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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Alaska Airlines, Inc. v. Darrow (8/25/2017) sp-7192

Alaska Airlines, Inc. v. Darrow (8/25/2017) sp-7192

          Notice:   This opinion is subject to correction before publication in the P                    ACIFIC   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, email  



                    THE  SUPREME  COURT  OF  THE  STATE  OF  ALASKA  

ALASKA  AIRLINES,  INC.;  EBERLE                              )  

VIVIAN,  INC.;  AIGA,  as  successor  in                      )  

interest  to  LUMBERMEN'S                                     )     Supreme  Court  Nos.  S-16127/16143  




                             Appellants  and  








                             Appellee and  












                             Intervenor and  





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                    J.  John Franich, Franich Law Office, LLC, Fairbanks, for  


                    Appellee/Cross-Appellant.  Kimberly D. Rodgers, Assistant  

                    Attorney General, Anchorage, and James E. Cantor, Acting  


                    Attorney  General,  Juneau,  for  Intervenor/Cross-Appellee  


                    State of Alaska.  


                    Before: Stowers, Chief Justice, Winfree, Maassen, Bolger,  


                    and Carney, Justices.  


                    CARNEY, Justice.  



                    An employee continued to work for over ten years after a job-related knee  


injury but had multiple surgeries on her injured knee.  Over time, her employer made  


several permanent partial impairment payments, and she was eventually determined to  


be permanently and totally disabled because of the work injury.  She began to receive  


Social Security disability at about the same time she was classified as permanently and  


totally disabled for workers' compensation.  


                    Her employer asked the Alaska Workers' Compensation Board to allow  


two offsets to its payment of permanent total disability (PTD) compensation: one related  


to Social Security disability benefits and one related to the earlier permanent partial  


impairment  (PPI)  payments.                    The  Board  established  a  Social  Security  offset  and  


permitted  the  employer  to  deduct  the  amount  of  previously  paid  PPI  (adjusted  for  




                    The employee appealed to the Alaska Workers' Compensation Appeals  


Commission, arguing that the Board had improperly applied one of its regulations in  


allowing the PPI offset and had incorrectly calculated the amount of the Social Security  


offset.   She also brought a civil suit against the State challenging the validity of the  


regulation.  The State intervened in the Commission appeal; the lawsuit was dismissed.  

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The Commission reversed the Board's calculation of the Social Security offset and                                                                                                                                                                             

affirmed   the   Board's   order   permitting   the   PPI   offset.     The   employer   appealed   the  

Commission's Social Security offset decision to this court, and the employee cross-                                                                                                                                                                    

appealed the PPI offset.                                                   We affirm in part and reverse in part.                                                                                 

II.                  FACTS AND PROCEEDINGS                         

                                         PamelaDarrowworkedforAlaskaAirlines                                                                                               attheFairbanks airportin 1996.                                                                     

While working, she suffered a knee injury that required multiple surgeries and ultimately                                                                                                                                                   

led to her becoming permanently and totally disabled.                                                                                                                      Darrow held other jobs in the                                                         

years following the 1996 injury, and Alaska Airlines paid her temporary total disability                                                                                                                                                      

(TTD) during times she was unable to work because of her injury.                                                                                                                                           Alaska Airlines also                               



made four payments for PPI for a total of $40,500.                                                                                                           The last payment was made in 2005.  


                                         In  2012  the  Social  Security  Administration  decided  Darrow  met  its  


standards for disability related to her knee, found her disabled as of December 2010, and  


determined that her first month of eligibility for benefits was June 2011. In January 2013  


Darrow filed a written workers' compensation claim for PTD benefits and an adjustment  

                                                                                                             2     She was receiving TTD at the time and was in the  


of her disability compensation rate. 

reemployment process.3  


                     1                   PPI is calculated by multiplying the percentage of an injured worker's                                                                                                                               

permanent impairment by a fixed amount.  AS 23.30.190(a).  At the time of Darrow's   

injury, the fixed amount was $135,000.                                                                                        Former AS 23.30.190(a) (1996).                                                                             Using the   

medical reference named in the statute, Darrow's doctor ultimately rated Darrow as                                                                                                                                                                                 

having a 30% whole person impairment.                                                                                          

                     2                   When a worker is permanently and totally disabled, AS 23.30.220(a)(10)  


permits the Board to base compensation on a wage rate the employee could earn during  


the period of disability rather than what she earned before the injury.  


                     3                   The reemployment process, which helps to prepare an employee to return  



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                         AlaskaAirlines               initially objectedtoher reclassification, but later                                   agreedshe   

was permanently and totally disabled.                                   It objected to the compensation rate adjustment                     

and noted it might be entitled to an offset for Darrow's Social Security disability (SSDI)                                                         

                                             4    Alaska Airlines later petitioned the Board to allow it two  

under AS 23.30.225(b).                                                                                                                                   

offsets: one for SSDI and another one, pursuant to AS 23.30.180, for the PPI it had paid  




                         During Darrow's 2014 deposition Alaska Airlines learned that she had also  


been working for the State of Alaska at the time of her injury, which affected  her  


compensation rate.6                     The parties later entered into a partial settlement in which they  


agreed  that:              (1)  Darrow's  "average  weekly  wage"  when  the  injury  occurred  was  


$668.98,  rather  than  $270  as  the  adjuster  had  initially  calculated;7                                                     (2)  she  became  


            3            (...continued)  


to work in a different job when she can no longer return to her former one, is set out in  


AS 23.30.041.  

            4            AlaskaStatute23.30.225(b) authorizes anoffset to an employer's disability  


payments when an employee gets both workers' compensation and SSDI for the same  



            5            Alaska Statute 23.30.180 provides in part, "If a permanent partial disability  


award has been made before a permanent total disability determination, permanent total  


disability benefits must be reduced by the amount of the permanent partial disability  


award, adjusted for inflation, in a manner determined by the board."  


            6            Pursuant to AS 23.30.220(a)(7), "when the employee is working under  


concurrent contracts with two or more employers, the employee's earnings from all  


employers is considered as if earned from the employer liable for compensation."  


            7            The  partial  settlement  indicated  that  the  average  weekly  wage  was  


"computed  under  the  1996  version  of  AS  23.30.220(a)(4)(A)"  and  that  the  initial  


calculation "did not take into account" Darrow's concurrent employment with the State.  


No records were available to show how the adjuster at the onset of the case determined  



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disabled for purposes of the Alaska Workers' Compensation Act (Act) on October 8,                                                                                                                 

2012; (3) Alaska Airlines would pay Darrow an additional $15,000 related to penalties                                                                                             

and interest "in satisfaction of all claims prior to March 8, 2012"; and (4) Darrow's                                                                                           

attorney would receive "minimum statutory fees on all previously disputed benefits."                                                                                                                    

They listed four unresolved issues in the partial settlement:  one related to the Board's       

exerciseofdiscretion under AS23.30.220(a)(10) to determineawageratefor calculating                                                                                            

                                                     8  one regarding the percentage of PTD that could be withheld for  

Darrow's PTD amount,                                                                                                                                                                            

any overpayment, and the two raised in this appeal.  


                              The Board held a hearing in August 2014; because the contested issues  


were primarily legal, no witnesses testified.   Darrow argued that, contrary to Alaska  


Airlines' assertion, AS 23.30.180 did not permit Alaska Airlines to offset the amount of  


PPI it had previously paid her because the statute authorized an offset for permanent  


                                                                                                                                   9  Although aBoardregulation  

partial disability rather thanpermanent partial impairment.  


               7               (...continued)  


the  average  weekly  wage.                                            The  applicable  subsections  of  the  1996  version  of  


AS 23.30.220(a) used the phrases gross weeklyearnings and spendableweeklywage, see  


former AS 23.30.220(a) (1996), but the parties referred to the average weekly wage in  


the partial settlement.  

               8               Alaska Statute 23.30.220(a)(10) permits the Board to "determine gross  


weekly earnings by considering the nature of the employee's work, work history, and  


resulting disability" when an employee is PTD and the Board decides that the amount  


of gross weekly earnings under other statutory subsections "does not fairly reflect the  


employee's earnings during the period of disability."  The amount of compensation is  


tied to an employee's gross weekly earnings.  AS 23.30.175, .180, .185, .200, .220(a).  


Alaska Airlines later agreed with Darrow's calculation of $1,390 as her adjusted average  


weekly wage under subsection .220(a)(10). Counsel told the Board the figure was based  


on a vocational expert's report.  


               9               Compare  AS  23.30.190(a)  (providing  for  compensation  "[i]n  case  of  



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provided that "[f]or purposes of (b) of this section and AS 23.30.180, permanent partial                                            

disability        benefits         include        permanent           partial       impairment            benefits   paid           under  

                          10  Darrow contended the regulation was against legislative intent.  She  

AS 23.30.190,"                                                                                                                          

asked the Board to adopt the reasoning of Miller v. Municipality of Anchorage, in which  


the Board based an offset on the worker's adjusted weekly wage,11 when calculating the  


SSDI offset. Under Darrow's analysis, Alaska Airlines would not be entitled to an SSDI  


offset because the offset calculation resulted in a negative number.  


                      Alaska Airlines argued first that it was entitled to an SSDI offset based on  


Darrow's actual wages in 1996 rather than the amount it had agreed to as an adjusted  


wage  under  AS  23.30.220(a)(10).                           It  contended  that  the  statement  in  Underwater  


Construction, Inc. v. Shirley that the phrase average weekly wages in AS 23.30.225(b)  


                                                                                                               12  meant that only  

was "the same as 'gross weekly earnings' in AS 23.30.220(a)(1)"                                                                        


AS 23.30.220(a)(1) could be used to establish gross weekly earnings.  Alaska Airlines  


maintained that the purpose of AS 23.30.225 was to save the employer money and that  


the way to effectuate this purpose was to calculate the offset using Darrow's actual 1996  


           9          (...continued)  


impairment partial in character but permanent in quality, and not resulting in permanent  


total disability"), with AS 23.30.180(a) (requiring reduction of PTD by "the amount of  


the permanent partial disability award, adjusted for inflation").  

           10         8 Alaska Administrative Code (AAC) 45.134(c) (2011). 8 AAC 45.134(b)  


provides, "In accordance with AS 23.30.155(j), the employer may reduce permanent  


total disability benefits to recover permanent partial disability benefits previously paid  


by the employer for the same injury."  


           11         AWCB Dec. No. 13-0099 at 27, 2013 WL 4508816, at *20 (Aug. 20,  



           12         884 P.2d 150, 154 (Alaska 1994).  


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wage, even though Darrow would get less money in combined SSDI and PTD than she                                                                              


would get in PTD alone under this proposal.                                              

                         Alaska Airlines acknowledged that AS 23.30.180provided for an offset for  


permanent  partial  disability  (PPD)  rather  than  PPI.                                               But  it  argued  that  in  enacting  


AS 23.30.180, the legislature intended "to avoid double payment for injuries" that cause  


first a permanent impairment and later a permanent total disability.   Alaska Airlines  


pointed out that AS 23.30.190(a), the statute authorizing PPI, directs payment of PPI  


only when the partial impairment does not "result[] in permanent and total disability."  


It argued that if an employee was paid PPI and later became permanently and totally  


disabled, the employer should get a credit for the previously paid PPI as an advance  


payment of PTD.  Alaska Airlines cited several Board decisions that allowed an offset  


for PPI when a claimant received PTD, and maintained that the Board's regulation  


"equat[ing] permanent and partial disability with permanent and partial impairment"  


required the Board to consider the terms synonymous.  


                         In its decision the Board adopted the approach  used in  Miller, but its  


application of  Miller  did  not give  Darrow  the  outcome she wanted.14                                                                   Instead,  the  


Board's result when it calculated the SSDI offset was the same as Alaska Airlines'  


proposal.  When it turned to the PPI offset, the Board referred to the legislative history  


of the 1988  amendments to  the Act that  replaced  permanent partial disability  with  


permanent partial impairment.  It also quoted from Larson's Workers' Compensation  


             13          Under   Alaska   Airlines'   calculation of the SSDI                                           offset, Darrow would          

receive $535.18 a week in combined SSDI and PTD instead of $668.98 in PTD alone.                                                                                     

             14          In  applying  Miller,  the  Board  limited  Darrow's  adjusted  wages  under  


AS 23.30.220(a)(10) to $668.90.  As the Commission pointed out, this was erroneous.  


                                                                               -7-                                                                       7192

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SSDI offset, even though its analysis was somewhat different from hers.                                                                                                              Under the   

Commission's    analysis,    the    average    weekly    wage    the    parties    agreed    to    under  

AS 23.30.220(a)(10) was the average weekly wage to be used in calculating the offset.                                                                                                                            

It noted Alaska Airlines' argument that the statutory language of AS 23.30.225(b) said                                                                                                               

"average weekly wages at the time of injury."                                                                   But it interpreted the legislature's 1995                                          

                                                                            19  to include wages calculated under any subsection of  

amendment of AS 23.30.220(a)                                                                                                                                                                              

AS 23.30.220(a), including subsection .220(a)(10), within the definition of average  


weekly wages under AS 23.30.225(a).  The Commission thought that to interpret the  


statute otherwise would lead to an unfair result: Darrow would receive less in combined  


SSDI and PTD than she would  in PTD alone.   The Commission observed that the  


statutory language permitted an offset, but that Alaska Airlines' argument would result  


in a reduction of total benefits.  


                                Next the Commission decided that Darrow's PPI did not now meet the  


terms of AS 23.30.190(a) - "impairment partial in character but permanent in quality,  


and not resulting in permanent total disability" - and thus the earlier PPI payments were  


effectively an advance payment of PTD.  It allowed Alaska Airlines to offset the PPI  


amountunder AS23.30.155(j),20 andordered that "AlaskaAirlinesis entitled to withhold  


20% of [Darrow's] permanent total disability payments, without regard to AS 23.30.180  


                18              The parties also disputed howtheBoardshould apply the maximumbenefit                                                                                           

cap, but neither party has raised that issue before us.                                                                        We therefore do not address it.                                               

                19              This  amendment  added  subsection  .220(a)(10)  and  allowed  the  Board  


discretion to vary  gross weekly earnings when an employee was eligible for PTD.  


Ch. 75,  9, SLA 1995.  


                20              Alaska Statute 23.30.155(j) permits an employer to offset overpayments or  


advance payments "by withholding up to 20 percent .  .  .  of unpaid installments of  



                                                                                                    -9-                                                                                            7192

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computing compensation."                               We noted that even though the legislature had changed the                                              

language of AS 23.30.220 in 1983, the method used to calculate a weekly wage rate in                                                                           

                                                                                                                                  34     From this we  

the 1977 and 1983 versions of the statute remained "very similar."                                                                                           

concluded that  average weekly wages  in AS 23.30.225(b) was "the same as 'gross  


weekly  earnings'  in  AS  23.30.220(a)(1),"  the  subsection  used  to  calculate  the  


employee's compensation in that case.35  


                         Alaska Airlines asserts that AS 23.30.225(b)'s use of the phrase at the time  


of injury only permits the use of Darrow's income from 1996, the year of her injury.  


This argument ignores the use of the same phrase in AS 23.30.220, which currently  


provides that compensation is calculated "on the basis of an employee's spendable  


weekly wage  at the time of injury."36                                     (Emphasis added.)   In spite of this language,  


AS 23.30.220(a)(10) allows the Board to set a different wage rate for certain workers  


who are permanently and totally disabled.  


                         Historically AS 23.30.220 has permitted the Board some discretion in  


setting the wage used as a base for compensation calculation.  When AS 23.30.225(b)  


was added to the Act in 1977, for example, former AS 23.30.220 permitted the Board to  


set a worker's average weekly wages at the time of injury by considering wages for  


             33          Id.  at 153 (quoting former AS 23.30.220 (1977)).                             

             34          Id.  at  153-54  (quoting  former  AS  23.30.220(2)  (1977)  and  former  


AS 23.30.220(a)(1) (1983)).  


             35          Id. at 154.  We also observed that the version of AS 23.30.220 in effect  


when Shirley was injured was unconstitutional.  See id. at 151 n.2 (citing Gilmore v.  


Alaska Workers' Comp. Bd., 882 P.2d 922 (Alaska 1994)).  


             36          Spendable weekly wages are based on gross weekly earnings and serve as  


the  basis  for  calculating  compensation  under  the  Act.                                                          See  AS  23.30.220(a).  


AS 23.30.220(a)(10) allows the Board to vary an employee's gross weekly earnings  


when an employee is PTD, which changes the amount of compensation.  


                                                                             -13-                                                                        7192

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 AS 23.30.190(a) and AS 23.30.155(j) and decided that Alaska Airlines could recover the                                                                                                                                                      

 PPI as an overpayment of PTD "without regard to AS 23.30.180 and without regard to                                                                                                                                                             

 8 AAC [45].134."                                     It did not mention the additional $11,338.                                                                               

                                       Darrow argues that the Commission misinterpreted the Act by allowing                                                                                                                 

 Alaska Airlines to offset the PPI it had previously paid her against her PTD award.                                                                                                                                                     Her  

 argument is based on statutory language:                                                                              AS 23.30.180(a) requires an offset when "a                                                                              

 permanent partial                                   disability   award has been made before a permanent total disability                                                                                  

 determination" (emphasis added) - not a permanent partial                                                                                                                  impairment  award - yet                                         

 permanent partial disability as a benefit was removed from the Act in 1988.                                                                                                                                           69  Darrow  

 contends that disability and impairment are distinct concepts.   She points out that a  


 person may be disabled from working without having a permanent impairment,70  and  


 conversely,  a  person  who  has  a  permanent  impairment  may  not  be  disabled  from  


 working, as illustrated by Darrow herself.  Darrow maintains that the Board correctly  


 recognized that PPI was intended to compensate for a separate loss related to a physical  


 harm, rather than wage loss from an injury, which would be a disability benefit.  


                                       Darrow points to a different statutory subsection, AS 23.30.041(k), which  


 concernsanemployee's eligibility for reemployment benefits,toshowthatthelegislature  


 understood that PPD and PPI are in fact different.   In that subsection the legislature  


 explicitly differentiated between PPD and PPI.71  She concludes that AS 23.30.180 does  


                    69                 Ch. 79,  34, SLA 1988.                              

                    70                 For example, in                             Rydwell v. Anchorage School District                                                                      , 864 P.2d 526, 529-                       


 30 (Alaska 1993), the parties agreed the injured worker could not return to her former  

job even though she had a 0% impairment rating.                                                                           

                    71                Alaska  Statute  23.30.041(k)  provides  in  part,  "If  permanent  partial  


 disability or permanent partial impairment benefits have been paid in a lump sum before  



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not authorize an offset against her PTD for PPI.                                                                                                                                                                                                           Darrow argues that the Commission's                                                                                           

construction of AS 23.30.190 could permit an employer a double recovery of PPI when                                                                                                                                                                                                                                                                                                                                                      

AS 23.30.041(k) had been used to suspend benefits.                                                                                                                                                                                                                                Both Darrow and Alaska Airlines                                                                                                          

currently take the position that                                                                                                                               permanent partial disability                                                                                                                         in AS 23.30.180(a) refers to                                                                                                           

the permanent partial benefit that existed before the 1988 statutory amendments.                                                                                                                                                                                                                                                                                                                                                         

                                                                      AlaskaAirlines                                                                    asks us toaffirmtheCommission's                                                                                                                                                    interpretation oftheAct                                                                                 

allowing it to recoup PPI under AS 23.30.190(a) and .155(j). Alaska Airlines argues that                                                                                                                                                                                                                                                                                                                                                          

the 1988 addition of the offset provision to subsection .180(a) "only . . . related to                                                                                                                                                                                                                                                                                                                                                                   

injuries occurring prior to the statutory changes . . . which changed permanent partial                                                                                                                                                                                                                                                                                                                                            

disability benefits to permanent partial impairment benefits."                                                                                                                                                                                                                                                                       Therefore, it continues,                                                  

after the 1988 amendments to the Act, "neither the credit provision of  .180 nor the                                                                                                                                                                                                                                                                                                                                                               

board's regulation in 8 AAC 45.134(c) is required to address recovery of PPI paid when                                                                                                                                                                                                                                                                                                                                                   

an employee is rendered permanently and totally disabled."                                                                                                                                                                                                                                                                         It does not mention the                                                                                          

Board's adjustment of the PPI amount for inflation or the Commission's failure to                                                                                                                                                                                                                                                                                                                                                                        

address it.   

                                                                      The State supports the Commission's interpretation of the statute, arguing                                                                                                                                                                                                                                                                             

that Darrow "is not entitled to PPI benefits for her knee injury because her impairment                                                                                                                                                                                                                                                                                                                 

resulted   in   permanent   total  disability."     The   State   relies   on   the   plain   meaning   of  

AS 23.30.190(a) - which refers to PPI as not resulting in permanent total disability -                                                                                                                                                                                                                                                                                                                                                                  

and the common meaning of                                                                                                                         overpayment, but also maintains that the Board's regulation                                                                                                                                                                                                   

is consistent with both AS 23.30.180 and .190 and "harmonizes the two statutes."                                                                                                                                                                                                                                                                                                                                                                        It  

contends that the concepts of                                                                                                                        disability  and  impairment  are distinct but related, as shown                                                                                                                                                                                                               

                                   71                                 (...continued)  


the employee requested or was found eligible for reemployment benefits, payment of  


benefits  under  this  subsection  is  suspended  until  permanent  partial  disability  or  


permanent partial impairment benefits would have ceased . . . . "  

                                                                                                                                                                                                                         -23-                                                                                                                                                                                                               7192

----------------------- Page 24-----------------------

by language in AS 23.30.180(a) that classifies a worker who suffers certain impairments                                                                                                                                                                                                                                                      

as presumptively permanently and totally disabled. It argues that not requiring an offset                                                                                                                                                                                                                                                                                  

would overcompensate Darrow.                                                                                                                       At oral argument before us the State postulated that,                                                                                                                                                                         

because   both   statutes   took   effect   on   the   same   date,   the   statutory  language   in  

AS 23.30.180(a) was a drafting error and that the legislature meant to use                                                                                                                                                                                                                                                                     impairment  

rather than                                      disability  in the statutory language.                                                                                                                             

                                                            As noted, the Commission's decision relied solely on AS 23.30.190(a) and                                                                                                                                                                                                                                                 

AS 23.30.155(j) to permit Alaska Airlines' recovery of previously paid PPI and failed                                                                                                                                                                                                                         

to explore the meaning of AS 23.30.180(a) and its interaction with AS 23.30.190(a). The                                                                                                                                                                                                                                                                                            

Commission   effectively   wrote   out   of   the   statute   AS   23.30.180(a)'s   provision   for  

recovery of previously paid PPD by saying that "Alaska Airlines is entitled to withhold                                                                                                                                                                                                                                                                      

 20% of [Darrow's] permanent total disability payments, without regard to AS 23.30.180                                                                                                                                                                                                                                                                  

and without regard to 8 AAC [45].134."                                                                                                                                                 

                                                            Alaska Airlines asks us to ignore AS 23.30.180(a), the Board's regulation,                                                                                                                                                                                                               

and the Board's decision applying that statute and regulation, narrowing its focus to the                                                                                                                                                                                                                                                                                              

statutory  subsections   relied   on   by   the   Commission.     Although   we   review   the  

                                                                                                                                                                                                    72          when  construing  a  statute,  "we  must,  

Commission's   decision,   not   the   Board's,                                                                                                                                                                                                                                                                                                                         

whenever possible, interpret each part or section of a statute with every other part or  


section, so as to create a harmonious whole."73                                                                                                                                                                       "When a statute or regulation is part of  


a larger framework or regulatory scheme, even a seemingly unambiguous statute must  


                              72                            Humphrey v. Lowe's Home Improvement Warehouse, Inc.                                                                                                                                                                                                               , 337 P.3d 1174,                              

  1178 (Alaska 2014) (citing                                                                                                 Shehata v. Salvation Army                                                                                                    , 225 P.3d 1106, 1113 (Alaska                                                                          


                              73                            State, Dep't of Commerce, Cmty. &Econ. Dev., Div. of Ins. v. Progressive  


Cas. Ins. Co., 165 P.3d 624, 629 (Alaska 2007) (quoting Kodiak Island Borough v.  


Exxon Corp., 991 P.2d 757, 761 (Alaska 1999)).  


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inconsistent with those definitions.                                      The separation of powers doctrine "prohibits this                                        


court from enacting legislation or redrafting defective statutes."                                                                                    

                                                                                                                                 When the legislature  

                                                                                                             105     The statutory language in  



makes a drafting error, we do not rewrite the statute. 

AS 23.30.180(a) does not authorize an employer to reduce a PTD award when an  


employee has previously received PPI. Alaska Statute 23.30.180(a) authorizes recovery  


of  previously  paid  permanent  partial  disability,  not  impairment,  benefits.                                                                                The  


Commission's construction of AS 23.30.190(a) fails to interpret that subsection in the  


context of the entire Act, including AS 23.30.180(a), and essentially eliminates the  


Board's regulation.  We therefore reverse the Commission's decision.  


             C.           8 AAC 45.134(c) Is Invalid Because It Is Inconsistent With The Act.  


                          Darrow's cross-appeal asks us to consider the validity of 8 AAC45.134(c),  


which the Board applied to authorize Alaska Airlines' recovery of previously paid PPI  


and to increase the amount Alaska Airlines was entitled  to recover  for  the PPI  by  


adjusting for inflation.   Alaska Airlines does not directly address the validity of the  


regulation, arguing instead that its recovery of the overpayment does not rely on the  


regulation.               The  State  agreed  with  Alaska  Airlines  that  under  the  Commission's  


construction of the statute, the regulation is not needed to recover previously paid PPI.  


But neither Alaska Airlines nor the State addressed whether PPI should be adjusted for  


inflation, as permitted by AS 23.30.180(a) and 8 AAC 45.134(c) and ordered by the  


Board. And the State did not discuss why the Board would have adopted this regulation  


             103          262 P.3d 593, 597-98 (Alaska 2011).                          

             104          State v. Campbell                  , 536 P.2d 105, 111 (Alaska 1975) (citing Alaska Const.                                         

art. II,  1, art. IV,  1),                  overruled on other grounds by Kimoktoak v. State                                                  , 584 P.2d 25        

(Alaska 1978).  


             105          Alyeska Pipeline Serv. Co., 262 P.3d at 597-98.  


                                                                                 -33-                                                                           7192

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if the Commission's construction of the statute were correct.                                                                                                                                                        The State argues that the                                                     

regulation's  validity is not properly before us because the superior                                                                                                                                                                                  court case was                          

dismissed and the Commission determined it did not have jurisdiction to decide this                                                                                                                                                                                                             

issue.    It concludes that "no ruling on the regulation's validity exists to support this                                                                                                                                                                                                      

Court's appellate jurisdiction."                                                                              

                                               Alaska Statute 23.30.129(a) gives a party the right to appeal a decision by                                                                                                                                                                           

the Commission to this court rather than the superior court. This is precisely the posture                                                                                                                                                                                          

of the case before us; we therefore have jurisdiction.                                                                                                                                    The question of the regulation's                             

validity   may   not   technically   be   ripe   for   review   because   the   Commission   correctly  

decided it lacked jurisdiction to determine a regulation's validity and, according to the                                                                                                                                                                                                          

                                                                                                                                                          106   But the parties briefed the merits of this  

State, the superior court case was dismissed.                                                                                                                                                                                                                                                    

issue before the Commission and this court, and our construction of the relevant statutes  


leaves no question as to the validity of 8 AAC 45.134 (c).  


                                               Because Darrow does not challenge whether the regulation was properly  


promulgated, we consider only "whether the regulation is consistent with and reasonably  


necessary  to  carry  out  the  purposes  of  the  statutory  provisions"  and  "whether  the  


regulation is reasonable and not arbitrary."107                                                                                                                  "We exercise our independent judgment  


in determining the validity of an administrative regulation . . . ."108                                                                                                                                                                           A regulation that  


                        106                    Cf. Nelson v. Municipality of Anchorage                                                                                                   , 267 P.3d 636, 644 (Alaska 2011)                                                                

(deciding that as-applied constitutional challenge was not ripe because claim had not                                                                                                                                                                                                             

been litigated before Board or superior court).                                                                                           

                        107                    Kelly v. Zamarello, 486 P.2d 906, 911 (Alaska 1971); see also Lauth v.  


State, 12 P.3d 181, 184 (Alaska 2000).  


                        108                    Lauth, 12 P.3d at 184.  


                                                                                                                                                -34-                                                                                                                                         7192

----------------------- Page 35-----------------------


"differs   substantively   from   the   clear   language   of   the   statute"   is   invalid.                                                                                                                          Here  

AS23.30.180(a) specifies                                             thatan            employer can reducepermanent totaldisability                                                                               benefits  

by the amount of previously paid permanent partial disability benefits, adjusted for                                                                                                                                           

inflation.   While the State advances some policy arguments in support of the regulation,                                                                                                                  


such a policy decision is for the legislature rather than for the Board or this court.                                                                                                                                                    

Becausetheregulation effectively rewrites AS23.30.180(a), substituting impairment for  


disability, 8 AAC 45.134 (c) is not valid.  


V.                CONCLUSION  

                                    We AFFIRM that part of the Commission's decision reversing the Board's  


calculation  of  the  Social  Security  disability  offset  and  REVERSE  that  part  of  the  


Commission's decision permitting an offset for permanent partial impairment benefits.  


WethereforeREMANDthis matter to theCommission for furtherproceedingsconsistent  


with this opinion.  


                  109               Muller v. BP Expl. (Alaska) Inc.                                                    , 923 P.2d 783, 792 n.9 (Alaska 1996);                                                                see  

also Madison v.                                Alaska   Dep't of Fish                                       & Game                   , 696           P.2d   168,   178   (Alaska 1985)   

(holding that agency regulation was invalid because it unduly restricted subsistence                                                                                                                    

hunting, contrary to legislative intent).                                           

                  110               Fairbanks N. Star Borough Sch. Dist. v. NEA-Alaska, Inc., 817 P.2d 923,  


926 (Alaska 1991).  


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