Sines v. Appel

McFADDEN, Justice.

In October 1978 claimant Wesley Sines applied to the Industrial Commission for the modification of an award previously entered on January 6,1978, by the Industrial Commission. The original award sought to be modified arose out of a compensation agreement entered into on December 27, 1977, between the claimant and the employer’s surety, Industrial Indemnity. At this time, claimant had been represented by an attorney who subsequently died, and only after that did his present counsel commence representation of him and seek modification of the previously entered award.

The basis for the compensation agreement arose out of an industrial accident which occurred on September 23, 1975, at which time claimant was employed by Gary Appel at falling timber. On that date claimant stepped in a hole and fell, twisting his back. He was treated for this injury by Dr. Thurston of St. Maries, Idaho, and thereafter referred to Dr. Lynch and Dr. Cooke, both neurosurgeons of Spokane, Washington, as well as other physicians.

Beyond the impairment to his back arising from the industrial accident, the claimant’s physical condition was also impaired by a preexisting disease — multiple sclerosis. The claimant has suffered from nuerological disorders associated with multiple sclerosis since 1963 and continues to suffer from those disorders presently.

In response to letters from the employer’s surety, the aforementioned physicians all rated the extent of the claimant’s disability. On July 6, 1977, Dr. Thurston rated the claimant as having a permanent partial disability equivalent to 20% of the whole man. In his report Dr. Thurston observed that the evaluation was complicated by the existence of disorders associated with multiple sclerosis. He also stated in his physician’s final report that the claimant is unable to return to regular work primarily because of his multiple sclerosis. Dr. Cooke, in his letter of August 5, 1977 to the surety, also rated the claimant at 20% disability of the whole man as a result of the injury sustained in the industrial accident and opined that the claimant is totally disabled when the disorders associated with his multiple sclerosis are considered. Dr. Cooke doubted that the claimant could return to meaningful employment. Dr. Lynch, in his letter of October 17, 1977 to the surety, rated the claimant at 15% disability of the whole man. Dr. Lynch also made the following comment:

“I note that Dr. Cooke has given Mr. Sines a twenty percent disability rating based on his back injury. Certainly it is difficult to work out how much of his disability is due to his demyelinating process [destruction or removal of the myelin sheath of nerves] and how much is due to his back injury.”

Based upon these evaluations, the claimant and the employer’s surety in the compensation agreement settled upon the percentage figure of 17 V2% disability of the whole man as the basis for computation of the award in the agreement, with payment subsequently being approved by the Commission by way of its order of January 6, 1978.

In his application for hearing and for modification, the claimant joined the Special Indemnity Fund of the State of Idaho (I.S.I.F.), asserting, inter alia:

“This application for hearing is brought for the purpose of modifying a certain compensation agreement signed by the claimant on December 27, 1977, and thereafter approved by the Commission. Based upon a change in condition in that the claimant is now and has been ever since the time of the accident a total permanent disability.

That this application for hearing joins the Industrial Special Indemnity Fund for the reason that a part of claimant’s disability is related to the accident and a part is related to multiple sclerosis. The two causes have combined to render the claimant a total permanent disability. That the claimant is entitled to compensation from and after November 29,1976, based upon the contention that claimant has never been able to return to work and never was properly rated for disability and on December 27,1977, was entitled to a permanent total disability, part of which should be assessed against the employer and Industrial Indemnity Company and part against the Industrial Special Indemnity Fund of the State of Idaho.”

The employer and his surety answered the claimant’s application for hearing, denying that he was permanently disabled to the extent claimed, but admitting disability of 17 V2% of the whole man, and also alleging that the claimant, the employer and surety had entered into a compensatio. agreement on December 27, 1977, which was approved; and further, that claimant had preexisting impairments and disabilities for which the employer and surety are not liable. It is to be noted in this regard that the employer did not execute the compensation agreement.

Industrial Special Indemnity Fund also filed its separate answer to the claimant’s application for hearing, denying the claimant was totally disabled, denying any preexisting permanent physical impairment as defined by law, and also denying financial liability to any party.

A hearing was held by the Commission on April 23, 1979, at which time the Commission entered as exhibits Commission exhibit no. 1, the file of I.C. Claim No. 131308 (claimant’s file before the Commission reflecting the compensation agreement and its approval, together with correspondence and various physicians’ reports all relating to the claimant’s injury of September 23, 1975); Commission exhibit no. 2 (the deposition of Dr. Lynch taken at the request of Industrial Indemnity Company, on February 19, 1979, prior to the hearing); and defendant’s exhibit no. 3 (answers by claimant to defendant’s interrogatories). In addition to the exhibits, the Commission also heard the testimony of claimant and Dr. Walter D. Thurston, claimant’s attending physician.

The Commission entered its findings of fact and conclusions of law, and its order denying claimant’s application for modification of the compensation agreement. Following this order claimant perfected this appeal.

The primary issue presented by appellant is that the Commission erred in refusing to grant a modification of the previous award as sought in his application for a hearing. Correlative to this basic issue is the question of whether the Commission erred in construing the provisions of I.C. § 72-719¹ in entering its conclusions of law.

It is well recognized that a compensation agreement approved by the Industrial Commission is equivalent to an award under the Idaho Workmen’s Compensation Laws. I.C. § 72-711. Dep’t of Finance v. Union Pac. R. Co., 61 Idaho 484, 104 P.2d 1110 (1940) (decided under provisions of I.C. § 72-602, as it existed in 1940, which statute was reenacted almost verbatim in 1971 and now appears as I.C. § 72-711).² This court has held that except as provided by I.C. § 72-719 an award under the provisions of I.C. § 72-711 becomes final and conclusive if no appeal is taken (see also I.C. § 72-718). Blackburn v. Olson, 69 Idaho 428, 207 P.2d 1160 (1949).

Initially, under the foregoing finality rule, a question arises as to the effect of I.C. § 72-711 on the facts presented here. Reiterating the situation we are dealing with, the claimant and the employer’s surety entered into a compensation agreement which was approved by the Industrial Commission. At that time, I.S.I.F. was not a party to the agreement. The record discloses that at the time the agreement was entered into, the Commission had before it the fact that in the opinions of the claimant’s attending physician and one neurosurgeon that the claimant was totally disabled, yet the Commission on the basis of the agreement approved the award of 17 of the whole man, with no consideration given as to whether or not I.S.I.F. should be made a party. Under this state of facts, only the employee and the employer and his surety could rely upon the finality of that award under I.C. § 72-711 and 72-718. Res judicata is applicable only to the parties to that proceeding and their privies. Pocatello Industrial Park v. Steel West, Inc., 101 Idaho 783, 621 P.2d 399 (1980); Idaho State Univ. v. Mitchell, 97 Idaho 724, 552 P.2d 776 (1976). Thus, the I.S.I.F. cannot claim that approval of the compensation agreement foreclosed proceedings against it.

Prior to 1971, when I.C. § 72-719 was enacted, the only basis for a modification of an award was “on the ground of a change in condition.” See I.C. § 72-607, as it existed prior to 1971; see also S.L. 1917, Ch. 81, § 56, p. 252, and subsequent recodifications and amendments. However, the 1971 act, now in effect, provides for modification of awards and agreements on the following grounds:

“(1) .... (a) Change in the nature or extent of the employee’s injury or disablement; or (b) Fraud.” and also provides that

“(3) The commission, on its own motion .. . may review a case in order to correct a manifest injustice.” I.C. § 72-719(l)(a), (b) and (3). (Emphasis added.)

The Commission recognized in its conclusions of law that claimant applied for a modification of a compensation agreement on the grounds of change of condition (I.C. § 72-719(l)(a)) and in order to correct a manifest injustice (I.C. § 72-719(3)). As to this later ground for modification, the Commission ruled:

“Since Claimant knew at the time he signed the Compensation Agreement he had multiple sclerosis, the record does not support a modification of the Compensation Agreement to correct a manifest injustice. Idaho Code, Section 72-719(3) covers situations where a worker suffers a latent injury or disease not discoverable within the limitations period.”

In this regard it is the conclusion of the court that the Commission erred.

As used in the statute, the term “manifest injustice” as a ground for reopening and review of an order must be construed broadly. In Goodson v. L.W. Hult Produce Co., 97 Idaho 264, 266, 543 P.2d 167, 169 (1975), this court stated:

“This court repeatedly has recognized the policy that ‘there should be accorded to the Workmen’s Compensation Act a broad and liberal construction, that doubtful cases should be resolved in favor of compensation, and that the humane purposes which these acts seek to serve leave no room for narrow technical construction.’ Smith v. University of Idaho, 67 Idaho 22, 26,170 P.2d 404, 406 (1946).”

“Manifest” has been defined to mean: capable of being easily understood or recognized at once by the mind; not obscure; obvious. Webster’s Third New International Dictionary, 1967. “Injustice” has been defined to mean: absence of justice; violation of right or of the rights of another; iniquity, unfairness; an unjust act or deed; wrong. Webster’s, Third New International Dictionary, 1967.

Giving the term “manifest injustice” as used in I.C. § 72-719(3) a broad construction, it would appear that the Commission failed to fully consider its obligation to make specific findings and conclusions in this regard, and thus, this case must be remanded to the Commission to afford it the opportunity to again examine its position in this regard.

During argument to this court, it was specifically pointed out that at the time the Commission approved the compensation agreement, it had in its files the statement contained in a letter by Dr. Thurston, claimant’s attending physician, that claimant was totally disabled. Dr. Lynch, in his deposition, also stated that in 1976, prior to the time that the compensation agreement was executed, claimant was 90% disabled. The employer and his surety, in argument to this court, also recognized that the claimant suffered from total disability, but asserted that insofar as they were concerned their only responsibility under the statute (I.C. § 72-332) was for 17 xh% as provided in the agreement which the Commission approved. The employer and surety pointed out that the findings by the Commission that claimant’s multiple sclerosis condition was not aggravated in any way by the industrial accident, that his back condition has not changed since the date of the compensation agreement, and that claimant’s condition would be the same whether or not he had suffered the industrial accident, were all fully sustained by the evidence. We agree with this latter point.

Nonetheless, the finding by the Commission that claimant’s condition was not aggravated in any way by the industrial accident is not wholly determinative of the responsibility of the I.S.I.F. in this action. I.C. § 72-332(1) provides in pertinent part:

“If an employee who has a permanent physical impairment from any cause or origin, incurs a subsequent disability by an injury . . . arising out of and in the course of his employment, and by reason of the combined effects of both the preexisting impairment and the subsequent injury ... or by reason of the aggravation and acceleration of the preexisting impairment suffers total and permanent disability, the employer and surety shall be liable for payment of compensation benefits only for the disability caused by the injury . . ., and the injured employee shall be compensated for the remainder of his compensation benefits out of the special industrial indemnity fund.” (Emphasis added.)

This statutory provision is phrased in the disjunctive, and not in the conjunctive. If either condition exists, i.e., total permanent disability occasioned by the combined effects of both the preexisting impairment and the subsequent injury, or if the facts disclose aggravation and acceleration of the preexisting impairment by the industrial accident, then the liability of the I.S.I.F. arises. The Commission in its findings of fact and conclusions dealt only with the issue of whether the industrial accident aggravated the claimant’s preexisting condition. It is the conclusion of this court that the Commission should have also made the first determination, i.e., did the claimant’s total and permanent disability arise by reason of the combined effects of both the preexisting impairment (multiple sclerosis) and the subsequent injury sustained in the industrial accident. The predicate of this conclusion is that if the determination had been made, it may very well have also followed that the initial award was a manifest injustice.

Finally, it is important to note that even though denoted a request for modification, the proceedings below were not truly an action seeking modification of a previous award. No one really disputes the propriety of the initial award of 17 Vz% permanent partial disability charged to the employer and surety. Rather, the case can more properly be characterized as an attempt to bring in I.S.I.F. as a party so as to secure additional compensation benefits long after the initial award against the employer and surety had been entered. In this regard, the instant case is similar to the case of Anderson v. Potlatch Forests, Inc., 77 Idaho 263, 291 P.2d 859 (1955). In that case the claimant had been paid for permanent partial disability under an agreement with his employer and its surety for an injury to his right hand and arm. Nonetheless, at that time, due to a previous injury resulting in loss of use of the left hand, the claimant was totally and permanently disabled. Three years after the compensation agreement had been approved, and almost four years after the industrial accident, the claimant brought an action for additional compensation benefits from the I.S.I.F. The court reversed the Industrial Accident Board’s decision denying the claimant’s request for additional benefits, observing that the files before the Board disclosed that the combined effects of the industrial accident and preexisting injury had rendered the claimant totally and permanently disabled. 77 Idaho at 268-270, 291 P.2d at 862-863. Accordingly, the cause was remanded for further proceedings to determine the amount of compensation. 77 Idaho at 270, 291 P.2d at 863. In the instant case, the files before the Commission reflect some evidence that the claimant was totally and permanently disabled. However, there having been neither a determination of whether the multiple sclerosis constituted a preexisting impairment (see Gugelman v. Pressure Treated Timber Co., 102 Idaho 356, 630 P.2d 148 (1981)), nor whether the combined effects of the multiple sclerosis and the industrial accident caused the claimant’s total and permanent disability, we cannot say as the court in Anderson could say that the claimant is entitled to additional benefits from the I.S.I.F. Thus, the order of the Commission is reversed and the cause remanded for further proceedings to determine the liability of I.S.I.F., if any, in accordance with the views expressed in this opinion. Costs to appellant and to be paid by I.S.I.F.

BISTLINE, DONALDSON and SHEPARD, JJ. concur.

1 . I.C. § 72-719, enacted in 1971, provides in pertinent part:

“(1) Modification of awards and agreements — Grounds—Time within which made. —(1) An application made by a party in interest filed with the commission at any time within five (5) years of the date of the accident causing the injury ..., on the ground of a change in condition, the commission may, but not oftener than once in six (6) months, review any order, agreement or award upon any of the following grounds:

(a) Change in the nature or extent of the employee’s injury or disablement; or

(b) Fraud.

(2) The commission on such review may make an award ending, diminishing or increasing the compensation previously agreed upon or awarded, subject to the maximum and minimum provided in this law, and shall make its findings of fact, rulings of law and order or award, file the same in the office of the commission, and immediately send a copy thereof to the parties.

(3) The commission, on its own motion at any time within five (5) years of the date of the accident causing the injury or date of first manifestation of an occupational disease, may review a case in order to correct a manifest injustice.” (See I.C. § 72-607 as it existed pri- or to 1971.)

2 . I.C. § 72-711. Compensation Agreements.— If the employer and the afflicted employee reach an agreement in regard to compensation under this law, a memorandum of the agreement shall be filed with the commission, and, if approved by it, thereupon the memorandum shall for all purposes be an award by the commission and be enforceable under the provisions of section 72-735, unless modified as provided in section 72-719. An agreement shall be approved by the commission only when the terms conform to the provisions of this law. (See former I.C. § 72-602 as it existed prior to 1971.)