NICKOLAS C. PAYOVICH, 
Employee, 
Applicant
v. 
VECO ALASKA INC (NN LGHTS),
Employer,
and 
FREMONT INDEMNITY CO,
Insurer,
Defendants.

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FINAL
DECISION AND ORDER
AWCB Case No. 199729479
AWCB Decision No. 
Filed with AWCB Anchorage, Alaska
on December , 1999

We heard the employee’s claim on November 18, 1999 at Anchorage, Alaska. Attorney Joseph Kalamarides represented the employee. Attorney Philip Eide represented the employer and the insurer ("employer"). We held the record open to receive additional documents and closed the record on November 30, 1999, the first scheduled Board meeting after receipt of those documents.

1. Is the employee’s claim barred under AS 23.30.100?
2. Did the employee sustain a compensable on-the-job injury, while he was employed with the employer in August of 1997?
3. Is the employee entitled to attorney fees and legal costs under AS 23.30.145 and 8 AAC 45.180?

The employee worked for VECO ALASKA INC. ("VECO") as a roustabout in Prudhoe Bay with the Wells Support Group from approximately June of 1997 until October of 1997. At his deposition, the employee testified his back began to bother him in August of 1997, while he was lifting and carrying directional valves and holding them in place in order to rig for a flow-back.¹ The employee testified that he informed Dennis Barnes, the foreman, of his back pain the following day and requested Ibuprofen.²

At his deposition, Dennis Barnes testified the employee mentioned to him one evening that he had a sore back and asked for Ibuprofen. Mr. Barnes further testified the employee seemed unsure how he hurt his back or when it began to hurt. According to Mr. Barnes, the employee did not want to fill out the Band-Aid log or see the medic.³

The employee testified he also spoke to safety manager Rick Meredith about his back pain in August of 1997.⁴ At his deposition, Mr. Meredith did not remember the employee ever mentioning a back problem to him. Mr. Meredith testified it is the responsibility of both the employer and the employee to report injuries in the Band-Aid log. ⁵ After the hearing, the employer submitted its safety handbook which states, "Notify supervision and safety that an accident has occurred. Supervision is responsible to assure that: The appropriate forms for investigation and accident reporting are completed and forwarded to the appropriate persons within the required time frame."⁶

According to the employee, he continued to experience back pain for the remainder of his employment with the employer.⁷ The employee testified he did not go to the medic because he thought he could work through the pain and because he did not want to be sent home.⁸ At the hearing, the employee testified he borrowed a back brace from a co-worker between August and October of 1997, and his co-workers accommodated him by helping him avoid lifting. The employee continued to work for the employer until October of 1997, when he went to work for the Alaska Municipal League Joint Insurance Association as a risk manager on October 6, 1997. The employee testified he changed jobs because he could no longer perform as a roustabout.

At the hearing, the employee testified he continued to have back pain, with varying degrees of discomfort, from October of 1997 through December of 1997, though he sought no medical treatment. According to the employee, the pain became unbearable in January of 1998, and he began to experience numbness in his legs. On January 28, 1998, he went to Gregory Colbert, D.C. at Northern Chiropractic and complained of lower back pain and numbness down his left buttock, left leg and left foot.⁹ The employee filled out a medical history form at Northern Chiropractic, indicating his major complaints were lower back pain and numbness from a work incident. He stated the injury occurred in, "late ’94 Early ’95, while he was a production operator."¹⁰ At the hearing, the employee testified that when he filled out the Northern Chiropractic forms, he related the written questions to an earlier industrial injury in 1993. Moreover, he testified that while there is no written mention of the August 1997 injury in those chiropractic records, he did discuss it with Dr. Colbert.

On March 16, 1998, the employee filled out a Report of Occupational Injury with the employer, stating he suffered a work-related injury in August of 1997. On March 26, 1998, the employee went to orthopedic surgeon Edward Voke, M.D for treatment. It should be noted that the employee had seen Dr. Voke in March of 1994 for low back pain associated with the above referenced 1993 industrial injury.¹¹ In his March 1994 report, Dr. Voke noted the employee reported, "intermittent pain in the low back area, radiating into the left lower extremity to the calf with a list."¹² In March of 1994, Dr. Voke diagnosed facet syndrome and suspected a herniated disc.¹³ At the hearing, the employee testified he experienced problems with his back for approximately one year after his 1993 injury, though his back stabilized after that until August of 1997.

On March 26, 1998, Cindy Lee, D.O., at Dr. Voke’s office, treated the employee and noted, "Pain is mostly in the low back occasionally moving down to his left buttock and leg to the toes, it comes and goes."¹⁴ The employee stated in a patient information form, "Through heavy lifting back progressively became sorer & sorer (stiff) until I could not move."¹⁵ Dr. Lee diagnosed lumbar facet syndrome with muscle spasm.¹⁶

On April 3, 1998, the employer controverted the employee’s claim on the basis that there was no medical documentation to support the employee’s diagnosis, symptoms or need for medical treatment in relation to any injury with the employer. The employer also stated the employee’s claim was untimely.

The employee was then referred to Douglas Smith, M.D. for an Employer Independent Medical Examination ("EIME") in May of 1998. A physical examination demonstrated slight decreased strength of the toe straightener or extensor on the left side.¹⁷ Dr. Smith reported that an x-ray of the lumbar spine dated January 28, 1998 revealed anterior osteophyte formation at L3-4 and probable narrowing of the disc space and slight osteophyte formation at L4-5. Dr. Smith diagnosed, "chronic intermittent low-back pain with underlying lumbar degenerative disc disease with no firm evidence of radiculopathy."¹⁸ Dr. Smith went on to state in his report,

At his deposition, Dr. Smith testified he had no doubt the employee has a herniation, but there is no documentation to show it occurred while the employee was working from August until October of 1997. Dr. Smith testified a disc herniation may result from everyday activities, and the symptoms associated with degenerative disc disease and disc herniation can wax and wane. Dr. Smith also testified that a herniated disc could occur with the type of work the employee was performing from June until October of 1997.²⁰ Moreover, Dr. Smith went on to testify, in part, at his deposition as follows:

The employer once again controverted the claim in August 3, 1998 on the basis of Dr. Smith’s report.

The employee returned to Dr. Voke’s office on August 17, 1998 for a recent flare-up. Dr. Voke’s impression was "rule out herniated disk of the lumbar spine," and he ordered an MRI.²² The MRI of the lumbar spine revealed a very small disk herniation at L3-4, left-sided disk herniation at L4-5 with mild compression of the thecal sac and a small radial tear in annulus of L5-S1.²³ Dr. Voke met with the employee again on August 25, 1998 and determined surgical intervention was not indicated at that time.²⁴

In a letter dated November 4, 1998, Dr. Voke stated the employee had disc degeneration of the lumbar spine plus disc herniation. Dr. Voke concluded the injury of 1997 was a substantial factor in causation of his present condition.²⁵

At his March 16, 1999 deposition, Dr. Voke testified, in part, as follows:

1. Now, is it fair to say that the degenerative disk disease that was evidenced on the MRI was something that had been present for several years?

1. Yes.

1. And the disk herniation, is there any way that you can date the onset of those—

1. Well, the—

1. --objectively?

1. You can’t, but he—it occurred somewhere. So—so that it may have occurred prior to 1994 and it could have been aggravated by his ’94 problem. Or—industrial injury. Or it could have occurred maybe prior to ’98 – that’s when he was – ’97, whenever those – last one is; and could have been aggravated by that. Usually I don’t see – I’ve only seen one acute disk rupture during my illustrious career, in that most of them are aggravations of the previous problems. That’s the usual presentation.²⁶

Dr. Voke continued to testify at his deposition, in part, as follows:

1. And in that letter you gave an opinion which was referred to in the third paragraph when you say: I felt that the injury of 1997 was a substantial factor in causation of his present condition. Could you tell me the basis for that and how you came about that opinion?

1. Yes. First of all, his history, from what he told me; he had an injury in Prudhoe Bay. The second aspect in the above – well, in the history he said that he had not only leg pain but also in his back. He had leg pain and it radiated in the left lower extremity down to his foot with numbness and tingling. So that to me means he has some nerve root irritation; something’s wrong with the spinal nerve on the left.

At his deposition, Dr. Voke testified the employee gave a history of radiculopathy in August of 1998 with complaints of left groin pain, left lower extremity pain to the toes, numbness and tingling. Dr. Voke also determined Dr. Smith’s finding of weakness in the left toe was evidence of radiculopathy.²⁸ The employee has not sought medical treatment since August of 1998.

At the hearing, the employee testified he worked for Piquniq Management Corporation as a safety manager prior to August of 1997. In the position of safety manager, he investigated on-the-job injuries and filled out reports of occupational injuries on behalf of employees. The employee also testified he sustained three on-the-job injuries prior to August of 1997, and he provided notice of those injuries to his employers.

After the hearing, the employer submitted a portion of the ARCO/VECO contract entitled, "ARCO/VECO ALLIANCE INCENTIVE PROGRAM." Pursuant to their safety incentive program, the employer provided both individual and team incentive pay to employees each quarter. According to the contract, the amount of safety incentive pay to each employee was determined on the basis of both individual and team "Recordable Incidents" and "Lost Time Accidents."²⁹

In addition, the employer submitted an affidavit by Doug Smith, corporate safety manager for the employer. Mr. Smith stated in his affidavit that the safety incentive program was designed to encourage safe behavior and, at the same time, to provide stiff penalties for non-recording of incidents. Mr. Smith noted that non-reporting would result in the forfeiture of all safety incentives for the quarter. Mr. Smith also stated that if the employee had reported an injury in August of 1997, it would not have affected the safety incentive payout to his group, though it would have affected his individual payout. At the hearing, the employee testified that while he was sure it was the employer’s policy to require employees to report all incidents and injuries, employees were nevertheless encouraged not to report injuries through the safety incentive program. The employee testified he had direct knowledge of employees at VECO who failed to report on-the-job injuries and instead "worked through them."

The employee argued his failure to provide written notice pursuant to AS 23.30.100 should not terminate his claim because he informed Dennis Barnes of his injury the day after he began feeling back pain. Relying on Kolkman v. Greens Creek Mining Co., 936 P.2d 150 (Alaska 1997), the employee argued the employer’s knowledge of an injury constitutes notice, despite a lack of knowledge of work-relatedness of the injury. The employee further argued the 30-day period to provide written notice started running on January 28, 1999, when he first sought medical treatment. Consequently, the employee argued he was 17 days late when he provided written notice on March 16, 1998, and the employer was not prejudiced in that short time period.

The employee argued he suffered an on-the-job injury in August of 1997 that was a substantial factor in causation of his current condition, as substantiated by Dr. Voke. The employee argued Dr. Smith admitted in his deposition that the type of work the employee was doing in August of 1997 could cause a herniated disc and that the employee had symptoms consistent with herniation. The employee argued Dr. Smith also admitted that one could have a herniated disc with no leg symptoms which later progresses to nerve consequence.

The employer argued the employee’s claim should be barred, as he did not properly provide written notice of an injury. The employer argued the employee did not provide written notice until more than six months after his alleged on-the-job injury and until more that 30 days after he first sought medical treatment. According to the employer, oral notice is in dispute because Mr. Barnes only recalled one mention of a sore back, and Mr. Meredith had no recollection of any back complaints by the employee. Further, neither Mr. Barnes nor Mr. Meredith recalled seeing the employee exhibit behavior consistent with an injured back. The employer argued the employee was fully familiar with written notice procedures and intentionally failed to give notice because he did not want to be sent home. The employer argued there was prejudice to the employer because, had the employee provided proper notice, it would have had an opportunity to promptly investigate the claim and to seek medical documentation.

The employer argued that even assuming the employee experienced an exacerbation of his pre-existing back condition, the exacerbation was only temporary. The employer referenced Dr. Smith’s opinion that activity between August and October of 1997 could not have conceivably caused the January 1998 x-ray findings. The employer argued Dr. Voke largely agreed with Dr. Smith’s findings and admitted the employee’s herniations probably date back to 1994. According to the employer, the employee has not sought medical treatment since 1998, Dr. Voke has not recommended surgery and the employee’s condition simply represents the natural ups and downs of his underlying condition.

I. NOTICE OF INJURY

AS 23.30.100 provides in pertinent part:

1. Notice of an injury or death in respect to which compensation is payable under this chapter shall be given within 30 days after the date of such injury or death to the board and to the employer.
2. The notice must be in writing, contain the name and address of the employee and a statement of the time, place, nature, and cause of the injury or death, and be signed by the employee...

1. Failure to give notice does not bar a claim under this chapter

Timely written notice of an injury is required to let the employer provide immediate medical diagnosis and treatment and investigate the facts surrounding the injury.³⁰ However, the Alaska Supreme Court in Kolkman v. Greens Creek Mining Co., 936 P.2d 150 (Alaska 1997) found,

We find Dennis Barnes, the foreman, had knowledge of the employee’s complaints of a sore back in and around August of 1997. We find this constitutes knowledge of the injury on the part of employer for the purposes of AS 23.30.100(d)(1).

After finding the employer had actual knowledge of the injury, we must next determine whether the employer was prejudiced by the employee’s failure to timely provide written notice. The Alaska Supreme Court has established that the 30-day notice period begins when, "by reasonable care and diligence, it is discoverable and apparent that compensable injury has been sustained."³¹ In Cogger v. Anchor House, the Court found the 30-day notice period began to run when the claimant first visited the emergency room for back pain and incurred medical costs.³² Applying that same reasoning in this case, we find the 30-day notice period began to run on January 28, 1998, when the employee first sought medical treatment and incurred medical costs in relation to the August 1997 event.

We further find the employee was 17 days late when he provided written notice of an injury to the employer on March 16, 1998. We find the delay of 17 days in March of 1998 did not significantly hinder the employer’s ability to investigate the August 1997 event, which occurred six months prior. Moreover, we find no evidence that the employer’s inability to provide medical treatment during those 17 days prejudiced their defense.

Therefore, we find the employee’s failure to timely provide written notice of his injury is not a bar to his claim pursuant to AS 23.30.100(d)(1). However, it should be noted, the Board is troubled by several aspects of this matter. First, the Board is disturbed by the employee’s failure to comply with AS 23.30.100(a) and (b), when he was specifically aware of the written notice requirements through past experiences. Nevertheless, we find no authority upon which to deny him the §100(d)(1) provision on the basis of his past experience and knowledge.

Additionally, we are troubled by some of the evidence presented regarding the employer’s safety incentive program and the testimony pertaining to its disincentives to reporting injuries. It is this Board’s opinion that, in practice, the employer’s safety incentive program was at odds with its own injury reporting policies and with the written notice requirements under AS 23.30.100.

II. COMPENSABILITY OF THE EMPLOYEE’S CLAIM

In our analysis, we must first apply the statutory presumption of compensability. ³³ AS 23.30.120(a) provides in pertinent part, "In a proceeding for the enforcement of a claim for compensation under this chapter it is presumed, in the absence of substantial evidence to the contrary, that (1) the claim comes within the provisions of the chapter."

Applying the presumption of compensability is a three-step process.³⁴ In the first step, generally, "AS 23.30.120(a)(1) creates the presumption of a compensable disability once the employee has established a preliminary link between employment and injury."³⁵

The Alaska Supreme Court has held, "the text of AS 23.30.120(a)(1) indicates that the presumption of compensability is applicable to any claim for compensation under the workers’ compensation statute."³⁶ A substantial aggravation of a pre-existing condition "imposes full liability on the employer at the time of the most recent injury that bears a causal relation to the disability."³⁷ In Peek v. SKW/Clinton, 855 P.2d 415, 416 (Alaska 1993), the Court stated:

An aggravation, acceleration or combination is a substantial factor in the disability if a reasonable person would regard it as a cause and attach responsibility to it.³⁸ Moreover, the Supreme Court has expressly adopted the "but for" test.³⁹ If the employee’s evidence establishes the preliminary link, we presume his injury is compensable, and the burden of producing contrary evidence shifts to the employer.

We find the employee suffered a lower back injury in April of 1993. We find the employee experienced periodic flare-ups for approximately one year following his 1993 injury. We find Dr. Voke examined the employee in March 1994, and he noted the employee reported intermittent low-back pain with radiation into the left lower extremity, though there were no objective findings. We find the employee’s testimony concerning the return of back pain in August 1997 and the progression to severe pain with numbness and tingling in January 1998 is substantial evidence he suffered a compensable injury. Therefore, we conclude the presumption of compensability attaches to the employee’s claim, and the burden of production shifts to the employer.

In the second step, we must determine whether the employer has met its burden of producing contrary evidence.⁴⁰ To rebut the presumption, the employer must produce "substantial evidence" that either (1) provides an alternative explanation which, if accepted, would exclude work-related factors as a substantial cause of the disability; or (2) directly eliminates any reasonable possibility that the employment was a factor in the disability.⁴¹ "Substantial evidence" is the amount of relevant evidence a reasonable mind might accept as adequate to support a conclusion.⁴² Because the presumption shifts only the burden of production to the employer, and not the burden of proof, we examine the employer’s evidence in isolation.⁴³If the employer produces substantial evidence rebutting the presumption of compensability, the presumption drops out, and we move to the third step.⁴⁴

We find the employer presented substantial evidence to overcome the presumption of compensability. Dr. Smith stated in his EIME report and confirmed at his deposition that the employee’s activities between August and October of 1997 could not have conceivably caused any of the findings in the January 1998 x-ray. We find Dr. Smith’s opinion provides affirmative evidence rebutting the presumption of compensability.

In the third step, the employee bears the burden of proving all the elements of the claim by a preponderance of the evidence.⁴⁵ The party with the burden of proving asserted facts by a preponderance of the evidence must "induce a belief in the mind of the triers of fact that the asserted facts are probably true."⁴⁶ A longstanding principle in Alaska workers’ compensation law is that inconclusive or doubtful medical testimony must be resolved in the employee’s favor.⁴⁷

We have weighed the opinions of Dr. Voke and Dr. Smith, and we have considered the entire medical record. We find, based upon the medical records and the opinions of both Dr. Voke and Dr. Smith, the employee had pre-existing degenerative disc disease and disc herniation in August of 1997. However, we are persuaded the preponderance of the evidence shows the employee’s pre-existing back condition stabilized approximately one year after his 1993 industrial injury. We further find the employee’s August 1997 injury substantially aggravated his pre-existing back condition and caused severe pain with new symptoms of nerve root irritation, namely numbness and tingling down the left leg. We are, therefore, persuaded by a preponderance of the medical evidence, especially the opinion of Dr. Voke, that the August 1997 injury was a substantial factor in causation of the employee’s current condition. Accordingly, we conclude the employee’s claim for benefits is compensable. We will retain jurisdiction to resolve any disputes that may arise.

III. ATTORNEY FEES AND COSTS

AS 23.30.145 provides in pertinent part:

1. If an employer fails to file timely notice of controversy or fails to pay compensation or medical and related benefits within 15 days after it becomes due or otherwise resists the payment of compensation or medical and related benefits and if the claimant has employed an attorney in the successful prosecution of the claim, the board shall make an award to reimburse the claimant for the costs in the proceedings, including a reasonable attorney fee. The award is in addition to the compensation or medical and related benefits ordered.

AC 45.180 provides in pertinent part:

The employee seeks an award of attorney’s fees under subsection 145(b) for the benefits obtained. We find the employer resisted the employee’s claim, which we found compensable. Consequently, we can award fees and costs under 145(b).⁴⁸ Moreover, the Alaska Supreme Court has held that our attorney fee awards should be reasonable and fully compensatory, considering the contingency nature of representing injured workers, to insure adequate representation.⁴⁹

Subsection 145(b) requires the award of attorney fees and costs be reasonable. Our regulation 8 AAC 45.180(d) requires a fee awarded under subsection 145(b) be reasonably commensurate with the work performed. We have examined the record and the employee’s itemization of fees and costs. We note the employer made no objection to the reasonableness of the itemized legal fees and costs. Having considered the nature, length and complexity of the services performed, as well as the potential benefit to the employee, we find both the fees and costs are reasonable for the prosecution of this claim. We will award the fees and costs requested by the employee. We retain jurisdiction over any disputes.

1. The employee’s claim is not barred under AS 23.30.100.
2. The employee sustained a compensable on-the-job injury, while he was employed with the employer in August of 1997.
3. The employer shall pay the employee reasonable attorney fees and legal costs under AS 23.30.145(b) and 8 AAC 45.180, as itemized in the Amended Statement of Attorney Fees and Costs dated November 19, 1999.

Dated at Anchorage, Alaska this 23rd day of December 1999.

ALASKA WORKERS' COMPENSATION BOARD

/s/ Kathleen M. Snow
Kathleen M. Snow,
Designated Chairperson

/s/ John A. Abhsire
John A. Abshire, Member

/s/ Philip E. Ulmer
Philip E. Ulmer, Member

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

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 Decision and Order in the matter of NICKOLAS C. PAYOVICH employee/applicant; v. VECO ALASKA INC (NN LGHTS), employer; FREMONT INDEMNITY CO, insurer/defendants; Case No.199729479; dated and filed in the office of the Alaska Workers' Compensation Board in Anchorage, Alaska, this 23rd day of December, 1999.

Julie A. Tapia, Clerk