ANTHONY J. ANDREAS, JR.,	)
				)
Employee,			)	DECISION AND ORDER
(Deceased),			)	AWCB Case No. 8718024
				)	AWCB Decision No. 90-0108
v.				)
				)	Filed with AWCB Anchorage
ALERT LIGHTS & BARRICADE 	)	May 18, 1990
SYSTEM,				)
				)
Employer,			)
				)
and				)
				)
ALASKA PACIFIC ASSURANCE,	)
				)
Insurer,			)
Defendants.			)
				)

This dispute, concerning a $10,000 death benefit payment made into time Second Injury Fund, was heard on April 19, 1990 in Anchorage. The estate of the deceased employee was represented by attorneys Patrick James and Beng. O. Walters, Jr. The employer and carrier (defendants) were represented by attorney Randall J. Weddle. The Second Injury Fund (SIF) was represented by assistant attorney general Toby N. Steinberger. We closed the record when the hearing ended.

Is the assignment between the employee's estate and the defendants valid? If so, what effect does it have on the pending dependency issue under AS 23.30.215 and a possible refund of death benefits under AS 23.30.040(d).

On September 12, 1987 Employee was killed in a work accident. On September 22, 1987 the carrier, having decided that no dependents survived the employee, paid $10,000 into the Second Injury Fund (SIF) as required by AS 23.30.040(c).

On September 13, 1988 the estate filed an application for death benefits, attorney's fees and interest. The application indicated that Irene Andreas, the employee's mother, was a dependent entitled to death benefits under AS 23.30.215.

The defendants filed an answer on October 21, 1988. In it, they denied that Mrs. Andreas was a dependent and asserted that the claim was time barred. The employee's estate also filed a third party lawsuit.

Attorney Walters wrote Weddle on January 6, 1989, asserting that Mrs. Andreas was a dependent. He supported his assertion with the affidavits of Mrs. Andreas (the mother) and Helen Andreas, sister of the employee. Walters requested that Weddle request reimbursement from the SIF under AS 23.30.040(d).

Weddle then wrote Richard Austerman, Administrator of the SIF. (Weddle January 20, 1989 letter). In this letter, he noted that the carrier was still controverting the dependency claim. However, he inquired whether Austerman could assure him the $10,000 paid into the fund would be reimbursed if the carrier accepted (as compensable) the dependency claim.

By letter dated February 10, 1989 Austerman replied that he could make no such assurance. He added: "if the Board finds the mother to be a dependent and compensable under section .215, and orders the refund then the $10,000 would be reimbursed."

A prehearing was held on April 12, 1989. The prehearing summary simply indicates the parties would attempt resolution of the dependency claim and the third party action.

Sometime later, the estate and third party reached a settlement for $100,000. However, Allstate Insurance Company, the third party insurer, refused to pay the monies until the estate and the workers' compensation insurance carrier decided who was entitled to the settlement monies.

Discussions ensued, and on August 25, 1989 attorneys Weddle and Walters (who represented the estate on the third party suit) signed a document titled "Assignment of All Claims." In it, the estate agreed to pay the carrier $12,500 which included the SIF payment plus $2,500 for funeral expenses (as allowed under section 215) In return, the carrier agreed to assign "all its right, title and interest whatsoever in and to the rights of the [employee's estate], as well [sic] any right to recover from the Second injury Fund on the claim of mistake or inadvertence pursuant to AS 23.30.040(b) the funds paid to that fund."

The document went on to state that the assignment by the carrier was made with "full knowledge" that the estate would attempt to get reimbursement of the $10,000 paid into the SIF "on the ground that the decedent was survived by dependent relatives." The document added that unless it were subpoenaed, the carrier would "neither participate nor interfere" in the estate's attempt to get reimbursement.

The estate then requested reimbursement from the SIF which denied the request. Among other arguments, the SIF contends that Mrs. Andreas has no standing to bring a claim pursuant to AS 23.30.040(d); the assignment by the carrier is void under AS 23.30.160; and the assignment is an invalid agreement, under AS 23.30.012, because it has not received board approval. Further, the SIF urges that it is the defendants' duty to determine dependency. The SIF asserts that if a dispute on dependency arises, the defendants and the estate must take the matter to the board. In this respect, they claim, the defendants are unnecessarily placing the burden of litigation on the SIF.

AS 23.30.040(c) and (d) state:

In this case, the employer’s personnel department filed a report of injury on September 14, 1987, two days after the employee’s death. A section of that report (item number 46) indicates whether there may be any dependents. This section lists the deceased employee’s mother as a dependent. Although this mention of dependency does not constitute evidence. Of Mrs. Andreas’ dependency (AS 23.30.070 (c)), it at least raises the question of dependency. There is no evidence indicating the defendants investigated the legitimacy of this notation.

The estate and the defendants urge us to recognize their assignment and allow the estate to pursue its dependency claim with the SIF. They argue that Croxton v. Crowley Maritime Corporation, 758 P.2d 97 (Alaska 1988), is dispositive of this matter.

In Croxton, there was no dispute that the employee died without dependents. The carrier paid $10,000 into the SIF. Later, the carrier reassigned its statutory right to sue a third party (AS 23.30.015(c)) back to the Croxton estate. The superior court dismissed the Croxton estate's cause of action against the third party on the ground that reassignments of personal injury claims are invalid.

The Alaska Supreme Court reversed the superior court. The court recognized that in some situations, public policy may compel dismissal of a reassignment. Nonetheless, while disallowing such an assignment may be "sensible in other situations, it has little force in the specific context of an insurer reassigning a right of action back to the estate of a deceased employee." Croxton, 758 P.2d at 99. The court pointed out that all that was involved in that matter was "recasting of real party in interest Status for the purpose of prosecuting a claim . . . ." Id.

The matter before us is clearly distinguishable. In Croxton, the "third party" would be the defendant in the lawsuit whether or not it was sued by Croxton's estate or by the workers' compensation insurance carrier. Here, the parties are, in effect, attempting to bring in a new party (the SIF) to litigate the dependency dispute.

In disputes over dependency status in death claims, the litigating parties are 1) the employee's estate, the moving party who has the burden of proving it satisfies the dependency requirements under the Alaska Workers' Compensation Act (Act); and 2) the employer and carrier (the defendants), who can either accept the moving party's claim of dependency, or dispute it. The SIF is normally not a party to these disputes. It merely acts as a depositary for the $10,000 death benefit if the defendants determine there are no dependents.

Further, the SIF can refund this amount only if it receives a board order indicating the defendants have shown that the initial deposit was made by mistake or inadvertence, or the defendants have shown there exists a beneficiary entitled to benefits under AS 23.30.215. AS 23.30.040 (d). The defendants and the estate now ask us to allow the estate to stand in the shoes of the defendants, pursuant to the assignment:, and allow the estate to seek reimbursement from the SIF.

The SIF points out that under AS 23.30.160 (a), assignment of benefits due or payable is invalid except as otherwise provided in the Act. The SIF asks us to deny the request of the estate and the defendants by finding their assignment invalid. However, we find that a determination on the validity of the assignment would be premature because there has not been a determination on whether any benefits are due or payable under the Act. This determination can only be made by resolving the pending dependency dispute.

That dispute is between the defendants and the estate. The defendants cannot now drop out of his dispute and put the SIF into their place as a new defending party. The defendants made the initial determination that: no dependents existed despite the fact that the deceased employee's mother was listed as a dependent on the injury report. They then used their decision as a hammer over the estate in the subsequent third party claim. This could have been avoided with a more thorough dependency investigation. They must now either defend their initial decision or request a refund from the SIF based on mistake, inadvertence or the existence of a beneficiary.

The defendants cannot now transfer or delegate the potentially burdensome consequences of their initial dependency determination to the SIF. If we ordered the SIF to defend the dependency dispute, we would create a burden on the SIF where none had previously existed. Such an order would not be simply the recasting of a real party in interest for prosecuting a claim, as occurred in Croxton. Rather, it would place the burden of defending a claim (the defendants' initial dependency determination) onto a new party (the SIF) who had no part in that decision.

It would be ludicrous for us to order the SIF into the dependency dispute. Moreover, such an order may influence other employers or carriers in these death cases to cast a quick eye around, conclude there are no dependents and make the required deposit to the SIF, thereby relieving themselves of the burden of future litigation on dependency. This would simply, be unacceptable procedure and bad policy.

We conclude that the defendants' duty of defending the dependency issue cannot be delegated to the SIF. Therefore, the parties' request to have the SIF brought in as a party to the dependency dispute is denied and dismissed.

The request of the defendants and the estate to have the second injury fund defend the dependency dispute in place of the defendants is denied and dismissed.

Dated at Anchorage, Alaska, this 18th day of May, 1990.

ALASKA WORKERS' COMPENSATION BOARD

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

/s/ Donald R. Scott
Donald R. Scott, Member

/s/ HM Lawlor
Harriet M. Lawlor, Member

MRT:mrt

If compensation is payable under terms of this decision, it is due on 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 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 Anthony J. Andreas, Jr., employee, (Deceased), v. Alert Lights & Barricade Systems, employer; and Alaska Pacific Assurance, insurer/defendants, Case No. 8718024; dated and filed in the office of the Alaska Workers' Compensation Board in Anchorage, Alaska, this 18th day of May, 1990.

Clerk

SNO