JAMES D. CLIFTON,		)
				)
Employee,			)	DECISION AND ORDER
				)
v.				)	AWCB Case No. 8902691
				)	AWCB Decision No. 90-0078
WESTERN GEOPHYSICAL,		)
				)	Filed with AWCB Anchorage
Employer,			)	April 24, 1990
				)
and				)
				)
CNA INSURANCE,			)
				)
Insurer,			)
Defendants.			)
				)

We heard this claim for attorney's fees, interest and penalty on March 23, 1990 in Anchorage. Employee was not present but was represented at hearing by attorney Chancy Croft. Defendants were represented by attorney Randy Weddle. We closed the record when the hearing ended.

Did Defendants controvert Employee's claim for a permanent partial impairment (PPI) payment?

Employee injured his left knee at work on February 13, 1 9 8 9 . Defendants commenced payment of temporary total disability (TTD) benefits effective February 19, 1989 when Employee was declared disabled. On March 24, 1989 David McGuire, M.D., performed surgery (a debridement of the patella) on Employee's knee. Dr. McGuire's post-operative diagnosis was chondromalacia of the medial femoral condyle and chondromalacia of the patella.

Employee's TTD payments continued until April 26, 1989 when Dr. McGuire released him for work.

On March 15, 1989 Employee filed an application for benefits, requesting a compensation rate adjustment and an evaluation for vocational rehabilitation (VR) benefits. A dispute over VR eligibility is currently pending before the Alaska Workers' Compensation Board (Board).

On August 11, 1989 Barbara Kardys, adjuster for Crawford and Company, filed a controversion notice. In this notice, "all benefits" after July 27, 1989 were controverted. The reason given was "[f]ailure to attend scheduled medical exam." (August 8, 1989 Controversion Notice). There is nothing else in the record at that time to indicate the specific medical exam which triggered the controversion.

Employee was examined by Dr. McGuire on August 17, 1989, and then again on October 6, 1989. Dr. McGuire's August 17 notes indicate Employee suffered additional knee pain after a recent walk on a beach.

The doctor's October 6, 1989 chart notes reveal Dr. McGuire's first estimates on a PPI rating. (Kardys testified she received Dr. McGuire's October 6 report on October 25, 1989.) The notes state in part:

On October 11, 1989 Kardys filed another controversion notice. This time, the benefits controverted were "all medical and disability after 8/17/89." The reasons for this controversion were1) Employee sustained an intervening injury not in the course and scope of employment; 2) Employee suffered a new injury which was a "joint surface injury;" and 3) Employee's "new injury not related." (Kardys October 5, 1989 Controversion Notice). Kardys sent a copy of this controversion to Dr. McGuire.

Dr. McGuire then sent Kardys a letter in early November 1989, apparently to clarify Employee's condition and to respond to the controversion. He stated in part:

(McGuire November 6, 1989 letter).

Kardys testified she received Dr. McGuire's November 6 letter on November 13, 1989. On November 14, 1989 Kardys filed another controversion notice. This time, the only benefit controverted was "PPD" benefits. The reason for controversion was: [rating received needs clarification of AMA whole man. Also waiting for clarification it personal aggravations have worsened (sic] medical condition." (Kardys November 10, 1989 controversion notice).

On November 22, 1989 Kardys sent Dr. McGuire a speed letter." She stated:

(Hearing Exhibit Number Five).

On November 28, 1989 Employee filed an application for benefits. In it, he requested a PPD lump sum, interest, penalty and attorney's fees. (November 22, 1989 application). This application was served on Defendants on December 7, 1989.

Kardys testified that on December 15, 1989 she received her speed letter with an added notation by Dr. McGuire. The doctor's note indicates that 15 percent was correct, and the October note was just an estimate of impairment. (Hearing Exhibit Number Five).

Despite Dr. McGuire's notation, Kardys indicated she was still unsure whether the 15 percent impairment was for the "lower extremity" or was a whole man rating. Consequently, she telephoned Dr. McGuire on December 19, 1989, and the doctor informed her the rating was whole man.

Kardys determined that Employee was owed $8100 for the resulting six percent whole man rating. On December 22, 1989 Kardys issued a check to Employee in the amount of $4860. The remaining $3,240 was sent to the State Child Support Enforcement Division.

Meanwhile, Douglas Saltzman, Reemployment Benefits Administrator (RBA), had been reviewing Employee's eligibility for VR benefits. On December 8, 1989 he sent the parties a letter noting that there were several unresolved controversions in the record, and these controversions suggested there may be a pending compensability issue. Accordingly, Saltzman asked the parties to resolve the compensability issue so he could proceed with the eligibility determination.

Kardys filed a response to Saltzman's letter on December 26, 1989. (Kardys December 20, 1989 letter). Kardys informed Saltzman that the three controversions in question had been lifted, and there were no controversions in effect at that time.

On January 12, 1990 Kardys filed an answer to Employee's November 1989 application. In it, she denied all of Employee's claims, asserting that PPD was paid timely and was "never denied as due." (Kardys January 9, 1990 answer).

Kardys testified that in other claims, she had also been confused about the correct impairment rating. She stated she called Bruce Dalrymple, a Juneau employee of the Board, to determine how to proceed when she was unsure of the correct rating to pay. She indicated Dalrymple told her to deny the claim based on clarification " and write the attending physician to get the proper rating. She insisted that in this case, she was not denying in her controversion that she would not pay PPI benefits. She simply needed clarification.

She did admit that after she received Dr. McGuire's 15 percent rating, she looked in the American Medical Association (AMA) Guidelines to determine the whole man rating based on a lower extremity impairment. She testified that this is the first conversion she had done using the AMA charts. Because of this, she called Dr. McGuire to make sure it was correct.

Employee asserts that attorney's fees are due because Defendants controverted permanent partial impairment benefits on November 10, 1989. He argues that these benefits were controverted for two reasons; 1) clarification of the PPI rating; and 2) clarification of the effect of a "personal aggravation" on Employee's condition. Employee maintains that notwithstanding the "clarification" language, any reasonable employee would have felt the need for getting an attorney to pursue his claim. He contends that this November 10 controversion is at the least a "controversion in part" which also triggers an award of attorney's fees under AS 23.30.145(a).

Defendants point out that in Staten v. Alaska Airlines, AWCB No. 90-0024 (February 9, 1990), we stated that an adjuster has a right and a duty to investigate ratings provided by physicians. They assert that in this case, the adjuster did not have a valid rating, and she should not be required to pay until she gets the necessary clarification. They argue that the controversion was sent only for advisory purposes, to show why PPI benefits were not paid at that time.

Defendants also point out that this case falls under the jurisdiction of the Alaska Workers' Compensation Act (Act) which became effective July 1, 1988. They argue that under the new Act, PPI payments are made in a single lump sum. They assert that they paid the required lump sum as soon as they received clarification of the ratings in the confusing doctor's reports. Defendants contend they should not be required to pay until they learn the correct whole man rating.

As 23.30.145(a) states in pertinent part:

Defendants argue that the controversions they filed don't say they won't pay PPI benefits. Therefore, they assert, these controversions were merely advisory, in nature, to show why a PPI lump sum could not be paid. They further suggest that the term "clarification" in the controversion notices shows the advisory nature of the controversions.

Nonetheless, the notices were still controversions. None of the controversions indicate they are only advisory and that Defendants really intended to pay PPI benefits.

Even if these controversions are only "advisory," they still indicate a refusal to pay some benefits. We note that the board-prescribed notices sent by Ms. Kardys state in part: "Under the provisions of As 23.30.155 the employer/insurer gives notice that the right: to the benefit(s) described below is controverted (denied) on the following grounds . . . ." The entire focus of the form is that benefits are being denied.

We find no evidence in the record which would lead Employee to believe that a PPI payment was imminent as soon as the adjuster cleared up the rating matter with Dr. McGuire. If we had picked up this record on December 8, 1989, we would have felt the same as did Doug Saltzman, the RBA: the record suggested there was a pending compensability issue. There is nothing in the record to indicate that the controversions, which suggested this issue, were 'lifted' until after December 26, 1989, when Kardys filed her clarification letter.

Kardys indicated she filed the November 10, 1989 controversion to clarify the size of the impairment rating. Even if she had by then conceded that a PPI payment was due, we find she still disputed the amount due. The Alaska Supreme Court addressed this issue in Alaska Interstate v. Houston, 586 P.2d 618, 620 (Alaska 1978). There, the court indicated that even if only the amount of compensation due is at issue, it is still a controversion "in part" and falls under the express language of AS 23.30.145(a).

In Wien Air Alaska v. Arant, 592 P.2d 352, 365 at n.54, (Alaska 1979), the supreme court stated that under subsection 145(a), the term "advises" (that a claim had been controverted) can be read as "finds." We find that Defendants controverted Employee's claim, not once, but several times. As late as their controversion filed November 11, 1989, they indicated they still questioned whether Employee had an intervening "personal" aggravation which could potentially preclude a PPI lump sum.

We conclude that, at a minimum, Defendants controverted Employee's PPI lump sum "in part." Under the express language of AS 23.30.145 (a) , attorney's fees are due on the amount controverted. None of the controversions state that Defendants were resisting or denying payment of only part of Employee's PPI lump sum. Therefore, we find that the entire lump sum had been controverted. Accordingly, Defendants shall pay minimum statutory fees, under subsection 145(a), based on the entire lump sum¹

Employee also requests a penalty under AS 23.30.155 (e) which states:

Under express language above, a penalty is not due if a controversion notice is filed under AS 23.30.155(d). Based on the testimony of Barbara Kardys, we find these controversions valid. Therefore, no penalty is due. Employee's request is denied and dismissed.

Employee also requests interest. Under Land and Marine Rental Co. v. Rawls, 686 P.2d 1187 (Alaska 1984), we award interest on the PPI benefits.

1. Defendants shall pay Employee attorney's fees in accordance with this decision.

2. Employee's request for a penalty under AS 23.30.155(e) is denied and dismissed.

3. Defendants shall pay interest in accordance with this decision.

Dated at Anchorage, Alaska, this 24th day of April, 1990.

ALASKA WORKERS' COMPENSATION BOARD

/s/ M.R. Torgerson
Mark R. Torgerson, Designated Chairman

/s/ Darrell F. Smith
Darrell F. Smith, Member

MRT/jpc

If compensation is payable under terms of this decision, it is due an the date of issue and 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.

APPEAL PROCEDURES

A compensation order may he appealed through proceedings in 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 James D. Clifton, employee/applicant; v. Western Geophysical, employer; and CNA insurance, insurer/defendants; Case No. 8902691; dated and filed in the office of the Alaska Workers' Compensation Board in Anchorage, Alaska, this 24th day of April, 1990.

Clerk