J.L. HODGES,			)
				)
Employee,			)	DECISION AND ORDER
 Applicant,			)
				)	AWCB Case No. 101919
v.				)
				)	AWCB Decision No. 90-0030
ALASKA CONSTRUCTORS,		)
				)	Filed with AWCB Fairbanks
Employer,			)	February 27, 1990
				)
and				)
				)
ALPAC/INC.,			)
				)
Insurer,			)
 Defendants.			)
				)

We heard this claim for a compensation rate adjustment, interest, penalties, attorney fees, and costs in Fairbanks, Alaska on February 13, 1990. Attorney Arthur Robson represented the applicant employee, and attorney Robert McLaughlin represented the defendant employer and insurer. Labor representative Board member Joe Thomas was unable to attend the hearing, so we proceeded with a two-member panel as authorized by AS 23.30.005(f). We gave the parties until February 16, 1990 to respond to certain documents first introduced at the hearing. We closed the record when we next met, February 27, 1990.

1. Is the employee entitled to a compensation rate adjustment under the Alaska Supreme Court ruling in Ragland v. Morrison-Knudsen Co., Inc., 724 P.2d 519 (Alaska 1986), to reflect contributions made by the employer into his union pension fund?

2. Is the employee entitled to a compensation rate adjustment to reflect room and board provided by the employer?

3. Is the employee entitled to a Ragland compensation rate adjustment to reflect health care benefits provided by his employer?

4. Is the employee entitled to a Ragland compensation rate adjustment to reflect union supplemental unemployment benefits fund contributions made by the employer?

5. Is the employee entitled to a Ragland compensation rate adjustment to reflect contributions made by his employer into his union's training fund?

6. Should the employee's compensation rate be adjusted downward under former AS 23.30.220(3) because of an economic downturn in the economy of Alaska's North Slope?

7. Is the employee entitled to interest on unpaid compensation?

8. Is the employee entitled to a penalty under AS 23.30.155(e) for unpaid compensation?

9. Is the employee entitled to a statutory minimum attorney fee under AS 23.30.145(a), and to reasonable legal costs under AS 23.30.145(b)?

The employee suffered a back injury while working as a pipefitter for the employer on June 6, 1977 on Alaska's North Slope. He underwent a series of seven surgeries to his back, the last one on October 18, 1989. The employer paid him temporary total disability (TTD) benefits from June 8, 1977 through December 11, 1981 and permanent total disability (PTD) benefits from December 12, 1981 through January 17, 1986. The employer adjusted his compensation rate several times during his disability, eventually setting under former AS 23.30.220(2) a rate of $866.83 per week, based on his earnings of $62,612.48 during 1976. The employee returned to his home and family in California.

On July 20, 1989 the employee filed an Application for Adjustment of Claim requesting an adjustment of his compensation rate. He argues that

J.L. Hodges v. Alaska Constructors

under Ragland the compensation rate should reflect the pension benefits paid by this employer and health benefits of $1.90 per hour, supplemental unemployment benefits of $.25 per hour (which he later cashed-in), and training benefits of $.45 per hour (which he never used) paid to the union on his behalf by his employer during 1977. The pension benefits in question have recently vested as a result of amendments to the Federal Employee Retirement Insurance Security Act; other pension and disability benefits being received by the employee are not relevant to his compensation rate).

The employee also claimed a compensation rate adjustment to reflect the value of room and board provided by the employer in field work camps. The employee offered testimony from Matt Gambardella, a former pipeline camp project manager and executive chef, who testified that the camps charged the employers between $66.00 and $78.00 per man, per day; and that they charged visitors and people in transit a flat rate of $75.00 per day.

The employer commissioned a labor market survey of pipefitters working on the North Slope by Vincent Gollogly of Northern Rehabilitation Services. Mr. Gollogly found that few of the employee's contemporary workers still held jobs on the North Slope. He found that most North Slope pipefitters now worked five or six months per year and earned wages of $27,900.00 to $33,500,00. At the hearing the employee offered testimony from Michael Beavers, the business agent of the employee's home local union in Vallejo, California, that the employee could be expected to earn an average of $1,133.60 per week in California if he was not disabled.

The employee cites an Alaska Superior Court case, Barr v. AS/WS, 3AN-88-6122 CIV. (Alaska Super. Ct., March 1, 1989), and a Board decision, Easter v. TAM Construction, AWCB No. 89-0012 (January 20, 1989), to support his claim. He also requests interest and a punitive penalty on the additional compensation that he is due. He requests a statutory minimum attorney fee and an itemized list of legal costs,

The employer argues that the employee's pension benefits are not vested under his contract of hire, and that the compensation rate adjustment should be denied based on a long line of Board decisions. It argues that any compensation rate would be contained by the statutory maximum, that any interest awarded should reflect the varying rates of interest provided in state statute over time, and that we have no authority to award a punitive penalty in any event.

I. Pension Benefits

When it interpreted wages under federal statutes in the Longshoremen and Harbor Workers' Compensation Act, 33 U.S.C. §902(13), the United States Supreme Court refused to include union pension benefits in calculating an injured worker's wages. Morrison-Knudsen Const. v. Director, OWCP, 103 S. Ct. 2045 (1983). The parties dispute whether or not the employee's pension had vested. Professor Larson contends that no union fringe benefits should be included in the definition of wages. 2 A. Larson, The Law of Workmen's Compensation §60.12(b) at 10-571 (1983). Professor Larson criticized the federal district court's decision to include union fringe benefits as wages in Hilyer v. Morrison-Knudsen Const. Co. v. Director, OWCP, 103 S. Ct. 2045 (1983). Larson, Cumulative Supplement (1983), at 153-155.

The employee requests us to adjust his compensation rate in accordance with the Alaska Supreme Court's holding in Ragland, including his pension benefits in his wages. In Ragland the Alaska Supreme Court noted that Mr. Ragland was vested but did not otherwise discuss the distinction between the benefits owed to vested versus non-vested employees. The Court distinguished the Hilyer decision, stating that the employee, and not the union, is the beneficiary of the employer's benefits contributions to the union trust fund, and reasoned that Mr. Ragland should be allowed to include in his definition of wages all employer contributions an behalf of his benefit package because the amounts were "readily identifiable and calculable."

We have distinguished a line of our cases from Ragand when employees were not vested with their union at the time of injury. The majority of an employer's contribution to the non-vested employee's union trust fund is administered only for the benefit of the vested employees. Until vested with the union the employee has a benefit package of what we have considered very limited and indefinite value. For some years we consistently found it is too speculative to include union contributions in wages when the employee has not vested. See, Barr v. AS/WS, AWCB No. 88-0042 (March 1, 1988). Kenneth Gray v. Morrison-Knudsen Co. Inc., AWCB No. 87-212 (September 10, 1987). Edgar Pulley v. Arctic Slope/Wright Schuchart, AWCB No. 870047 (February 25, 1987).

Nevertheless, as noted by the employee, the Anchorage panel of our Board came to a contrary conclusion in Easter on January 20, 1989, pointing out that in Ragland the court mentioned the vesting of benefits only in the "facts and proceedings section", but did not mention vesting as a factor in the rationale for the holding. The Board panel in Easter concluded that even unvested union pension payments were identifiable and should be considered "wages" under the Ragland ruling.

On March 1, 1989 the Alaska Superior Court reversed Barr, a decision by those of us in the Fairbanks panel of the Board which had excluded unvested pension benefits from the calculation of the employee's wages. The Superior Court held that Ragland did not require benefits to be vested, and remanded the case to us with specific instructions to include the unvested pension benefits in determining the employee's compensation rate.

In keeping with the rationale in Easter and the court ruling in Barr we conclude that pension benefits paid by the employer on behalf of the employee whether vested or not should be included as "wages" in the calculation of the employee's compensation rate.

II. Health and Supplementary Unemployment Benefits.

As noted in our discussion of pension benefits above the Alaska Supreme Court in the Ragland decision required us to include as wages all readily identifiable and calculable employer contributions to an employee's employment benefit package. The employee provided the specific amounts per hour paid into the employee's wage package for these benefits. We conclude that they should be included as wages for the determination of his compensation. See, Horvarth v. Anglo Energy, Ltd., AWCB No. 87-0184 (August 12, 1987); aff'd 3 AN-87-8332 (Alaska Super. Ct., March 3, 1988).

III. Downward Compensation Rate Adjustment

At the time of the injury, AS 23.30.220 provided, in part:

In Johnson v. RCA-OMS, Inc., 681 P.2d 905, 907 (Alaska 1984), the court held that the worker's wages at the time of injury should be used when the disparity between those wages and the wages obtained under the historical earnings formula is so substantial that the latter wages does not fairly reflect the worker's wage-earning capacity.

In Deuser v. State, 697 P.2d 647, 648-650 (Alaska 1985), the court expanded upon its holding in Johnson. In Deuser the court determined that the difference between the worker's wages at the time of injury and his wages under the formula based on historical earnings was substantial. The court held that the wages at the time of injury should have been used because evidence was presented that showed these wages would have continued during the period of disability. Id., at 649, 650.

Finally, in State v. Gronroos, 697 P.2d 1047 (Alaska 1985), the court expanded on its decisions in both Johnson and Deuser. The Gronroos court noted that "(i)t is entirely reasonable to focus upon the probable future earnings during the period into which disability extends when the injured employee seeks temporary disability compensation." Id. at 1049 (citation omitted). See also Brunke v. Rogers and Babler, 714 P.2d 795 (Alaska, 1986). By focusing on wages projected into the period of disability, the Board is, in effect, deciding on wages to "fairly" reflect the wage-loss the injured worker will be suffering.

The employer has introduced a labor market survey showing that most of the fellow employee's no longer work on the North Slope and that the average number of hours worked and the average income in the employee's field has declined in that area. It requests that the employee's compensation rate should be accordingly adjusted under former AS 23.30.220(3). The employee counters with testimony from the business agent of his local union in Vallejo, California that he could be working full time earning $1,133.60 per week in California. We find that to attempt to project the employee's earnings based on the employer's general survey would be too speculative to be regarded as fairer to the employee than to rely on the wages determined under former AS 23.30.220(2). See Beavers v. Alaska Construction Inc., AWCB No. 88-0222 (August 24, 1988). We will deny the employer's request.

IV. Interest

In Land & Marine Rental Company v. Rawls, 686 P.2d 1187, 1192 (Alaska 1984), the Alaska Supreme Court held "that a worker's compensation award, or any part thereof, shall accrue lawful interest, as allowed under AS 45.45.010. . . ." The court's rationale is that the applicant has lost the use (hence, interest) on any money withheld, and should be compensated. In accordance with the court's decision in Rawls, we award interest on the benefits awarded to the applicant by this decision.

V. Penalties

AS 23.30.155(e) provides:

Considering the confusing state of the caselaw concerning compensation rate adjustments to reflect benefit payments, the employer could not reasonably have been expected to anticipate the amount the board might ultimately have found to be due. Accordingly, any possible penalty would be excused. See Phillips v. Nabors Alaska Drilling, Inc., 740 P.2d 457, 461 (Alaska 1987). We have no authority to award punitive penalties of the sort requested by the employee.

VI. Maximum Weekly Benefit Amount

At the time of the employee's injury AS 23.30.175 established a maximum weekly benefit amount from year to year at twice the state's average weekly wages as follows for the relevant years:

1977 $551.86 1984 $1,080.00

1978 607.85 1985 1,114.00

1979 654.30 1986 1,114.00

1980 650.00 1987 1,108.00

1981 858.00 1988 1,094.00

1982 942.00 1989 1,074.00

1983 996.00 1990 1,070.00

The employee has not been paid in excess of those rates, and any adjustment should not exceed those rates.

VII. Attorney Fees and Legal Costs

AS 23.30.145 provides in the pertinent parts:

The employee retained an attorney and incurred costs in the Successful prosecution of this claim. Under AS 23.30.145(a) we will award statutory minimum attorney fees on any past due compensation received by the employee as a result of this decision. Under AS 23.30.145(b) we will award the employee reasonable legal costs. We retain jurisdiction to resolve any disputes that might arise concerning this issue.

VIII. Unresolved Issues

We heard this claim as a two-member panel of the Board and we have differing opinions concerning two of the issues: adjustments based on room and board, and on training benefits. We offer summaries of our opinions below. In order to resolve these issues we will retain jurisdiction over them, and pursuant to 8 AAC 45.070(a), direct the parties to file simultaneous legal briefs on the three issues 30 days after our decision. The third panel member, Joe Thomas, will review the briefs, the written record and the recorded testimony, and will participate in our decision on these remaining issues.

A. Opinion of William Walters

1. Room and Board

The term "wages" was defined at the time of the employee's injury at AS 23.30.265(20):

The employee was entitled to room and meals as part of his work for the employer. Such a service may constitute an "advantage received from the employer." We have repeatedly ruled that room and board privileges would count toward the wage of an employee only to the degree that these privileges had measurable value to the employee. Melvin Gushalak v. Doyon Construction Co., AWCB No. 850068 (March 15, 1985). Robert King v. State of Alaska, Department of Natural Resources, AWCB No. 840412 (December 31, 1984). William Hess v. Brinkerhoff Signal, AWCB No. 840073 (March 30,1 984). We also have ruled that the party seeking a wage adjustment for employer-provided board has the burden of proof that an advantage existed and in what amount. Arthur Stites v. Northland Maintenance Co., AWCB No. 850113 (May 3, 1985). Gushalak, AWCB No. 850068 at 3. LLng, AWCB No. 840073 at 4.

Based on the uncontradicted evidence presented by the employee I would find that the market value of the room and board provided by the employer in the Alaska pipeline camps was $75.00 per day. I would conclude that the value of the employer-provided room and board is to be included in the employee's wages to determine his compensation rate.

2. Training Benefits

For precisely the same rationale we discussed concerning health and supplementary unemployment benefits above, I would include the identifiable and calculable employer contributions to the employee's training benefits as wages for purposes of calculating his compensation rate. See Horvarth, AWCB No. 870184 at 8.

B. Opinion of Steve Thompson

1. Room and Board

In this case the employee already owned his own home while working for the employer on the North Slope. The employee lived in work camps and had no alternative lodging or food source. As there was no competition or "market" for the camp services, I could not find a measurable "value" to the employee, consequently I would not consider these as part of the employee's wages. See Gushalak, AWCB No. 850068 at 3.

2. Training Benefits

The employee derived no use or advantage from these benefits. I would conclude they are not a part of wages. It appears that Mr. Hodges' compensation, pensions, and various other benefits may well provide a take-home income in excess of what he earned while employed. Wringing still more benefits from gray areas of the law is clearly beyond the purpose of workers' compensation.

1. The employer shall adjust the employee's compensation rate to reflect as wages union pension, health, and supplemental unemployment benefits paid by the employer on behalf of the employee during 1976. In no year will this exceed the statutory maximum amount established in AS 23.30.175.

2. The employer shall pay interest on past due compensation at the rate established at AS 45.45.010.

3. The employee's claim for penalties under AS 23.30.155(e) is denied and dismissed.

4. The employer shall pay the employee a statutory minimum attorney fee under AS 23.30,145(a) on any compensation resulting from this decision. The employer shall pay the employee his reasonable legal costs under AS 23.30.145(b). We retain jurisdiction to resolve any disputes that might arise concerning this issue.

5. We retain jurisdiction over the issues of compensation rate adjustment to reflect room and board, and to reflect training benefits. We direct the parties to file simultaneous legal briefs on these two issues 30 days after the date of issue of this decision. The three members of this panel of the Board will then decide these issues based on the briefs, the hearing testimony, and the documentary record.

DATED at Fairbanks, Alaska, this 27th day of February, 1990.

ALASKA WORKERS' COMPENSATION BOARD

/s/ William S.L. Walters
William S.L. Walters, Designated Chairman

/s/ Steve M. Thompson
Steve Thompson, Member

WSLW/ml

If compensation is payable under terms of this decision, it is due on the date of issue and penalty of 20 percent will accrue if not paid within 14 days of the due date unless interlocutory order staying payment is obtained in Superior Court.

APPEAL PROCEDURES

A compensation order may be appealed through proceedings in the Superior Court brought by a party in interest against the Board and all other parties to the proceedings before the Board, as provided in the Rules of Appellate Procedure of the State of Alaska.

A compensation order becomes effective when filed in the office of the Board, and unless proceedings to appeal it are instituted, it becomes final on the 31st day after it is filed.

CERTIFICATION

I hereby certify that the foregoing is a full, true and correct copy of the Decision and Order in the matter of J.L. Hodges, employee/applicant; v. Alaska Constructors, employer; and Alpac/Inc., insurer/defendants; Case No. 101919; dated and filed in the office of the Alaska Workers' Compensation Board at Fairbanks, Alaska this 26th day of February, 1990.

Clerk

SNO