Court Opinion

ID: 1047240
Source: CourtListenerOpinion
Date Created: 2013-10-08 02:43:51.156519+00
Date Added: 2024-06-11T11:51:39.867908
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                                August 26, 2011 Session

  LIBERTY MUTUAL INSURANCE COMPANY ET AL. v. TENNESSEE
 DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT AND
           WORKERS’ COMPENSATION DIVISION

                Appeal from the Chancery Court for Davidson County
                  No. 08-2777-I   Claudia Bonnyman, Chancellor

                No. M2010-02082-COA-R3-CV - Filed January 3, 2012

This action was filed pursuant to the Uniform Administrative Procedures Act, Tennessee
Code Annotated § 4-5-322, for contested cases. The petitioner challenges a penalty assessed
by the Tennessee Department of Labor and Workforce Development, Division of Workers’
Compensation. The stated reason for the penalty was the failure to file Form C-20, Tennessee
Employer’s First Report of Work Injury, regarding eighteen injuries that occurred in January
and February 2003 which were medical only injuries, meaning no disability benefits were
owing. The trial court affirmed the penalty. We find the petitioner was not afforded proper
notice of the Department’s basis for issuing the penalty in violation of the petitioner’s due
process rights under the UAPA, Tennessee Code Annotated § 4-5-307. We also find that the
Department exceeded its authority by changing its “interpretation” of Tenn. Comp. R. &
Regs. 0800-2-1-.06, a rule that was unambiguous and, thus, not subject to interpretation. The
trial court’s holding is reversed, and this matter is remanded with instructions to vacate the
penalty assessed against the petitioner.

 Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed

F RANK G. C LEMENT, J R., J., delivered the opinion of the Court, in which A NDY D. B ENNETT
and R ICHARD H. D INKINS, JJ., joined.

Richard C. Mangelsdorf, Jr., and David B. Weatherman, Nashville, Tennessee, for the
appellants, Liberty Mutual Insurance Company and Covenant Transport.

Robert E. Cooper, Jr., Attorney General and Reporter; Joseph F. Whalen, Associate Solicitor
General; and Joshua Davis Baker, Assistant Attorney General, for the appellee, Tennessee
Department of Labor and Workforce Development and Workers’ Compensation Division.
                                         OPINION

        The Workers’ Compensation Division of the Tennessee Department of Labor and
Workforce Development (“the Department”) assessed a $59,050 civil penalty against Liberty
Mutual Insurance Co. (“Liberty Mutual”), a workers’ compensation insurance carrier. The
penalty was assessed by the Director of the Department’s Penalty Program in April 2008, for
the stated reason that Liberty Mutual failed to file twenty-two Form C-20 First Reports of
Work Injury (“Form C-20”) for workplace injuries occurring in January and February of
2003. Following a contested case hearing before the Designee of the Commissioner of Labor
and Workforce Development, the Department affirmed the Director’s decision with respect
to eighteen of the twenty-two counts. Liberty Mutual then filed this Petition for Judicial
Review in the Davidson County Chancery Court. The Chancellor affirmed the penalty,
finding the Department’s decision to assess the penalty was within its statutory authority and
was supported by substantial and material evidence.

                                  S TANDARD OF R EVIEW

       Judicial review of decisions of administrative agencies, when those agencies are
acting within their area of specialized knowledge, experience, and expertise, is governed by
the narrow standard contained in Tennessee Code Annotated § 4-5-322(h) rather than the
broad standard of review used in other civil appeals. Willamette Indus., Inc. v. Tenn.
Assessment Appeals Comm’n, 11 S.W.3d 142, 147 (Tenn. Ct. App. 1999) (citing Wayne
County v. Tenn. Solid Waste Disposal Control Bd., 756 S.W.2d 274, 279-80 (Tenn. Ct. App.
1988)).

      Although judicial review is constrained, the reviewing court may reverse or modify
the decision of the agency if the petitioner’s rights have been prejudiced because the
administrative findings, inferences, conclusions or decisions are:

       (1)    In violation of constitutional or statutory provisions;
       (2)    In excess of the statutory authority of the agency;
       (3)    Made upon unlawful procedure;
       (4)    Arbitrary or capricious or characterized by abuse of discretion or
              clearly unwarranted exercise of discretion; or
       (5)(A) Unsupported by evidence which is both substantial and material in the
              light of the entire record.

Tenn. Code Ann. § 4-5-322(h)(1)-(5)(A).

                                             -2-
                                           A NALYSIS

       Our analysis shall focus on the unequivocal language of the regulation at issue, Tenn.
Comp. R. & Regs. 0800-2-1-.06(2), the Notice of Potential Claim Form Filing Violations
provided by the Department to Liberty Mutual, and the stated reason for the assessment of
the penalty.

                                                I.

        Workers’ compensation insurance carriers are required, by statute and regulation, to
file certain reports with the Tennessee Department of Labor following workplace injuries.1
The Department reviews the forms to ensure compliance with workers’ compensation rules
and statutes, and to compile and analyze statewide claims statistics in order to make accurate
and reliable reports and recommendations to the Tennessee General Assembly. The specific
reporting requirements are set forth in Rule 0800-2-1-.06, which went into effect in 1987:

       Each employer, self-insured employer, and/or insurance company shall file
       with the Director an accident report, Form C-20 (Tennessee Employer’s First
       Report of Work Injury), which records each and every accident resulting in a
       work-related death or personal injury as defined in T.C.A. § 50-6-102.

               (1) When the injured person does not return to employment
               within seven (7) days after the occurrence of such accident or if
               there is permanent disability regardless of the number of days of
               lost work, Form C-20 must be filed. Form C-20 shall be
               submitted to the Director as soon as possible, but not later than
               fourteen (14) days after the accident.
               (2) Reports of all accidents causing seven (7) days of disability
               or less and/or causing no permanent impairment shall be
               submitted to the Director on or before the 15th day of the month
               following the month covered by the report. Such reports shall be
               submitted on Form C-21.

       1
       See Tenn. Code Ann. §§ 50-6-118, -415; The Occupational Safety and Health Act of 1972, Tenn.
Code Ann. § 50-3-101 et. seq.; Tenn. Comp. R. & Regs. 0800-2, Division of Workers’ Compensation.

                                                -3-
Tenn. Comp. R. & Regs. 0800-2-1-.06.2

        Subpart (1) of Rule 0800-2-1-.06 expressly provides that Form C-20 shall be filed to
report an injury for which the employee missed more than seven days of work or sustained
a permanent disability. Such claims are referred to as “loss time” claims for which the
injured employee would be entitled to receive disability benefits in addition to medical
benefits. Form C-20 is one full page, providing sufficient space for the insurer to provide a
detailed report of the injuries sustained by the employee and the incident leading to the
injury. Each C-20 covers one incident of injury to one employee.

        By contrast, as subpart (2) of Rule 0800-2-1-.06 expressly provides, Form C-21 shall
be filed to report an injury for which the employee missed seven days of work or less and is
not permanently disabled. Form C-21, “Monthly Report of Non-Compensable Injuries or
Diseases,” is – or was, as we discuss below – a monthly log on which the insurer listed all
“medical only” injuries3 occurring in a given month. The information to be provided on Form
C-21 was minimal compared to that provided on Form C-20; the pre-printed C-21 form
limited the information to be reported to one line for each injury. On Form C-21 the insurer
was to provide the name of the employee, the date of the accident, the name of the employer,
a very brief description of the nature of the injury, the days of work lost, and the medical
expenses. Because Form C-21 was a monthly log, injuries to several employees could be
reported on each monthly report.4 The instructions for completing Form C-21, which were
stated at the top of the form, read as follows:

        This report should include all claims closed in the previous month that resulted
        in lost time of seven days or less and/or incurred medical expenses. The report
        should be filed with this division by the fifteenth day of the month, covering
        the previous month. This report must contain the total medical expenses paid
        when closing out the claim.

        2
         The penalty for failing to comply with the reporting requirements under Rule 0800-2-1-.06 is $25
per violation for every fifteen days past the required date of filing. Tenn. Comp. R. & Regs. 0800-2-1-.06(4).
        3
         These are referred to as “medical only” because the injured employee qualified for medical benefits
but not disability benefits.
        4
          At the bottom of Form C-21 were spaces in which the insurer was to report totals for: (1) the number
of cases without lost time from work, (2) the total medical expense of cases without lost time from work, (3)
the total number of cases with one to seven days lost from work, (4) the total number of lost work days (the
cumulative of number 3), and (5) the total medical expense for cases with one to seven days lost from work.

                                                     -4-
       Fatality claims, claims involving more than eight days lost time, or claims
       resulting in permanent disability must be reported on Form C-20 First Report
       of Injury.

(Emphasis in original).

       Rule 0800-2-1-.06 went into effect in 1987 and has not been amended; nevertheless,
the Department changed the filing requirements effective July 1, 2003. Prior to July 1, 2003,
the Department applied Rule 0800-2-1-.06 as the rule expressly reads – all “loss time”
injuries were reported to the Department by filing Form C-20, “First Report of Injury,” and
all “medical only” injuries were reported to the Department by filing Form C-21, “Monthly
Report of Non-Compensable Injuries or Diseases.” The 2003 change, however, as the
Department explains, resulted from the Department changing its interpretation of the
reporting requirements of Rule 0800-2-1-.06 and to accommodate a new electronic,
computer-based filing system.5 To implement the change, effective July 1, 2003, the
Department issued a notice on February 4, 2003 (the “2003 EDI Notice”) to all employers
and workers’ compensation insurance carriers, including Liberty Mutual. The 2003 Notice
provided in relevant part:

       The Tennessee Workers’ Compensation Division is accepting Electronic Data
       Interchange (EDI) for First Reports of Work Injury (FROI). . . . The standard
       used for implementation is the International Association of Industrial
       Accidents Boards and Commissions (IAIABC) Implementation Guide for
       Release 1.

       The Division is currently piloting with Cambridge Integrated Services Group
       Inc. Other carriers are being added on a voluntary basis. Effective July 1, 2003,
       filing electronically will become mandatory.

       The IAIBC standard First Report of Work Injury form which Tennessee must
       use for EDI purposes contains a field that will identify the First Report as
       medical only or loss time. Therefore, Tennessee Form C21, Monthly Report
       of Non-compensable Injuries, will be phased out through the implementation
       of FROI. As a result, the IAIBC First Report of Work Injury Form will be filed
       with the Tennessee Workers’ Compensation Division for both loss time and
       medical only claims.

       5
        Notwithstanding its interpretation of the Rule, the Department stated the change was due to the
requirements of the Electronic Data Interchange, which was not compatible with the C-21 Form.

                                                  -5-
       Because of the changes dictated by the 2003 EDI Notice, Form C-21 was
discontinued, and since July 1, 2003, the Department has required all employers and workers’
compensation insurance carriers to submit Form C-20 for every workplace accident that
causes injury.

                                                    II.

       The present dispute arises from a 2006 investigation conducted by the Tennessee
Occupational Safety and Health Administration (“TOSHA”) into employment policies and
practices at Covenant Transportation, a large trucking and shipping company based in
Chattanooga, Tennessee (“Covenant”). During the course of the investigation, TOSHA
discovered possible reporting irregularities in workers’ compensation claims involving
Covenant employees, and forwarded its findings to the Department.

       After reviewing the information provided by TOSHA, the Department discovered that
Liberty Mutual, along with several other workers’ compensation insurance carriers, had not
filed C-20 Forms in 1,216 cases involving Covenant employees between January 2003 and
March 2007. On June 11, 2007, the Director of the Department’s Penalty Program, Peter
Halverstadt, issued a Notice of Potential Claim Form Filing Violations to Liberty Mutual and
the other carriers (“2007 Notice” or “2007 Notice of Potential Claim Form Filing
Violations”). Liberty Mutual reviewed its files and determined that twenty-two cases
involved claims filed during its period of coverage, January 1, 2003 through February 28,
2003. Of those twenty-two cases, eighteen involved “medical only” injuries.6 As for the
remaining four, Liberty Mutual had no record of injury for two of the listed employees, one
case was settled; and, in one case, Liberty Mutual’s records reflected that a C-20 had been
timely filed. Based upon its determination that the eighteen accidents at issue were medical
only and the unequivocal reporting requirements in Rule 0800-2-1-.06(2) that Form C-21
shall be filed for medical only injuries, Liberty Mutual refused to file C-20 forms for the
eighteen medical only injuries.

        In response to Liberty Mutual’s refusal to file the C-20s, Mr. Halverstadt issued an
Agency Decision Assessing a Penalty for Failure to File or Timely File 1st Report of Injury
Claim Forms to Liberty Mutual on April 18, 2008 (“2008 Penalty Assessment” or “Penalty
Assessment”). The 2008 Penalty Assessment provided that Liberty Mutual was required to
file the C-20 forms, and that the Department was assessing a $59,050.00 penalty for the
unfiled C-20s. Liberty Mutual immediately requested an administrative hearing, which was
held July 17, 2008, before the Designee of the Commissioner of Labor and Workforce

        6
        Only these 18 violations were considered at the administrative hearing. The record does not reflect
how the parties resolved the remaining 4 alleged violations.

                                                   -6-
Development, Administrative Law Judge Dan Bailey. Administrative Law Judge Bailey
affirmed the penalty as to eighteen of the twenty-two alleged violations,7 finding that,
“Petitioners have admitted that there were eighteen (18) first reports of injury at issue in this
case, and that these eighteen first reports of Injury were not filed as of the date of the
hearing,” and further finding there was “substantial and material evidence to support the
Agency Decision of April 6, 2008 assessing penalties for the failure to timely file First
Reports of Injury.”

       The Department admits that Liberty Mutual cannot be penalized for failing to file
Form C-20 in each of the eighteen cases because, when the disputed injuries occurred, Form
C-20 was not required for such injuries; Form C-21 was required. The Department states that
Liberty Mutual was assessed the penalty for failing to submit information about each of the
eighteen incidents on a C-21 Form.8

       The due process problem with the Department’s rationale is that the failure to file C-
21 forms is not identified as a deficiency in the 2007 Notice of Potential Claim Filing
Violations; moreover, it is not the stated basis for the 2008 Penalty Assessment. Instead,
Form C-20 filing deficiencies are listed as the basis for the penalty, and the Department
agrees C-20 forms were not required for medical only injuries at the time of Liberty Mutual’s
alleged violations.

       In administrative proceedings such as this, “the minimum requirements of due process
must . . . be satisfied when an agency’s decision could adversely affect vested property
interests or other constitutional rights.” Martin v. Sizemore, 78 S.W.3d 249, 267 (Tenn. Ct.
App. 2001). Although due process does not dictate particular procedures in every instance,
administrative proceedings must afford affected parties 1) adequate notice, 2) an opportunity
for a hearing at a meaningful time and in a meaningful manner, and 3) an opportunity to
obtain judicial review of the board’s or agency’s decision. Id. (internal citations omitted).

       7
           The record does not reflect how the remaining 4 alleged violations were resolved.
       8
           As the Department states in its brief:

        “[Mr. Halverstadt] further testified that Liberty Mutual had been required to file a C-21
       form to disclose no lost time and medical only injuries; however, because the C-21 had been
       ‘phased out’ by July 1, 2003, a C-20 form is now the only form to use for reporting injuries.
       He testified that Liberty Mutual did not file either form for the claims in this case. Mr.
       Halverstadt had requested that Liberty Mutual file a C-20 form to avoid additional penalties;
       C-21 forms were not requested, as they had been phased out.”

                                                     -7-
       The Uniform Administrative Procedures Act addresses the minimum notice required
in contested administrative cases, such as the one at bar, at Tennessee Code Annotated § 4-5-
307:

       (a) In a contested case, all parties shall be afforded an opportunity for hearing
       after reasonable notice.
       (b) In all proceedings the notice shall include:
               (1) A statement of the time, place, nature of the hearing, and the
               right to be represented by counsel;
               (2) A statement of the legal authority and jurisdiction under
               which the hearing is to be held, including reference to the
               particular sections of the statutes and rules involved; and
               (3) A short and plain statement of the matters asserted. If the
               agency or other party is unable to state the matters in detail at
               the time the notice is served, the initial notice may be limited to
               a statement of the issues involved. Thereafter, upon timely,
               written application a more definite and detailed statement shall
               be furnished ten (10) days prior to the time set for the hearing.

Tenn. Code Ann. § 4-5-307 (emphasis added). To satisfy the basic due process notice
requirement, the notice provided to the offending party must be “‘reasonably calculated
under all the circumstances, to apprise interested parties’” of the claims of the opposing
parties. McClellan v. Bd. of Regents of State Univ., 921 S.W.2d 684, 688 (Tenn. 1995)
(quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950)). The
purpose of due process requirements is to notify the individual or organization in advance
in order to allow adequate preparation and reduce surprise. Id. (citing Memphis Light, Gas
and Water Div. v. Craft, 436 U.S. 1, 14 (1978)).

       The 2007 Notice of Potential Claim Form Filing Violations, states:

       Our Division finds the potential for assessing civil penalties for failing to file
       or to timely file the First Report of Injury (C-20 form). Pursuant to Tenn.
       Comp. R. & Regs. 0800-2-1-.06, employers and/or insurance companies are
       required to file the C-20 no later than fourteen (14) days after the accident.
       Please find attached a spread sheet containing One Thousand, Two Hundred,
       and Sixteen (1,216) cases where our information indicates a failure to file or
       to timely file the C-20 for claims from January 1, 2003 through March 1, 2007.
       Thus, pursuant to T.C.A. § 50-6-118 and Tenn. Comp. R. & Regs. 0800-2-1-
       .06, you are potentially subject to a civil penalty of One Million, Sixty
       Thousand, Six Hundred, and Seventy-Five dollars ($1,060,675.00). Please

                                              -8-
       allow this letter to serve as official written request for submission of
       documentation as to why the civil penalty should not be assessed for the above
       described violation.

The 2008 Penalty Assessment similarly provides:

       Upon review of the items submitted, all the information and documentation in
       the file, and the matter as a whole, the Director hereby FINDS that LM
       [Liberty Mutual] was given notice of 22 different injuries by the employees
       listed in the style of this case. Further, the Director finds that LM untimely
       filed the 1st Report of Injury Form (hereinafter “C-20”) on 6 claims, for which
       a state file number has been assigned. The Director further finds that LM has,
       to date, failed to file the C-20s on the remaining 16 claims, for which no state
       file number has been generated. Lastly, the Director finds that LM has
       continued to refuse to file the C-20 on the remaining 16 claims even after the
       June 11, 2007 notice described above.

       In response to the 2007 Notice of Potential Claim Filing Violations, John Nethery, the
general claims manager for Liberty Mutual, wrote a letter to Mr. Halverstadt explaining that
Liberty Mutual did not file the C-20s because the injuries were medical only, “for which no
temporary total benefits were owed and, therefore, [there was] no requirement to file a C-20
form.” Mr. Nethery reiterated his position that Form C-20 was not required in the eighteen
disputed cases in a letter to Mr. Halverstadt in response to the 2008 Penalty Assessment.
Neither Mr. Halverstadt, nor anyone else at the Department, informed Mr. Nethery that the
penalty was for failing to file C-21 forms.

       The 2007 Notice of Potential Claim Filing Violations and the 2008 Penalty
Assessment both clearly state the basis for the penalty is Liberty Mutual’s failure to file the
C-20 First Report of Injury Form, not the C-21 Monthly Report of Non-Compensable Injuries
or Diseases. The 2007 Notice also references the two-week filing deadline. This is significant
because Rule 0800-2-1-.06 clearly states Form C-20 “shall be submitted to the Director as
soon as possible, but not later than fourteen (14) days after the accident,” whereas Form C-21
“shall be submitted to the Director on or before the 15th day of the month following the
month covered by the report.” Tenn. Comp. R. & Regs. 0800-2-1-.06(1) & (2). While the
2007 Notice and the 2008 Penalty Assessment state that Form C-20 filing deficiencies are
the basis for the penalty, the Department agrees that C-20 forms were not required at the time
of Liberty Mutual’s alleged violations. Moreover, credible, uncontradicted evidence in the
record shows the incidents at issue involved “medical only” injuries, which, pursuant to Rule
0800-2-1-.06(2), were required to be reported on Form C-21, not Form C-20. Id.

                                              -9-
        Under these circumstances, the notice provided to Liberty Mutual was not reasonably
calculated to apprise Liberty Mutual of the Department’s claims against it, that is, the failure
to file Form C-21 for medical only injuries. See McClellan, 921 S.W.2d at 688 (internal
citations omitted). If Liberty Mutual is to be penalized for allegedly failing to file the
required C-21 forms in January and February of 2003,9 the 2007 Notice of Potential Claim
Form Filing Violations and the 2008 Penalty Assessment should have included a “statement
of the legal authority, . . . including reference to the particular sections of the statutes and
rules involved,” and a “short and plain statement of the matters asserted,” as Tennessee Code
Annotated § 4-5-307 expressly requires. The “phasing out” of Form C-21 subsequent to
Liberty Mutual’s alleged filing violations does not relieve the Department of this obligation.

       For the above reasons, we have concluded that the Department failed to follow the
notice procedure required in Tennessee Code Annotated § 4-5-307 and, as a result, Liberty
Mutual’s rights have been prejudiced.10 Because the failure to follow the lawful procedure
resulted in prejudice to Liberty Mutual, the penalty assessed against Liberty Mutual must be
vacated. See Tenn. Code Ann. § 4-5-322(h)(3); see also Martin, 78 S.W.3d at 267.

                                                   III.
                                Interpretation of an Unambiguous Rule

       As the Department correctly asserts, courts are to afford deference and controlling
weight to an agency’s interpretation of its own rules and regulations. Jones v. Bureau of
TennCare, 94 S.W.3d 495, 501 (Tenn. Ct. App. 2002) (citing Profill Dev., Inc. v. Dills, 960
S.W.2d 17, 27 (Tenn. Ct. App. 1997) (citing Jackson Express, Inc. v. State Public Serv.
Comm’n, 679 S.W.2d 942, 945 (Tenn. 1984)). There are, however, limits to this deferential
standard. One such limitation is that the rule or regulation to be interpreted by the agency
“must be ambiguous.” See Christensen v. Harris County, 529 U.S. 576, 588 (2000); see also
Hannon Food Service, Inc., 317 F.3d 489, 495 (5th Cir. 2003). Another limitation is that the
agency’s interpretation of its own rule or regulation shall not be “plainly erroneous or
inconsistent with the regulation.” Jones, 94 S.W.3d at 501.

      At all times relevant to the matters in dispute, Rule 0800-2-1-.06(1) and (2) expressly
and unambiguously provided that Form C-20 shall be filed to report a loss work injury for

        9
          Evidence was presented during the administrative proceedings concerning whether Liberty Mutual
actually did report the disputed incidents on Form C-21 in 2003. Jan Gatlin testified that she completed a
“log” every month, which contained all of the information contained on a C-21, but she could not remember
whether the form was actually a Form C-21. However, whether Liberty Mutual filed a C-21 is not relevant
in the instant case, because Liberty Mutual was not given the appropriate notice.
        10
             Our decision renders the remaining issues raised by Liberty Mutual moot.

                                                    -10-
which the employee missed more than seven days of work or sustained a permanent
disability, and Form C-21 shall be filed to report a medical only injury for which the
employee missed seven days of work or less, and is not permanently disabled. The foregoing
notwithstanding, in 2003 the Department disregarded the unambiguous and mandatory
language in the rule by interpreting it in a manner that effectively re-writes the rule by
deleting subpart (2) in its entirety, which requires the filing of Form C-21 to report medical
only injuries, and modifying subpart (1) by adding the requirement that the insurer shall file
Form C-20 to report a medical only injury.

       The reporting change the Department implemented with the 2003 EDI Notice was not
the result of a change in the interpretation of an ambiguous rule, it was the impermissible
creation of a de facto new rule.11 As the United States Supreme Court explained in Christen:

        Seeking to overcome the regulation’s obvious meaning, the United States
        asserts that the agency’s opinion letter interpreting the regulation should be
        given deference under our decision in Auer v. Robbins, 519 U.S. 452, 117
S. Ct. 905, 137 L. Ed. 2d 79 (1997). In Auer, we held that an agency’s
        interpretation of its own regulation is entitled to deference. Id., at 461, 117
S. Ct. 905. See also Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 65
S. Ct. 1215, 89 L. Ed. 1700 (1945). But Auer deference is warranted only when
        the language of the regulation is ambiguous. The regulation in this case,
        however, is not ambiguous - it is plainly permissive. To defer to the agency’s
        position would be to permit the agency, under the guise of interpreting a

        11
           The Department’s authority to change the reporting requirements in Rule 0800-2-1-.06 by issuing
the 2003 EDI Notice was not explicitly stated as an issue on appeal; however, the Department’s authority
to act in contravention of Rule 0800-2-1-.06 has been an issue throughout the administrative and judicial
proceedings. The following exchange took place between counsel for Liberty Mutual and Director
Halverstadt of the Department in testimony before Administrative Law Judge Bailey:

        Q: And you think they deserve the penalty despite the fact your regs today from the Web site
        . . . still require the filing of a C-21, . . . That’s on the requirements today, isn’t it?

        A: It is the requirements. And, again, when it changed to EDI, the rules are out of line with
        the actual process.

When asked why the Department had not amended the rule, Mr. Halverstadt responded, “It’s on the list of
to-do things for the Department.”

                                                    -11-
       regulation, to create de facto a new regulation. Because the regulation is not
       ambiguous on the issue of compelled compensatory time, Auer deference is
       unwarranted.

529 U.S. at 588.

        Because the filing requirements in Rule 0800-2-1-.06(1) and (2) are unambiguous, the
Department exceeded its authority, under the guise of interpreting the rule, by changing the
filing requirements for medical only injuries.

                                     I N C ONCLUSION

       The judgment of the trial court is reversed, and this matter is remanded with
instructions that the trial court remand the case to the Department and to vacate the penalty
assessed against Liberty Mutual. Costs of appeal are assessed against the State of Tennessee,
Department of Labor and Workforce Development.

                                                      ______________________________
                                                      FRANK G. CLEMENT, JR., JUDGE

                                            -12-