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Harp v. Arco Alaska Inc. and ALPAC/CIGNA/INA (5/1/92), 831 P 2d 352
<![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
LINDA HARP, )
) Supreme Court File Nos.
) S-4400/S-4437
Appellant/ ) Superior Court File No.
Cross-Appellee, ) 3AN-89-1891 Civil
)
v. ) O P I N I O N
)
ARCO ALASKA, INC. and )
ALPAC/CIGNA/INA, )
)
Appellees/ )
Cross-Appellants. ) [No. 3834 - May 1, 1992]
______________________________)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage, Milton Souter, Judge, on appeal
from the Workers' Compensation Board.
Appearances: Chancy Croft, Anchorage,
for Appellant/Cross-Appellee. Timothy A.
McKeever and Theresa Hennemann, Faulkner,
Banfield, Doogan & Holmes, Anchorage, for
Appellees/ Cross-Appellants.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton and Moore, Justices.
MOORE, Justice.
I. INTRODUCTION
Linda Harp appeals a ruling by the Alaska Workers'
Compensation Board that ARCO Alaska, Inc. and ALPAC/CIGNA/INA
(collectively "the employer") need not pay Harp a penalty
pursuant to AS 23.30.155 for controverting her claim to temporary
total disability ("TTD") benefits. Harp argues that a penalty is
appropriate because the employer controverted her claim in bad
faith. The employer cross-appeals the Board's ruling that Harp
is entitled to TTD benefits. The employer argues that Harp is
not disabled, and that even if she is disabled, her disability is
not work-related.
II. FACTS AND PROCEEDINGS
Linda Harp worked for the employer as a security
specialist in the atrium of its Anchorage office building. She
suffered from thoracic outlet syndrome1 since at least 1982. In
June 1987, she underwent surgery to relieve her symptoms. Doctor
Edward Berkeley performed the surgery.
Following the surgery, Harp returned to work. As part
of her job as a security specialist, she took a CPR class on July
29, 1987. During the class she was required to use both arms to
compress the chest cavity of a mannequin used to test CPR
technique. Harp experienced pain in her right shoulder on the
day after the class. This pain later became severe. Due to her
injury, Harp stopped working approximately three weeks after the
CPR class.
The employer paid Harp TTD benefits from August 24,
1987 until June 11, 1988. In June 1988, the employer
controverted payment of any future benefits and contended that
benefits paid after February 9, 1988 represented an overpayment.
The employer stated in the controversion notice that it was
controverting her claim because she had provided "no medical
verification of on-going disability,"and because the "[w]ork
incident of 7-29-87 was only a temporary aggravation of long-
standing pre-existing non-work related cervical problems."
After the controversion, Harp filed an application for
adjustment of her claim with the Alaska Workers' Compensation
Board.2 Harp requested, inter alia, TTD benefits and a penalty
pursuant to former AS 23.30.155(e).3 The employer disputed all
of Harp's claims. It argued that Harp's disability was not work-
related and that an order to pay benefits was therefore
inappropriate.
The Board relied upon the opinions of several medical
experts. The most important evidence came from Dr. Berkeley,
Harp's treating physician, and Dr. Charles Brantigan, a thoracic
surgeon who examined Harp in November 1988 at the employer's
request.
Doctor Berkeley testified that, although it is not
mentioned in his operative notes, he removed portions of Harp's
scalene muscles during her surgery. After the surgery, he
prescribed medication for pain due to the surgery. Harp called
him a few days after the operation and told him her thoracic
outlet syndrome symptoms had totally subsided. She also
complained about hypersensitivity in the area of the surgical
incision. He released her to return to work the following week
with restrictions on reaching, pulling, pushing, and carrying.
On August 11, 1987, Harp called him to report the CPR incident
and the recurrence of neck and shoulder pain and tingling in her
fingers. Dr. Berkeley testified that, in his opinion, the CPR
incident could have caused Harp some permanent damage. He also
stated that Harp could return to work after the CPR incident, as
long as the same restrictions on her work applied.
Doctor Brantigan testified in his deposition that
"compelling evidence"supported the diagnosis of thoracic outlet
syndrome, and that Harp was completely disabled from meaningful
work. He disagreed, however, with Dr. Berkeley's conclusion that
the CPR class was to blame. If the CPR training had resulted in
damage to the surgical site, he stated, Harp would have noticed
symptoms immediately rather than one or two days later. Unaware
of Dr. Berkeley's testimony that he had severed Harp's scalene
muscles, Dr. Brantigan concluded from Dr. Berkeley's operation
notes that Harp's condition was attributable to a natural
reattachment of the scalene muscles to the brachial plexus
nerves. When scalene muscles are divided but not removed in
surgeries to relieve thoracic outlet syndrome, he testified, the
muscles reattach to the nerve roots directly or by scar tissue
"50-60% of the time,"often resulting in recurring symptoms. He
testified that the CPR activity conceivably caused a muscle spasm
which caused the scalene muscle reattachment to become evident
through thoracic outlet syndrome symptoms, but that the CPR
activity itself probably had no meaningful relationship to Harp's
current condition. Doctor Brantigan also testified that Harp's
prescriptions for pain-killing medication were inconsistent with
Dr. Berkeley's opinion that the employee was asymptomatic after
the surgery.
In its Decision and Order dated February 10, 1989, the
Board ordered payment of past, and reinstatement of future, TTD
benefits as requested by Harp. The Board refused to order
payment of a penalty, however, holding that the employer's
reliance upon Dr. Brantigan's report was a sufficient basis for
the controversion. This conclusion was erroneous, for Dr.
Brantigan did not examine Harp until November 1988, several
months after the controversion.
Harp appealed the Board's decision to the superior
court, arguing that the Board erred in denying her claim for a
penalty and in denying her claim for additional attorney's fees.
The employer cross-appealed, arguing inter alia that the Board
erred in concluding that Harp was temporarily totally disabled.
The employer then petitioned the Board to reconsider certain
aspects of its Decision and Order which are not at issue in this
case. Harp moved for a partial remand to the Board and
petitioned the Board to modify its Decision and Order to award
Harp additional attorney's fees and a penalty pursuant to former
AS 23.30.155. The superior court remanded the case to the Board
to consider Harp's motion for modification of the Board's order
regarding the penalty and additional attorney's fees.
Upon remand, the Board denied Harp's petition for
modification of its Decision and Order. The Board conceded that
it had erred in concluding that the employer had controverted the
claim in reliance on Dr. Brantigan's report. It ruled that a
penalty was inappropriate, however, stating that an employee's
failure to provide medical verification of a continuing
disability is a valid basis for controversion. The Board also
refused to award additional attorney's fees to Harp's counsel.
Harp appealed the Board's decision to the superior
court, alleging that the Board erred in denying her claims for a
penalty and for additional attorney's fees. The employer cross-
appealed, claiming that the Board erred in concluding that Harp
was temporarily totally disabled. Because the record did not
contain a transcript of the Board's proceedings, the parties
stipulated to the accuracy of the representations in the briefs
concerning testimony before the Board.
Judge Milton Souter affirmed the Board's Decision and
Order. He denied Harp's claim for a penalty, holding that the
Board's finding that the employer had not acted in bad faith
justified the Board's decision not to penalize the employer.4 He
rejected the employer's cross-appeal, concluding that the
testimony of Dr. Berkeley sufficiently supported the Board's
decision that Harp was temporarily totally disabled.
III. DISCUSSION
A. DID THE BOARD ERR IN HOLDING THAT HARP WAS
ENTITLED
TO TEMPORARY TOTAL DISABILITY BENEFITS?
The Board ordered the employer to pay Harp continuing
TTD benefits from the date of controversion, as well as the costs
of reasonable and necessary medical treatment of Harp's thoracic
outlet syndrome. The employer argues that this decision should
be reversed because it is based upon an erroneous standard of law
and is not supported by substantial evidence.
1. Did the Board apply the correct legal standard?
In a proceeding for the enforcement of a workers'
compensation claim, it is presumed that the claim is compensable
in the absence of substantial evidence to the contrary. Former
AS 23.30.120(a)(1). In Burgess Constr. Co. v. Smallwood, 623
P.2d 312, 316 (Alaska 1981), we held that for the presumption of
compensability to apply to an employee's claim, the employee must
establish a preliminary link between the injury and continuing
symptoms. When a preliminary link is established, it becomes
incumbent upon the employer to come forward with substantial
evidence to rebut the presumption. Resler v. Universal Serv.,
Inc., 778 P.2d 1146, 1149 (Alaska 1989). To overcome the
presumption of compensability, the employer must present
substantial evidence that the injury was not work-related. Id.
We have "consistently defined _substantial evidence_ as _such
relevant evidence as a reasonable mind might accept as adequate
to support a conclusion._" Miller v. ITT Arctic Serv., 577 P.2d
1044, 1046 (Alaska 1978). If the presumption of compensability
is successfully rebutted, the employee must then prove all of the
elements of the case by a preponderance of the evidence. Id.
The employer argues that while the Board discussed the
presumption of compensability, it failed to actually apply the
presumption, or any part of the legally-required analysis, in
reaching its conclusion that Harp had a TTD. Specifically, the
employer claims that the Board failed to determine whether Harp
established a preliminary link between her employment and her
physical impairment, whether the employer rebutted the
presumption of compensability, and whether Harp proved her case
by a preponderance of the evidence. Because the Board applied
the incorrect legal standard, the employer argues, the superior
court's order should be vacated.5
We agree that the Board failed to explicitly apply the
proper legal analysis. The Board simply ruled that, based on the
evidence presented at the hearing, Harp's work "aggravated her
preexisting thoracic outlet syndrome condition and was a
substantial factor in bringing about her current disability." We
believe, however, that the Board's failure to explicitly state
that Harp was entitled to the presumption of compensability was a
harmless error. Because the Board articulated the correct legal
standard, and then concluded that Harp should be compensated
because her work aggravated her preexisting injury and was a
substantial factor in bringing about her current disability, no
doubt can exist that the Board applied the proper legal analysis.
See Kodiak Oilfield Haulers v. Adams, 777 P.2d 1145, 1150-51
(Alaska 1989) (holding that the Board's failure to apply the
statutory presumption of compensability was harmless since the
employer had presented sufficient evidence to rebut the
presumption). We note, however, that the conclusory findings of
the Board made our review of the Board's decision quite
difficult. In future cases involving the presumption of
compensability, the Board should explicitly state whether the
employee established a preliminary link between her employment
and her physical impairment, whether the employer rebutted the
presumption of compensability, and if so, whether the employee
proved her case by a preponderance of the evidence.
2. Was the Board's decision supported by substantial
evidence?
The employer next contends that the record does not
support the Board's conclusion that Harp was physically unable to
work after February 1988 due to a work-related disability. This
court must affirm the Board's findings of fact if substantial
evidence supports those findings. Ketchikan Gateway Borough v.
Saling, 604 P.2d 590, 593 n.8 (Alaska 1979). "Substantial
evidence is such relevant evidence as a reasonable mind would
accept as adequate to support a given conclusion." Id.
a. Does substantial evidence support
the Board's finding that Harp was
disabled after February 1988?
Alaska Statute 23.30.265(10) 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." The employer argues that, since Dr. Berkeley
testified that Harp could return to work as long as certain
restrictions were placed on her activities, she is not "disabled"
for purposes of the Act.
The record indicates that the employer failed to
preserve the issue of Harp's disability for review by this court.
While the employer's controversion notice states that there was
"[n]o medical verification of ongoing disability,"the employer
did not argue that Harp was not disabled in its briefs to the
Board. Because the record does not contain a transcript of the
January 12, 1989 hearing before the Board, it is impossible to
ascertain whether the employer questioned Harp's disability
during the hearing.6 The Board's February 10, 1989 decision
suggests, however, that the employer did not question Harp's
disability during the hearing. That decision states that "[t]he
basis for the employer's position is that the employee's current
disability is not work-related."Because the employer did not
argue before the Board that Harp was not disabled, the employer
is precluded from raising this issue on appeal.
Even if the employer had not waived the issue of
whether Harp was disabled, we would not reverse the Board's
decision to award TTD benefits. With the exception of the
testimony of Dr. Berkeley, no medical testimony suggests that
Harp is not disabled.7 Doctor Brantigan, the medical expert
hired by the employer, felt very strongly that Harp was disabled.
He testified that Harp's "symptoms are so pronounced that [she]
is completely disabled from doing any meaningful work at the
present time." Because the medical records and testimony
indicate that Harp was disabled, and only Dr. Berkeley's
testimony suggests that Harp was not disabled, substantial
evidence supports any Board conclusion that Harp was disabled.
b. Does substantial evidence support the
Board's finding that Harp's ailments
stem from the CPR-training incident?
In its Decision & Order of February 10, 1989, the Board
found that Harp aggravated her thoracic outlet syndrome condition
during the CPR-training class and that her claim was therefore
compensable. The Board examined the medical testimony of Dr.
Berkeley and Dr. Brantigan before making this finding. The Board
reasoned:
Dr. Brantigan's belief that naturally
occurring muscle reattachment rather than CPR
activity caused the current symptoms was
based only on Dr. Berkeley's operative notes.
Dr. Berkeley testified, under oath, that
while he did not mention it in his notes he
did in fact remove portions of the scalene
muscles. While we have no reason not to
believe Dr. Berkeley, we also note that he
mentioned removing bands of muscle or
ligament in his deposition before Dr.
Brantigan focused on the lack of removal in
his deposition. We find, therefore, that Dr.
Brantigan's thesis is not supported by the
facts. We also accept Dr. Berkeley's
explanation distinguishing "surgical pain"
from the thoracic outlet syndrome symptoms
(including head and neck pain) and thereby
explaining the apparent conflict between his
belief the employee was essentially symptom-
free after surgery even while he (and other
physicians) prescribed pain medication.
The employer attacks the Board's determination that Harp
aggravated her thoracic outlet syndrome condition during the CPR-
training class. The employer claims that that finding was based
only on Dr. Berkeley's testimony that he had removed portions of
Harp's scalene muscles, and that this testimony does not
constitute substantial evidence because it is inconsistent with
his previous testimony, the medical records and Dr. Brantigan's
unrefuted testimony.
Judge Souter rejected the employer's argument that the
Board erred in finding Harp's injury was work-related, holding
that the testimony of Dr. Berkeley is "more than ample" to
support the Board's determination, and that the Board did not
exceed its discretion in resolving minor inconsistencies in Dr.
Berkeley's testimony in favor of Harp.
We also reject the employer's argument that Harp's
injury was not work-related. Before the Board found that Harp's
disability was work-related, it carefully weighed the same
arguments which the employer raises in this appeal. These
arguments are that Dr. Berkeley's report shows that he simply
divided Harp's scalene muscles, and that Harp's symptoms
following surgery are consistent with a reattachment of the
scalene muscles. The Board expressly considered these issues,
reasonably concluding from Dr. Berkeley's testimony that he had
resected portions of Harp's scalene muscles. We affirm this
conclusion because it is supported by substantial evidence.
B. DID THE BOARD ERR IN FAILING TO IMPOSE A PENALTY
ON THE EMPLOYER FOR CONTROVERTING HARP'S CLAIM?
Harp maintains that the employer had no valid reason to
controvert her claims to TTD benefits, and that the employer
should therefore pay Harp a penalty pursuant to former AS
23.30.155(e). The employer disagrees, claiming that its stated
reasons for filing the notice of controversion evince its good
faith, and therefore it should not be penalized.
Alaska Statute 23.30.155 imposes a penalty on an
employer who fails to pay an installment due to an employee if
the employer does not controvert the employee's right to
compensation within 21 days, or within seven days if the employer
has previously made compensation payments. The Act does not
state whether a controversion notice which is timely filed can
under certain circumstances be ineffective to avert a penalty.
A controversion notice must be filed in good faith to
protect an employer from imposition of a penalty. In Stafford v.
Westchester Fire Ins. Co. of New York, 526 P.2d 37 (Alaska 1974),
this court wrote:
In circumstances where there is reliance
by the insurer on responsible medical opinion
or conflicting medical testimony, invocation
of penalty provisions is improper. However,
when nonpayment results from bad faith
reliance on counsel's advice, or mistake of
law, the penalty is imposed.
Id. at 42. See also 3 A. Larson, Larson's Workmen's Compensation
Law 83.41(b)(2) (1990) ("Generally a failure to pay because of
a good faith belief that no payment is due will not warrant a
penalty."). 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. See Kerley v.
Workmen's Comp. App. Bd., 481 P.2d 200, 205 (Cal. 1971) (the only
satisfactory excuse for delay in payment of disability benefits,
whether prior to or subsequent to an award, is genuine doubt from
a medical or legal standpoint as to liability for benefits).
The evidence which the employer possessed at the time
of controversion was, at best, neutral evidence that Harp was not
entitled to benefits. As to the first stated reason for the
controversion, that Harp failed to provide ongoing verification
of her disability, the employer possessed no evidence that Harp
was not disabled. Because the Act does not require an employee
to provide updates of her medical condition, an employer must not
be allowed to unilaterally terminate benefits when an employee
fails to provide medical verification of her ongoing disability.8
See Colomb v. Frito-Lay, Inc., 544 So.2d 710, 715-16 (La. Ct.
App. 1989) (holding that the defendant employer, who controverted
an employee's claim in the absence of any factual information
that the employee was not entitled to benefits, must pay a
penalty because it did not possess sufficient factual information
to reasonably counter the factual information presented by the
claimant). The Act expressly allows an employer to require an
employee to submit to medical examinations requested by the
employer, but the employer in this case did not take advantage of
that opportunity.9 See AS 23.30.095(e) ("The employee shall,
after an injury, at reasonable times during the continuance of
the disability, if requested by the employer or when ordered by
the board, submit to an examination by a physician or surgeon of
the employer's choice . . . .").
The employer also possessed insufficient evidence as to
the second stated reason for controverting Harp's benefits, that
her disability was not work-related. The employer points out
that when Dr. Berkeley examined Harp in December 1987, he was "at
a loss to understand what [was] going on and why she had
recurrent symptoms." This statement alone would not constitute
substantial evidence that Harp is not entitled to benefits.
Furthermore, it appears from the context of the statement that
Dr. Berkeley was referring to the specific internal source of her
pain, not to the external event which had aggravated her pain.10
Finally, because Dr. Berkeley, along with Dr. Fu and Dr.
Meinhardt, had previously concluded that Harp's disability was
work-related, it is unlikely that Dr. Berkeley was questioning
the work-relatedness of her injury in his December 1987 report.
Because neither reason given for the controversion was
supported by sufficient evidence to warrant a Board decision that
Harp is not entitled to benefits, the controversion was made in
bad faith and was therefore invalid. A penalty is therefore
required by former AS 23.30.155(e).
III. CONCLUSION
Because the superior court did not err in ordering the
employer to pay Harp continuing TTD benefits from the date of
controversion, that aspect of the Board's Decision and Order is
AFFIRMED. We REVERSE the Board's decision not to require the
employer to pay Harp a penalty, and REMAND the case with
instructions to enter judgment accordingly.
_______________________________
1. The thoracic outlet is a triangular-shaped opening
beneath the collar bone above the first rib. Thoracic outlet
syndrome arises when the brachial plexus nerve and the subclavian
artery become compressed in the thoracic outlet due to lack of
sufficient space. The neurological symptoms of thoracic outlet
syndrome include numbness, tingling, and weakness in the hands.
The vascular symptoms (Raynaud's phenomenon) of thoracic outlet
syndrome include poor circulation to the fingers with blanching,
numbness, and vasoconstriction.
2. In an earlier Decision and Order, the Board directed the
employer to reimburse Harp for the reasonable travel expenses she
incurred as a result of her treatment by Dr. Berkeley. Harp v.
ARCO Alaska, Inc., AWCB No. 88-0252 (September 29, 1988).
3. Former AS 23.30.155 provided in relevant part:
(a) Compensation under this chapter
shall be paid periodically, promptly, and
directly to the person entitled to it,
without an award, except where liability to
pay compensation is controverted by the
employer. . . .
. . . .
(e) If any installment of compensation
payable without an award is not paid within
seven days after it becomes due, as provided
in (b) of this section, there shall be added
to the unpaid installment an amount equal to
20 percent of it, which shall be paid at the
same time as, and in addition to, the
installment, unless notice is filed under (d)
of this section or unless the nonpayment is
excused by the board after a showing by the
employer that owing to conditions over which
he had no control the installment could not
be paid within the period prescribed for the
payment.
The 1988 amendments to subsection (e) of this statute, which
became effective July 1, 1988, substituted "25 percent"for "20
percent."
4. The Board did not actually examine whether the employer
acted in bad faith. The Board did not require a penalty because
it felt that Harp's failure to provide medical verification of a
continuing disability was a valid basis for controversion.
5. The employer's arguments that the Board misapplied the
applicable law raise questions of law, which this court reviews
de novo. Simon v. Alaska Wood Products, 633 P.2d 252, 254
(Alaska 1981).
6. The parties stipulated before Judge Souter to the
accuracy of the representations in the briefs concerning
testimony before the Board, but that stipulation does not seem to
pertain to the parties' arguments before the Board.
7. The fact that Dr. Berkeley testified that Harp could
return to work as long as certain restrictions are applied
suggests that Harp is not disabled. Some of his medical reports
indicate, however, that he believes she is disabled. For
example, Dr. Berkeley noted after Harp's December 1987 office
visit that Harp had difficulty using her right hand.
8. Harp argues that because AS 23.30.120 provides a
presumption of compensability, an employer which has accepted an
employee's claim must continue paying benefits until the employer
produces evidence that payments are no longer warranted. The
Board has consistently rejected this argument, holding that the
presumption applies only to work-relatedness. See, e.g., Keyes v.
Reeve Aleutian Airlines, AWCB No. 850312 (November 8, 1985).
9. Linda Harp testified that Marlene Sjoberg, ARCO's
adjuster, called her in March 1988 and "was going to set up an
independent medical consultation for [Harp]." Sjoberg apparently
told Harp that she would arrange for the examination and then
call Harp back. Sjoberg never called her back.
10. Doctor Berkeley's notes state:
I explained to her that I had no simple
solution to her problem. I am at a loss to
understand really what is going on and why
she had recurrent symptoms, some of which
might be due to some brachial plexus
irritability in the place where we did the
previous surgery and decompression in the
right thoracic outlet, though she has in
addition, some degenerative changes at C4-5.
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