Title: Liberty Northwest Ins. Corp., Inc. v. Watkins

State: oregon

Issuer: Oregon Supreme Court

Document:

FILED: February 19, 2010
IN THE SUPREME COURT OF THE STATE OF OREGON
LIBERTY NORTHWEST INSURANCE CORPORATION,
INC.,
and WESTERN CEDAR, INC.,
Respondents on Review,
v.
JOHN L. WATKINS,
Respondent,
and
DEPARTMENT OF CONSUMER AND BUSINESS
SERVICES,
Petitioner on Review.
(0500147H; CA A134305; SC S057190)
En
Banc
On
review from the Court of Appeals.*
Argued
and submitted November 2, 2009.
Judy
C. Lucas, Senior Assistant Attorney General, Salem, argued the cause for
petitioner on review.  With her on the petition were Erika L. Hadlock, Acting
Solicitor General, and John R. Kroger, Attorney General.  With her on the brief
were Jerome Lidz, Solicitor General, and John R. Kroger, Attorney General.
David
O. Wilson, Johnson Nyburg & Andersen, Eugene, argued the cause and filed
the brief for respondent on review.
DE
MUNIZ, C. J.
The decision of the
Court of Appeals is reversed.  The order of the Director of the Department of
Consumer and Business Services is affirmed.
*On judicial review from final order of the Department of Consumer and Business            
Services. 224 Or App 599, 198 P3d 960 (2008).
DE MUNIZ, C. J.
In this workers' compensation case, the
Department of Consumer and Business Services (department)
petitions for review of a Court of Appeals decision reversing and remanding a
final order by the Director of Consumer and Business Services (director) that awarded
attorney fees to claimant's attorney stemming from proceedings brought by
claimant to resolve a medical services dispute.  Liberty Northwest Ins.
Corp., Inc. v. Watkins, 224 Or App 599, 198 P3d 960 (2008).  The Court of
Appeals concluded that the director's award of attorney fees was improper,
because a claim disposition agreement (CDA) previously agreed to by claimant and
insurer included a release of claimant's right to attorney fees.  For the reasons that follow, we reverse the decision
of the Court of Appeals and affirm the final order of the director awarding
attorney fees.   
We
take the facts from the record, the final order, and the Court of Appeals
opinion.  On June 13, 2000, claimant suffered a compensable back injury
resulting in partial paralysis of his lower extremities; he was later determined
to be permanently wheelchair dependant.  In February 2001, claimant and insurer
entered into a CDA pursuant to ORS 656.236, set out post at __ (slip op
at 4).  In exchange for monetary compensation specified in the CDA, claimant
released 
"all rights to all workers' compensation benefits
allowed by law, including temporary disability, permanent disability,
vocational rehabilitation, aggravation rights to reopen claim, attorney fees,
penalties, and survivor's benefits potentially arising out of this claim, and
any subsequent claim for new medical conditions, except for medical services
* * *."  
(Emphasis in original.)   In
addition, the CDA provided checkboxes to indicate whether, for each category of
benefits, the release would be a "full" or "partial"
release.  For each category, including a category entitled "Penalties and
Attorney Fees," the checkbox indicating a full release was marked.  The
CDA also stated that the CDA did not "limit [claimant's] statutory medical
rights pursuant to ORS 656.245"(1)
and that claimant "retain[ed] his right to medical services[.]"  The Workers'
Compensation Board (board) later approved the CDA.  
In
January 2005, claimant, with the assistance of counsel, requested
administrative review of insurer's refusal to provide him with a
wheelchair-accessible van.  The medical review unit (MRU) found that a van was
reasonable and appropriate for claimant's condition and subsequently issued an
order that required insurer to purchase the wheelchair-accessible van and to
pay a fee to claimant's attorney pursuant to the mandatory attorney fee
provision in ORS 656.385(1), set out post (___ Or at ___) (slip on at 7
n 2).  Insurer filed a request for a contested case hearing with the department.
 The sole issue at the hearing was the portion of the order awarding attorney
fees.  In November 2006, the department issued an order affirming the award of
attorney fees, and insurer sought judicial review in the Court of Appeals.  
The
Court of Appeals reversed and remanded, concluding that ORS 656.236(1)(a)
provides a default rule to the effect that, unless otherwise specified, a CDA
resolves all rights pertaining to a claimant's entitlement to attorney fees,
including attorney fees that could potentially arise out of a medical services
dispute, and that the terms of a CDA control whether attorney fees may be
awarded.  The court reasoned that any right that claimant may have asserted to
attorney fees was resolved by the CDA, which applied to "all rights to
attorney fees that could potentially arise out of the claim."  Liberty
Northwest Ins. Corp., Inc., 244 Or App at
612 (emphasis in original). 
As
noted, the department petitioned for review, asserting that the CDA entered
into in this case did not and could not release claimant's right to an attorney
fee in a future medical services dispute.  We allowed review to determine whether,
through a CDA entered into in accordance with ORS 656.236, a claimant may
release the right to attorney fees that are derivative of a successful medical
services claim.
We begin
with a brief summary of the statutory scheme applicable to medical services.  ORS
656.245(1)(a) and (b) entitle an injured worker to medical services for
conditions caused in material part by a compensable injury, and require the
insurer to provide those medical services for the life of the worker.  ORS
656.245(6) provides that, when a claim for medical services is denied, an
injured worker may request administrative review by the director.  In turn, ORS
656.327(1)(a) provides that, when an injured worker, insurer, self-insured
employer, or the director believes that a proposed medical service is
excessive, inappropriate, ineffectual, or in violation of rules regarding the
performance of medical services, the dissatisfied party must request
administrative review by the director before requesting a contested case
hearing on the issue.   
Here, claimant prevailed after a
contested case hearing involving a dispute over medical services, and the
director awarded attorney fees to claimant's attorney.  However, as noted, the
Court of Appeals reversed the award of attorney fees, concluding that the CDA,
entered in accordance with ORS 656.236, unambiguously released claimant's right
to all attorney fees potentially arising from any claim, including a medical
services claim, and that those contractual terms should be enforced.  In our
view, the determination of whether a claimant may release his or her right to
attorney fees that derive from a successful medical services claim in a CDA
depends on the legislature's intent expressed in ORS 656.236.  We turn to that
statute.
ORS 656.236 provides, in part:
"(1)(a) The parties to a claim, by
agreement, may make such disposition of any or all matters regarding a claim, except
for medical services, as the parties consider reasonable, subject to such
terms and conditions as the Workers' Compensation Board may prescribe.  * * * Unless
otherwise specified, a disposition resolves all matters and all rights to
compensation, attorney fees and penalties potentially arising out of claims, except
medical services, regardless of the conditions stated in the agreement.  
"* * * * *
"(7) * * * Insurers or self-insured
employers may be joined as parties in subsequent proceedings under this chapter
to determine responsibility for medical services for claim conditions
for which disposition is made by an approved claim disposition agreement, but
no order in any subsequent proceedings may alter the obligations of an insurer
or self-insured employer set forth in an approved claims disposition agreement,
except as those obligations concern medical services."
(Emphases added.)  We begin our analysis with the text and
context of the statute.  PGE v. Bureau of Labor and Industries, 317 Or
606, 610-11, 859 P2d 1143 (1993).  As part of that first level of analysis,
this court considers its prior interpretations of the statute.  See State v.
Toevs, 327 Or 525, 532, 964 P2d 1007 (1998) (so stating).   
This court most recently interpreted
and applied ORS 656.236 in Rash v. McKinstry Co., 331 Or 665, 20 P3d 197
(2001).  In that case, a worker was injured and, after he began a tort action
against a third party involved in the cause of the injuries, the insurer and
the worker entered into a CDA.  The CDA did not expressly preserve the
insurer's lien rights against any recovery that the worker might receive in the
tort action.   However, after the worker settled with the third party, the
insurer sought to recover from the settlement the amount that it had paid on
the claimant's claim.  Id. at 667.  The board determined that the
insurer's statutory lien rights survived the parties' CDA.  On review, this
court first noted that the lien at issue was not an "attorney fee" or
a "penalty."  The court then determined that the words "to
compensation," as used in the phrase "a disposition resolves all
matters and all rights to compensation" in ORS 656.236(1)(a), qualifies
only the word "rights," and not the word "matters."  Rash,
331 Or at 671.  The court also determined that the phrase "all rights to
compensation" relates only to a worker's right to benefits, and
that the plain and unambiguous meaning of the word "all" is
"every."  Id. at 672 (emphasis added).  The court stated that "the
relevant wording [ ]: 'all matters * * * potentially arising out of claims,'"
meant that a CDA resolves all matters that, in the future, could arise out of a
claim.  Id. at 673.  The court therefore concluded that "an
insurer's lien against a claimant's third-party recovery is a 'matter[ ] * * *
potentially arising out of claims' within the meaning of ORS
656.236(1)(a)" and thus was extinguished by the CDA.  Id. at 673.
Although the court did not examine the
meaning of the phrase "except medical services," the court's
conclusions regarding the legislature's intent are instructive here.  As noted,
the court concluded that, in the third sentence of ORS 656.236(1)(a), the words
"to compensation" qualified only the word "rights" and not
the word "matters."  Thus, the term "all rights to
compensation" is treated separately from "all matters."  Accordingly,
that part of the statute should be read "all rights to compensation * * * potentially
arising out of claims."  Because the term "all rights to
compensation" ("all rights to compensation, attorney fees and penalties")
 is followed by a comma, the term "attorney fees and penalties" also
qualifies the word "rights," and is properly read as "all rights
to * * * attorney fees and penalties potentially arising out of claims." 
The phrase "except medical
services" in the third sentence in ORS 656.236(1)(a) is set off from the
rest of the sentence by commas, indicating that as a matter of English that
phrase is nonrestrictive; that is, it is not intended to modify only the
immediately preceding noun in the sentence, which is "claims."  See
The Chicago Manual of Style § 6.38 (15th ed 2003) (explaining a reading of
that kind).  The phrase "except medical services" therefore modifies
the phrases "all matters," and "all rights to compensation * * *
potentially arising out of claims," and "all rights * * * to attorney
fees potentially arising out of claims."  Thus, under the statute's text,
a CDA does not resolve a claimant's right to attorney fees, regardless of the
conditions stated in the CDA, when those fees derive from a subsequent claim
for medical services.  
We reach the same conclusion applying
the rule of the last antecedent.  In State v. Webb, 324 Or 380, 386, 927
P2d 79 (1996), this court explained that rule as follows:
"Referential and qualifying words and
phrases, where no contrary intention appears, refer solely to the last antecedent. 
The last antecedent is the last word, phrase, or clause that can be made an
antecedent without impairing the meaning of the sentence.  Thus a proviso
usually is construed to apply to the provision or clause immediately preceding
it.  * * * 
"Evidence that a qualifying phrase is
supposed to apply to all antecedents instead of only to the immediately
preceding one may be found in the fact that it is separated from the
antecedents by a comma."  
(Internal quotations omitted.)  Here, the phrase "except
medical services" is preceded by a comma, indicating that it applies to
all the antecedents.  From that sentence structure we conclude that a claimant
cannot dispose of "all matters" and "all rights to compensation,
attorney fees and penalties potentially arising out of claims" where those
matters and rights involve medical services.
That interpretation is consistent
with the legislature's intent to provide medical services for the life of the
worker, ORS 656.245, and the provision for mandatory attorney fees for claimants
that prevail in medical services disputes, ORS 656.385(1).(2) 
See Davis v. Wasco IED, 286 Or 261, 272, 593 P2d 1152 (1979) ("whenever
possible the court should construe together statutes on the same subject as
consistent with and in harmony with each other").  Attorney fees are
derivative of medical services claims, and thus, a successful medical services
claim carries with it the right to attorney fees under ORS 656.385(1).  The director's
award of attorney fees to claimant was correct, and the Court of Appeals erred
in concluding otherwise.
The decision of the Court of Appeals
is reversed.  The order of the Director of the Department of Consumer and
Business Services is affirmed.
1. ORS
656.245 relates to medical services and provides, in part, that for every
compensable injury, employers are responsible for providing medical services
"caused in material part" by the injury.   
2. As
originally enacted in 1995, ORS 656.385(1) required the director to award a
reasonable attorney fee to a prevailing claimant only at the contested case
level.  However, in 2003, ORS 656.385(1) was amended to require that the
director award a reasonable attorney fee to a prevailing claimant at any
level of review.  ORS 656.385(1) currently provides, in part:
"In all cases involving a dispute over
compensation benefits pursuant to ORS 656.245, 656.247, 656.260, 656.327 or
656.340, where a claimant finally prevails after a proceeding has commenced, the
Director of the Department of Consumer and Business Services or the
Administrative Law Judge shall require the insurer or self-insured employer to
pay a reasonable attorney fee to the claimant's attorney."  
(Emphasis added.)