Title: State ex rel., Wyoming Workers' Compensation Div. v. Hollister,

State: wyoming

Issuer: Wyoming Supreme Court

Document:

State ex rel., Wyoming Workers' Compensation Div. v. Hollister,1990 WY 73794 P.2d 886Case Number: 90-21Decided: 07/06/1990Supreme Court of Wyoming
STATE OF WYOMING, EX 
REL., WYOMING WORKERS' COMPENSATION DIVISION, APPELLANT 
(PETITIONER/OBJECTOR-DEFENDANT),

v.

LANCE E. HOLLISTER, 

APPELLEE 
(RESPONDENT/EMPLOYEE-CLAIMANT),

 v. 

TEGELER LOGGING, 

EMPLOYER-OBJECTOR.

Appeal from the District 
Court of Sheridan County, James N. Wolfe, J.

Joseph B. Meyer, 
Atty. Gen., Ron Arnold, Sr. Asst. Atty. Gen., for appellant.

Thomas E. 
Campbell, Sheridan, for appellee.

Before 
CARDINE,* C.J., and THOMAS, URBIGKIT, 
MACY and GOLDEN, JJ.

* Chief Justice at time of 
oral argument.

THOMAS, Justice.

[¶1]      The dispositive 
question in this case is whether a district court has authority to afford 
affirmative relief as a product of its review of a workers' compensation 
proceeding. A second question that must be resolved is whether the district 
court properly ruled that the injured workman had not engaged in conduct that 
justified the invocation of the injurious practices statute, § 27-12-412, W.S. 
1977.1 A question related to both of these 
issues is whether the district court improperly substituted its judgment for 
that of the administrative hearing officer. We agree with the contention of the 
Wyoming Workers' Compensation Division (Division) that the district court has no 
authority to afford affirmative relief in connection with a review of a workers' 
compensation proceedings. Its disposition is limited to the review of authority 
articulated in the Wyoming Administrative Procedure Act, §§ 16-3-101 to -115, 
W.S. 1977 (Oct. 1982 Repl.). We agree, however, with the ruling of the district 
court that the injurious practices statute was not applicable, and we conclude 
that this ruling was properly made within the review authority of the district 
court. We reverse and remand this case for further proceedings in accordance 
with our opinion. 

[¶2]      The Division sets 
forth the issues it has chosen to advance in this way:

"1. Whether the district 
court erred as a matter of law by reversing the administrative decision on the 
grounds that the injurious practice statute was not applicable.

"2. Whether the district 
court erred as a matter of law by substituting its judgment and opinion for that 
of the hearing officer.

"3. Whether the district 
court lacked statutory authority to award a permanent total disability 
award."

The injured 
worker, Lance E. Hollister (Hollister), restates the issues in this way in his 
brief:

"1. Whether the order of 
the administrative law judge (ALJ) that Hollister engaged in an injurious 
practice sufficient to invoke the harsh penalty of forfeiture is arbitrary, 
capricious and not in accordance with law.

"2. Whether the decision 
of the ALJ is unsupported by substantial evidence.

"3. Whether Hollister 
should be awarded permanent total disability benefits."

[¶3]      In July of 1984, 
while Hollister was working for Tegeler Logging, he slipped on a log and fell 
onto a rock, injuring his left knee. A few days later, Hollister filed his 
original report of injury with the Clerk of the District Court of Sheridan 
County. Tegeler Logging waived any objection to the claim and approved payment 
within a week. The treating physician, in February of 1985, rated Hollister as 
having a 50% disability of the knee based on pain, limited motion, and joint 
destruction. Hollister was next evaluated by the Division of Vocational 
Rehabilitation at the Gottsche Rehabilitation Center in Thermopolis. The product 
of that evaluation was the recommendation that he should give serious 
consideration to less strenuous work, but that he might go back to the logging 
industry in a different position if further surgery could make his knee more 
stable. In March of 1985, an award was made in the District Court of Sheridan 
County of a 50% permanent partial disability.

[¶4]      After that, 
Hollister had an osteotomy performed in August of 1985. He received temporary 
total disability during the period of recuperation from that surgery. The 
following May, Hollister was returned to his permanent partial disability status 
and, at that time, received the balance of the permanent partial disability 
award.

[¶5]      The record is 
clear that Hollister endeavored to find lighter work to support his family of 
seven, but he was unable to find suitable employment in either Wyoming or 
Montana. He then returned to his former occupation in the logging industry, and 
he worked for several employers. Eventually, his pain reached a level that 
prevented him from accomplishing his tasks in his logging occupation. Hollister 
applied for further benefits, and he received those for a short period. He then 
was denied any additional benefits, and the denial of that claim resulted in 
this case.

[¶6]      The 
administrative hearing officer found that Hollister had returned to logging and 
other heavy labor following his original injury and that this constituted an 
injurious practice that served to invoke the penalty of forfeiture of any 
further right to compensation. That conclusion was premised upon the 
demonstration in the record that he had been advised by physicians not to return 
to work in the logging industry, but to find some other line of work instead. 
Upon review, the district court ruled that Hollister's return to employment in 
the logging industry was not a violation of the statutory provision, § 
27-12-412, W.S. 1977, and then entered an award of permanent total disability in 
favor of Hollister. It is from the decision of the district court that the 
Division has taken this appeal.

[¶7]      One of the 
indubitable features of the 1986 revision of the Wyoming Workers' Compensation 
Act, § 27-14-101 to -804, W.S. 1977 (June 1987 Repl.), is that the adjudicatory 
function was moved from our state district courts to the "office of independent 
hearing officers." Section 27-14-602, W.S. 1977 (June 1987 Repl.). The appeal to 
the district court from the decision of a hearing examiner is taken pursuant to 
the Wyoming Administrative Procedure Act. According to the frequently quoted 
provisions of the Wyoming Administrative Procedure Act, § 16-3-114(c), W.S. 1977 
(Oct. 1982 Repl.):

"* * * The reviewing 
court shall:

"(i) Compel agency action 
unlawfully withheld or unreasonably delayed; and

"(ii) Hold unlawful and 
set aside agency action, findings and conclusions found to be:

"(A) Arbitrary, 
capricious, an abuse of discretion or otherwise not in accordance with 
law;

"(B) Contrary to 
constitutional right, power, privilege or immunity;

"(C) In excess of 
statutory jurisdiction, authority or limitations or lacking statutory 
right;

"(D) Without observance 
of procedure required by law; or

"(E) Unsupported by 
substantial evidence in a case reviewed on the record of an agency hearing 
provided by statute."

It follows that 
when a workers' compensation determination of the hearing examiner is appealed 
to the district court, this quoted language circumscribes the disposition by the 
district court.

[¶8]      The same 
standards that apply to this court in reviewing administrative determinations 
are applicable to district courts. With respect to our authority, we have 
said:

"`For the purpose of 
reviewing the propriety of the district court's action, we will review the 
agency action as though the appeal were directly to this court from the agency. 
We are governed by the same rules of review as was the district court. 
[Citations.]

"`Therefore, we will not 
substitute our judgment for that of the agency. * * *

"`* * * * * *

"`* * * Under this 
standard [§ 16-3-114(c), W.S. 1977 (October 1982 Replacement)], we do not 
examine the record only to determine if there is substantial evidence to support 
the Board's decision, but we must also examine the conflicting evidence to 
determine if the Board could reasonably have made its findings and order upon 
all of the evidence before it.'" Trout v. Wyoming Oil & Gas Conservation 
Commission, 721 P.2d 1047, 1050 (Wyo. 1986), quoting Board of Trustees of School 
District No. 4, Big Horn County v. Colwell, 611 P.2d 427, 428-29 (Wyo. 
1980).

The inhibition 
upon substitution of the court's judgment for that of the agency has to extend 
to the affirmative relief afforded by the district court in this instance. It 
follows that the order of the district court awarding total disability benefits 
must be reversed, and the district court appropriately should remand the case to 
the office of hearing examiners after setting aside its determination on the 
ground that it is not in accordance with law.

[¶9]      This disposition 
flows from our agreement with the district court that the hearing examiner 
inappropriately invoked § 27-12-412, W.S. 1977, relating to the forfeiture of 
right to compensation because of the knowing engagement or persistence in an 
unsanitary practice that tends to imperil or retard recovery. We are not in 
agreement with the Division's contention that the district court's ruling on 
this issue was erroneous.

[¶10]   In his decision letter, the hearing 
examiner noted that the treating physician felt that, to avoid "`total knee 
arthroplasty [for] as long as possible,'" Hollister should change occupations. 
The hearing examiner also quoted from the report of the surgeon who performed 
the osteotomy that "`he is permanently disabled as far as the left knee is 
concerned and will be forever limited to light activities.'" The latter 
physician went on to say that Hollister's knee would continue to degenerate, but 
he could not say when that would occur. Based upon this information, the hearing 
examiner held, as a matter of law, that one can impair or retard recovery of a 
knee that is partially, permanently disabled by returning to a former occupation 
against a doctor's advice, after that same doctor had determined that the 
workman is "`essentially fully recovered * * * from the present surgery'" and 
had released the workman to light work. The finding of imperiling or retarding 
recovery is internally inconsistent with the information, which is not refuted 
in the record, that Hollister had fully recovered.

[¶11]   In addition, the hearing examiner 
ruled that Hollister had failed to prove entitlement to a modification of his 
previously awarded 50% permanent partial disability. There is evidence in the 
record that demonstrates the fact that Hollister no longer was suited to 
employment for which he had previous experience or training. We have noted that 
the record establishes that his knee would continue to deteriorate. The record 
does not disclose whether Hollister originally sought permanent total 
disability, instead of a partial disability, or whether total disability should 
have been granted in the original proceeding.

[¶12]   In his decision letter, the hearing 
examiner notes the possibility that Hollister would have to undergo surgery 
after the date that he was granted an award of permanent partial disability. The 
hearing examiner did not address whether, in light of the continuing 
deterioration, the initial decision might have been premature as a matter of 
law. He does state, however, that Hollister could seek modification of the 50% 
permanent partial disability award, provided he could establish an increase of 
incapacity due solely to injury, mistake of fact, or fraud.

[¶13]   The hearing examiner also concluded 
that the deterioration of Hollister's knee was caused by his continuing to work 
as a logger. This conclusion is directly opposed by the only medical evidence of 
yet a third physician who stated, in deposition, an opinion that Hollister's 
then existing condition was caused by the original 1984 compensable injury. The 
hearing examiner dismissed this physician's opinion by saying he attached little 
weight to it because the doctor's determination was based upon a "questionable" 
work history. The conclusion that well might be drawn from the history of this 
matter is that the crux of the problem in this case is that the original award 
was the product of a mistake of fact. This could have been the reaction of the 
district court when it endeavored to provide affirmative relief in the form of a 
permanent total disability.

[¶14]   On the basis of this history, we 
have no equivocation in justifying our conclusion that the district court did 
not err in holding that the forfeiture provision should not be applied. In re 
Hibler, 37 Wyo. 332, 341, 261 P. 648, 651 (1927), held with respect to a 
predecessor statute:

"* * * [T]he statute * * 
* [now § 27-14-412, W.S. 1977], in providing for a forfeiture of all right to 
compensation under the act, is quite harsh, and must be strictly construed. When 
the issue is raised, the burden of proof is on the employer."

This holding is 
consistent with a principle observed for more than fifty years that the 
provisions of the Workers' Compensation Act should receive a liberal 
construction to accomplish the benevolent purposes for which those provisions 
were promulgated. State ex rel. Worker's Compensation Division v. Borodine, 784 P.2d 228, 230 (Wyo. 1989), quoting Baldwin v. Scullion, 50 Wyo. 508, 62 P.2d 531, 538, 108 A.L.R. 304 (1936). In Borodine, we held that a claimant was 
entitled to workers' compensation benefits even though she had skills and 
qualifications to earn more than what she was receiving in the occupation in 
which she engaged at the time of her injury.

[¶15]   Only after the finder of fact 
initially determines that the injured claimant acted in conformity with the 
statutory definitions may a forfeiture be declared. Matter of Meredith, 743 P.2d 874 (Wyo. 1987). The evidence from the physician who performed the osteotomy was 
that "`[t]he patient today [May 1, 1986] is deemed to be essentially fully 
recovered, or as recovered as he is going to get from the present surgery.'" The 
plain language of the statute invoked by the hearing examiner states that there 
must be an "injurious practice which tends to imperil or retard his 
recovery." Section 27-12-412, W.S. 1977 (emphasis added). Our analysis of 
the record is that there is no evidence to support a finding that returning to 
logging imperiled or retarded Hollister's recovery, and the employer did 
not present evidence that established the contrary. In Meredith, the court 
reiterated that the burden of establishing the basis for a forfeiture of 
workers' compensation benefits rests on the employer, and we emphasized that the 
court would construe the statute strictly. Meredith, 743 P.2d  at 876. We 
conclude that the ruling of the district court, finding the injurious practice 
defense not appropriate to Hollister's case, is correct as a matter of 
law.

[¶16]   The district court determined that 
the hearing examiner's decision was not supported by substantial evidence. The 
Division asserts what was the appellate rule for our review of factual 
determinations by the district court when jurisdiction to adjudicate workers' 
compensation claims was vested in the district court. The correct rule is that 
found in Hohnholt v. Basin Electric Power Co-op, 784 P.2d 233, 234 (Wyo. 1989), 
in which, quoting Trout, 721 P.2d  at 1050, this court said:

"`We examine the entire 
record to determine if there is substantial evidence to support an agency's 
findings. If the agency's decision is supported by substantial evidence, we 
cannot properly substitute our judgment for that of the agency, and must uphold 
the findings on appeal. Substantial evidence is relevant evidence which a 
reasonable mind might accept in support of the conclusions of the agency. It is 
more than a scintilla of evidence. (citation omitted) * * *.'"

[¶17]   The Division argues an erroneous 
test. Applying the correct test quoted above, we agree with the district court 
that the hearing examiner's decision is not supported by substantial evidence, 
and we agree with the district court's conclusion that an examination of the 
entire record in fact discloses that the evidence is contrary to the 
determination by the hearing examiner.

[¶18]   The decision of the district court 
is reversed with instructions that the case be remanded to the office of hearing 
officers to afford a rehearing in accordance with this decision. We assume that 
the claim will be amended to seek additional relief upon the basis of a mistake 
of fact in connection with the initial award. It is clear that the injurious 
practice statute could not impact the issues to be resolved in that 
regard.

[¶19]   Reversed with instructions to 
remand to the administrative agency.

FOOTNOTES

1 Section 27-12-412, W.S. 
1977, provided:

"If 
an injured employee persists in an unsanitary or injurious practice which tends 
to imperil or retard his recovery, or if he refuses to submit to medical or 
surgical treatment reasonably essential to promote his recovery, he forfeits all 
right to compensation under this act [§§ 27-12-101 to 27-12-804]. Forfeiture 
shall be determined by the district judge."

This statutory provision 
now has been renumbered as § 27-14-407, W.S. 1977 (June 1987 Repl.). The 
statutory language was not substantially changed, but the determination under 
the new statute is now made by the hearing examiner upon application by the 
Division or the employer.