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In re Compensation of Caren

Supreme Court of Oregon

August 8, 2019

In the Matter of the Compensation of Susan Caren, Claimant.
v.
PROVIDENCE HEALTH SYSTEM OREGON, Respondent on Review. Susan CAREN, Petitioner on Review,

          Argued and submitted September 11, 2018.

          On review from the Court of Appeals (WCB 1405147) (CA A160470). [*]

          Joe Di Bartolomeo, Di Bartolomeo Law Office PC, Astoria, argued the cause and filed the briefs for petitioner on review.

          Vera Langer, Lyons Lederer LLP, Salem, argued the cause and filed the brief for respondent on review.

          Before Walters, Chief Justice, and Balmer, Nakamoto, Flynn, Duncan, Nelson, and Garrett, Justices. [**]

         [365 Or. 467] Case Summary: Claimant injured her back at work and employer accepted a "lumbar strain." She also had preexisting arthritis in her back, which doctors estimated caused part of her overall impairment. In awarding permanent partial disability, the Worker's Compensation Board agreed that the department had correctly reduced claimant's award to factor out the impairment related to her preexisting arthritis. Claimant disagreed, arguing that, under the permanent partial disability statute, ORS 656.214, her entire impairment was "due to" her work injury, and thus the entire impairment should have been rated for her permanent partial disability award, not just the part related directly to her work injury. Additionally, claimant contended that the employer could only reduce that award to factor out her preexisting arthritis, as it had done, if it were to deny a "combined condition" and close the claim under ORS 656.268(1)(b). Held: The legislature intended that workers be compensated for their entire impairment if that impairment is due in material part to the compensable injury, except where the employer has issued a denial of a "combined condition" and utilized the closure process set out in ORS 656.268(1)(b).

         The decision of the Court of Appeals is reversed, and the decision of the Workers' Compensation Board is reversed and remanded.

         [365 Or. 468] FLYNN, J.

         The dispute in this workers' compensation case arises from the intersection of overlapping statutory provisions that control the determination of a worker's permanent partial disability. ORS 656.214 obligates employers to provide compensation for a worker's permanent impairment, meaning "loss of use or function" that is "due to the compensable industrial injury." ORS 656.214(1)(a). But another statute limits the employer's liability when the compensable injury combines with a qualifying "preexisting condition" to "cause or prolong" the injured worker's' disability or need for medical treatment, unless the compensable injury is the "major contributing cause" of the "combined condition."[1] ORS 656.005(7)(a)(B). As part of that liability limit, the legislature has created a process by which the employer issues a denial of the "combined condition" and then pays permanent partial disability compensation only for the estimated portion of the worker's permanent impairment that is attributable to the "current accepted condition." ORS 656.268 (1)(b). The question we must resolve is whether the legislature intended that an employer would obtain the same limited liability when the employer has not followed the process that the legislature has created for estimating a reduced amount of permanent impairment following the denial of a "combined condition." We conclude that the legislature intended that injured workers would be fully compensated for new impairment if it is due in material part to the compensable injury, except where an employer has made use of the statutory process for reducing liability after issuing a combined condition denial.

         I. BACKGROUND

         A. Overview of the Workers' Compensation Claims Process

         We begin with an overview of key terminology and the basic workers' compensation claim process before [365 Or. 469] explaining the procedural history of this particular case. "A 'compensable injury' is an accidental injury * * * arising out of and in the course of employment requiring medical services or resulting in disability or death[.]" ORS 656.005(7)(a). Traditionally, an injury "arises out of a worker's employment "'if the labor being performed in the employment is a material, contributing cause which leads to the unfortunate result.'" Schleiss v. SAIF, 354 Or. 637, 643-44, 317 P.3d 244 (2013) (quoting Olson v. State Ind. Ace. Com., 222 Or. 407, 414-15, 352 P.2d 1096 (1960)); see also Hopkins v. SAIF, 349 Or. 348, 351, 245 P.3d 90 (2010) (describing a "compensable injury" as proven by a "material contributing cause" standard). When an injury is compensable, the worker may be entitled to a variety of benefits through the period of recovery, including "medical services for conditions caused in material part by the injury," temporary disability compensation for lost wages, and permanent partial disability compensation. ORS 656.245; ORS 656.210; ORS 656.214.

         The rule for compensation is different when the worker has a "combined condition," which arises when an "otherwise compensable injury combines *** with a preexisting condition to cause or prolong disability or a need for treatment." ORS 656.005(7)(a)(B).[2] If the worker has a combined condition, it "is compensable only if, so long as and to the extent that the otherwise compensable injury is the major contributing cause of the disability of the combined condition or the major contributing cause of the need for treatment of the combined condition." Id. However, only certain preexisting causes qualify as a "preexisting condition" that can form a "combined condition"-generally only conditions diagnosed prior to the injury or "arthritis." ORS 656.005(24)(a).[3]

         [365 Or. 470] If the worker has a "combined condition," then the claim may be closed when the "accepted injury is no longer the major contributing cause of the worker's combined *** condition." ORS 656.268(1)(b). But, "before the claim may be closed" on that basis, the employer must send the worker a written notice denying the combined condition. ORS 656.262(7)(b).

         When an employer closes a worker's claim, the employer "shall issue *** an updated notice of acceptance that specifies which conditions are compensable." ORS 656.262(7)(c). Also at the time of closure, the employer calculates and pays permanent partial disability. ORS 656.214.[4]In general, "permanent partial disability" means "[permanent impairment resulting from the compensable industrial injury," where "impairment" is "the loss of use or function of a body part or system due to the compensable industrial injury." ORS 656.214(1)(a), (c)(A). Permanent impairment is measured according to standards adopted by the Director of the Department of Consumer and Business Services and is "expressed as a percentage of the whole person." ORS 656.214(1)(a); ORS 656.726(4)(f). However, if the claim has been closed "because the accepted injury is no longer the major contributing cause of the worker's combined or consequential condition or conditions," then permanent partial disability compensation is based on an estimate of "the likely permanent disability that would have been due to the current accepted condition." ORS 656.268(1)(b).

         B. Procedural History of this Case

         Employer's calculation of permanent partial disability in the notice of claim closure is the source of the dispute that arose in this case. Claimant injured her back at work, and employer issued a notice of acceptance listing the accepted condition as a "lumbar strain." A few months later, claimant underwent surgery to address a lumbar disc herniation, but she continued to experience back pain and [365 Or. 471] enrolled in and completed a comprehensive pain management program. At discharge from that program, a staff physician measured diminished lumbar range of motion but also noted preexisting arthritis in the lumbar spine, which the evaluator estimated contributed to 50 percent of the impairment in claimant's spine. However, claimant did not request that employer accept a "combined condition," and employer did not accept or deny a "combined condition."

         When claimant's attending physician released her to return to regular work, the physician concurred with the earlier evaluator that preexisting arthritis contributed to an estimated 50 percent of claimant's lumbar impairment. Based on that report, employer issued a notice of closure in which it calculated claimant's permanent partial disability as 50 percent of her impairment from reduced range of motion. On reconsideration, the department's medical arbiters estimated that claimant's arthritis was actually responsible for 70 percent of her current impairment, and the Order on Reconsideration reduced her permanent partial disability compensation accordingly.

         On review of that decision, the administrative law judge and the Workers' Compensation Board agreed that the department had correctly reduced claimant's disability to factor out the estimated contribution from her preexisting arthritis. The board reasoned: "[I]t is undisputed that claimant's permanent impairment is due in part to 'arthritis' (i.e., a legally cognizable 'preexisting condition') and in part to her accepted lumbar strain. Accordingly, claimant's impairment was appropriately apportioned." The Court of Appeals affirmed in a per curiam opinion, citing to an earlier decision in which it had held that, if the worker has a "legally cognizable" preexisting condition (such as claimant's arthritis), then "impairment due to the compensable industrial injury" is calculated by factoring out the estimated contribution from the preexisting condition, "unless [the preexisting condition] is part of an accepted combined condition claim that remains compensable at the time of closure."[5] McDermott v. SAIF, 286 Or.App. 406, 420, 422, 398 P.3d 964 (2017).

         [365 Or. 472] Claimant argues that the Court of Appeals has misconstrued the meaning of loss "due to the compensable industrial injury," on which permanent partial disability is based. According to claimant, the legislature intended ORS 656.268(1)(b) to provide an exception to a general rule that the employer is obligated to pay compensation for the full measure of the worker's disability if the disability as a whole is caused in material part by the compensable injury, and the legislature intended that employers would obtain the benefit of that exception only by following the specified process. In other words, the dispute turns on whether the legislature intended that permanent partial disability for workers with a preexisting condition will be calculated automatically under the method described in ORS 656.268 (1)(b)-absent an "accepted combined condition"-or whether the legislature intended that permanent partial disability will be calculated under the method described in ORS 656.268(1)(b) only when the employer has issued a denial of a "combined condition" and closed the claim under the process specified in ORS 656.268(1)(b). We allowed review to resolve that question of statutory construction.

         II. DISCUSSION

         As with all questions of statutory construction, our goal is to determine the intention of the legislature when it enacted the relevant statutes. See State v. Gaines, 346 Or. 160, 171, 206 P.3d 1042 (2009). We have explained that the words adopted by the legislature provide the best evidence of what the legislature intended, although we also give appropriate weight to any pertinent legislative history. Id. at 171-72. We examine the "workers' compensation statutes as a whole" and our "prior judicial interpretations" of those statutes to determine whether the legislature intended that the estimated contribution from a preexisting condition would be factored out of a workers' permanent impairment only when an employer follows the process specified in ORS 656.268(1)(b) for accomplishing that result. See Brown v. SAIF, 361 Or. 241, 283, 391 P.3d 773 (2017) (explaining that process for construing a different provision of chapter 656).

         To understand whether the legislature intended the process for denying and closing a "combined condition" to [365 Or. 473] be the only process through which an employer's liability for permanent impairment will be reduced to account for a preexisting condition, we first explain the longstanding method for calculating permanent partial disability under ORS 656.214, to which the legislature added the process for identifying, accepting, and denying "combined conditions." We then explain that "combined condition" process and our prior construction of the process in Schleiss, 354 Or. 637. Finally, we explain why the process proposed by employer allows a denial of compensation through a process that is inconsistent with the notice requirements that the legislature has otherwise specified in the workers' compensation laws. From those considerations, we conclude that the legislature intended the combined condition process to create an exception to the general rule that employers pay compensation for the full measure of the workers' permanent impairment if the impairment as a whole is caused in material part by the compensable injury, and we conclude that the legislature intended that employers would obtain the benefit of that exception only by issuing a denial of a "combined condition" and following the process that the legislature has specifically provided in ORS 656.268(1)(b) for reducing the worker's permanent partial disability.

         A. Text and Prior Construction of ORS 656.214

         As explained above, permanent partial disability means "[p]ermanent impairment resulting from the compensable industrial injury," and "impairment" is the loss of use or function "due to" the compensable injury. ORS 656.214 (1)(a).[6] The pertinent portions of that statute specify:

"(1) As used in this section:
"(a) 'Impairment' means the loss of use or function of a body part or system due to the compensable industrial injury or occupational disease determined in accordance [365 Or. 474] with the standards provided under ORS 656.726 expressed as a percentage of the whole person.
"(b) 'Loss' includes permanent and complete or partial loss of use.
"(c) 'Permanent partial disability' means:
"(A) Permanent impairment resulting from the compensable industrial injury or occupational disease; or
"(B) Permanent impairment and work disability resulting from the compensable industrial injury or ...

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