[o]nce [an initial award]
is protested, it becomes a nullity and cannot, in and of itself, afford an evidentiary basis for
future awards.”), quoting Le Duc v. Indus. Comm’n, 116 Ariz. 95, 98, 567 P.2d 1224, 1227
(App. 1977); Tucson Steel Div. v. Indus. Comm’n, 154 Ariz. 550, 744 P.2d 462 (App. 1987)
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(award of Commission final unless protested); Kuchinski v. Indus. Comm’n, 11 Ariz. App.
26, 28, 461 P.2d 505, 507 (1969) (“[W]hen there is a timely protest and petition for hearing
or rehearing, the effect is to set aside the previous findings and award.”). Thus, when Parra
filed his notice of hearing objecting to the initial award, that award was effectively vacated.
Disposition
¶13 The ALJ incorrectly applied the apportionment provision of § 23-1044 to an
award governed by § 23-1045, and its choice to simply defer to the Commission employee’s
calculations did not comply with § 23-1061(J), depriving Parra of “any meaningful hearing”
on his claim. United Metro, 117 Ariz. at 49, 570 P.2d at 820. Accordingly, we set the award
aside.
____________________________________
PHILIP G. ESPINOSA, Judge
CONCURRING:
____________________________________
PETER J. ECKERSTROM, Presiding Judge
____________________________________
J. WILLIAM BRAMMER, JR., Judge
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