Casey v. City of Portland (In re Casey)

277 Or.App. 574

372 P.3d 571

In the Matter of the Compensation of Jeffrey S. Casey, Claimant.

Jeffrey S. CASEY, Petitioner

v.CITY OF PORTLAND, Respondent.

1004578

A15S2297.

Court of Appeals of Oregon.

Argued and Submitted Sept. 10, 2014.

Decided April 20, 2016.

James S. Coon, Portland, argued the cause for petitioner. With him on the briefs was Swanson Thomas, Coon & Newton.

Ian M. Leitheiser argued the cause and filed the brief for respondent.

Before ARMSTRONG, Presiding Judge, and HADLOCK, Chief Judge, and EGAN, Judge.^*

ARMSTRONG, P.J.

Claimant injured his left shoulder in 2002 while working for the City of Portland (employer) and filed a claim for workers' compensation benefits. In addition to “boilerplate” language stating that claimant's rights would be lost if he did not take certain actions within specified timeframes, employer's claim denial also included this statement: “If in the future you are diagnosed with a condition that you or your physician believe to be related to this exposure with [employer], your claim will be reconsidered for possible acceptance.” Notwithstanding that statement, employer denied claimant's subsequent claim, in 2010, on the ground that it was precluded by the 2002 denial. The Workers' Compensation Board ultimately upheld that denial, agreeing that claim preclusion barred claimant's 2010 claim. On judicial review of the board's order, we conclude that that was legal error; accordingly, we reverse and remand. ORS 183.482(8).

The facts pertinent to our resolution of the issue on review are few and undisputed. Claimant injured his left shoulder at work on February 27, 2002, and filed a workers' compensation claim for that injury.¹ Employer issued a denial of claimant's claim on May 14, 2002 (the 2002 denial). The denial listed the “Claimed Conditions” as “left shoulder” and stated, as relevant:

“Under current Workers' Compensation law it is not the accident or exposure that is accepted in a workers' compensation claim. Rather what is accepted is the diagnosed condition or disease that is proven by objective medical findings to have been the result of that accident or exposure.

“We are required to either accept or deny a new workers' compensation claim within 60 days of the employer's date of knowledge of that claim. We are approaching our time limit on your claim and as of this date you have not been diagnosed with any condition that is supported by objective findings that the condition is related to your claimed exposure on the job.^[2] “Therefore we must respectfully deny this claim. We do agree that it was wise for you to have a medical checkup after your exposure and we agree to pay for your medical office visit of March 19, 2002 in connection with your exposure as diagnostic and precautionary.

“We are required by State law to add the following paragraph to this letter:

“IF YOU THINK THIS DENIAL IS NOT RIGHT, WITHIN 60 DAYS AFTER YOU ARE NOTIFIED OF THIS DENIAL YOU MUST FILE A LETTER WITH THE WORKERS' COMPENSATION BOARD [.] YOUR LETTER MUST STATE THAT YOU WANT A HEARING, YOUR ADDRESS AND THE DATE OF YOUR ACCIDENT, IF YOU KNOW THE DATE.* * *IF YOU DO NOT FILE A REQUEST WITHIN 60 DAYS, YOU WILL LOSE ANY RIGHT YOU MAY HAVE TO COMPENSATION UNLESS YOU CAN SHOW GOOD CAUSE FOR DELAY BEYOND 60 DAYS. AFTER 180 DAYS,

ALL YOUR RIGHTS WILL BE LOST.* * *

“If in the future you are diagnosed with a condition that you or your physician believe to be related to this exposure with [employer], your claim will be reconsidered for possible acceptance. ”

(Boldface and capitalization in original; italics added.) In the remainder of this opinion, we refer to the boldface text as the “boilerplate language” and the italicized sentence as the “reconsideration provision.”

Claimant did not request a hearing, and there is no record of any relevant medical treatment from December 2002 until May 2010.

Eight years later, in May 2010, claimant sought medical treatment for worsening left shoulder pain, and, on May 24, 2010, he filed an aggravation claim of the February 27, 2002, injury; he later filed a new or omitted condition claim.³ He eventually underwent surgery on his left shoulder—specifically, “a left shoulder arthroscopy and decompression of posterior paralabral cyst”—on August 12, 2010, and was released to full duty with no restrictions on September 29, 2010.

Employer denied claimant's 2010 claim on the ground that his 2002 claim had been denied, and that denial had become final.⁴ Claimant requested a hearing before an administrative law judge (ALJ), who upheld the denial. The ALJ agreed with employer that, “because the May 14, 2002 denial became final by operation of law,” the 2010 claim was barred by claim preclusion. As relevant here, the ALJ reasoned that, although the reconsideration provision—viz., “If in the future you are diagnosed with a condition that you or your physician believe to be related to this exposure with [employer], your claim will be reconsidered for possible acceptance”—“could be interpreted as allowing claims for later, as yet undiagnosed, conditions, the general and complete claim denial became final by operation of law when claimant failed to request a hearing.” The ALJ pointed out that “[t]he denial contained the required language that, if claimant did not request a hearing within 60 days, ‘you will lose any right you may have to compensation’ (unless he could show ‘good cause’), and that after 180 days, ‘all your rights will be lost.’ ” Thus, according to the ALJ, the “seemingly inviting language” of the reconsideration provision “did not ‘revive’ claimant's rights with regard to a denial that had become final after 180 days, in contradiction of [ORS 656.319⁵ ].” The board adopted and affirmed the ALJ's order in its entirety.

On judicial review, claimant contends that the board erred in concluding that claim preclusion barred his 2010 claim, because the reconsideration provision in the 2002 denial entitled him to consideration of his 2010 claim on the merits, notwithstanding that he did not challenge the earlier denial. In claimant's view, the 2002 denial promises that “his claim would be reconsidered if he were diagnosed in the future with a condition that he or his physician believed to be related to his accident,” that promise became final, and employer is bound by it. In short, claimant contends that, because the 2002 denial “expressly reserved his right to have [his] later claim ‘reconsidered for possible acceptance,’ ” claim preclusion does not bar his 2010 claim.⁶

Employer, by contrast, agrees with the board that, because claimant did not timely challenge the 2002 claim denial, it became final by operation of law, ORS 656.319, and therefore bars litigation of claimant's 2010 claim under principles of claim preclusion. Employer contends that the “exception” to those principles relied on by claimant does not apply in these circumstances.⁷

Thus, as framed by the parties on review, the question we must address is this: Did the board err in determining that claim preclusion operated to bar claimant's 2010 claim, given the reconsideration provision included in the 2002 denial? For the reasons that follow, we conclude that it did.

In Drews v. EBI Companies, 310 Or. 134, 140, 795 P.2d 531 (1990), the Supreme Court articulated the rule of claim preclusion as follows:

“ ‘[A] plaintiff who has prosecuted one action against a defendant through to a final judgment * * * is barred [i.e., precluded] * * * from prosecuting another action against the same defendant where the claim in the second action is one which is based on the same factual transaction that was at issue in the first, seeks a remedy additional or alternative to the one sought earlier, and is of such a nature as could have been joined in the first action.’ ”

(Quoting Rennie v. Freeway Transport, 294 Or. 319, 323, 656 P.2d 919 (1982) (brackets and omissions in Drews ).) Or, more concisely, “[c]laim preclusion bars litigation of a claim based on the same factual transaction that was or could have been litigated between the parties in a prior proceeding that has reached a final determination.” Liberty Northwest Ins. Corp. v. Rector, 151 Or.App. 693, 698, 950 P.2d 387 (1997) (internal quotation marks and brackets omitted). Both claim and issue preclusion apply in the workers' compensation context.⁸ Drews, 310 Or. at 142, 795 P.2d 531. However, as the court also explained in Drews, those rules are subject to a number of exceptions, among them this one:

“Where the decision maker expressly reserves for a party the right to maintain a second action or proceeding at the time the first determination is made, there is no preclusive effect.”

Id. at 141, 795 P.2d 531 (citing Restatement (Second) of Judgments § 26(1)(b) (1982) ).

Claimant contends that such a “reservation” is precisely what happened here. The 2002 claim denial expressly states that claimant's claim “will be reconsidered for possible acceptance ” if claimant later is diagnosed with a condition that claimant or his physician believes is related to the 2002 injury. (Emphasis added.) Thus, at the time of the first determination (the denial), employer expressly reserved for claimant his right to maintain a second action or proceeding (reconsideration). And, consequently, the denial can have “no preclusive effect” as to that second proceeding.

Employer responds that the “reservation of rights” exception to claim preclusion applies only to a judicial reservation of rights, and thus it has no application to this case.

As support for that proposition, employer points out, first, that the “source” of the court's announcement of the exception in Drews —that is, the Restatement itself—references a reservation of rights by a court. See Restatement § 26 (l )(b) (preclusion does not apply to extinguish a claim when “[t]he court in the first action has expressly reserved the plaintiffs right to maintain the second action” (emphasis added)). Indeed, employer argues that claimant ...