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Stoltz v. Liberty Northwest Insurance Corp.

Court of Appeals of Oregon

March 29, 2017

Tobby A. STOLTZ, Petitioner,
v.
LIBERTY NORTHWEST INSURANCE CORPORATION and Department of Consumer and Business Services, Respondents.

          Argued and Submitted September 11, 2015

         Department of Consumer and Business Services 1300021H

          Julene M. Quinn argued the cause and fled the brief for petitioner.

          Amie Fender argued the cause and fled the brief for respondent Liberty Northwest Insurance Corporation.

          Denise Fjordbeck waived appearance for respondent Department of Consumer and Business Services.

          Before Ortega, Presiding Judge, and Lagesen, Judge, and Garrett, Judge.

         Case Summary: In this workers' compensation case, claimant seeks judicial review of a fnal order by the Director of the Department of Consumer and Business Services (DCBS) denying claimant's request for attorney fees and penalties against insurer, Liberty Northwest (Liberty). Claimant sought sanctions after Liberty failed to timely deliver payment on his workers' compensation claim, which had been settled under a claim disposition agreement (CDA). Liberty contends, as it did below, that claimant is not entitled to attorney fees and penalties because he waived his right to them under ORS 656.236(1)(a) and the terms of the CDA. Held: Under ORS 656.236(1)(a), a claimant's right to seek attorney fees and penalties for delayed payment of compensation is waived unless that right is reserved in the terms of the CDA. In this case, given that the CDA contained an unambiguous waiver provision and did not reserve claimant's right to attorney fees and penalties, claimant's right to attorney fees and penalties for delayed payment of compensation was waived under the CDA.

          ORTEGA, P. J.

         In this workers' compensation case, claimant seeks judicial review of a final order by the Director of the Department of Consumer and Business Services (DCBS) denying claimant's request for attorney fees and penalties against insurer, Liberty Northwest (Liberty). Claimant sought sanctions after Liberty failed to timely deliver payment on his workers' compensation claim, which had been settled under a claim disposition agreement (CDA). Liberty contends, as it did below, that claimant is not entitled to attorney fees and penalties because he waived his right to them under ORS 656.236(1)(a) and the terms of the CDA.[1]Reviewing the final order for legal error, Rash v. McKinstry Ca, 331 Or 665, 667, 20 P.3d 197 (2001), we affirm.

         The relevant facts are mostly procedural and undisputed. In 2011, claimant suffered a compensable injury, which was settled through a CDA. Under the terms of that agreement, claimant was to receive a lump sum of $154, 875, payment of which was to be "made no later than the fourteenth day after the [Workers' Compensation] Board mails notice of its approval of the agreement to the parties [.]" The board approved the CDA on January 9, 2013. Claimant did not receive the funds until February 7, 2013, several days after the 14-day deadline.

         As a result, claimant sought penalties against Liberty under ORS 656.262(ll)(a) for "failure to timely pay settlement proceeds."[2] The sanctions unit of the Workers' Compensation Division declined to impose penalties on Liberty under that statute, finding that Liberty did not unreasonably delay payment.

         Claimant then sought a hearing on the matter before an administrative law judge (ALJ). At the hearing, Liberty asserted two arguments as to why attorney fees and penalties were not warranted. First, Liberty argued that claimant had waived his right to seek penalties under the terms of the CDA. Second, Liberty contended that it had not delayed payment. The ALJ rejected both arguments, concluding, in part, that claimant had not waived his right to seek penalties because a CDA only waives future benefits (i.e., temporary and permanent disability, vocational benefits, and medical services), not benefits related to payment of the CDA itself. Further, the ALJ concluded that Liberty unreasonably failed to timely pay claimant's settlement award. Accordingly, the ALJ awarded attorney fees and penalties.

         Liberty, in turn, requested that DCBS review the ALJ's order. The director reversed the order, concluding that, under ORS 656.236(1)(a) and the CDA, claimant had waived his right to request attorney fees and penalties for a delayed payment. In the final order, the director relied on ORS 656.236(1)(a) and the Supreme Court's interpretation of that statute in Rash to conclude that, as a matter of law, "a CDA waives all rights, other than to medical services, unless those rights are expressly reserved." Further, the director determined that, in this case, the CDA did not include language allowing claimant to retain the right to obtain attorney fees and penalties. The director did not determine whether the delay in payment of funds was reasonable.

         On judicial review of the director's final order, claimant argues that the director erred by concluding that claimant "released his rights to hold [Liberty] liable for a penalty and attorney fee[s] for late payment of the compensation due under the CDA" where "[Liberty] failed to pay the compensation which formed the consideration of that settlement agreement [.]" He raises several arguments challenging the director's conclusion. First, claimant contends that ORS 656.236, the statute that governs CDAs generally, is silent about whether the right to enforce a CDA is waived through that same agreement. Claimant suggests that, under the workers' compensation statutory scheme, a CDA cannot be read as waiving the right to attorney fees and penalties because those are the only mechanisms for enforcing the terms of a CDA.[3] Second, claimant argues that, under contract principles, claimant did not waive his right to enforce the terms of the CDA because Liberty failed to fully perform under the terms of the agreement. On that point, he argues that, because Liberty did not make a timely payment, waiver of his right to fees and sanctions was not "triggered." That is, claimant contends that he "is not considered to have released his ...


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