ANITA D. LANGE, 
Employee, 
Applicant
v. 
SITKA CONSERVATION SOCIETY,
(not insured) Employer,
Defendant.

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

FINAL
DECISION AND ORDER
AWCB Case No. 199809471
AWCB Decision No. 
Filed with AWCB Juneau, Alaska
on February , 2000

We heard the employee's claim for penalties and interest against this employer in Juneau, Alaska, by teleconference on February 15, 2000. The employee represented herself. Floyd Tompkins represented the employer. We closed the record at the conclusion of the hearing.

1. Is the employee due penalties from the employer under AS 23.30.155(e) for the late payment of permanent partial impairment (PPI) benefits?

2. Is the employee due interest from the employer under 8 AAC 45.142?

The employee injured her back lifting a heavy box of paper, while working as an office manager for the employer on April 23, 1998. She came under the care of Robert Klem, M.D., who ordered a CT scan, referred her to neurosurgeon Charles Nussbaum, and provided conservative treatment. Dr. Nussbaum diagnosed herniation at L5-S1. She also saw Karen Zamzow, D.C., who restricted her from work.

At the employer’s request she was evaluated by John Bursell, M.D., on May 5, 1999 and July 6, 1999. Dr. Bursell concurred with her treating physicians that she suffered a work-related L5-S1 herniation. Dr. Bursell discussed surgery with her, but she elected to pursue conservative care. In his July 6, 1999 report, Dr. Bursell found her to be medically stable, and determined her to have a ten percent whole-person PPI rating under the American Medical Association Guides to the Evaluation of Permanent Impairment, Fourth Edition (AMA Guides). He recommended either surgery or continued back exercises, and indicated she would gradually improve and eventually be able to return to her employment.

The employer’s workers’ compensation insurance had lapsed at the time of the employee’s injury (and was subsequently reinstated). The employer accepted the claim and provided temporary total disability (TTD) benefits at a compensation rate of $301.33 per week, and medical benefits. Neither the employee nor the employer requested reemployment benefits for the employee. The record reflects the employer received Dr. Bursell’s July 6, 1999 report on July 13, 1999. The employer did not dispute Dr. Bursell’s rating, nor controvert PPI benefits, but continued to pay an additional three weeks of TTD benefits through July 27, 1999. On August 12, 1999, the employer began to pay PPI benefits in bi-weekly installments at the TTD weekly compensation rate. On August 27, 1999, the employer paid the employee a lump-sum PPI payment of $12,294.64.

The employee requested penalties in a Workers’ Compensation Claim filed on September 16, 1999. We heard the claim by teleconference on February 15, 2000. Although the parties disputed whether or not the issue of interest should be considered during the hearing, we noted interest accrues automatically by operation of law from any decision we make on the penalty, and we elected to address the issue for administrative economy and the convenience of the parties.

At the hearing, and in documents in the record, the employee argued her PPI benefits were due in a lump-sum 14 days after her PPI rating, and she is due a 25 percent penalty under AS 23.30.155(e) for any PPI benefits due more than seven days after they were due. She contends the employer should not be permitted to recharacterize TTD benefits paid after her medical stability as PPI benefits. She also argues she is due interest on any late-paid benefits.

At the hearing, and in its correspondence, the employer argued it relied on the decisions and advice of attorney Tom Bachelor (who has not entered an appearance) and adjustor Scott Brylinsky, whom it hired to administer the employee’s claim. It argued it relied on the advice of attorney Bachelor to pay PPI benefits in bi-weekly installments instead of in a lump sum, in order to avoid payments under AS 23.30.041(k) if the employee later requested reemployment benefits. It argued it acted in good faith, based on professional advice, and should not be penalized or have to pay interest. It argued the employee was not due the TTD benefits paid after her date of medical stability, and the employer was due interest on that overpaid TTD.

I. THE EMPLOYER'S RESPONSIBILITY TO PROVIDE BENEFITS

Under AS 23.30.045(a) employers have the affirmative duty to provide workers' compensation to injured workers. In this case, the employer’s workers' compensation insurance lapsed during the time of the employee's injury. Under AS 23.30.060(a) this employer is conclusively presumed to be directly responsible to provide the employee all benefits due under the Alaska Workers' Compensation Act.

Under AS 23.30.020 the provisions of the Alaska Workers' Compensation Act are considered as a matter of law to be an integral part of the employee's employment contact, and the employer is directly responsible for the provisions of the employment contract. The employer is directly responsible, as a matter of law, to provide PPI benefits under AS 23.30.190.

Although keeping aware of the provisions of this law would obviously be somewhat burdensome to a small employer, this task is normally done by insurers approved by the Division of Insurance to provide workers' compensation coverage in this state. Because the employer’s mandatory insurance lapsed, it has inherited the responsibility of complying with the individual provisions of the Act.

AS 23.30.190 specifically provides a mechanism for employers and insurers to get notice of the amount of PPI benefits to which an injured employee is entitled. The employer receives notice of the whole-person percentage, permanent partial impairment rating under the AMA Guides. The employer then, simply and mechanically, multiplies that percentage times $135,000.00. The employer then bears the responsibility of providing the resulting benefits in a lump sum, and in a timely manner.

II. PENALTIES

AS 23.30.155(e) provides, in part:

Under AS 23.30.190 PPI is due in a single lump sum, unless one of the parties claims reemployment benefits for the employee. In this case, no reemployment benefits were claimed. The "injury" in the case of PPI benefits was the permanent impairment of the injured worker. Under AS 23.30.155(b) the PPI benefit is due 14 days after an employer receives notice of the impairment rating. A penalty is automatically due under AS 23.30.155(e) if the employer fails to pay the lump sum within seven days after it is due. See Phillips v. C&A Distributors, AWCB Decision 98-0278 (November 3, 1998)

The record is clear the employer received Dr. Bursell’s medical report rating the employee under the AMA Guides on July 13, 1999. We find the employer received notice of the employee's ten percent PPI rating as of that date. We find the employer failed to controvert the employee's entitlement to those benefits, and we find no reemployment benefits were requested. We find the lump-sum payment of $13,500.00 in PPI benefits were due 14 days after the employer received notice; that is, they were due on July 27, 1999. Under AS 23.30.155(e) a 25 percent penalty was due on any PPI benefits not paid within seven days, no later than August 3, 1999.

When considering penalties, we offset compensation amounts due by other forms of compensation which have been overpaid to an employee. See Fahlsing v. Arctic North Services, Inc., AWCB Decision No. 94-0072 (March 29, 1994). We find the employer overpaid the employee three weeks of TTD benefits, totaling $903.99, after she was determined medically stable by Dr. Bursell on July 6, 1999. We will offset the $13,500.00 of PPI benefits due by August 3, 1999, by the $903.99 of TTD overpaid as of that date. Accordingly, we find the employer should have paid $12,596.01 in PPI benefits to the employee no later than August 3, 1999 to avoid a penalty under AS 23.30.155(e). We find the employer failed to pay this amount within the time limits of the statute.

We can excuse the late payment only if the employer specifically shows us the payment was not made for reasons beyond the employer's control. See also Fahlsing v. Arctic North Services, Inc., AWCB Decision No. 94-0072 (March 29, 1994). Parties remain responsible for their attorney’s actions and advice. Forest v. Safeway Stores, 830 P.2d 778,782 (Alaska 1992); See Hall v. Alaska West Express, AWCB Decision No. 98-0285 (November 17, 1998). We have no evidence of any circumstance rendering the employer unable to meet its legal responsibilities.

We find the employer has failed to timely pay $12,596.01 of the PPI lump sum within seven days after it was due, and we conclude a 25 percent penalty was due on this unpaid amount as of August 4, 1999. We will award the employee a penalty of $3,149.00 under AS 23.30.155(e).

II. INTEREST

8 AAC 45.142 provides:

Our regulation at 8 AAC 45.142 requires the payment of interest at a statutory rate of 10.5% per annum, as provided at AS 45.45.010, from the date at which each installment of compensation, including medical compensation, is due. See also, Land & Marine Rental Co. v. Rawls, 686 P.2d 1187 (Alaska 1984). The employee is entitled to interest from the employer on any outstanding penalties from the date on which those benefits were due. See Williamee v. Derrick Enterprises, AWCB Decision No. 98-0078 (March 27, 1998). Accordingly, we award interest at the statutory rate, on the $3,149.00 in penalties due under AS 23.30.0155(e) from August 4, 1999, until those penalties are paid.

1. The employer shall pay the employee a 25 percent penalty under AS 23.30.155(e), an amount totaling $3,149.00 .

2. The employer shall pay the employee interest under 8 AAC 45.142 on all unpaid penalties from August 4, 1999, until those penalties are paid.

Dated at Juneau, Alaska this day of February, 2000.

ALASKA WORKERS' COMPENSATION BOARD

/s/ William Walters
William Walters, Designated Chairman

James G. Williams, Member

/s/ Nancy J. Ridgley
Nancy J. Ridgley, Member

If compensation is payable under terms of this decision, it is due on the date of issue. A penalty of 25 percent will accrue if not paid within 14 days of the due date, unless an interlocutory order staying payment is obtained in Superior Court.

If compensation is awarded, but not paid within 30 days of this decision, the person to whom the compensation is payable may, within one year after the default of payment, request from the board a supplementary order declaring the amount of the default.

This compensation order is a final decision. It becomes effective when filed in the office of the Board unless proceedings to appeal it are instituted. Proceedings to appeal must be instituted in Superior Court within 30 days of the filing of this decision and be 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 party may ask the Board to reconsider this decision by filing a petition for reconsideration under AS 44.62.540 and in accordance with 8 AAC 45.050. The petition requesting reconsideration must be filed with the Board within 15 days after delivery or mailing of this decision.

Within one year after the rejection of a claim or within one year after the last payment of benefits under AS 23.30.180, 23.30.185, 23.30.190, 23.30.200 or 23.30.215 a party may ask the Board to modify this decision under AS 23.30.130 by filing a petition in accordance with 8 AAC 45.150 and 8 AAC 45.050.

I hereby certify that the foregoing is a full, true and correct copy of the Final Decision and Order in the matter of ANITA D. LANGE employee / applicant; v. SITKA CONSERVATION SOCIETY, not insured employer / defendants; Case No. 199809471; dated and filed in the office of the Alaska Workers' Compensation Board in Juneau, Alaska, this day of February, 2000.

Susan N. Oldacres, Secretary

SNO