GARY W. MIRANDA,		)
				)
Employee,			)	DECISION AND ORDER
				)	AWCB Case Nos.	8726901
v.				)		8607446
				)	AWCB Decision No.	90-0087
POOL ARCTIC ALASKA DRILLING,	)
				)	Filed with AWCB Anchorage
Employer,			)	April 27, 1990
				)
and				)
				)
ALASKA NATIONAL INSURANCE CO.,	)
				)
Insurer,			)
Petitioners,			)
				)
and				)
				)
STATE OF ALASKA, SECOND INJURY	)
FUND,				)
				)
Respondent.			)
				)

This matter came before us in Anchorage, Alaska on March 8, 1990. Attorney Trena L. Heikes represented the employer and its insurer. Assistant Attorney General Toby N. Steinberger represented the Second injury Fund. The record closed at the end of the hearing. The employee, who injured his back working for the employer, received compensation and medical benefits from the insurer. The insurer paid most of the compensation pursuant to a compromise and release approved by our southeastern panel on September 1, 1988. The insurer sought reimbursement, from the Second injury Fund, of compensation paid for disability in excess of 104 weeks. The Second Injury Fund rejected the insurer's claim for reimbursement. The insurer asks us to find it entitled to reimbursement under AS 23.30.205.

1. Whether the records in the employer's possession met the "written record" requirement of AS 23.30.205(c).

2. If the requirements of AS 23.30.205(c) have been met, whether reimbursement of compensation should be denied because:

The employee, Alaska Division of Workers' Compensation management analyst Richard Austerman, and the insurer's adjuster Kelley Stonke testified at hearing. We also relied upon the depositions of Stonke (February 12, 1990) and Richard McEvoy, M.D. (November 19, 1989). We also considered documentary evidence.

The employee testified he worked for the employer, or its predecessor entity, from 1980 through May 1987. He experienced some back pain through most of that period. On his application for employment, he told the employer he had suffered a minor back injury in 1980. In 1981 he reported a back injury, saw a chiropractor, but missed no time from work. It was undisputed the employer received a report from the employee's treating chiropractor. The report stated, "Diagnosis - Acute moderate traumatic lumbar sprain with muscle sprain, radiculitis, and myositis."

The employee stated he continued to work for the employer. He reported another back injury in 1985 and one in 1986. Since the February 1986 injury, he stated, he experienced periodic back pain with increasing frequency. In April 1986, following the 1986 injury, he went to Harry Reese, M.D. The parties agreed Dr. Reese's reports, which noted spondylolisthesis, were not received by the employer.

The employee testified that while the frequency of painful episodes increased following the 1986 injury, the pain did not increase. However, he did change his work habits. He "took it easier" and slowed down. On May 13, 1987 he left his drilling rig for an extended vacation. He stated he wasn't feeling very well at the time but had no unusual complaints. On May 15, 1987 he experienced excruciating lower back and leg pain while getting out of bed at home. He went to a hospital emergency room at that time.

Richard McEvoy, M.D., testified in his deposition that he is a board-certified orthopedic surgeon. (McEvoy Dep. at 4). He first treated the employee on June 15, 1987 and diagnosed a ruptured intervertebral disc, spondylolisthesis, and disc syndrome. (Id. at 5) . Following a period of conservative treatment, Dr. McEvoy performed a discectomy and spinal fusion. (Id. at 6).

Comparing medical notes from April 1986 to those of May 20, 1987, Dr. McEvoy stated the employee's complaints were worse on May 20, 1987. Comparing reports of CT scans performed in April 1986 and June 1987, Dr. McEvoy concluded the disc rupture for which he had treated the employee occurred after April 1986. (Id. at 12). Dr. McEvoy concluded the employee's condition was aggravated by an on-the-job injury in 1987. (Id. at 13).

Dr. McEvoy testified spondylolisthesis is not always symptomatic although, over time, people with that condition experience a higher incidence of back pain than those without spondylolisthesis. (Id. at 14). He defined "radiculitis" as an inflamed nerve root. The most frequent causes of radiculitis, in decreasing order of occurrence, were ruptured discs, bulging or degenerative discs, spondylolysis or spondylolisthesis, and unexplained radiculitis with "no other diagnosis." (Id. at 15). He stated between 10 and 30 percent of his patients experiencing radiculitis have spondylolisthesis or spondylolysis. (Id. at 17).

Dr. McEvoy was shown the July 20, 1981 medical report from Dr. Mosher which noted the employee's radiculitis. (Id. at 17). Reviewing that report, and a second report, Dr. McEvoy stated he could not conclude with a reasonable degree of medical certainty that the employee had spondylolisthesis at the time of Dr. Mosher's examination. (Id. at 22).

1. Did Dr. Mosher's July 20, 1981 report meet the requirements for a written record under AS 23.30.205(c)?

AS 23.30.205 provides authority for employers to seek reimbursement from the Second Injury Fund for compensation paid under certain circumstances. It states:

. . . .

(1) it is one of the following conditions;

. . . .

(AA) spondylolisthesis . . . .

Our court has recently rendered two opinions concerning the requirements of AS 23.30.205(c). In Sea-Land Services v. Second Injury Fund, 737 P.2d 793, 795 (Alaska 1987), the court stated, "We adopt the test set forth by the Tennessee court: an employer is entitled to reimbursement from the Second injury Fund if it produces a written record from which its prior knowledge of the employee's qualifying disability can fairly and reasonably be inferred." The written record need not contain "the exact medical terminology employed in AS 23.30.205(d)(1)." 737 P.2d at 795.

Alaska International Constructors v. State of Alaska, Second Injury Fund, 755 P.2d 1090 (Alaska 1988), involved application of the test adopted in Sea-Land Services. The written record noted a back injury resulting in surgery. The court noted the reference to the injury, "could reflect any injury which is sufficiently severe to require surgery. one can not infer, without further information, that there will be a permanent impairment." The court also stated:

755 P.2d at 1094 (emphasis in original).

The evidence here is the employer received a report from Dr. Mosher which noted, "Diagnosis - Acute moderate traumatic lumbar sprain with muscle sprain, radiculitis, and myositis." None of those conditions are listed as qualifying permanent physical impairments under As 23.30.205(d)(1). The employer offered no proof that they were qualifying conditions because they would support disability ratings of 200 weeks or more under AS 23.30.205 (d) (2) . We find no fair, reasonable inference of the employer's prior knowledge of the employee's qualifying physical impairment based on Dr. Mosher's medical report.

Dr. Mosher's report also noted radiculitis and myositis. The employer seeks to rely on Dr. McEvoy's testimony to construe Dr. Mosher's report. It is, however, the employer's prior knowledge of the employee's qualifying condition which is in issue here. Consequently, we do not find a medical expert's testimony concerning the inferences he draws when treating patients experiencing radiculitis relevant to our determination of the employer's knowledge fairly and reasonably inferable from Dr. Mosher's report. Even it we did find Dr. McEvoy's testimony relevant on that point, we would not change our conclusion. Dr. McEvoy testified, based on his experience, that 10 to 30 percent of radiculitis cases involve either spondylolisthesis or spondylolysis (not a qualifying condition). He also stated he could not conclude the employee had spondylolisthesis when seen by Dr. Mosher. We would find, even based on Dr. McEvoy's testimony, that the employer had not established its knowledge of a qualifying condition by a preponderance of the evidence.

Based on our finding that the employer's necessary prior knowledge of the employee's qualifying condition cannot be fairly and reasonably inferred from Dr. Mosher's written report, we conclude that the employer has not met the requirements of AS 23,30.205(c). Its petition for reimbursement from the Second Injury Fund is denied and dismissed.

2. Denial of reimbursement on other grounds.

Although we denied the petition for failure to meet the written record requirement of AS 23.30.205(c), the Second injury Fund raised other defenses which we address briefly. The Second injury Fund seemed to argue that reimbursement of compensation paid based upon a non-traumatic aggravation of a previous injury could not be granted. We disagree, relying upon cases in which our court has held non-traumatic aggravations of injuries are compensable.¹ We agree with the employer's contention that the purpose of the Second Injury Fund will best be accomplished where the rules for reimbursement match the rules for determining liability for the compensation underlying the reimbursement request. We would conclude that the provisions of AS 23.30.205(a), predicating reimbursement on a "subsequent injury or . . . aggravation," should be construed to match the court's construction of "injury" and "aggravation" Used when determining liability.

More substantial, however, is the Second injury Fund's argument that 104 weeks of compensation have not been paid for an injury eligible for reimbursement. The Fund contended both that the employee was injured at home in 1987 and that all compensation paid by the insurer was attributed to a 1986 injury. Payment based on the 1986 injury, rather than the 1987 injury, would bar the claim for reimbursement because the employer did not notify the Second Injury Fund within 100 weeks of knowledge of the 1986 injury. The latter argument was supported by referring to the 1988 compromise and release agreement (C&R) under which the compensation was paid.

The C&R referred to claim number 607446, the number we assigned to the employee's 1986 injury. While the C&R referred to resolution of "any claims for any injuries or aggravations . . . to [employee's low back while working for the employer] from his date of hire through the date of termination, the termination date was identified as February 26, 1986. The release section noted intent to release claims for liability "arising out of or in any way connected with the work-related accident referred to above The 1987 injury was not mentioned. Finally, the insurer made a contribution to the Second Injury Fund based on a 1986 injury.

Because the employee's compensation began in 1987, following an arguable 1987 injury, we are inclined to accept the insurer's argument that reference to the 1986 injury was a clerical and drafting mistake. On that basis, given the admitted timely notice to the Second Injury Fund of the 1987 claim, compensation paid for the 1987 injury could be the basis for reimbursement. We would not agree with the Second injury Fund's contention that since the insurer paid the employee compensation using the 1986 rate tables (applicable to 1986 rather than 1987 injuries), and consequently paid a lesser rate than would have obtained using the 1987 rate tables, its present reimbursement request should be denied on estoppel, waiver, or public policy theories.

The more significant question arising from the insurer's request for reimbursement of compensation paid under a C&R is whether the necessary liability for compensation has been established. AS 23.30.205(e) provides:

Professor Larson notes that in a jurisdiction that deems the Second injury Fund's liability derivative (as we do in Alaska), "it also follows that the Fund should have a right to intervene in any settlement proceeding between the claimant and the carrier, and that, if the claimant settles without the participation of the Fund, the Fund is not bound." 2 Larson, The Law of Workmen's Compensation 59.31(j) 10-426 to 10-427 (1986).

Because it is undisputed the Second Injury Fund did not participate in the C&R, and the Commissioner of Labor was not given at least three weeks notice before the C&R was approved, we would find the Second Injury Fund was not bound by the C&R. Before we could order reimbursement, therefore, we would either have to determine the underlying liability owed to the employee or the Second Injury Fund would have to concede it. Since neither occurred here, we would have to deny the insurer's claim at the current time pending either of those two events.

The insurer's petition for reimbursement from the Second Injury Fund of compensation paid the employee under a compromise and release approved on September 1, 1988 is denied and dismissed.

Dated at Anchorage, Alaska, this 27th day of April, 1990.

ALASKA WORKERS' COMPENSATION BOARD

/s/ Paul F. Lisankie
Paul F. Lisankie, Designated Chairman

/s/ RL Whitbeck SR
Richard L. Whitbeck, Sr., Member

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

PFL/jw

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 an interlocutory order staying payment is obtained in Superior Court.

APPEAL PROCEDURES

A compensation order may be 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 Gary W. Miranda, employee; v. Pool Arctic Alaska Drilling, employer; and Alaska National Insurance Co., insurer/petitioners; and State of Alaska, Second Injury Fund, Respondent; Case No. 8726901 and 8607446; dated and filed in the office of the Alaska Workers' Compensation Board inAnchorage, Alaska, this 27th day of April, 1990.

Jamie Whitt, Clerk