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Schmidt v. Beeson Plumbing and Heating, et al (2/25/94), 869 P 2d 1170
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NOTICE: This opinion 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
ANTHONY W. SCHMIDT, ) Supreme Court No. S-5426
)
Appellant, ) Superior Court No.
) 3AN-91-8812 CI
v. )
) O P I N I O N
BEESON PLUMBING AND HEATING, )
INC., GREAT AMERICAN ) [No. 4059 - February 25, 1994]
INSURANCE CO., and INDUSTRIAL )
INDEMNITY, INC., )
)
Appellees. )
______________________________)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage,
Joan M. Katz, Judge.
Appearances: Richard L. Harren,
Wasilla, and Susan D. Mack, Anchorage, for
Appellant. Richard L. Wagg, Russell, Tesche
& Wagg, Anchorage, for Appellees, Beeson
Plumbing & Heating and Industrial Indemnity
Insurance Company. Phillip J. Eide, Eide &
Miller, Anchorage, for Appellees, Beeson
Plumbing and Heating, Inc. and Great American
Insurance Company. Toby N. Steinberger,
Assistant Attorney General, Anchorage,
Charles E. Cole, Attorney General, Juneau,
for Appellee, Alaska Workers' Compensation
Board.
Before: Moore, Chief Justice,
Rabinowitz, Matthews, Compton, Justices, and
Bryner, Justice pro tem.*
RABINOWITZ, Justice.
I. INTRODUCTION
In this workers' compensation appeal, Anthony Schmidt
argues that a degenerative disc disorder in his neck and shoulder
is a result of heavy lifting while he was employed with Beeson
Plumbing & Heating, Inc. (Beeson). The Alaska Workers'
Compensation Board (the Board) denied his claim, on the ground
that his employment with Beeson was not the cause of his
condition. Schmidt argues that Beeson's workers' compensation
carriers waived certain defenses, that his second hearing before
the Board violated due process, and that the Board improperly
appointed to the hearing panel a third member who had not been
physically present at Schmidt's second hearing. We affirm in
part and reverse in part.
II. FACTS AND PROCEEDINGS
Schmidt worked at Beeson from April 1987 to November
1988. During this time two successive carriers provided workers'
compensation insurance for Beeson. Great American Insurance Co.
(Great American) insured Beeson until mid-April 1988. Industrial
Indemnity Insurance Co. (Industrial Indemnity) insured Beeson
thereafter.
In July 1987, while working on a project that spanned
several months and involved frequent heavy lifting, Schmidt began
to experience persistent pains in his right shoulder. Schmidt
could not attribute the occurrence of this pain to any particular
event, stating that he "just noticed the pain start" in his
shoulder approximately one month after the project began.
In August he sought treatment from Dr. Richard
Strohmeyer for his shoulder problem, pain in his right knee, and
a hand injury from a drill accident. In his chart notes, Dr.
Strohmeyer stated that Schmidt did not relate his shoulder pains
to any specific on-the-job injury but that Schmidt "in working,
using his shoulder a lot he has noticed the increased discomfort
lately, in the right shoulder." Dr. Strohmeyer's diagnosis of
the condition was degenerative joint disease in the AC joint.
Schmidt testified that the doctor told him that the shoulder
discomfort resulted from arthritis. Dr. Strohmeyer prescribed
Motrin for the pain, and allowed him to return to work. Schmidt
and Beeson filed a notice of occupational injury with the Board.
Schmidt saw Dr. Strohmeyer twice over the next few
months. At a September 1987 visit, which focused primarily on
the knee and hand injuries, Schmidt "incidentally mention[ed]"
that his shoulder was better with the Motrin. Schmidt made a
return visit in January 1988. The chart notes for this visit are
focused almost solely on his knee injury, but a handwritten
notation stated, "Shoulder helped by Motrin." Schmidt testified
that the Motrin actually did little for his pain, but that
because Dr. Strohmeyer told him that the shoulder was arthritic
and that there was no cure, Schmidt made no further visits for
over a year. Meanwhile, Schmidt continued working for Beeson,
performing the same job duties with the same physical demands,
until in November 1988 he took a vacation and was essentially
laid off upon his return.1
In January 1989 Schmidt's pain intensified, spreading
to his elbow, forearm, and hand. Schmidt returned to Dr.
Strohmeyer's office in mid-February. Dr. Richard Dix, who was
substituting for Dr. Strohmeyer at the time, diagnosed "a
radiculopathy that is perhaps related to a degenerative disc."
Dr. Strohmeyer saw Schmidt at the end of February, found a
herniated cervical disc of "progressive, unrelenting nature,
present over . . . a long period of time,"and referred Schmidt
to Dr. Michael Newman. Dr. Newman examined Schmidt a few days
later, and also identified cervical disc degeneration with
radiculopathy. Dr. Newman saw Schmidt on two other occasions in
1989, and sent him to a colleague for injections of cervical
epidural steroids.
When Schmidt reopened his workers' compensation claim
after his visit with Dr. Dix, both workers' compensation carriers
controverted Schmidt's claim. Great American filed its
controversion notice in March 1989, on the grounds that no
medical documentation linked Schmidt's current condition to the
events of July 1987, that the July 1987 injury was a temporary
aggravation of a preexisting condition, and that the last
injurious exposure rule relieved Great American of liability.2
Industrial Indemnity filed its notice of controversion in May
1989, on the grounds that it could not determine whether Schmidt
suffered a new injury in 1989, and that no medical data showed a
link between his condition and his employment with Beeson. In
July 1989 Industrial Indemnity filed another notice of
controversion, asserting that because Schmidt "suffered medical
problems continuously after the 1987 injury and no injury has
taken place during [the] Industrial policy period," Great
American should cover his current injury.
In November 1989 Schmidt filed an application for
adjustment of his claim, seeking temporary total disability (TTD)
benefits for the period from February 14, 1989 through May 9,
1989. He alleged that his current condition was related to the
heavy lifting that he did in July 1987. Among his reasons for
filing the application were that each carrier asserted that the
other was responsible for his claim and that both carriers had
controverted his claim.
Great American and Industrial Indemnity filed separate
answers to Schmidt's application. Great American's answer, filed
in November 1989, contained one argument:
The employee's claim of disability
appears to arise from his February 14, 1989,
injury date. Therefore, pursuant to the
"last injurious exposure rule" this claim
would appear to be the responsibility of the
employer's carrier from the period 4/19/88
onward: Industrial Indemnity Company.
Pursuant to AS 23.30.155(d) Industrial
Indemnity should make all payments due during
the pendency of this dispute.
Industrial Indemnity's answer, filed in December of the same
year, admitted the validity of Schmidt's TTD claim for February
through May 1989, but included the following statement: "We
reserve the right to raise further defenses after discovery."
In December 1989, Industrial Indemnity paid TTD
benefits covering the period for which Schmidt requested them.
In its compensation report, Industrial Indemnity stated that it
was "lifting [its] controversion at this time."
A prehearing conference was held in February 1990.
Industrial Indemnity stated that it had paid Schmidt TTD benefits
pursuant to AS 23.30.155(d).3 The conference notes also indicate
that Industrial Indemnity alluded to two possible defenses: that
Schmidt's condition may have been the result of the 1987 injury
alone, and that the carrier never received actual notice of
Schmidt's injury. The notes also indicate that the carriers
raised a last injurious exposure defense.
In April 1990 Dr. Newman furnished Industrial Indemnity
with an affidavit summarizing the results of his examinations of
Schmidt. Dr. Newman stated his opinion that "Mr. Schmidt's
cervical disc condition did not arise as a result of his work for
Beeson . . . between the dates of April 19, 1988 and October 30,
1988,"the period of Schmidt's employment during which Industrial
Indemnity was Beeson's workers' compensation carrier. He further
opined that Schmidt's employment during the same period neither
"aggravate[d] his underlying cervical disc disease nor was . . .
[it] a substantial factor in Mr. Schmidt's present condition."
In September 1990 Schmidt suffered a flare-up of
shoulder and arm pain. He saw Dr. Newman, who put him on several
medications and ordered a steroid injection. Schmidt also made a
TTD claim for the five days his pain had incapacitated him.
In early October the litigants assembled for another
prehearing conference. Almost six months after receiving it,
Industrial Indemnity disclosed Dr. Newman's affidavit to the
other parties as evidence of Great American's liability. A
little over three weeks later, Industrial Indemnity formally
filed the Newman affidavit with the Board and served copies on
the other parties.
Subsequently, Industrial Indemnity scheduled a
deposition of Dr. Newman, which took place in late November 1990.
At his deposition Dr. Newman testified that Schmidt's condition
since 1989 not only was unrelated to his employment during
Industrial Indemnity's coverage period, but also was unrelated to
the 1987 injury altogether.
Another prehearing conference took place on February
27, 1991. At this conference the carriers indicated that they
would raise defenses that Schmidt's injury neither occurred in
the course of his employment nor was related to his employment
with Beeson. Schmidt argued that the carriers had waived such
defenses. He asked for a bifurcation of the case so that the
Board would address the waiver issue first. The Board refused
this request, scheduled a hearing for April 5, 1991, and allowed
Schmidt to raise his bifurcation and waiver issues at the
hearing.
In March 1991 Industrial Indemnity amended its answer
to Schmidt's application for benefits. The carrier now stated
that it was not liable for the TTD benefits that it had already
paid, but rather had paid them only pursuant to AS 23.30.155(d).
In addition, Beeson and Industrial Indemnity "reaffirm[ed] their
position that the employee's employment during their period of
coverage [was] not a substantial factor in the employee's
disability or need for medical treatment as per the affidavit of
Michael Newman, M.D. previously filed with the board and served
on all parties on November 1, 1990." The carrier again reserved
the right to raise further defenses following discovery.
On April 2, 1991, Schmidt filed his list of witnesses.
He identified four witnesses who would testify, among them Dr.
Dix and himself.
The Board held a hearing on April 5, 1991. As of this
date, the benefits at issue were the five days of TTD that
Schmidt had claimed for the September 1990 flare-up, and unpaid
medical expenses through April 1991. At this hearing the Board
ordered an independent medical examination (IME) of Schmidt
pursuant to AS 23.30.110(g) and a continuance on the other
issues.4 In response to a question from Schmidt's counsel
concerning a possible additional deposition, the hearing panel's
chair, Mark Torgerson, advised, "we gather that the parties were
essentially ready to go today, and so we may--we may take a dim
view of people trying to add to the record. Keeping in mind that
if--that the results of the medical exam may compel us to change-
-to change on that."
Dr. Douglas G. Smith conducted the IME on April 11 and
submitted his evaluation on April 22. He found cervical disc
degeneration, agreed with Dr. Newman that Schmidt's employment
with Beeson probably did not cause Schmidt's condition, and
attributed the condition to the aging process rather than to a
traumatic event. Dr. Smith added that "no specific incident
mentioned in the records or in Mr. Schmidt's history . . . would
implicate the February, 1989 problem to any particular industrial
exposure." At his deposition in late May, Dr. Smith reiterated:
"I think the odds are . . . that the disk degeneration was caused
by not being 18 years old."
On April 19 Schmidt underwent surgery, in which Dr.
Newman fused three vertebrae in his neck. In May Schmidt
submitted a new application for adjustment of his claim.5 To his
original claim he added the medical costs resulting from his
recent neck surgery. He also filed a claim for TTD benefits from
April 12, 1991 forward.
On May 22, one week before the scheduled date for the
second Board hearing, Schmidt moved for a further continuance.
He argued that he needed more time to review the latest medical
records and Dr. Smith's deposition testimony, and to redepose Dr.
Newman. In addition, Schmidt contended that his new claim for
additional benefits to cover his neck surgery would of necessity
cause the hearing to last longer than a day. Finally, he
asserted that by reason of his recent surgery, participating in
the hearing at its scheduled date would endanger his health.
Schmidt also filed a revised witness list, which increased the
number of witnesses that he intended to have testify at the
hearing from four to twelve.
The second Board hearing was held on May 30, 1991. A
two-member panel, consisting of Chair Torgerson and labor
representative Harriet Lawlor, heard the case. The Board denied
Schmidt's motion for a continuance and addressed only those
issues that were pending before the Board at Schmidt's first
hearing. The Board allowed Schmidt to present only the four
witnesses identified on his first witness list. In addition, the
Board rejected Schmidt's waiver arguments.
The Board proceeded to hear the case on the merits.
Beeson and the carriers relied on the opinions of Drs. Newman and
Smith. Schmidt relied on the contrary opinion of Dr. Dix. In
order to prevent the hearing from exceeding the time allotted,
the Board limited the time for witness testimony.
In the following month Chair Torgerson notified the
parties that he and Ms. Lawlor had been unable agree on the
proper disposition of the case. In order to break the deadlock,
he appointed a management Board member, Richard Whitbeck, Sr., to
the panel. Chair Torgerson stated that after Mr. Whitbeck
reviewed the hearing tapes, the depositions, and the documentary
evidence, the Board would render a decision. Schmidt objected to
Mr. Whitbeck's participation on the grounds that Mr. Whitbeck
would not be able to observe the witnesses' demeanor.
In September 1991 the Board published its decision. It
again rejected Schmidt's contention that the carriers had waived
their right to assert that his condition was not work related
because it pre-dated his 1987 injury. The Board also found,
inter alia, that Schmidt's current medical condition was
unrelated to his employment with Beeson. The Board denied
Schmidt the five days of TTD benefits for September and medical
costs through April 5, 1991. The Board expressly limited its
decision to Schmidt's condition up to the date of the first April
hearing, before his neck surgery. The superior court affirmed
the Board decision.6 Schmidt now brings this appeal.
III. DISCUSSION
A. Implied Waiver of Defenses
We have held that the Board has the discretion to
invoke equitable principles, such as implied waiver or equitable
estoppel, to bar an employer from asserting statutory rights.
Wausau Ins. Cos. v. Van Biene, 847 P.2d 584, 588 (Alaska 1993).
We will uphold a Board decision as to whether to apply equitable
principles if it is supported by substantial evidence. See id.
at 588-89.7
First, Schmidt argues that Great America's answer
amounted to an implied waiver on the part of both carriers. He
acknowledges that in their controversion notices both carriers
initially asserted that Schmidt's injury was unrelated to his
employment with Beeson. However, he alleges that Great
American's answer raised only the last injurious exposure defense
and that both carriers eventually "unequivocally abandoned" any
other defense.
Schmidt's efforts to impute Great American's position
to Industrial Indemnity are without merit. Industrial Indemnity
conducted a separate defense and filed its own answer in these
proceedings. Industrial Indemnity's initial answer made no
mention of the last injurious exposure rule and expressly
reserved the right to raise other defenses. Moreover, Schmidt's
contention that at the first prehearing conference the only
defense raised was that of last injurious exposure is inaccurate.
Though Industrial Indemnity focused on this issue, the carrier
also raised a notice defense. Such acts do not meet the standard
for implied waiver. See cases cited supra note 7.
In addition, Schmidt's implication that the carriers
are absolutely bound by the defenses raised in their answers has
little substance. Parties may amend pleadings "at any time
before award upon such terms as the board or its designee
directs." 8 AAC 45.050(e). Moreover, the summaries of the
prehearing conferences, not the pleadings, control the subsequent
course of the suit.8 See 8 AAC 45.065(c).
Second, Schmidt argues that Industrial Indemnity's
payment of TTD benefits to Schmidt indicated its abandonment of
any defense other than one based on the last injurious exposure
rule. At the February 1990 prehearing conference, Industrial
Indemnity stated that it paid these benefits pursuant to AS
23.30.155(d). This statute includes the following language:
When payment of temporary disability
benefits is controverted solely on the
grounds that another employer or another
insurer of the same employer may be
responsible for all or a portion of the
benefits, the most recent employer or insurer
who is party to the claim and who may be
liable shall make the payments during the
pendency of the dispute.
AS 23.30.155(d) (emphasis added). Schmidt contends that on its
face this requirement applies if a carrier controverts only on
the grounds that another carrier is liable, and that Industrial
Indemnity's payment of TTD benefits thus amounted to an admission
that the carrier had no other defenses.
Schmidt is mistaken. Payment of TTD benefits pursuant
to AS 23.30.155(d) does not satisfy Milne's standard of direct,
unequivocal conduct for waiver. Alaska Statute 23.30.155(d)
ensures that an employee receives the compensation due him or her
while the carriers litigate the issue of who must pay. The
purpose of this statute is not to circumscribe the defenses that
a controverting carrier may raise.
Finally, Schmidt's argument that he suffered prejudice
from the carriers' actions has little merit. He contends that
the carriers did not formally raise a defense that employment and
injury were not connected until the February 27, 1991 prehearing
conference, a little over a month before the scheduled hearing.
However, the record indicates that Schmidt first knew that such a
defense was possible in November 1990, when Dr. Newman was
deposed. By admitting that the testimony had surprised him,
Schmidt's counsel indicated that he was aware of its
significance. Moreover, on February 11, 1991, well before the
prehearing conference of February 27, Schmidt filed an affidavit
opposing the employer's affidavit of readiness for hearing, in
part on the grounds that he had not completed discovery and
needed to obtain additional depositions from Schmidt's doctors.
This document is a strong indication of Schmidt's awareness that
the matter was no longer just one of deciding which carrier would
pay.
Thus, between Dr. Newman's deposition and the first
Board hearing in early April 1991, Schmidt had approximately four
months to conduct discovery and address the new issues. If prior
to Dr. Newman's deposition he thought that the last injurious
exposure rule was the only issue, he could not reasonably rely on
this assumption afterwards. Nonetheless, Schmidt did not obtain
additional deposition testimony during this time, despite his
protestations that discovery had not yet been completed, and he
did little to build a case linking his injury to his employment.
Instead, at the February 27 prehearing conference he focused
predominantly upon the waiver issue.
As his own briefs indicate, Schmidt's inaction after
November 1990 was not a result of reliance on representations by
the employer or the carriers. Schmidt contends that until Dr.
Newman's deposition the carriers appeared to be building cases
against each other, not against Schmidt. Therefore, his counsel
"only monitored the litigation . . . and intentionally kept
Schmidt's costs to a minimum,"particularly given Schmidt's
impression that only the five days of TTD for September were at
stake at the time. Even after the Newman deposition, Schmidt
avoided extensive discovery in the hope that he could win his
case on the waiver issue alone. The superior court aptly viewed
these tactics as a gamble, albeit a reasonable one given
financial realities. Schmidt will not be accorded relief simply
because his litigation strategy proved ineffective.9
B. The Board's Appointment of a Third Member to Break
the Deadlock
Schmidt argues that the Board's appointment of Mr.
Whitbeck to break the deadlock on the two-member panel was
improper. In particular, he argues that the superior court erred
in relying on provisions of the Administrative Procedure Act, AS
44.62, to uphold the Board's appointment.10 Because this
question involves statutory interpretation, we review it under
the independent judgment standard. Hood v. State, Workmen's
Compensation Bd., 574 P.2d 811, 813 (Alaska 1978).
The Alaska Workers' Compensation Board consists of five
hearing panels, with three members each: a representative of
labor, a representative of management, and either the
commissioner of labor or his or her designated representative.
AS 23.30.005(a). Two members of a hearing panel constitute a
quorum for hearing claims. AS 23.30.005(f). In addition, a
member of one panel may serve on another panel as long as a labor
or management member replaces a counterpart on the other panel.
AS 23.30.005(e). However, the Workers' Compensation Act offers
no express procedure for breaking a deadlock on a two-member
panel.
The Administrative Procedure Act governs the procedures
of the Board "where procedures are not otherwise expressly
provided by the Alaska Workers' Compensation Act." AS
44.62.330(a)(15). The Administrative Procedure Act includes
rules governing who within an agency may participate in deciding
a contested case:
If a contested case is heard before
an agency
(1) the hearing officer who
presided at the hearing shall be present
during the consideration of the case and, if
requested, shall assist and advise the
agency; and
(2) a member of the agency who has
not heard the evidence may not vote on the
decision.
AS 44.62.500(a). Though due process requires that administrative
officers "hear"the evidence presented at a hearing, they need
not physically attend the presentation of the evidence, and they
may "hear" the evidence by making an informed judgment on
evidence received through a hearing officer. Earth Resources Co.
v. State, Dep't of Revenue, 665 P.2d 960, 962 n.1 (Alaska 1983);
see also Alaska Transp. Comm'n v. Gandia, 602 P.2d 402, 405-06
(Alaska 1979).
Schmidt argues that Earth Resources is not applicable
because the Board does not employ hearing officers in proceedings
and because Board members have broader duties than hearing
officers. He argues that Board members must physically attend
the hearing in order to take an active role in observation of
witness demeanor, examination of witnesses, and immediate
deliberations with Board members.11
Schmidt is mistaken. On grounds similar to those that
Earth Resources cited, a majority of other jurisdictions allow
current or new members of an administrative tribunal to
participate in a decision even though they were not physically
present when evidence was taken in a case, as long as they
consider and act on the evidence received in their absence. See,
e.g., Cooper v. State Bd. of Medical Examiners, 217 P.2d 630, 632-
33 (Cal. 1950) (interpreting statutory provision similar to AS
44.62.500(a), and holding that an agency member need not be
physically present to hear evidence); Clairborne v. Coffeyville
Memorial Hosp., 510 P.2d 1200, 1202-03 (Kan. 1973) (holding that
the term "hearing" relates "not to physical presence at the
taking of evidence, but to certain procedural minimums to ensure
an informed judgment"); Lewandoski v. Vermont State Colleges, 457
A.2d 1384, 1385-88 (Vt. 1983) (upholding finding of Labor
Relations Board, even though no one member was present every day
of a multi-day hearing, because a quorum of two members was
present at all times). But cf. Miskovich v. City of Helena, 551
P.2d 995, 1001 (Mont. 1976) (holding that a member of an
administrative tribunal absent from part of a hearing should not
participate in the final decision, because a transcript of the
hearing may not be available). See generally E.H. Schopler,
Annotation, Administrative Decision by Officer Not Present When
Evidence Was Taken, 18 A.L.R.2d 606, 610-14 (1951).12
In the interest of promoting speedy summary
proceedings, the Board has relaxed a number of formal procedural
and evidentiary rules. For example, regulations permit Board
members to participate in hearings by telephone, even though
members who take part telephonically cannot observe the physical
demeanor of witnesses. See 8 AAC 45.070(k). Similarly,
regulations permit the Board to receive in evidence depositions,
even though such a practice prevents either the observation of
witness demeanor or questioning of the witness. See 8 AAC
45.120(a).
Chair Torgerson indicated that Mr. Whitbeck would
review the hearing tapes, examine the depositions and documentary
evidence, and deliberate with the other Board members at the
Board's next scheduled hearing date. Assuming that Mr. Whitbeck
did these things, he has "heard"the evidence and his attendance
at its presentation was not necessary. Schmidt does not allege
that Mr. Whitbeck failed to do these things. Therefore, we
conclude that the appointment of Mr. Whitbeck to the hearing
panel after the hearing took place was not improper.
C. Amended Witness List
Finally, Schmidt contends that by refusing his amended
witness list, among other things, the Board violated his due
process rights under the Alaska Constitution. See Alaska Const.
art. I, 7 ("No person shall be deprived of life, liberty, or
property, without due process of law."). We review Board rulings
that operate to exclude evidence for abuse of discretion. See
Adamson v. University of Alaska, 819 P.2d 886, 889 n.3 (Alaska
1991).
We agree with Schmidt's arguments to the extent that we
conclude that the Board's limitation of witnesses constituted an
abuse of discretion. When submitting his amended witness list,
Schmidt relied upon 8 AAC 45.112, which provides that whenever
the Board requires the filing of a witness list, the list "must
be filed with the board and served upon all parties at least five
working days before the hearing." As Schmidt notes, this
regulation does not distinguish between an original hearing and a
hearing that had been continued from an earlier date.
Nonetheless, the Board concluded that limiting Schmidt's
witnesses to the ones listed for the first hearing would be more
efficient, and that if Schmidt needed to present additional
witness testimony regarding events subsequent to the first
hearing date, he could seek modification of the award, pursuant
to AS 23.30.130(a), for a change of conditions.13
The possibility for modification under AS 23.30.130(a)
is not a satisfactory rationale for the Board's failure to allow
the amended witness list. Between the April and the May hearing,
there were several developments relevant to the substantive
issues of the case. First, the parties received significant
additional evidence: the medical report of Dr. Smith,
summarizing the results of the IME which the Board ordered at the
first hearing; and Dr. Smith's subsequent deposition testimony.
Second, Schmidt's neck surgery raised new factual issues as to
whether his condition was work related. Schmidt should have been
permitted to present witnesses to rebut Dr. Smith's testimony and
to testify on the outcome and significance of his recent neck
surgery.
Among Schmidt's proposed witnesses was Dr. Morris
Horning, whose testimony would have challenged Dr. Smith's
conclusion that Schmidt's condition was related solely to the
aging process. When he saw Schmidt in 1989, Dr. Strohmeyer
ordered a magnetic resonance imaging (MRI) scan of Schmidt's
spine. The MRI scan revealed disc protrusions on the right side
of the spine, which Strohmeyer mentioned in a February 1989
letter to Dr. Newman. The osteophytes, or bone spurs, which were
removed during Schmidt's neck surgery were also on the right
side, but neither Dr. Smith nor Dr. Newman explained why the
osteophytes occurred on that side alone.14 According to the offer-
of-proof that Schmidt presented at the second Board hearing, Dr.
Horning would have explained this phenomenon and linked it to
Schmidt's 1987 shoulder injury:
Dr. Horning would testify that the
changes occurring on that MRI in 1989 were
probably the results [of an event] which
occurred more than six months previously.
Probably 12 to 18 months previously, and
possibly longer. . . . He would state . . .
that when discs occur [sic] abruptly, people
are generally more attuned to them. But as
often as that occurs, discs will have some
trauma which sets a degenerative process in
motion, and then the degenerative process
occurs within the next following months. The
process of degeneration includes dehydration
of the disc space, and when that happens, the
vertebrae move closer together and the space
between them narrows. The settling of the
two vertebras [sic] and this pressure between
them often result in the disc punching out
the back or the side and the pressing onto a
nerve. . . . Dr. Horning would testify the
spurs and osteophytes develop when a disc
loses the cushioning integrity and begins to
settle together, sometimes putting pressure
on the end plates of the vertebrae from the
disc pulling out the side.
Given the importance of rebuttal testimony such as this, the
Board's failure to allow Schmidt's amended witness list was not
harmless error.
The reliance of the workers' compensation carriers on
Lajiness v. H.C. Price Construction Co., 811 P.2d 1068 (Alaska
1991), is not helpful to their argument. In Lajiness, we upheld
the Board's refusal to permit the employee to call a previously
unlisted witness, after the employee had filed an affidavit of
readiness for hearing and had not included that witness among
those specified at a number of prehearing conferences. Id. at
1069 & n.2. Lajiness is inapposite here, because Schmidt neither
filed an affidavit of readiness nor committed himself to a set
number of witnesses at the prehearing conference of February
1991.
By allowing him to call only witnesses scheduled for
the earlier April hearing, the Board gave too narrow a meaning to
8 AAC 45.112, and denied Schmidt an adequate opportunity to
present his case. Therefore, we hold that the Board abused its
discretion in refusing Schmidt's amended witness list. We remand
this case for new proceedings, at which Schmidt may present the
witnesses necessary to fully support his claim.15
IV. CONCLUSION
We REVERSE the Board's denial of leave for Schmidt to
file an amended witness list, and we REMAND to the superior court
for REMAND to the Board for further proceedings in accordance
with this opinion. We AFFIRM the Board's rulings on all other
issues.
_______________________________
* Sitting by assignment made pursuant to article IV,
section 16 of the Alaska Constitution.
1 The record indicates that he was offered 15 hours'
work, and was promised part-time work on a regular basis, but the
lack of available work caused the company to be unable to provide
him with any further employment.
2 Under the last injurious exposure rule, if an employee
suffers successive injuries while working for different
employers, and both injuries contribute to the employee's
disability, then the later employer incurs full liability. E.g.,
Olsen Logging Co. v. Lawson, 856 P.2d 1155, 1159 (Alaska 1993).
3 AS 23.30.155(d) states in part:
When payment of temporary disability
benefits is controverted solely on the
grounds that another employer or another
insurer of the same employer may be
responsible for all or a portion of the
benefits, the most recent employer or insurer
who is party to the claim and who may be
liable shall make the payments during the
pendency of the dispute.
4 Alaska Statute 23.30.110(g) states in part: "An
injured employee claiming or entitled to compensation shall
submit to the physical examination by a duly qualified physician
which the board may require."
5 This form was filed in June 1991, after correction of a
technical error.
6 Because the superior court acted as an intermediate
court of appeal, we do not give deference to its decision.
Hester v. State, Public Employees' Retirement Bd., 817 P.2d 472,
474 (Alaska 1991).
7 The elements of equitable estoppel are "assertion of a
position by word or conduct, reasonable reliance thereon by
another party, and resulting prejudice." Id. at 588. Implied
waiver, a variant of equitable estoppel, occurs when a party's
course of conduct shows an intention to waive a right and such
conduct is inconsistent with any intention other than a waiver,
or if neglect to insist upon the right causes prejudice to
another party. Id. at 588-89; Milne v. Anderson, 576 P.2d 109,
112 (Alaska 1978). Implied waiver cannot exist in the absence of
"direct, unequivocal conduct indicating a purpose to abandon or
waive the legal right, or acts amounting to an estoppel by the
party whose conduct is to be construed as a waiver." Milne, 576
P.2d at 112 (emphasis added); see also Van Biene, 847 P.2d at 589
("[N]eglect to insist upon a right only results in an estoppel,
or an implied waiver, when the neglect is such that it would
convey a message to a reasonable person that the neglectful party
would not in the future pursue the legal right in question.").
8 Furthermore, the text of Great American's answer
provides little support for Schmidt's position:
The employee's claim of disability
appears to arise from his February 14, 1989,
injury date. Therefore, pursuant to the
"last injurious exposure rule" this claim
would appear to be the responsibility of the
employer's carrier from the period 4/19/88
onward: Industrial Indemnity Company. Pursu
ant to AS 23.30.155(d) Industrial Indemnity
should make all payments due during the
pendency of this dispute.
(Emphasis added). The use of tentative language such as "appears
to arise"and "would appear to be"does not evidence an intent to
abandon Great American's previous position taken in its
controversion notice.
9 Schmidt also argues that Industrial Indemnity's failure
to disclose the Newman affidavit to the other parties until six
months after the affidavit was obtained constituted a violation
of 8 AAC 45.052(d). This regulation provides that every 30 days
after the initial filing of an application or petition, a party
must serve updated medical summary forms and medical reports to
the other parties, if the party obtains a new medical report
during the 30-day period. 8 AAC 45.052(d). Schmidt urges us to
construe Industrial Indemnity's violation as a forfeiture of the
right to raise further defenses after discovery.
We decline to do so. Assuming arguendo that Industrial
Indemnity violated the regulation, Schmidt has not shown how this
violation establishes an intent to waive a defense. The
regulation does not identify what penalty the Board might impose
on violators. Nothing in the regulation's text mandates waiver
of one or more defenses.
10 Schmidt also argues that no procedural regulations
existed to permit the Board to appoint Mr. Whitbeck and that the
action constituted an impermissible ad hoc procedure. The State
contends that this argument has been raised for the first time on
appeal. Examination of the record indicates that Schmidt indeed
failed to raise this theory before the superior court or as a
point on appeal before this court. He has therefore waived this
argument. See Gates v. City of Tenakee Springs, 822 P.2d 455,
460 (Alaska 1991). Though we express no opinion on the propriety
of appointing Mr. Whitbeck in the absence of express procedures
for doing so, we suggest nonetheless the promulgation of
regulations dealing with future Board deadlocks of this sort.
11 Schmidt also argues that if this court allowed the
Board to appoint a third member to break a deadlock, the new
member likely would not be able to review evidence before the
running of the statutory period for issuing a decision. Alaska
Statute 23.30.110(c) states in part, "Within 30 days after the
hearing record closes, the board shall file its decision."
Chair Torgerson announced the deadlock, appointed Mr.
Whitbeck, and reopened the hearing record on June 20, within the
30-day period. Mr. Whitbeck was unavailable to review the tapes
and hearing record until July 11. Upon Mr. Whitbeck's receipt of
this material, deliberations on Schmidt's case and closing of the
record were scheduled for the next regular meeting of the hearing
panel. The Board met on August 8 to discuss the claim and close
the record. The Board issued its final decision on Sept. 9.
Though Schmidt notes that the Board released its
decision 102 days after the May hearing, he does not challenge
the decision as a violation of AS 23.30.110(c). Moreover, he
does not expressly argue that a violation of this provision would
occur if the Board exceeded the 30-day limit as a result of
having appointed a third member to break a deadlock.
12 Schmidt relies on Shawley v. Industrial Comm'n, 114
N.W.2d 872 (Wis. 1962), to support his argument that observation
of witness demeanor is sufficiently important to require the
physical presence of Board members. In Shawley, two hearings
were held on a workers' compensation claim, the first before one
examiner and the second before his replacement. The court
concluded that a denial of due process occurred, on the ground
that the second hearing examiner could not reproduce the personal
impressions that the witnesses made on the first examiner. Id.
at 875-76; see also Adams v. Industrial Comm'n, 710 P.2d 1073,
1074-75 (Ariz. App. 1985) (finding that it was inappropriate for
a replacement administrative law judge, who did not observe the
testimony, to rescind the award of the original judge on the
basis that it was not supported by "a preponderance of credible
evidence").
Significantly, Shawley involved a single decisionmaker.
Although ideally all decisionmakers who weigh evidence should be
present to observe witness testimony, courts accept that the
reality of administrative proceedings often makes that
impossible. As noted above, courts generally will not overturn
the decisions of tribunals, even when not every member was
present at all times, as long as the court believes the entire
tribunal considered the evidence in some form, and a quorum was
present to observe all testimony. This is different from
situations like Shawley's where the decisionmaking apparatus
contains no one who observed the witnesses testifying. Compare,
e.g., Younkin v. Boltz, 216 A.2d 714, 716 (Md. 1966) (holding
that zoning board members not present at hearings could
participate in decision, because a three-member quorum was
physically present at hearings) with Clark v. County Bd. of
Appeals, 201 A.2d 499, 502 (Md. 1964) (overturning zoning board
decision because members who attended hearings did not constitute
a quorum). This concern does not arise in Schmidt's case,
because the two-member panel at the May hearing constituted a
quorum. See AS 23.30.005(f).
13 Alaska Statute 23.30.130(a) states in part:
Upon its own initiative, or upon
the application of any party in interest on
the ground of a change in conditions, . . .
or because of a mistake in its determination
of a fact, the board may . . . review a
compensation case under the procedure
prescribed in respect of claims in AS
23.30.110.
14 Dr. Newman did not know why osteophytes would have
formed only on the right side. Dr. Smith had not seen Dr.
Strohmeyer's February 1989 letter until Smith's deposition, and
did not address the question of the osteophytes.
15 Because we have remanded this case for new proceedings,
we need not address Schmidt's contention that the Board's denial
of his request for continuance was an abuse of discretion.
Without citing case authority, Schmidt claims that the
Board imposed impermissible time limits on the testimony of
Schmidt's witnesses, specifically Dr. Dix. At the April hearing,
Schmidt's counsel gave the Board an estimate of the number of
witnesses that he would call and the length of their testimony.
The record indicates that at the May hearing, the Board held not
only Schmidt but also the other parties to the time estimates
that they had given. Reasonable Board limits on the length of
witness testimony are a permissible means of controlling the
Board's hearing docket, and such limits do not violate the
employee's due process rights. Childs v. Copper Valley Elec.
Ass'n, 860 P.2d 1184, 1190 (Alaska 1993). Furthermore, Schmidt
failed to make an offer-of proof as to what new evidence would
have been provided had Dr. Dix received enough time to testify.
This omission is fatal to Schmidt's claim. See Adamson, 819 P.2d
at 889-90.
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