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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. VECO Alaska, Inc. v. State, Dept. of Labor, Division of Worker's Compensation, Second Injury Fund (07/25/2008) sp-6291
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| VECO ALASKA, INC. and | ) |
| ALASKA NATIONAL INSURANCE | ) Supreme Court No. S- 12163 |
| COMPANY, | ) |
| ) Superior Court No. 3AN-05- 05765 CI | |
| Appellants, | ) |
| ) O P I N I O N | |
| v. | ) |
| ) No. 6291 July 25, 2008 | |
| STATE OF ALASKA, DEPARTMENT | ) |
| OF LABOR, DIVISION OF | ) |
| WORKERS COMPENSATION, | ) |
| SECOND INJURY FUND, | ) |
| ) | |
| Appellee. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, William F. Morse, Judge.
Appearances: Allan E. Tesche and Karen
Russell, Russell, Tesche, Wagg, Cooper &
Gabbert, P.C., Anchorage, for Appellants.
Richard W. Postma, Jr., Assistant Attorney
General, Anchorage, and David W. M rquez,
Attorney General, Juneau, for Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, and Carpeneti, Justices. [Bryner,
Justice, not participating.]
FABE, Chief Justice.
EASTAUGH, Justice, dissenting.
I. INTRODUCTION
Cornelius Buck Huizenga worked at VECO for
approximately eleven years in a number of positions. Before
beginning his VECO employment, he sustained a back injury while
working for another employer. He reinjured his back at his VECO
job while moving some timbers. He then had three surgeries and
ultimately was confined to a wheelchair. VECO paid his workers
compensation benefits and petitioned the Second Injury Fund for
partial reimbursement. The Fund denied both that Huizenga had a
qualifying preexisting condition and that VECO had established by
a written record that it knew Huizenga had such a preexisting
condition. The Alaska Workers Compensation Board found that VECO
had not produced written records from which it could reasonably
be inferred that VECO had prior knowledge of Huizengas qualifying
impairment. Because the Board applied a standard that was too
restrictive in evaluating whether VECO satisfied the written
record requirement, we reverse the Boards decision denying VECOs
petition and remand the case to the Board for further
proceedings.
II. FACTS AND PROCEEDINGS
Cornelius Huizenga has a congenital condition diagnosed
as achondroplastic dwarfism. The condition is characterized by
defects in bone formation and results in short stature. Another
consequence of Huizengas achondroplasia is his narrow spinal
canal, which means that arthritic changes occur in him at a
relatively early age.
In December 1988 Huizenga was working for a private
contractor when he fell from a stepladder, landing on his back
and left hip area. He was diagnosed with lumbar spinal stenosis
diastematomyelia with bilateral radiculopathy.1 As a result of
this injury, he had L3, L4, and L5 laminectomies and bilateral
neural foraminotomies at the S1, L5, and L4 nerve roots in
January 1989.2 Huizenga received a twenty-two percent permanent
partial impairment rating due to this injury.
Huizenga began working for VECO the summer following
this back surgery. He worked for VECO at different locations
over the next several years. On April 30, 1996, and again on
October 1, 1997, Huizenga completed health questionnaires for
VECO. His answers to both health questionnaires disclosed that
he had a prior back injury and surgery, that he had never been
advised to limit his activities in any way, and that he did not
have arthritis. His response to the second questionnaire
provided the following details about his back surgery: Back
operation, compression 5 lower vertebrae, Dec[.] 21, 1987, Dr.
Voke.3
In January 1999 Huizenga began work for VECO as an
equipment operator at the Port of Anchorage. On October 15,
2000, he reinjured his back at work.4 He was dragging several
timbers that weighed about thirty pounds each when something let
go in his back, and he began to experience pain. At first
Huizenga simply took over-the-counter pain medication. But about
a week following the accident, he was hospitalized because he
could not move his legs. On October 24, 2000, Huizenga again had
back surgery to relieve pressure on his nerves. This time the
surgery involved laminectomies of T12, L1, L2, and L3, as well as
a partial L4 laminectomy, decompression of conus cauda equina,
and foraminotomies at L1-2, L2-3, and T12-L1.5 He was discharged
from the hospital about four weeks later in a wheelchair after
having spent several weeks in rehabilitation therapy.
Huizenga remained unable to walk, and on March 11,
2002, he underwent a spine fusion surgery in Colorado. He
developed complications and was readmitted to the hospital for a
fourth surgical procedure in late March 2002.
On June 24, 2003, Dr. Susan Klimow gave Huizenga a
permanent partial impairment rating. Huizenga was then in a
wheelchair and could stand only by using a walker. Dr. Klimow
indicated that she had to take into account Huizengas prior
twenty-two percent permanent partial impairment rating in
determining his whole person impairment. She stated, His new
whole person impairment rating is 57%.
Dr. Edward Voke, Huizengas orthopedic surgeon in
Anchorage, stated in an affidavit submitted to the Alaska Workers
Compensation Board that the combined effects of Huizengas 2000
injury and his preexisting arthritis produced a disability that
was substantially greater than the injury that would have
resulted from the 2000 injury alone. Dr. Klimow later signed an
affidavit concurring with this assessment.
On May 11, 2004, VECO filed a Petition to Join Second
Injury Fund and Claim for Reimbursement with the Board.6 VECO
alleged that it had met the statutory requirements for
reimbursement. Nichola Lienhart, an employee in VECOs risk
management department, filed an affidavit averring that VECO had
written knowledge that Huizenga had arthritis before his October
2000 injury. In support, she attached Huizengas two completed
health questionnaires. As additional support, VECO submitted Dr.
Vokes affidavit, in which Dr. Voke stated that Huizengas answers
to the October 1, 1997 health questionnaire would have alerted a
reasonable employer to the presence of arthritis in his lower
spine on October 1, 1997 because that condition is closely
related to his post-operative condition ten years earlier.
The Second Injury Fund, through its administrator,
filed an answer that disputed whether VECO had established by
written record knowledge of a qualifying preexisting condition
and whether Huizenga in fact had a qualifying preexisting
condition.
On August 19, 2004, Dr. Klimow signed an affidavit
stating that the information Huizenga provided on his October 1,
1997 health questionnaire would have alerted a reasonable
employer to arthritis in Huizengas lower spine. Dr. Voke and Dr.
Klimow both testified via deposition at the hearing on VECOs
petition to join the Second Injury Fund. Before the hearing
Huizenga stated in an affidavit that he did not know he had
arthritis before the litigation regarding the Second Injury Fund.
The Board held a hearing on VECOs petition on January
6, 2005. The only witness to testify in person at the hearing
was Huizenga, who again affirmed that he did not know that he had
arthritis when he answered the 1996 and 1997 health
questionnaires. The sole issue before the Board was, as the
Board saw it, whether VECOs prior knowledge of Huizengas
arthritis could fairly and reasonably be inferred from the
written records VECO had produced.7
The Board decided that Huizengas answers to VECOs
health questionnaires were not a written record from which prior
knowledge of Huizengas arthritis could fairly and reasonably be
inferred. In so deciding, the Board found that Huizenga had not
been told until September 2004 that he had arthritis. It
concluded that Huizengas disclosure that he had a prior back
injury and surgery was an insufficient written record, as a
matter of law, to establish that VECO knew about Huizengas
arthritis. The Board also found that the two doctors who
testified for VECO had reached their conclusions based on their
knowledge of Huizengas medical records, not his health
questionnaires; it further determined that VECO had not shown by
a preponderance of the evidence that it had knowledge of a
qualifying preexisting condition.
VECO appealed to the superior court, arguing that the
Board erred as a matter of law in reaching its ultimate
conclusion; after independently reviewing the evidence, the
superior court affirmed the Boards ruling.
VECO appeals.
III. DISCUSSION
A. Standard of Review
When the superior court acts as an intermediate court
of appeals in a workers compensation case, we directly review the
Boards ruling.8 Whether VECO established by a written record its
knowledge of Huizengas preexisting impairment turns on a question
of statutory interpretation involving no agency expertise.9 We
review issues of statutory interpretation under the independent
judgment standard, adopting the rule of law that is most
persuasive in light of precedent, reason, and policy. 10
The dissent argues that the proper standard of review
for this case is the substantial evidence test. If we were
reviewing only the Boards factual determinations, this might be
the correct standard of review. But we are reviewing the legal
standard the Board used here to evaluate the evidence, not simply
its determinations of weight or other factual findings. Also,
the Board decided as a matter of law the record was insufficient.
B. The Board Applied a Standard that Was Too Restrictive.
1. The Second Injury Fund
The Second Injury Fund was created to encourage
employers to hire and retain partially disabled employees.11 The
Second Injury Fund reimburses qualifying employers for workers
compensation benefits paid to disabled employees after 104 weeks
if an employees preexisting permanent physical impairment,
combined with his subsequent injury, results in compensation
liability substantially greater than [what] would have resulted
had the preexisting condition not existed.12 To be eligible for
reimbursement from the Fund, the employer is required to
establish by written records that it had knowledge of the
employees permanent physical impairment before the subsequent
injury occurred and that it retained the employee after it
acquired that knowledge.13 The Alaska Workers Compensation Act
contains a list of conditions that are presumptively disabling,
as well as a provision that covers conditions that are not
listed.14 Although the employers written record need not contain
the exact medical terminology of the statute, it must contain
adequate information to support a reasonable inference that the
employee suffered from a qualifying impairment.15
Not all causes of permanent physical impairment qualify
for reimbursement from the Second Injury Fund. To be considered
a permanent physical impairment for Second Injury Fund purposes,
the condition must be listed in the statute or fall within the
statutes general provision.16 An employer need not show that a
listed condition is in fact a hindrance to employment for a
specific employee; if the condition is one covered by the Second
Injury Fund statute, a permanent physical impairment exists as a
matter of law.17 Permanent impairment for purposes of Second
Injury Fund reimbursement is different from permanent impairment
for receipt of permanent partial impairment benefits.18 A
qualifying condition for Second Injury Fund purposes need not be
work related; in fact, some qualifying Second Injury Fund
conditions are congenital, such as muscular dystrophies.19 VECO
does not allege that Huizenga had any condition other than
arthritis that might qualify as a physical impairment for
purposes of Second Injury Fund reimbursement.20
2. The written record requirement
In Sea-Land Services, Inc. v. State, Second Injury
Fund, we construed the written record requirement as follows:
[A]n employer is entitled to reimbursement from the Second Injury
Fund if it produces a written record from which its prior
knowledge of the employees qualifying disability can fairly and
reasonably be inferred.21 We identified two purposes for the
written record requirement: (1) it protects the Fund against
spurious or collusive claims by demonstrating that the employer
actually knew of the preexisting condition, and (2) it eliminates
the need to litigate whether the employer had knowledge of the
preexisting condition.22
The issue presented in this appeal is whether VECOs
knowledge that Huizenga has a permanent impairment as defined in
AS 23.30.205 can fairly and reasonably be inferred from the
written record VECO presented to the Second Injury Fund and the
Board. The Board held that it could not, based in part on its
interpretation of our prior cases. VECO urges us to overturn the
Boards findings and conclusions of law, arguing that the Board
applied an incorrect standard and misconstrued the evidence. The
State asks us to affirm the Board, asserting that the Boards
decision is legally correct and supported by substantial
evidence.
The Board construed our prior cases and the relevant
statute as requiring VECO to show not only that his employer knew
that Huizenga suffered from a permanent physical impairment, but
also had knowledge of the specific physical impairment he
suffered from, i.e., arthritis. Thus, the Board found that the
employers written record that the employee had prior back
injuries and surgeries, and nothing more, does not reasonably
connote a preexisting arthritic condition and therefore is
insufficient as a matter of law to establish the employers
written notice of a preexisting qualifying disability. It also
stated that Huizengas denial that he had arthritis and his
description of his back surgery negate[d] any argument by VECO
that it had written notice of an arthritic condition. This goes
beyond what we have previously held an employer must show to
obtain reimbursement from the Second Injury Fund and what we
believe the correct standard is.
By requiring VECO to present evidence that showed
unequivocally that VECO knew Huizenga had arthritis rather than
simply a permanent impairment, the board imposed a requirement
that exceeds what we have previously held an employer must show
to obtain reimbursement from the Second Injury Fund.23 This
strict standard is one that most employers would likely not be
able to meet based on information from employee-based
questionnaires. Employees may not fully understand their medical
conditions or may misconstrue a doctors advice or opinions.
Here, for example, Huizenga denied that he knew he had arthritis
before the Second Injury Fund litigation, even though the doctors
who treated him testified that his medical records indicated the
presence of an arthritic condition. As Huizenga told the Board,
Im just not a doctor-type person. I just dont know what these
terms mean, you know, like the arthritis. We are concerned that
the standard the Board used here creates the wrong incentive for
employers: it could discourage employment or retention of any
employee who appears to have an impairment unless the impairment
can easily and explicitly be pinned to a specific cause listed in
AS 23.30.205(d)(1). Because one of the purposes of the Second
Injury Fund is to encourage employment and retention of employees
with physical impairments,24 the stringent standard used by the
Board is contrary to the purpose of the Fund.
VECO argues that the written record requirement is met
when there is enough evidence in the written record to tempt the
employer to discriminate against an employee on the basis of a
qualifying condition under AS 23.30.205(d). In looking at what
the employer needs to show to qualify for Second Injury Fund
reimbursement, we previously held that the written record does
not need to contain the exact medical terminology describing the
condition.25 As Larson notes in his treatise:
It is clear that the employer does not have
to know exactly what the employees prior
condition is in medical terms. If the
employer, who was the claimants mother, knew
that something was troubling the employee
about his bones, she did not need to know
also that it was Pagets disease. And if the
employer, a brewmaster, knew of the
permanency of claimants previous shoulder
injury, but did not know what the trouble
was, the employer had sufficient prior
knowledge.[26]
The written record requirement does not dispense with
an employer knowledge requirement, as the dissent suggests.27 One
purpose of the written record standard providing evidence of
employer knowledge28 addresses the problems of litigation time
and cost that Larson identifies with an actual knowledge
standard,29 but it does not waive employer knowledge.
As we noted above, the underlying purpose of the Second
Injury Fund is to encourage employers to hire workers who are
known to suffer from a permanent physical impairment.30 In order
to prevent employers from claiming knowledge of a permanent
physical impairment opportunistically after a subsequent injury,
the legislature imposed a written record requirement.31 This
purpose is satisfied if the employers written record shows a
preexisting permanent impairment that could reasonably be due to
one of the conditions listed in AS 23.30.205(d)(1), even if the
employer cannot precisely identify the specific medical
condition. In other words, if the written record shows that an
employee had a permanent or chronic condition that could be a
hindrance to employment, the written record requirement would be
satisfied. This construction of the written record requirement
is substantially the same as the Arizona appellate courts
construction of a similar statute.32 If an employee disclosed
that she had knee problems and had undergone knee surgery and a
laminectomy, the written record would be satisfied, even though
the employer did not know the specific reason for the laminectomy
or knee problems.33 Or if an employee takes sick leave over the
years for back problems and this is recorded in the employers
files, the employer shows that it had knowledge of the
impairment, even if the employer does not know that the employee
had degenerative disk disease.34 If an injury happens after the
employer acquires knowledge of the permanent condition, the
Second Injury Fund should reimburse the employer so long as the
underlying impairment is in fact one of the conditions listed in
the statute and the other statutory requirements are met.35
Although the dissent cautions that the term back
problems lacks precision, this is the type of information that an
employee is likely to give to his employer. We specifically held
in Sea-Land Services that the written record did not need to use
exact medical terminology.36 If an employer is aware of an
employees medical problems and records them in everyday language,
that employer still satisfies the written record requirement.37
The dissent may misunderstand our statement that the
purpose of the written record requirement is satisfied when the
record shows an impairment that could reasonably be due to a
condition listed in the statute. Reasonableness in construing
the employers written record is required by the test in Sea-Land
Services and is not a foreign notion in determining the meaning
of a written record.38 The written record need not show that an
underlying cause of the impairment was, in fact, a condition
listed in AS 23.30.205. Whether such a causal relationship
existed may be demonstrated at the hearing by any acceptable
evidence. Further, our statement is not concerned with a causal
relationship between the preexisting condition and the subsequent
injury39 but is meant to clarify the standard an employer must
meet to qualify for Second Injury Fund reimbursement.
Because the health questionnaires are the only written
records that VECO alleges it had before the October 2000 injury,
the question whether VECOs knowledge of a permanent impairment
satisfies the written record requirement turns on what
conclusions can be drawn from those health questionnaires.40
Because the Board is charged with evaluating evidence in
compensation proceedings,41 we must remand the case to the Board.
Although Huizenga told VECO that he had back surgery involving
compression and [five] lower vertebrae, he also checked the box
on the questionnaire showing that he had never been advised by a
health care provider to limit his activities in any way. The
Board will need to decide in the first instance whether the
written record VECO relied on, showing that Huizenga had a prior
back injury and surgery, supports a fair and reasonable inference
that Huizenga had a preexisting back condition that was a
permanent physical impairment. If the Board determines that such
an inference can be made, then the written record requirement
should be considered met, and the Board can determine whether
VECO has satisfied the other statutory requirements for Second
Injury Fund reimbursement.
What the employee or his doctors understood the
questionnaire to mean is evidence that the Board may choose to
consider, but the statutory standard is the employers knowledge,
not the knowledge of either the employee or his physicians.42 The
Board may choose here to weigh the testimony of Drs. Klimow and
Voke in determining what inferences an employer could reasonably
draw from the answers to the health questionnaire, but expert
testimony is not necessary to demonstrate what a reasonable
inference might be. Unless VECO can demonstrate that it had
Huizengas medical records in its possession at some time prior to
the 2000 injury, the contents of the medical records discussed by
the doctors in their depositions cannot serve as a written record
showing VECOs pre-injury knowledge.
We disagree with the States argument that our previous
cases interpreting the written record requirement compel the
result that the Board reached. Both cases are consistent with
our holding today. In Sea-Land Services, Inc. v. State, Second
Injury Fund, the only record was a physical examination report.43
The report contained a box marked yes next to head or spinal
injuries but no other information about the nature and extent of
the injuries.44 The report also indicated that the employee had
no [p]ermanent defect from illness, disease, or injury and that
his spine was OK.45 The parties agreed that the employer had
actual knowledge of the employees previous back surgery for a
herniated disk.46 We concluded that it could not reasonably be
inferred from the written record that Sea-Land knew of the
employees permanent disability.47 In Sea-Land Services, the
written record contained no reference to surgery or to anything
else that might indicate that the employees previous injury had
caused lasting damage.
In Alaska International Constructors v. State, Second
Injury Fund, the employer had slightly more information.48 Alaska
International had a resume from the employee stating that he had
been injured by a sheet of iron while working for a previous
employer, that the injury had been corrected by surgery, and that
he was released with no restrictions by his doctor to return to
work.49 Besides the resume in the employers possession, the
employees union had a written record showing that the employee
had suffered a back injury and had undergone three back
surgeries.50 In Alaska International, even though the union
record did not mention arthritis, the State conceded that if the
union records were imputed to the employer, the written record
requirement would be satisfied.51 We determined that the union
record could not be imputed to the employer.52 Although our
opinion stated that the resumes reference to an injury failed to
raise the inference that Alaska International knew of the
employees arthritis and in this respect went too far the focus
of the inquiry did not need to be on the precise medical
condition.53 The resumes reference to an injury did not even
identify the body part that had been injured and did not in any
way indicate that the employee might have suffered a permanent
impairment because of the injury.54 The resume failed to raise an
inference that the employer knew of any condition, not just
arthritis, that might have caused the employee to have a
permanent impairment. We noted, The reference to [the employees]
injury could reflect any injury which is sufficiently severe to
require surgery. One can not infer, without further information,
that there will be a permanent impairment.55
In Huizengas case, the employer had more information
than the employers in either of our previous written record
cases. Here, Huizenga told VECO that he had a back injury that
required surgery and that it involved compression and the five
lower vertebrae. The Board must determine whether VECOs
knowledge that Huizenga had a permanent physical impairment can
fairly and reasonably be inferred from this information and his
other statements in the health questionnaires.
IV. CONCLUSION
For the reasons above, we REVERSE the decision of the
superior court affirming the Boards decision and REMAND this case
to the Board for further proceedings consistent with this
opinion.
EASTAUGH, Justice, dissenting.
This is what the board said in the critical passage of
the dispositive portion of the decision denying VECOs Second
Injury Fund claim:
The Board finds that the employers written
record that the employee had prior back
injuries and surgeries, and nothing more,
does not reasonably connote a preexisting
arthritic condition and therefore is
insufficient as a matter of law to establish
the employers written notice of a pre-
existing qualifying disability.
(Emphasis added.) The entire paragraph containing the
dispositive portion of the boards decision is attached as
Appendix A.
The boards assessment of the employers written records
is supported by substantial evidence the records themselves.
The boards decision is also consistent with the legal standard
that controls Second Injury Fund claims. Because the board did
not err, we should affirm.
Todays opinion instead reverses and remands. I think
it does so erroneously. But whatever the ultimate result may be
in this case, we should not adopt a new and unjustified test for
determining whether AS 23.30.205(c) is satisfied. I therefore
respectfully dissent.
My disagreement starts with the standard of review.
The courts opinion regards the case as turning on a question of
statutory interpretation, freeing this court to apply its
independent judgment.1
But this case does not really turn on statutory
interpretation. The critical question is whether the employers
prior knowledge of the employees qualifying disability can be
fairly and reasonably inferred from the employers written
records.2 That is how we phrased the question in Alaska
International Constructors v. State, Second Injury Fund,3 a
comparable case. As so phrased, the question inherently asks the
board to weigh the written records to determine what fair and
reasonable inferences may be drawn from them. In theory, an
employers written records could be so self-explanatory and self-
evident that they would compel the board to conclude that the
employers prior imputed knowledge of a qualifying disability
either must be, or may not be, fairly and reasonably inferred.
If the written records do not compel one of those legal
conclusions, they necessarily raise a factual question to be
decided by the board. We apply the substantial evidence test in
reviewing the boards factual findings.4 The board here found
that the written record showing only the employees prior back
injuries and surgeries does not reasonably connote a preexisting
arthritic condition. The boards decision is ultimately based on
its factual assessment of the adequacy of VECOs written records.
We should review that assessment under the substantial evidence
standard of review.
The realities of this case confirm that the substantial
evidence standard of review applies. The board was in the best
position to evaluate VECOs records and determine whether they
permitted an inference of arthritis. We have no superior
information or training that allows us to make a finding the
board did not, or to say that the board should have reached a
different result. We certainly cannot say that the information
in the written records was so clear that the board erred in
making its factual finding.5
Whether the board applied the correct standard in
weighing the evidence theoretically presents a threshold legal
question. I say theoretically, because there is no plausible
indication the board deviated from the dictates of the
controlling statute or from what we have said about applying that
statute. The board said two things potentially bearing on
whether it was actually making a legal determination. First, it
noted that the employee was not informed he had arthritis until
long after he filled out VECOs questionnaires. The court reads
this statement as reflecting the boards legal misunderstanding of
what evidence is relevant.6 But the board did not reason that
Huizengas ignorance foreclosed VECOs claim. After mentioning
what Huizenga was told, the board looked at VECOs written records
in deciding whether there was a fair and reasonable inference
VECO knew of a permanent impairment.7 Second, the board stated
that the employers record is insufficient as a matter of law to
satisfy the statute. But that conclusion depended on the boards
review of the records and its determination that they do not
reasonably connote a qualifying condition.
The courts opinion reads the boards decision as
requiring VECO to present evidence that showed unequivocally that
VECO knew Huizenga had arthritis rather than simply a permanent
impairment . . . .8 It is unclear what error the court
perceives. If the quoted passage is raising a question about the
standard of proof, the independent standard of review would apply
to that legal issue. But, as the plain text of the boards
dispositive paragraph reveals, the board did not apply the wrong
unequivocal standard of proof. If the quoted passage is
raising a question about whether the board misapplied the
statutory standard, whether the board did so is indeed a legal
question. But because I think the board applied the correct
statutory standard, the ultimate question is whether substantial
evidence supported the boards factual assessment of the written
records.
My second disagreement with the courts opinion is more
fundamental. The opinion departs from both the statutory
standard and from the approach we have said we (and the board)
should follow in deciding such disputes. The Alaska Legislature
adopted a Second Injury Fund scheme with two requirements germane
here: first, that the employer, before it hired or retained the
employee, had knowledge (or, more accurately, imputed knowledge)
of the employees permanent physical impairment; second, that this
knowledge be established by the employers written records.9
Whether the employers records establish the employers knowledge
of the qualifying condition is normally for the board to
decide.10 Whether the evidence is sufficient is peculiarly
within the boards province.11 In Sea-Land Services, Inc. v.
State, Second Injury Fund, we approvingly quoted as follows from
a Tennessee Supreme Court opinion that interpreted what we
described as a written record requirement substantially identical
to AS 23.30.205(c):
when it can fairly and reasonably be inferred
from such records as are produced in evidence
that the employer did have knowledge of the
physical handicap or impairment of the
employee before occurrence of the injury
which activates the Second Injury Fund claim,
then the [statutory] requirements . . . are
satisfied.[12]
We then adopted for Alaska the test announced by the Tennessee
Supreme Court: [A]n employer is entitled to reimbursement from
the Second Injury Fund if it produces a written record from which
its prior knowledge of the employees qualifying disability can
fairly and reasonably be inferred.13 We also stated that the
written record need not contain the exact medical terminology
employed in AS 23.30.205(d)(1).14
Todays opinion seems to alter the longstanding test
announced in Sea-Land Services and applied in Alaska
International.15 The opinion does so in apparent reliance on a
passage the court quotes from the Larson treatise.16 I doubt
that Larson intended the quoted passage to apply to written-
records states like Alaska. The quoted passage is introduced by
the preceding paragraph of the treatise.17 The introductory
paragraph states: An obvious question in states requiring actual
employer knowledge is: How much must the employer have known
about the actual nature of the prior injury?18 As I read Larson,
the passage quoted by the court was not meant to apply to a
written-record jurisdiction like Alaska, and only applies to
states requiring actual knowledge for Second Injury Fund
claims.19 Alaska is not such a state. The legislature adopted a
written-record standard, not an actual-knowledge standard, for
Second Injury Fund claims in Alaska. Written records are used in
Alaska to impute knowledge but neither AS 23.30.205 nor our case
law requires that the employer have actual knowledge of the
contents of the record or the impairment. Larsons treatise
distinguishes actual-knowledge jurisdictions from written-record
jurisdictions, noting, among other things, that a down-to-earth
reason for disapproving the [actual-knowledge] rule is that it
involves one of those distinctions that consume far more
litigation time and cost than the policy at stake is worth.20
After revising the longstanding test in Sea-Land
Services and Alaska International, the opinion proposes another
standard that is potentially just as problematic. The opinion
asserts that the underlying purpose of the Second Injury Fund
is satisfied if the employers written record
shows a preexisting permanent impairment that
could reasonably be due to one of the
conditions listed in AS 23.30.205(d)(1), even
if the employer cannot precisely identify the
specific medical condition. In other words,
if the written record shows that an employee
had a permanent or chronic condition that
could be a hindrance to employment, the
written record requirement would be
satisfied. . . . If an employee disclosed
that she had knee problems and had undergone
knee surgery and a laminectomy, the written
record would be satisfied, even though the
employer did not know the specific reason for
the laminectomy or knee problems. Or if an
employee takes sick leave over the years for
back problems and this is recorded in the
employers files, the employer shows that it
had knowledge of the impairment, even if the
employer does not know that the employee had
degenerative disk disease.[21]
This passage may seem unexceptional at first glance; a
legislature might rationally choose to base Second Injury Fund
claims on just such a standard. But this passage is
problematic, given the text of the statute and what we have said
about the statute.
First, this passage seems to change the analysis
required by statute and case law. Our statute requires a
qualifying impairing condition and lists specific conditions that
qualify.22 It requires the employer to establish by its written
records that it had knowledge of the permanent physical
impairment before the . . . injury and that the employee was
retained after the employer acquired that knowledge.23 Likewise,
the statute defines permanent physical impairment to mean any
permanent condition of such seriousness as to hinder obtaining
employment or reemployment;24 it also makes it clear that a
condition is not a permanent physical impairment unless it is one
of the following conditions listed in subsection .205(d)(1).25
The statute therefore requires that the employer have pre-injury
knowledge of one of the qualifying conditions, and, per
subsection .205(a), that this condition be a cause of or have
contributed to the new employment injury. Actual advance
knowledge, of course, is not required. Only imputed advance
knowledge is required; the imputation is to be made from the
employers written records. If knowledge of a condition listed in
the statute here, arthritis can be fairly and reasonably
inferred from the records, the employer can recover from the
fund if that condition causes or contributes to the subsequent
injury. Before today, the issue in such a case was whether the
written records could support an inference of an employers prior
knowledge of the qualifying condition that causes or contributes
to the new injury.26 But the courts opinion asserts that the
purpose of the Second Injury Fund is satisfied if the employers
written record shows a preexisting permanent impairment that
could reasonably be due to one of the conditions listed in the
statute.27 This formulation deviates from the substantive
standard we adopted in Sea-Land Services, and is not obviously an
equivalent paraphrase of that standard. Assuming the opinions
formulation is not intended to change the existing standard, it
is not obvious that the two formulations, rigorously applied,
will give identical results. If they do not, todays formulation
will create confusion and diminish predictability in Second
Injury Fund disputes.
Todays formulation may simply be intended to be an
explanatory paraphrase of the existing standard. If so, it
nonetheless seems to alter how such disputes are to be resolved.
It seems to assume that it is sufficient that the records show a
permanent impairment that could reasonably be due to one of the
listed conditions. This formulation misdescribes the required
analysis. It implies that it is sufficient that the permanent
impairment itself could reasonably be due to the qualifying
condition. But under the standard we adopted in 1987 the only
occasion for taking reasonable inferences is when knowledge about
the employees condition at the time of hire or retention is being
imputed to the employer; this inference does not aid the employer
in establishing that the qualifying condition caused or
contributed to the new injury. Also, subsection .205(d) uses
permanent physical impairment and permanent condition or
condition as equivalent terms. The statute as written makes it
unnecessary to determine whether a permanent impairment could
reasonably be due to one of the listed conditions.28
Second Injury Fund disputes arising out of records
reflecting knee and back problems the examples given by the
courts opinion would be for the board to resolve. Whether a
given circumstance satisfies the statute is highly situational.
This implies that it is uniquely for the board to weigh the
evidence and determine whether the impairing condition listed in
the statute is revealed in the employers written records. That
sort of situational dispute must be resolved on a case-by-case
basis. This confirms that the ultimate standard of review
(assuming no legal error) must be the substantial evidence
standard.
Second, the opinions use of the phrase back problem[]29
as an illustrative example seems contrary to what we have said
about very general information concerning health conditions. We
have said that a general reference to an injury utterly fails to
raise an inference . . . [of a] preexisting permanent physical
impairment.30 The phrase back condition lacks precision and
using it as an example suggests that colloquial statements will
support (or will be deemed by this court to support) a fair and
reasonable inference of a qualifying condition. Because back
problem is a common expression used to encompass a variety of
permanent and non-permanent disabilities, the example used by the
opinion potentially encourages Second Injury Fund claims that
would not previously have succeeded.
The opinion states that the term back problems . . . is
the type of information that an employee is likely to give to his
employer and that [i]f an employer is aware of an employees
medical problems and records them in everyday language, that
employer still satisfies the written record requirement.31 The
opinion is arguably correct when it states that employees are not
likely to provide employers with information that is medically
precise or that exactly matches the statutes list of qualifying
conditions. But the type of information employers receive and
record is not necessarily germane to the boards determination.
Again, the written-record requirement can only be satisfied if
the board determines that the written record could support an
inference of an employers prior knowledge of a qualifying
condition that causes or contributes to the new injury.
The court faults the board for requiring VECO to
present evidence that showed unequivocally that VECO knew
Huizenga had arthritis rather than simply a permanent impairment
. . . .32 This passage can be interpreted several different
ways. It is probably intended to say that the board erred by
requiring VECO to prove that the records revealed the specific
condition of arthritis, i.e., that the records named arthritis.
But the board imposed no such requirement. And because its
decision approvingly summarized past board cases in which the
records did not name the specific condition, it is fair to assume
the board did not depart from its past practice.
This passage could be interpreted to say that the board
erred by requiring VECO to prove that the records revealed a
permanent impairment that turned out to be arthritis. But that
is what the statute and our past decisions require. And that is
what the board did, without error. The board could not have
permitted VECO to prove its claim with evidence the records
revealed a permanent impairment that was unrelated to arthritis.
That would be an incorrect interpretation of what the statute
requires.33 It would have been error for the board to have
interpreted the statute in that fashion.34
Finally, the courts own remand instructions confirm
that the board did not err. The court states that the board on
remand must determine whether VECOs knowledge that Huizenga had a
permanent physical impairment can fairly and reasonably be
inferred from [what Huizenga told VECO].35 But as I read the
boards decision, that is exactly the issue the board decided. We
should therefore affirm.
For these reasons, I respectfully dissent.
APPENDIX A
The Alaska Supreme Court has instructed the Board to
only consider whether a fair and reasonable inference can be
drawn, and thereby imparted to the employer, from the written
records. Based on the above, the Board finds the employer in the
instant case is not entitled to SIF reimbursement. The employee,
in the instant case, was not informed that he had arthritis until
September 2004. This was long after he had submitted hiring and
employment documents to the employer. The Board further finds
that the employer has not provided written proof that it hired or
retained the employee after it had written notice that the
employee had a qualifying pre-existing impairment before he was
injured on October 15, 2000. The Alaska Supreme Court has
determined the employer must show knowledge of a permanent
impairment. Alaska International Constructors.1 This case is
directly on point as far as the instant case is concerned. The
Board finds that the employers written record that the employee
had prior back injuries and surgeries, and nothing more, does not
reasonably connote a preexisting arthritic condition and
therefore is insufficient as a matter of law to establish the
employers written notice of a pre-existing qualifying disability.
Both Drs. Voke and Klimov reached their conclusions regarding the
employees conditions based on their knowledge of the employees
medical records and conditions and not from his Health
Questionaires. The employees written description of back
operation, compression 5 lower vertebrae, Dec. 21, 1987, Dr. Voke
and his written disavowal on the same Health Questionaire that he
had any arthritic condition negates any argument by the employer
that the employees 1996 and 1997 Health Questionaires put them on
written notice that the employee had a qualifying permanent
disability of arthritis before he was injured October 15, 2000.
The Board finds that the employer has not met its burden of proof
by a preponderance of the evidence2 with respect to the statutory
requirements of AS 23.30.205 by showing knowledge by the employer
of the employees handicapping condition prior to his October 15,
2000 injury. For these reasons, the employers request for
reimbursement under the SIF is denied. Because of the denial
based on the employers lack of knowledge of the employees
condition prior to his October 15, 2000 injury is upheld, this
order does not address the other bases for denial addressed in
the SIF denial letter of May 18, 2004.
_______________________________
1 Spinal stenosis is a narrowing of the spaces in the
spine; stenosis is linked to arthritis. Diastematomyelia is a
congenital anomaly in which the spinal cord is split into halves
by a bony body or fibrous band. Dorlands Illustrated Medical
Dictionary 461 (28th ed. 1994). Radiculopathy is a disease of
the nerve roots. Id. at 1404.
2 A laminectomy is the excision of the posterior arch of
a vertebra. Id. at 898. A foraminotomy is an operation for
removing the roof of the intervertebral foramina, done for the
relief of nerve root compression. Id. at 650-51. The foramina
are the holes where the nerves exit the spinal column as they
extend into the extremities.
3 Huizenga gave the wrong date for his surgery.
4 VECO uses October 17, 2000 for the date of injury. The
Board used October 15, 2000 in its decision.
5 The conus medullaris is the cone-shaped lower end of
the spinal cord at the level of the upper lumbar vertebrae.
Dorlands Illustrated Medical Dictionary 374 (28th ed. 1994). The
cauda equina is the collection of spinal roots that descend from
the lower part of the spinal cord and occupy the vertebral canal
below the cord. Id. at 280.
6 The Second Injury Fund partially reimburses employers
for some workers compensation benefits when they meet statutory
requirements. AS 23.30.205.
7 VECO asserted at the hearing that the Second Injury
Fund no longer contested that Huizenga in fact had a qualifying
physical impairment. The Board decision states that it does not
address the other issues raised in the Second Injury Funds
answer.
8 Alyeska Pipeline Serv. Co. v. DeShong, 77 P.3d 1227,
1231 (Alaska 2003).
9 Sea-Land Servs., Inc. v. State, Second Injury Fund, 737
P.2d 793, 795 (Alaska 1987); see also Alaska Intl Constructors v.
State, Second Injury Fund, 755 P.2d 1090, 1091 (Alaska 1988).
10 Bloom v. Tekton, Inc., 5 P.3d 235, 237 (Alaska 2000)
(quoting Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979)).
11 Sea-Land Servs., Inc., 737 P.2d at 795 (citing
Employers Commercial Union Ins. Group v. Christ, 513 P.2d 1090,
1093 (Alaska 1973)).
12 Alaska Intl Constructors, 755 P.2d at 1092.
13 AS 23.30.205(c).
14 AS 23.30.205(d).
15 Sea-Land Servs., Inc., 737 P.2d at 795.
16 AS 23.30.205(d).
17 Christ, 513 P.2d at 1093-94.
18 Compare AS 23.30.190(b) with AS 23.30.205(d).
19 AS 23.30.205(d).
20 As previously noted, Huizenga has achondroplasia. At
oral argument before us, VECO stated that Huizengas
achondroplasia is legally irrelevant to its Second Injury Fund
claim.
21 Sea-Land Servs., Inc., 737 P.2d at 795.
22 Id.
23 Id. (holding that [t]he written record need not contain
the exact medical terminology).
24 Christ, 513 P.2d at 1093.
25 Sea-Land Servs., Inc., 737 P.2d at 795.
26 5 Arthur Larson & Lex K. Larson, Larsons Workers
Compensation Law 91.03[3] (2000) (citations omitted).
Notwithstanding the views of the dissent, Larsons discussion of
the level of knowledge that an employer must have logically
applies both to jurisdictions where knowledge may be established
by any form of proof and to jurisdictions, such as Alaska, where
knowledge may be established only by written records. See Sea-
Land Servs., Inc., 737 P.2d at 795 (stating that written record
requirement provides evidence that employer actually knew of
preexisting impairment).
27 AS 23.30.205(c).
28 Sea-Land Servs., Inc., 737 P.2d at 795.
29 Larson & Larson, supra note 26 at 91.03[5]. According
to Larson, a written record standard is a way to cut down on
controversy about employer knowledge. Id. at 91.03[6].
30 Christ, 513 P.2d at 1093.
31 Sea-Land Servs., Inc., 737 P.2d at 795 (citing U.S.
Pipe & Foundry Co. v. Caraway, 546 S.W.2d 215, 219 (Tenn. 1977)).
32 Special Fund Div. v. Indus. Commn of Ariz., 897 P.2d
643, 649 (Ariz. App. 1994); Country Wide Truck Serv. v. Indus.
Commn of Ariz., 891 P.2d 877, 879 (Ariz. App. 1994).
33 Special Fund Div., 897 P.2d at 649.
34 Denton v. Sunflower Elec. Coop., 740 P.2d 98, 103 (Kan.
App. 1987); see also Country Wide Truck Serv., 891 P.2d at 879
(holding that written record showing that claimant had lumbar
laminectomy and posterior cervical fusion sufficient to show
employer knew of employees preexisting disabling condition).
35 AS 23.30.205.
36 Sea-Land Servs., 737 P.2d at 795.
37 See Christ, 513 P.2d at 1092 (holding that written
record requirement met by notation on personnel evaluation that
employees loss of arm did not slow his work).
38 Sea-Land Servs., 737 P.2d at 795 (holding that written
record requirement satisfied if prior knowledge of disability can
be inferred fairly and reasonably).
39 The qualifying condition does not need to cause the new
injury. The qualifying condition, in combination with the
subsequent injury, need only produce a disability that is greater
than what would have resulted from the subsequent injury alone.
AS 23.30.205(a).
40 Huizengas medical records indicate that he was
diagnosed with arthritis before October 2000, but nothing in the
appellate record suggests that VECO had those medical records at
or before the time of Huizengas injury.
41 AS 23.30.122.
42 AS 23.30.205(c).
43 737 P.2d at 795.
44 Id. at 795-96.
45 Id. at 796.
46 Id. at 794.
47 Id. at 796.
48 755 P.2d 1090, 1091-92 (Alaska 1988).
49 Id.
50 Id. at 1091.
51 Id. at 1092 n.6.
52 Id. at 1093.
53 Id. at 1094.
54 Id.
55 Id.
1 Slip Op. at 7.
2 That is the standard the board applied here. The board
first correctly recognized that we have instructed the board to
only consider whether a fair and reasonable inference can be
drawn, and thereby imparted to the employer, from the written
records. The board then permissibly used an equivalent phrase in
finding that the written record does not reasonably connote the
qualifying condition of arthritis. Everyone recognizes that
arthritis, one of the specific conditions listed in AS
23.30.205(d)(1), is the only qualifying condition relevant in
this case.
3 The only question, then, is whether Alaska
Internationals prior knowledge of Kinters qualifying disability
can fairly and reasonably be inferred from his resume.
Alaska Intl Constructors v. State, Second Injury Fund, 755 P.2d
1090, 1094 (Alaska 1988).
4 Bloom v. Tekton, Inc., 5 P.3d 235, 237 (Alaska 2000)
(citing Bockness v. Brown Jug, Inc., 980 P.2d 462, 465 (Alaska
1999)); see also Brown v. State Workers Comp. Bd., 931 P.2d 421,
423 (Alaska 1997) ([W]e review the Boards factual
determination[s] . . . according to the substantial evidence
test.).
5 Because the board must determine whether the employers
written records permit an imputation of pre-injury knowledge of
the qualifying condition that is a cause of the present
disability, it is significant that the records contained the
employees denial of having had or having been treated for
arthritis. In Sea-Land Services, Inc. v. State, Second Injury
Fund, we thought it significant that Sea-Lands knowledge of the
employees disability cannot reasonably be inferred from a written
record that negated any possible inference of the qualifying
condition. Sea-Land Servs., Inc. v. State, Second Injury Fund,
737 P.2d 793, 796 (Alaska 1987).
6 Slip Op. at 10-11.
7 An employees ignorance of the qualifying condition
cannot foreclose the employers claim. But his ignorance remains
relevant to whether the employers written records permit a fair
and reasonable inference of that condition. Evidence that an
employees own physicians have not told him he has a qualifying
condition is probative in deciding whether the records can be
fairly read to impute knowledge of the condition to the employer.
The boards mention of Huizengas ignorance therefore reveals no
legal error that would justify independent review.
8 Slip Op. at 11 (emphasis added).
9 See AS 23.30.205(c); see also Sea-Land Servs., Inc.,
737 P.2d at 795.
10 See AS 23.30.110(a) ([A] claim for compensation may be
filed with the board in accordance with its regulations . . . and
the board may hear and determine all questions in respect to the
claim.); see also DeNuptiis v. Unocal Corp., 63 P.3d 272, 277
(Alaska 2003) (noting board has broad powers to administer Alaska
Workers Compensation Act, including authority to formulate
policy, interpret statutes, and conduct its hearings in the
manner by which it may best ascertain the rights of the parties.
(citing AS 23.30.135(a))).
11 See Kessick v. Alyeska Pipeline Serv. Co., 617 P.2d
755, 757 (Alaska 1980) ([I]t is not the function of this court to
reweigh the evidence but only to determine whether such evidence
exists. (citing Laborers & Hod Carriers Union, Local 341 v.
Groothuis, 494 P.2d 808, 811-12 (Alaska 1972))); see also AS
23.30.122, which provides:
Credibility of witnesses.
The board has the sole power to
determine the credibility of a witness. A
finding by the board concerning the weight to
be accorded a witnesss testimony, including
medical testimony and reports, is conclusive
even if the evidence is conflicting or
susceptible to contrary conclusions. The
findings of the board are subject to the same
standard of review as a jurys finding in a
civil action.
12 Sea-Land Servs., Inc. v. State, Second Injury Fund, 737
P.2d 793, 795 (Alaska 1987) (quoting U.S. Pipe & Foundry Co. v.
Caraway, 546 S.W.2d 215, 219 (Tenn. 1977)).
13 Id.
14 Id. (citing Leiker v. Manor House, Inc., 457 P.2d 107,
113-14 (Kan. 1969)).
15 See Slip Op. at 18 (stating Alaska International went
too far because our opinion stated that [a] resumes reference to
an injury failed to raise the inference that Alaska International
knew of the employees arthritis).
16 Id. at 12 (quoting 5 Arthur Larson & Lex K. Larson,
Larsons Workers Compensation Law 91.03[3] (2000)).
17 The footnotes omitted from the Larson passage quoted by
the court state that [a]lthough the New York cases on this point
are no longer operative since the 1987 deletion of the knowledge
requirement, they are retained for whatever value they may have
in states still having that requirement. 5 Larson, supra note
16, 91.03[3]. Because the written-record requirement of AS
23.30.205 implicitly rejects an actual-knowledge requirement, the
inoperative New York case law has no relevance in our
jurisdiction. See id. 91.03[5]-[6], D[6] (describing Sea-Land
Servs., 737 P.2d at 793, and noting Alaska requires written
record).
18 Id. 91.03[3] (emphasis added).
19 5 Arthur Larson & Lex K. Larson, Larsons Workers
Compensation Law 91.03[3] (2000). Nebraska, for example,
provides an actual knowledge exception to the written-record
requirement: [I]n the case of an obvious injury inevitably
leading to undisputed actual knowledge on the part of the
employer of the employees preexisting permanent disability, such
as an amputated arm, the written records requirement may be
dispensed with. Ashland-Greenwood Pub. Sch. v. Thorell, 723
N.W.2d 506, 513 (Neb. App. 2006).
20 Id. 91.03[5].
21 Slip Op. at 13-14 (footnotes omitted).
22 AS 23.30.205(d).
23 AS 23.30.205(c) (emphasis added).
24 AS 23.30.205(d).
25 The only exception is a condition satisfying AS
23.30.205(d)(2). There is no contention that subsection applies
here.
26 Sea-Land Servs., 737 P.2d at 795.
27 Slip Op. at 13 (emphasis added).
28 Our function is not to re-draft the statute, but to
enforce it according to its plain meaning. Sea-Land Servs., 737
P.2d at 796 n.3.
29 The courts opinion derives the back problem[] example
from Denton v. Sunflower Elec. Coop., 740 P.2d 98, 103 (Kan. App.
1987). Slip Op. at 14 n.34. Because Kansas law allows employers
to establish knowledge of an employees pre-existing impairment
through either written records or actual knowledge, the example
is inapt and inapplicable to Alaskas statutory scheme. See Kan.
Stat. Ann. 44-567(b) (2006) (The employers knowledge of the
preexisting impairment may be established by any evidence
sufficient to maintain the employers burden of proof with regard
thereto.); Denton, 740 P.2d at 101-03 (employers knowledge of
employees injury was established by witness testimony and
corroborated by business records).
30 Alaska Intl Constructors v. State, Second Injury Fund,
755 P.2d 1090, 1094 (Alaska 1988) (written record insufficient to
support inference of permanent impairment where writing stated I
was injured on the job by a sheet of iron. . . . My injury has
been corrected by surgery and I was released with no restrictions
by my doctor to return to work.); see also Sea-Land Servs.,737
P.2d at 795-96.
31 Slip Op. at 14.
32 Slip Op. at 11.
33 Subsection .205(c) requires the written records to show
the employer had knowledge of the permanent impairment . . . .
(Emphasis added.)
34 Thus, records revealing a history of past cardiac
problems putting an employer on notice of permanent impairment
would not satisfy subsection .205(c) if the disabling condition,
for example cerebral palsy, was unrelated to the conditions to be
inferred from the employers records. Likewise, records revealing
impairment from knee problems would not satisfy the statute if a
ruptured intervertebral disc causes the new disability.
35 Slip Op. at 18. Stated somewhat more accurately, the
question is whether VECO had knowledge of a permanent physical
impairment based on fair and reasonable inferences to be drawn
from what Huizenga told VECO. The court, in phrasing the remand
instruction, no doubt does not mean to assume that VECO indeed
had knowledge of a permanent impairment; there was no evidence
VECO had that actual knowledge; the entire dispute was and is
whether that knowledge is imputable to it from its written
records.
1 Alaska International Constructors at 1090.
2 In the instant dispute, the Alaska Workers Compensation
Act provides no specific standard of review. In the absence of a
specific standard, we apply the general preponderance of the
evidence standard provided by the Alaska Administrative Procedure
Act, AS 44.62.460(e). See DeNuptiis v. Unocal Corp., 63 P.3d 272
(Alaska 2003).
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