ALVIN J. ANDERSON,		)
				)
Employee,			)	DECISION AND ORDER
 Applicant,			)
				)	AWCB Case No. 724481
v.				)
				)	AWCB Decision No. 90-0036
VECO, INC.,			)
				)	Filed with AWCB Fairbanks
Employer,			)	March 6, 1990
				)
and				)
				)
ALASKA NATIONAL INSURANCE CO.,	)
				)
Insurer,			)
 Defendants.			)
				)

We heard this claim for a compensation rate adjustment, penalties, attorney fees and legal costs in Fairbanks, Alaska on March 1, 1990. Attorney Michael Stepovich represented the applicant employee, and attorney James Bendell represented the defendant employer and insurer. We closed the record at the hearing's conclusion.

1. Is the employee entitled to a compensation rate adjustment under former AS 23.30.220(a)(2)?

2. Is the employee entitled to past-due attorney fees from an earlier decision and order on this case?

3. Is the employee entitled to a penalty on the unpaid attorney fees under AS 23.30.155(f)?

4. Is the employee entitled to interest?

5. Is the employee entitled to attorney fees and legal costs under AS 23.30.145 for the prosecution of this claim?

The employee injured his back on November 11, 1987, herniating-discs at L4-L5, C5-C6, and L5-S1 while working as a pipe insulator for the employer on Endicott Island in the Prudhoe Bay oil field. We have a fuller discussion of his accident and medical history in the "Summary of the Evidence" section of a decision and order on this case that we issued on August 15, 1988. AWCB

No. 88-0213. We incorporate that recitation of facts here by reference.

The employer had controverted all benefits, but in our first decision we awarded continuing compensation. The employer then paid the employee temporary total disability (TTD) benefits retroactively to November 11, 1987 and continuing at the rate of $341.91 per week under AS 23.30,220(a)(1), based on total gross earnings of $51,784.00 for the years 1985 through 1986. The employee received $37,805.46 in TTD benefits by January 4, 1990. Although our first decision granted a statutory minimum attorney fee on the compensation awarded, the employer paid the employee's attorney of record at the time, Arthur Robson, $329.09. At the hearing the insurer's senior claims examiner handling this claim, Peggy Winkleman, testified that she misread the first decision and order, and did not discover her error until the day before the hearing.

The employee now requests an adjustment to his compensation rate to reflect higher earnings that he anticipated in the years following his injury. He testified at the hearing that he'd begun insulating in September 1987, about a month before his injury, and that he intended to stay with that job until Christmas time. He had been given a tentative offer for a position as a carpenter (his customary trade) on a Brown and Root project to begin in 1988 at the Green Creek Mine in Juneau. Jim Purvis, who worked on that project, confirmed that he could probably have been hired. Carpenters were gradually hired on to the project from January through August, 1988, and were laid off in October 1988. They worked nine hours a day, six days a week, for $17.00 per hour. (Purvis Dep. pp. 8-9). The employee claims he would have worked ten months with Brown and Root and earned in excess of $40,000.00. He also felt that he could have obtained a job in the cleanup of the Valdez oil spill during that summer, in any event.

At the hearing Brendon Heagney, an insulator on the North Slope who was working with the employee at the time of his injury, testified that although carpentry work has been slow there is a fair amount of work for insulators. He testified that he earned between $30,000 and $40,000 in 1987; $40,000 in 1988; and $52,000 in 1989.

Mary Moran of Collins and Associates conducted a labor market study concerning the employee at the request of the employer. She testified that she regarded him primarily as a carpenter, based on the bulk of his work history. She found that construction and related carpentry work fell 40 percent statewide from 1987 to 1989. She noted that the employee's historical pattern of work was spotty, and would not be expected to change. He worked four months in 1985, ten months in 1986, and two months in 1987 (until his injury in November).

In answer to interrogatories the employee wrote that in the ten years leading up to his injury he had earnings as follows:

1978 $17,700.00 1983 $ 9,596.00

1979 11,773.00 1984 7,996.44

1980 6,702.03 1985 20,020.00

1981 14,871.00 1986 31,764.00

1982 11,847.00 1987 8,583.00

The employee testified that he had come to Alaska to work beginning in 1983. He spent part of 1987 with his son in South Dakota and California. Although he maintained contacts in Alaska, looking for work during that year, there was little work available.

The employee argues that his compensation rate should be increased to reflect higher expected earnings, that he is due the previously awarded attorney fees and a penalty on those fees, and that he is due interest on all compensation ever paid late, statutory minimum attorney fees for bringing this claim, and reasonable legal costs. The employer argues that the employee has a poor work history and was working in a declining economy, It admits that additional attorney fees are due as a result of the first decision, but that those fees should be only on the amount of compensation due at the time of that decision.

I. Compensation Rate Adjustment

AS 23.30.220 read at the time of the injury, in the pertinent part, as follows:

(1) The gross weekly earnings are computed by dividing by 100 the gross earnings of the employee in the two calendar years immediately preceding the injury.

The Alaska Supreme Court decided several cases that gave guidance on when it was proper to use former subsection (1) of the law cited above instead of subsection (2) and vice versa. These cases interpreted §220 as it existed before the 1983 amendment that resulted in the statute's wording quoted above. Nonetheless, we have consistently applied these cases when asked to decide compensation rate issues under the version of the statute quoted above.¹ See e.g. ,Bufton v. Conam Alaska, AWCB No. 870163 (July 24, 1987); See also Phillips v. Nabors Alaska Drilling, 740 P.2d 457, 460 n.7 (Alaska 1987).

In Johnson v. RCA-QMS, 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 do not fairly reflect the worker's wage-earning capacity.

In Deuser v. State, 697 P.2d 647, 648-50 (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 649-50.

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. Roqers and Babler, 714 P,2d 795 (Alaska 1986). By focusing on the likelihood that wages being earned at the time of injury will continue into the period of disability, the Board is, in effect, deciding whether the wages at the time of injury "fairly" reflect the wage-loss the injured worker will be suffering.

In Taylor v. Pacific Erectors, Inc., AWCB No. 850335 (November 27, 1985), we found the Johnson, Deuser, and Gronroos holdings meld into the following analytical framework. First, we must compare the employee's historical wages as calculated under subsection 220(a)(1) with his wages at the time of injury as reflected by his actual earnings at that time. Second, we must determine whether the difference, if any, between these two wage figures is substantial. Third, if the difference is substantial, we must determine whether the wages being earned at 'the time of injury would continue into the period of disability. Finally, if the wages are likely to continue, we must determine the employee's gross weekly earnings by considering the nature of his work and work history.

The preponderance of the evidence available to us does indicate that the employee could have worked with Brown and Root in 1988, though it is not clear that he could have worked the full ten months that he asserts. Inasmuch as Brown and Root hired a trickle of carpenters from January through August we cannot determine exactly when he could have been hired. He could have worked anywhere from three to ten months on that job, earning from $12,000.00 to over $40,000.

It is apparent that the labor market in Alaska has not been good for the last few years for people with the employee's skills. Nevertheless, based on the testimony of Mr. Heagney we find that there has been good opportunity for insulators on the North Slope. We note the discrepancy between the 1987 earnings of the employee and Mr. Heagney, and we note the employee's long history of wages considerably lower than he is now claiming. His present compensation rate is already based on the two years with the highest income that he ever earned. Based on Mr. Heagney's testimony we find that the employee would have had reasonably good opportunity for work during the years following his injury, but based on the employee's own long term work history we do not find that his wages would have matched Mr. Heagney's. Giving the employee the benefit of the doubt, we find that the employee may have earned $30,000.00 a year for the years following his injury, roughly approaching the year of his highest earnings, 1986.

His present compensation rate is roughly based on gross annual earnings of $26,000.00. The figure of $30,000.00 represents a 16 percent increase, which we find to be significant. We will divide $30,000,00 by 50 for a spendable weekly wage of $600.00

II. Past-Due Attorney Fees

AS 23.30.145(a) provides, in part:

The employer controverted the employee's claim and refused to pay any benefits until our decision and order of August 15, 1988. In that decision we awarded compensation from the date of injury and continuing, and we awarded statutory minimum attorney fees on all compensation awarded. We here reaffirm that decision. The employee is entitled to a statutory minimum attorney fee under AS 23.30.145(a) on all compensation awarded by our decision of August 15, 1988, i.e. on all compensation received or to be received as a result of this injury.

III. Penalties

AS 23.30.155(f) provided at the time of the employee's injury:

The term "compensation" in §155(f) includes attorney's fees and costs. Rufus B. Bunch v. Model Builders, AWCB No. 850249 (August 30, 1985). In our decision of August 15, 1988 we ordered the payment of statutory minimum attorney fees. The employer has paid only a small portion of the attorney fees, and no injunction has been issued. We conclude that the applicant is entitled to a 20 percent penalty on all past-due attorney fees.

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, which provides a rate of interest of 10.5 percent a year and no more on money after it is due, from the date is should have been paid." The court's rationale is that the employee 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 compensation past due to the employee and awarded by the decision of August 15, 1988, and on the additional compensation awarded in this decision.

V. Attorney's Fees and Costs

AS 23.30.145 provides, in part:

The employee retained an attorney as incurred costs, in the successful prosecution of this claim. We will award statutory minimum attorney fees under AS 23.30.145(a) on all compensation awarded by this decision, and reasonable legal costs under AS 23.30.145(b).

1. The employer shall adjust the employee's compensation rate under former AS 23.30.220(a)(2) to reflect a spendable weekly wage of $600.00.

2. The employer shall pay the employee a statutory minimum attorney fee under AS 23.30.145(a) on all compensation paid to the employee in connection with this claim.

3. The employer shall pay the employee a 20 percent penalty under former AS 23.30.155(f) on all past due attorney fees.

4. The employer shall pay the employee interest at the rate of 10.5 percent per annum on all compensation paid late from the date of injury to the time of this decision.

5. The employer shall pay the employee a statutory minimum attorney fee under AS 23.30.145(a) on all additional compensation awarded by this decision. The employer shall pay the employee his reasonable legal costs under AS 23.30.145(b).

6. We retain jurisdiction to resolve any disputes that might arise concerning this claim.

DATED at Fairbanks, Alaska, this 6th day of March, 1990.

ALASKA WORKERS' COMPENSATION BOARD

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

/s/ Joe J. Thomas
Joe J. Thomas, Member

/s/ Steve M. Thompson
Steve M. 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 Alvin J. Anderson, employee/applicant; v. Veco, employer; and Alaska National Insurance, insurer/defendants; Case No. 724481; dated and filed in the office of the Alaska Workers' Compensation Board at Fairbanks, Alaska this 6th day of March, 1990.

Clerk