McDermott v. Saif Corp. (In re Comp. of Mcdermott)

286 Or.App. 406

398 P.3d 964

In the Matter of the Compensation of Maurice McDermott, Claimant.

Maurice MCDERMOTT, Petitioner,

v.SAIF CORPORATION and Industrial Diesel Power, Respondents.

A160016

Court of Appeals of Oregon, En Banc.

Argued and submitted June 14, 2016

resubmitted en banc February 8, 2017.

June 28, 2017

Joe Di Bartolomeo argued the cause for petitioner. With him on the briefs was Di Bartolomeo Law Office, P.C.

David L. Runner, Salem, argued the cause and filed the brief for respondents.

Before Hadlock, Chief Judge, and Armstrong, Ortega, Sercombe, Duncan, Egan, DeVore, Lagesen, Tookey, Garrett, DeHoog, and Shorr, Judges, and Flynn, Judge pro tempore.

SERCOMBE, J.

Claimant seeks review of an order of the Workers' Compensation Board upholding an award of permanent partial disability benefits by employer's insurer, SAIF Corporation, for claimant's right knee injury claim. The award apportioned claimant's benefits under OAR 436-035-0013 (2013)¹ so as to exclude compensation for his preexisting arthritic condition. In claimant's view, under ORS 656.268(1), as interpreted by the Supreme Court in Schleiss v. SAIF , 354 Or. 637, 317 P.3d 244 (2013), apportionment to exclude an award for impairment due to a preexisting condition is permitted only when the preexisting condition has been accepted as a part of a combined condition claim and then denied.² SAIF argues that the board correctly concluded that apportionment was appropriate under ORS 656.214 and the administrative rules for rating disability in OAR chapter 436, division 35. We review the board's order for legal error, ORS 656.298(7) (providing that review of board order shall be as provided in ORS 183.482 ); ORS 183.482(8)(a) (providing for review for legal error), conclude that the board did not err, and affirm.

Claimant suffered a compensable injury to his right knee that SAIF accepted as a strain and traumatic injury to the articular surface of the knee joint. During a surgical debridement, Dr. Hamilton observed preexisting arthritic changes. Hamilton opined that the work injury had combined with the preexisting arthritis to cause a combined condition. It is undisputed that claimant's arthritis is a preexisting condition as defined in ORS 656.005(24) ; claimant did not seek to have the arthritis accepted as a part of a combined condition, and SAIF did not accept a combined condition.

In the rating of claimant's disability, Hamilton attributed 40 percent of claimant's impairment to the accepted conditions and 60 percent to claimant's preexisting arthritic condition. SAIF closed the claim with an award of four percent "whole person impairment," apportioned as outlined by Hamilton. An administrative law judge and the board determined that apportionment was appropriate under OAR 436-035-0013 and upheld the award. Claimant seeks judicial review, contending that, under the pertinent statutes and the Supreme Court's opinion in Schleiss , the apportionment of impairment allowed by the rule was not permissible.

We begin our analysis with the text and context of the relevant statutes and rules. An injured worker who suffers permanent disability as a result of a compensable injury or occupational disease is entitled to benefits for impairment. ORS 656.214(2)(a) provides that, "[w]hen permanent partial disability results from a compensable injury or occupational disease, benefits shall be awarded [when the worker has been released to regular work] * * * for impairment only." ORS 656.214(1)(c)(A) defines "permanent partial disability" to mean "[p]ermanent impairment resulting from the compensable industrial injury or occupational disease." ORS 656.214(1)(a) defines "impairment":

" '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 with the standards provided in ORS 656.726, expressed as a percentage of the whole person."

Thus, ORS 656.214 authorizes permanent partial disability benefits only for impairment that "results from" or that is "due to the compensable industrial injury." "Compensable injury" is defined by ORS 656.005(7)(a)(B) to mean "an accidental injury * * * arising out of and in the course of employment requiring medical services or resulting in disability or death * * * subject to the following limitation[ ]":

"If an otherwise compensable injury combines at any time with a preexisting condition to cause or prolong disability or a need for treatment, the combined condition 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."

The director of the Department of Consumer and Business Services has interpreted and applied ORS 656.214(1) through administrative rules that preclude an award of permanent partial disability for the portion of an impairment that is not due to or resulting from the compensable industrial injury but, instead, is due to or resulting from some other cause. Those rules were adopted by the director under his general authority in ORS 656.726(4)(a) to "[m]ake and declare all rules * * * which are reasonably required in the performance of the director's duties," and, specifically, to implement ORS 656.726(4)(f), which delegates to the director the authority to determine the meaning of "impairment * * * due to the compensable industrial injury." ORS 656.726(4)(f) delegates to the director the authority to

"[p]rovide standards for the evaluation of disabilities. The following provisions apply to the standards:

"(A) The criterion for evaluation of a permanent impairment under ORS 656.214 is the loss of use or function of a body part or system due to the compensable industrial injury or occupational disease."

OAR chapter 436, division 35, sets out the director's standards for evaluation of a permanent impairment under ORS 656.214"due to the compensable industrial injury." At the relevant time, OAR 436-035-0007 provided:

"(1) Except for OAR 436-035-0014, a worker is entitled to a value under these rules only for those findings of impairment that are permanent and were caused by the accepted compensable condition and direct medical sequela. Unrelated or noncompensable impairment findings are excluded and are not valued under these rules. Permanent total disability is determined under OAR 436-030-0055."(2) Permanent disability is rated on the permanent loss of use or function of a body part, area, or system due to a compensable, consequential, or combined condition and any direct medical sequela, and may be modified by the factors of age, education, and adaptability. Except for impairment determined under ORS 656.726(4)(f), the losses, as defined and used in these standards, are the sole criteria for the rating of permanent disability under these rules."

OAR 436-035-0013(2), in turn, required the physician to

"describe[ ] the current total findings of impairment, then describe[ ] those findings that are due to the compensable injury. In cases where a physician determines a specific finding * * * is partially attributable to the accepted condition, only the portion of those findings that is due to the compensable condition receives a value. When apportioning impairment findings, the physician must identify any applicable superimposed or unrelated condition."

OAR 436-035-0014 provided, in part:

"(1) Where a worker has a pre-existing condition, the following applies:

"(a) For purposes of these rules only, a prior Oregon workers' compensation claim is not considered a pre-existing condition.

"(b) Under ORS 656.225, disability caused solely by a worker's pre-existing condition is rated completely if work conditions or events were the major contributing cause of a pathological worsening of the pre-existing physical condition or an actual worsening of the pre-existing mental disorder. Disability is rated without apportioning.

"(c) Where a worker's compensable condition combines with a pre-existing condition, under ORS 656.005(7), the current disability resulting from the total accepted combined condition is rated under these rules as long as the compensable condition remains the major contributing cause of the accepted combined condition (e.g., a major contributing cause denial has not been issued under ORS 656.262(7)(b) ). Disability is rated without apportioning."

Claimant's conditions were rated consistently with OAR chapter 436, division 35, to include the disability loss "due to the compensable industrial injury" but to exclude the loss caused by claimant's preexisting conditions that were not otherwise compensable as part of a combined condition. Claimant argues that the rules requiring that result exceed the director's authority, because they are inconsistent with ORS 656.268(1), regulating the closure of claims, ORS 656.266(2)(a), allocating the burden of proving that a work injury is no longer the major contributing cause of the disability of a combined condition, and ORS 656.268(7)(b), pertaining to denial of a combined condition.

As noted, ORS 656.268(1) describes the circumstances under which a claim involving disability may be closed. It provides, in part:

"One purpose of this chapter is to restore the injured worker as soon as possible and as near as possible to a condition of self support and maintenance as an able-bodied worker. The insurer or self-insured employer shall close the worker's claim, as prescribed by the Director of the Department of Consumer and Business Services, and determine the extent of the worker's permanent disability, provided the worker is not enrolled and actively engaged in training according to rules adopted by the director pursuant to ORS 656.340 and 656.726, when:

"(a) The worker has become medically stationary and there is sufficient information to determine permanent disability;

"(b) The accepted injury is no longer the

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