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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Louie v. BP Exploration (Alaska), Inc. (6/13/2014) sp-6914

Louie v. BP Exploration (Alaska), Inc. (6/13/2014) sp-6914

         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,  

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RICHARD LOUIE,                                        )  

                                                      )        Supreme Court No. S-15120 

                     Appellant,                       )  

                                                      )        Alaska Workers' Compensation  

         v.                                           )        Appeals Commission No. 12-022  


BP EXPLORATION (ALASKA),                              )        O P I N I O N  

INC., and ACE USA,                                    )  

                                                      )        No. 6914 - June 13, 2014 

                     Appellees.                       )  

_______________________________ )  

                  Appeal  from  the  Alaska  Workers'  Compensation  Appeals  


                  Commission, Laurence Keyes, Commissioner Chair.  

                  Appearances:         Joseph      A .   Kalamarides,   Kalamarides             &  


                  Lambert, Anchorage, Appellant.  Richard L. Wagg, Russell,  

                  Wagg, Gabbert & Budzinski, Anchorage, for Appellees.  

                  Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and  


                  Bolger, Justices.   

                  STOWERS, Justice.  


                  A highly paid worker suffered a debilitating stroke while traveling for his  


employer.  The employer initially controverted benefits because it did not think the  

stroke was work related, but it later accepted the claim and paid workers' compensation  

benefits.  The statutory maximum compensation rate at the time of the injury was $700  


a week.  A little more than five months after the employee's stroke, an amended version  


----------------------- Page 2-----------------------


of the Alaska Workers' Compensation Act took effect.  Instead of an absolute maximum  

compensation  rate,  the  amended  statute  set  a  variable  rate  indexed  to  the  statewide  


average  weekly  wage.    The  employee  asked  for  an  increased  rate  of  compensation,  

arguing that the law in effect at the time he was recognized as being permanently and  

totally disabled should govern his benefit amount.  The Alaska Workers' Compensation  

Board, with one panel member dissenting, decided that the version of the statute in effect  


at  the  time  of  the  injury  was  the  applicable  statute  and  consequently  capped  the  


employee's benefits at $700 a week for life.  The dissenting panel member would have  

construed   the   statute   as   permitting   increased   benefits.      The   Alaska   Workers'  

Compensation Appeals Commission affirmed the Board's decision.  The worker appeals,  

arguing that the amount of his benefits does not fairly compensate him for lost wages  


during the period of his disability so that the date of his disability, rather than the date  


of his injury, should be used to determine the version of the statute governing his claim.  

We affirm the Commission's decision.  


                    The facts in this case are largely uncontested.  Richard Louie worked for  


BP Exploration (Alaska), Inc. (BP) as an auditor.  At the time of his injury he earned in  


excess of $100,000  a year.   In January  2000  he traveled to  London, England, for  a  


meeting; en route, he developed "an air travel [deep vein thrombosis]" in his leg, and a  


small clot eventually made its way to his brain, causing a debilitating stroke.  He is now  

paralyzed on one side of his body and suffers from aphasia and muscle spasms.  


                    After initially controverting Louie's claim, BP accepted that the stroke was  


work related.  According to the compensation report dated September 12, 2002, BP was  


paying temporary total disability (TTD) at the rate of $700 a week.  The parties later  


entered into a partial compromise and release (C & R) agreement related to occupational,  


physical, and speech therapy; the Board approved the partial C & R in early 2004.  The  

                                                              -2-                                                        6914

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partial C & R acknowledged that Louie was unlikely to return to work, but it left open  


reemployment benefits.  The partial C & R also acknowledged that BP had paid Louie  


TTD from September 2002 to December 2003 (approximately the time the agreement  

was signed) and agreed that Louie's "total disability rate is $700."  

                   Louie  filed  a  workers'  compensation  claim  in  October  2011  seeking  a  


compensation  rate  adjustment  and  permanent  total  disability  (PTD)  benefits.    In  its  

answer BP raised the defense that Louie had  received, "from his date of injury and  


continuing," PTD benefits "at the maximum compensation rate allowable under the Act  

as it existed in the year of the employee's injury."  

                   At the hearing on the claim, Louie presented testimony from Curtis Smith,  


a former co-worker with approximately the same employment history as Louie.  Smith  

testified that, had Louie continued to work at BP, Louie's gross salary with bonuses  

would  have  been  approximately  $300,000  a  year,  plus  benefits  such  as  401(k)  


contributions.  Louie's wife testified that in the months following the stroke, she and  


Louie thought there was still some chance he would be able to return to work because,  

in spite of his initially severe condition, he made rapid progress in therapy.  

                   The  Board  panel  issued  a  split  decision  in  the  case,  with  the  majority  

deciding that Louie was not entitled to increased benefits.  The Board decided that the  

version of the statute in effect at the time of injury should govern the case, citing a  


number of cases from this court to support its decision. The Board determined that Louie  


was already receiving the maximum benefit he was permitted under law and denied his  


petition for a compensation rate adjustment.  The Board chair dissented.  She relied on  

the policy that workers' compensation is intended to replace workers' wages during the  


time of disability and wrote that the policy compromise under workers' compensation  


"is achieved only when an injured worker's compensation rate fairly approximates his  

                                                             -3-                                                       6914

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probable future earning capacity lost due to injury."   She relied on earlier cases from this  


court to construe the statute as requiring a departure from "the mechanical formula" for  

calculations when the result was grossly unfair.  Using reasoning similar to that found  



in  Peck  v.  Alaska  Aeronautical,  Inc. ,   she  said  that  the  conclusion  the  legislature  

authorized  departure  from  the  general  formula  was  "supported  by  the  legislature's  


                                                                                The dissent provided a statutory  

alternative computation method in AS 23.30.220." 


analysis to support the conclusion that Louie's compensation rate should be increased.  

                    On   appeal   the   Commission   affirmed   the   Board's   decision.                                    The  


Commission said that the only way to reach the conclusion that Louie was entitled to  


increased benefits was to construe "date of injury" in the current version of AS 23.30.175  

          1         The dissent explained:  


                    The  court  has  held  the  "essential  component  of  the  basic  

                    compromise underlying the Workers' Compensation Act[,]  

                    the  worker's  sacrifice  of  common  law  claims  against  the  

                    employer in return for adequate compensation without the  

                    delay and expense inherent in civil litigation," is achieved  

                    only  when  an  injured  worker's  compensation  rate  fairly  

                    approximates his probable future earning capacity lost due to  


                    injury.  Flowline of Alaska v. Brennan , 129 P.[3]d 881, 883  


                    (Alaska 2006);  Gilmore v. Alaska Workers' Compensation  


                    Board , 882 P.2d 922, 927 (Alaska 1994).  

          2         756 P.2d 282, 287-88 (Alaska 1988).  



                    AS 23.30.220(a)(10) permits the Board to depart from the general formula  


for calculating spendable weekly wage if the result from applying the general formula  


does not accurately reflect the employee's earnings.  An employee's spendable weekly  


wage  is  used  as  a  base  amount  for  calculating  his  workers'  compensation  rate.  

AS 23.30.220(a).  

                                                               -4-                                                         6914

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to mean "date of disability,"  and to find that Louie's disability started after July 1, 2000.  


The Commission declined to do so.  The Commission noted that even under an analysis  

that  increased  Louie's  compensation  rate,  the  weekly  amount  did  not  "bear  any  

reasonable relationship to his actual or predicted income."  It decided that no matter how  


Louie's spendable weekly wage was calculated, the statutory cap of $700 in place at the  

time of his injury prevented him from getting increased benefits.  Louie appeals.  



                        This appeal presents an issue of statutory construction.  Interpretation of a  


statute is a question of law to which we apply our independent judgment; we interpret  

the statute according to reason, practicality, and common sense, considering the meaning  

of the statute's language, its legislative history, and its purpose.5  

IV.         DISCUSSION  

                        The  Commission  Did  Not  Err  In  Deciding  That  The  Maximum  

                        Compensation Rate Set Out In Former AS 23.30.175(a) Applied.  

                        Although AS 23.30.180 provides that when an injured worker is found  


permanently  and  totally  disabled  "80  percent  of  the  injured  employee's  spendable  

weekly  wages  shall  be  paid  to  the  employee  during  the  continuance  of  the  total  


disability," actual computation of permanent total disability (PTD) rates is governed by  

            4           Cf. Johnson v. RCA-OMS, Inc.                           , 681 P.2d 905, 908 (Alaska 1984) (noting     

that this rationale for decision made it unnecessary to decide whether "time of injury"  

meant "time of disability due to injury").  



                        Grimm v. Wagoner, 77 P.3d 423, 427 (Alaska 2003) (citing Native Vill. of  

Elim v. State , 990 P.2d 1, 5 (Alaska 1999)).  

                                                                          -5-                                                                    6914

----------------------- Page 6-----------------------


AS 23.30.220, which deals with spendable weekly wages,  and AS 23.30.175, which sets 


compensation rates.  

                   On January 27, 2000, the date of Louie's stroke, AS 23.30.175(a) provided  

                                                                                 7   This statutory subsection was  


that the maximum weekly compensation rate was $700. 

amended in 2000, with an effective date of July 1, 2000.8  Louie's main argument is that  


the version of section .175 in effect at the time of his permanent total disability, which  


he says is the time of the 2004 partial C & R, should govern his rate of compensation  


rather than the version of the statute in effect at the time of his injury.  BP argues that the  


version of the statute in effect at the time of injury should be applied; because former  


AS 23.30.175(a) capped benefits at $700 a week at the time of Louie's stroke, it contends  


he is only entitled to $700 a week "for the lifetime of his disability related to this injury,"  

which in his case is probably for life.  


                   The Alaska Workers' Compensation Act has a provision for calculating a  


worker's spendable weekly wage, which is the base amount for benefit calculations,  but 


the   Act   also   sets   out   statutory   maximum   and   minimum   benefits.                                      Alaska  

Statute 23.30.220(a)(10) permits the Board to vary the method used to calculate the  


spendable weekly wage of an employee who is permanently and totally disabled when  


          6        "An employee's spendable weekly wage is the employee's gross weekly  

earnings minus payroll tax deductions."  AS 23.30.220(a).  

          7        Former AS 23.30.175(a) (1998) ("The weekly rate of compensation for  

disability or death may not exceed $700 . . . .").  

          8        Ch. 105, SLA 2000.   AS 23.30.175(a) as amended in 2000 caps benefits at  

a percentage of the statewide average weekly wage.  

          9        AS 23.30.220.  

          10       AS 23.30.175.  

                                                             -6-                                                       6914

----------------------- Page 7-----------------------

calculation  under  other  subsections  "does  not  fairly  reflect  the  employee's  earnings  

during the period of disability."  In such cases, the statute permits the Board to consider  


a number of factors, but it limits the "compensation calculated under this paragraph" to  


                                                                                                  Alaska Statute 23.30.220  

"the employee's gross weekly earnings at the time of injury." 

has not been amended since the time of Louie's injury.  At the time of injury Louie's  

gross weekly earnings were $2,301.69.12  


                     When the legislature changed the maximum benefit amount in 2000, the  


Director of the Division of Workers' Compensation told the legislature that workers'  


compensation benefits had not increased in about 12 years and said the bill provided  

                                                                                    13   There is no indication that the  

"needed increases in benefits for injured employees."                                    

legislation was intended to have retroactive application in either the statutory language14  


or the legislative history, and Louie does not argue that it should be construed as having  


retroactive application.  He argues instead that the version of the law in effect at the time  



both parties acknowledged that he was permanently and totally disabled should govern. 

           11        AS 23.30.220(a)(10).  

           12        The record does not contain a calculation of spendable weekly wage for   

Louie's claim, possibly because his income was high enough that he was simply eligible             

for maximum benefits at the time.  



                     Minutes, H. Labor & Commerce Comm. Hearing on H.B. 419, 21st Leg.,  


2d  Sess.  No.  2275  (Mar.  8,  2000)  (testimony  of  Paul  Grossi,  Director,  Division  of  

Workers' Comp.).  

           14        AS  01.10.090  provides,  "No  statute  is  retrospective  unless  expressly  

declared therein."  



                     Louie identifies 2004, when the partial C & R was signed and approved, as  


the applicable date.  The parties agreed in 2002 (in pleadings) that he was permanently  

and totally disabled as of the date of injury, January 27, 2000, but no compensation  


                                                                  -7-                                                           6914

----------------------- Page 8-----------------------


                    Louie bases his claim largely on Peck v. Alaska Aeronautical, Inc.     Peck  

involved the compensation rate for a pilot who was initially injured in a plane crash in  


1964  but  returned  to  work  and  continued  working  until  his  medical  certificate  was  



withdrawn in 1982 because of medication he was taking for the 1964 injury.                                               At the  


time of his injury he earned $255 a week; at the time of his permanent disability 18 years  



later,  he  was  earning  more  than  $1,200  a  week.                            At  the  time  of  the  1964  injury  


AS 23.30.175(b), the maximum compensation rate statute, provided that "in computing  


compensation for permanent total disability, the average weekly wages are considered  


                                                  19   The Board interpreted this provision as capping the  

to have been not more than $81."                                                               

average weekly wage, on which it based the PTD award, at $81, and it awarded Peck  


                                               20   One of Peck's arguments on appeal was "that the law  

only $52.65 a week in benefits.                                           

in effect at the time of the employee's disability, instead of that in effect at the time of  


injury,  should  be  applied  to  determine  an  employee's  benefits  under  the  Alaska  

                                                 21  But we did not use that rationale for our decision,  

Worker[s'] Compensation Act."  


deciding instead that the version of AS 23.30.175(b) in effect at the time of injury could  


          15        (...continued)  

report in the record shows a reclassification of benefits.  

          16        756 P.2d 282 (Alaska 1988).  

          17        Id. at 284.  

          18        Id.  

          19        Id.   (quoting  former  AS  23.30.175(b))  (internal  quotation  marks  and  

alterations omitted).  

          20        Id.  

          21        Id.  

                                                               -8-                                                         6914

----------------------- Page 9-----------------------



not be construed "with certainty" as containing a maximum limitation.                                     The Board was  


instructed to "calculate Peck's claim under the 1964 version of AS 23.30.220(3)" - the  

statute governing calculation of spendable weekly wage - because application of the  


                                                                                                                 The 1982  

$81 limit on the average weekly wage would lead to a grossly unfair result. 


version of the statute was not applied to the claim.                          

                    According to the leading treatise on workers' compensation law, the general  


method for calculating the amount of benefits to which a worker is entitled is to use a  


wage formula, and after applying the wage formula, to consider whether the result is  

                                         25                                                   26 

subject to maximum limits.                   Alaska follows this general rule.                    As we explained in  



Wien Air Alaska v. Arant,   the first step involves calculation of the weekly wage and the  


percentage of that wage to which the employee is entitled; the second step "specifies a  

maximum limitation on the weekly award.  If the result of the step one calculation, the  


dollar amount which represents the per cent of the worker's wage, is greater than the  


maximum  limitation,  the  claimant  receives  only  the  maximum  limitation."                                         Arant  

          22       Id. at 288.  The statute in effect in 1964 did not have a specific maximum     

dollar amount for the compensation rate.  Former AS 23.30.175(a) (1962).  

          23       Id.  

          24        See id. at 286-88.  

          25        5 ARTHUR LARSON   &   LEX  K.   LARSON ,   WORKERS '   COMPENSATION   LAW  

 93.04[1] (2013).   

          26        See,  e.g.,  Seward  Marine  Servs.,   Inc.  v.  Anderson,  643  P.2d  493,  493  

(Alaska 1982) (describing computation of death benefits).  

          27        592 P.2d 352 (Alaska 1979), overruled on other grounds by Fairbanks N.  


Star Borough Sch. Dist. v. Crider, 736 P.2d 770, 775 (Alaska 1987).  

          28       Id. at 354 (emphasis added).  

                                                             -9-                                                        6914

----------------------- Page 10-----------------------

involved death benefits from a plane crash that killed a pilot, so we did not need to  

consider different versions of the governing statutes.29  

                   Louie       argues       that     sections       .220      and     .175      conflict       because  


subsection .220(a)(10) does not permit an employee's compensation rate to exceed his  

gross weekly earnings at the time of injury.  He interprets this provision as "an upper  


limit which exceeds the compensation rate limitation under AS 23.30.175(a) at the time  


of the injury."  But in our view, these sections do not conflict because they concern two  

distinct steps in benefit calculation.  Alaska Statute 23.30.220 governs the first step of  


a two-step process - determining the employee's spendable weekly wage.  Variation  

in calculating spendable weekly wage is needed because the formula may produce lower  


                                                                                          Capping the amount of  

benefit amounts than are warranted in certain circumstances. 

compensation  under  the  alternative  formula  at  the  amount  of  actual  gross  earnings  


                                                                                                      Step two of the  

removes any incentive to be found disabled rather than return to work. 


two-step process is to apply the maximum or minimum set out in AS 23.30.175.  Unless  

the statutory maximum in effect in January 2000 does not apply to Louie's claim, his  


compensation is capped at $700 a week at the second step, no matter how his wage is  


calculated in the first step; this amount will never exceed his gross weekly earnings at  

the time of his injury.  

                   Louie   claims   that   his   gross   weekly   earnings   as   calculated   under  


AS 23.30.220 do not accurately reflect his "earnings during the period of disability" so  

         29        Id. at 353-55.  

         30        See  Dougan  v.  Aurora  Elec.  Inc.,  50  P.3d  789,   797   (Alaska  2002)  

(describing history of alternative methods of calculating wages in AS 23.30.220).  

         31        Cf. Alaska Pac. Assurance Co. v. Brown, 687 P.2d 264, 273 (Alaska 1984)  


(agreeing that State has interest in creating incentives for workers to return to work).  

                                                          -10-                                                     6914

----------------------- Page 11-----------------------

that he is entitled to a compensation rate adjustment under AS 23.30.220.  This argument  


is based on evidence - which BP does not dispute - that, had he continued to work for  


BP, his income and other benefits would have continued to increase.  The uncontested  

evidence showed that his income would have been approximately $300,000 a year, and  


BP would have had to put additional funds in his 401(k).  But adjusting Louie's wage  

rate is irrelevant if the $700 statutory maximum in former AS 23.30.175(a) applies to  




                     The  $700  cap  on  benefits  was  enacted  in  1988.                                According  to  the  

legislative        history,       the    1988       legislation        lowered         the    maximum            benefit      from  


                                                                                                          An analysis of this  

approximately $1,100 a week and increased the minimum benefit. 


section of the bill and public comments related to it noted that the "[m]ajority of workers  

are on the low end of the scale with less than 5% qualifying for weekly benefits in excess  


of   $700/week."                  According   to   a   sectional   analysis,   the   1988   amendment   to  


AS 23.30.175(a) created "an absolute maximum of $700 per week" and was intended to  


"provid[e] for a fixed maximum compensation rate which can be predicted."                                                     This  


legislative history underlines the statutory language and shows that the legislature knew  

highly paid workers would receive lower benefits after disability.  

          32         Ch. 79,  30, SLA 1988.  

          33         H. Labor & Commerce Comm., Workers' Comp. Legislation Comparative   

Analysis  House  &  Senate  Bills  at  10,  15th  Leg.,  2d  Session  (Feb.  23,  1988)  in  Pat  

Wilson, Alaska Legislative History: Workers' Comp. SB 322 (1988) (compiled 1993).  


Prior to its amendment the statute provided for a cap that was a percent of the average  


weekly wage, rather than a fixed amount.  Former AS 23.30.175(a) (1982).  

          34         Comparative Analysis, supra note 33, at 10.  

          35         H.  Judiciary Comm., House CS for CS for Senate Bill No. 322 (L&C)  

Sectional Analysis at 12, 15th Leg., 2d Session (Apr. 6, 1988) in Pat Wilson, Alaska  


Legislative History: Workers' Comp. SB 322 (1988) (compiled 1993).  

                                                                -11-                                                          6914

----------------------- Page 12-----------------------


                     In general the statute in effect on the date of injury applies to a workers'  



compensation claim.                  Louie points to no statutory language that suggests otherwise, nor  


does he cite cases that do not apply this rule.  Even Peck applied the version of the statute  


in effect on the date of injury.                     Near the time of Louie's injury there appears to have  



been a consensus that the compensation rates set out in the statute were too low. 


had the extreme misfortune both to suffer a devastating injury and to suffer it shortly  

before an amendment to the statute would have increased the benefit amount available  


to him.  We do not discount the devastating effect of Louie's injury on his family and his  


income:  $700 a week is a cheeseparing amount that inadequately compensates him for  


his lost income. Under the $700 statutory cap, Louie can receive an amount that is equal  

to a little more than 30% of what his income was in 2000 and approximately 12% of  


what Smith testified Louie would be earning now if he had not been disabled.  But Louie  


points to no authority that would support using a later version of the statute, and we find  

           36        See Thompson v. United Parcel Serv.                           , 975 P.2d 684, 688 (Alaska 1999)  

(applying 1988 version of statute to claim even though statute amended one month after  


 93.05[1] (2013) (noting general rule  that benefit increases are not retroactive and   

benefit level at time of injury controls). The treatise says that Alaska "applies the benefit           

level prevailing at the time the disability was rated."  Id .  93.05[2].                                      The cases it cites  

in   support  are  permanent  partial  impairment  (PPI)  cases  that  were  decided  under  a  

version of the statute providing that permanent disability benefits were to be calculated  

"according to currently existing benefit rates regardless of the benefit rate in existence  


at the time of injury."  Hood v. State, Workmen's Comp. Bd. , 574 P.2d 811, 813 (Alaska  


1978).  That statute was repealed in 1977.  Id. n.4.  

           37        Peck v. Alaska Aeronautical, Inc. , 756 P.2d 282, 288 (Alaska 1988).  



                     See Minutes, H. Judiciary Comm. Hearing on H.B. 419, 21st Leg., 2d Sess.  

No.  271  (Apr.  3,  2000)  (testimony  of  Paul  Grossi,  Director,  Division  of  Workers'  

Comp.) (noting that bill increased benefit amounts but also had provisions to benefit  


                                                                  -12-                                                             6914

----------------------- Page 13-----------------------

none.  Consequently, the Commission correctly affirmed the Board's decision that Louie     

is receiving the maximum amount to which he is entitled.  


               For the foregoing reasons, we AFFIRM the Commission's decision.  

                                                 -13-                                          6914

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