Title: SAIF v. Shipley
Citation: N/A
Docket Number: S44301
State: Oregon
Issuer: Oregon Supreme Court
Date: March 26, 1998

FILED:  March 26, 1998

IN THE SUPREME COURT OF THE STATE OF OREGON

In the Matter of the Compensation
of Dale R. Shipley, Claimant.

SAIF CORPORATION and
GREAT SHAKES, INC.,

	Respondents on Review,

	v.

DALE R. SHIPLEY,

	Petitioner on Review,

	and

DEPARTMENT OF CONSUMER AND
BUSINESS SERVICES,

	Intervenor.

(WCB 95-02156; CA A92310; SC S44301)

	On review from the Court of Appeals.*

	Argued and submitted January 5, 1998.

	Scott M. McNutt, Sr., Coos Bay, argued the cause and filed
the brief for petitioner on review.

	Michael O. Whitty, Salem, argued the cause and filed the
brief for respondents on review.

	Mary H. Williams, Assistant Attorney General, Salem, argued
the cause for intervenor.  With her on the brief were Hardy
Myers, Attorney General, and Michael D. Reynolds, Solicitor
General.

	Douglas A. Swanson, of Swanson, Thomas &amp; Coon, Portland,
filed a brief on behalf of amicus curiae Oregon Trial Lawyers
Association.

	Before Carson, Chief Justice, and Gillette, Van Hoomissen,
Graber, and Durham, Justices.**

	GRABER, J.

	The decision of the Court of Appeals is affirmed, except
that the final order of the Workers' Compensation Board is
vacated.

    *Judicial review from the Workers' Compensation Board.

	147 Or App 26, 934 P2d 611 (1997). 

   **Fadeley, J., retired January 31, 1998, and did not
participate in this decision; Kulongoski, J., did not participate 
in the consideration or decision of this case.

		GRABER, J.

 		The question in this workers' compensation case is
where to resolve a medical services dispute that claimant raised
before the Workers' Compensation Board (Board) at a hearing that
originally had been set to review a denial of compensability.  We
hold that the Board did not have authority to conduct a hearing
involving a medical services dispute.

		Claimant suffered a compensable left knee injury in
September of 1989.  The resulting claim was closed in 1991 with
an award of temporary and permanent partial disability. 
Claimant's left knee symptoms persisted for some period, and he
took medications for those symptoms.

		In December of 1994, claimant fell on the stairs of his
home, after which he experienced swelling and pain in the left
knee.  Claimant required medical services.  He sought to reopen
his 1989 claim to obtain compensation for those recent medical
services.

		The State Accident Insurance Fund (SAIF), his
employer's insurer, denied claimant's request to reopen his 1989
claim on two grounds.  First, SAIF asserted that the accepted
condition (the 1989 knee injury) had not worsened, i.e., that
there was no compensable aggravation.  Second, in the
alternative, SAIF asserted that the present knee condition had no
work connection, in that the fall at home was the major
contributing cause of any disability or need for treatment.

		After receiving SAIF's denial, claimant filed a request
for a hearing with the Board.  At the hearing, claimant withdrew
the aggravation claim and conceded that he had suffered no new
compensable injury.  In other words, claimant no longer
challenged the denial of compensability.  Instead, claimant
argued that the post-1994 medical treatments were materially
related to the original compensable 1989 condition and that he
therefore was entitled to benefits for those medical services,
based on the accepted claim.

		SAIF responded that the latest medical treatments were
not necessitated by, or related to, the original compensable 1989
condition.  An administrative law judge issued an order
concluding that the 1989 compensable injury was a material
contributing cause of the post-1994 need for medical services,
ORS 656.245(1)(a), and, consequently, that claimant's medical
services claim was compensable.  On review, the Board affirmed.

		SAIF petitioned for judicial review, arguing for the
first time that the Board had no jurisdiction and that claimant's
remedy, if he wished to challenge SAIF's denial on the theory
that was tried at the hearing, was with the Director of the
Department of Consumer and Business Services (Director).(1)  The
Court of Appeals agreed with SAIF:

	"The fact that SAIF's denial encompassed more than what
claimant was seeking does not enlarge the scope of this
dispute beyond the scope of the claim.  This is and has
always been a medical services dispute subject to the
exclusive jurisdiction of the Director pursuant to ORS
656.245(6)."  SAIF v. Shipley, 147 Or App 26, 29, 934
P2d 611 (1997).

Accordingly, the Court of Appeals reversed the Board's decision
and remanded the matter.  Ibid.

		Claimant petitioned for review, and this court allowed
the petition.  For the reasons that follow, we now affirm the
decision of the Court of Appeals, except that we vacate the
Board's final order.

		To resolve the question before us, we turn to an
analysis of the pertinent statutes, because an agency has only
those powers that the legislature grants and cannot exercise
authority that it does not have.  See Ore. Newspaper Pub. v.
Peterson, 244 Or 116, 123, 415 P2d 21 (1966) ("In the absence of
a statute which grants a presumption of validity to
administrative regulations, an administrative agency must, when
its rule-making power is challenged, show that its regulation
falls within a clearly defined statutory grant of authority."
(citation omitted)).  In interpreting those statutes, we apply
the template described in PGE v. Bureau of Labor and Industries,
317 Or 606, 610-12, 859 P2d 1143 (1993).  Because the
legislature's intention respecting the present question is clear
from an examination of the text and context of the relevant
statutes, we confine our discussion to the first level of
analysis identified in PGE.

		ORS 656.245 addresses the review of medical services
disputes, including questions about what treatment is appropriate
for a particular compensable injury.  ORS 656.245 provides in
part:

		"(1)(a) For every compensable injury, the insurer
or the self-insured employer shall cause to be provided
medical services for conditions caused in material part
by the injury for such period as the nature of the
injury or the process of the recovery requires * * *,
including such medical services as may be required
after a determination of permanent disability. * * *

		"* * * * *

		"(6) If a claim for medical services is
disapproved for any reason other than the formal denial
of the compensability of the underlying claim and this
disapproval is disputed, the injured worker, the
insurer or self-insured employer shall request
administrative review by the director pursuant to this
section, ORS 656.260 or 656.327.  The decision of the
director is subject to the contested case review
provisions of ORS 183.310 to 183.550."  (Emphasis
added.)

		ORS 656.260 provides for resolution of medical services
disputes when managed health care providers are involved.  ORS
656.327 provides in part:

		"(1)(a) If an injured worker, an insurer or self-insured employer or the Director of the Department of
Consumer and Business Services believes that the
medical treatment, not subject to ORS 656.260, that the
injured worker has received, is receiving, will receive
or is proposed to receive is excessive, inappropriate,
ineffectual or in violation of rules regarding the
performance of medical services, the injured worker,
insurer or self-insured employer shall request review
of the treatment by the director and so notify the
parties.

		"(b) Unless the director issues an order finding
that no bona fide medical services dispute exists, the
director shall review the matter as provided in this
section.  Appeal of an order finding that no bona fide
medical services dispute exists shall be made directly
to the Workers' Compensation Board * * *. * * * The
decision of the board is not subject to review by any
other court or administrative agency."

The remainder of ORS 656.260 and 656.327 pertain to the manner in
which the Director is to review medical information to resolve a
medical services dispute.	

		ORS 656.704 underscores that a medical services dispute
is to be resolved by the Director and describes the two avenues
of review that apply in workers' compensation cases.  ORS 656.704
provides in part:

		"(1) Actions and orders of the Director of the
Department of Consumer and Business Services, and
administrative and judicial review thereof, regarding
matters concerning a claim under this chapter are
subject to the procedural provisions of this chapter
and such procedural rules as the Workers' Compensation
Board may prescribe.

		"(2) Notwithstanding ORS 183.315(1), actions and
orders of the director and the conduct of hearings and
other proceedings pursuant to this chapter, and
judicial review thereof, regarding all matters other
than those concerning a claim under this chapter, are
subject to ORS 183.310 to 183.550 and such procedural
rules as the director may prescribe. * * *

		"(3) For the purpose of determining the respective
authority of the director and the board to conduct
hearings, investigations and other proceedings under
this chapter, and for determining the procedure for the
conduct and review thereof, matters concerning a claim
under this chapter are those matters in which a
worker's right to receive compensation, or the amount
thereof, are directly in issue.  However, such matters
do not include any disputes arising under ORS 656.245,
656.248, 656.260, 656.327, any other provisions
directly relating to the provision of medical services
to workers or any disputes arising under ORS 656.340
except as those provisions may otherwise provide." 
(Emphasis added.)

		Two points are clear from reading the text of those
statutes.  First, when claimant sought a hearing before the
Board, the Board had authority to conduct a hearing regarding the
dispute, because the matter at that time concerned a claim. 
Claimant's theory was that the 1994 condition was an aggravation
of the 1989 condition or, possibly, a new compensable injury. 
SAIF's formal denial was of the compensability of that underlying
claim respecting the 1994 condition.

		Second, by contrast, the issue, as ultimately presented
at the hearing, was a claim for medical services only, which
claimant alleged were directly and materially related to the 1989
injury.  The underlying claim for that purpose was the 1989
claim, which all parties agree is compensable.  Accordingly, the
issue at the hearing was a medical services dispute that,
pursuant to ORS 656.245(6), was subject to review by the
Director.  In other words, had the parties submitted only this
issue from the outset, the answer regarding review by the
Director would not have been in doubt.

		What creates uncertainty is that the issue presented to
SAIF for an initial response was not the same as the issue
presented at the hearing.  When the issue changes from one that
is within the Board's jurisdiction to one that otherwise is
outside the Board's jurisdiction, what do the statutes require
the Board to do?  That is a question of first impression in this
court.

		Claimant argues that the dispositive factor is the
employer's or insurer's original formal denial.  He relies on the
beginning phrase in ORS 656.245(6):  "If a claim for medical
services is disapproved for any reason other than the formal
denial of the compensability of the underlying claim," then a
dispute goes to the Director.  Here, claimant argues, SAIF
disapproved his claim by formally denying the compensability of
the underlying claim for aggravation or for a new compensable
injury.  Claimant then reasons that the claim was not
"disapproved for a[] reason other than the formal denial of the
compensability of the underlying claim" and that the dispute
therefore was not one for the Director under the terms of ORS
656.245.

		The problem with claimant's argument is that the "claim
for medical services," as related directly to the 1989
compensable injury, did not arise as a discrete claim until the
time of the hearing, when claimant chose to forego a challenge to
SAIF's denial of compensability and to reframe the issue as a
medical services dispute.  SAIF did not disapprove that claim
until the hearing.  When it did so, it did so not on the ground
that the 1989 injury was not compensable, but on the ground that
the current need for medical services did not relate materially
to the compensable 1989 injury, as required by ORS 656.245.

		The issue that the Hearings Division properly could
decide and that the Board properly could review was SAIF's denial
of the compensability of claimant's 1994 injury, either as an
aggravation of the compensable 1989 injury or as a new
compensable injury.  When the hearing began, however, claimant
chose not to challenge the denial of compensability.  Instead, he
decided to pursue a different theory, linking the post-1994
medical services to the underlying, compensable 1989 claim. 
SAIF's response did not deny the compensability of the 1989
injury but only the relatedness of the recent medical services to
that injury.

		When the issue was thus reframed, the administrative
law judge and the Board had no authority to decide it.  The
statutes contain no provision for transferring a case from the
Board to the Director.  That being so, dismissal was required.

		The decision of the Court of Appeals is affirmed,
except that the final order of the Workers' Compensation Board is
vacated.(2)

1. 	An argument that the lower tribunal lacked jurisdiction
may be raised for the first time on appeal.  Ailes v. Portland
Meadows, Inc., 312 Or 376, 383, 823 P2d 956 (1991).  The parties
may not waive lack of subject-matter jurisdiction.  Wink v.
Marshall, 237 Or 589, 592, 392 P2d 768 (1964).

2. 	The Court of Appeals reversed and remanded the final
order of the Board.  However, because the Board did not have
jurisdiction to entertain the question that it ultimately
decided, the Court of Appeals should have vacated, rather than
reversed and remanded, the Board's order.