Court Opinion

ID: 6930861
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:59:43.031737+00
Date Added: 2024-06-11T16:07:10.732215
License: Public Domain

VAN HOOMISSEN, J.
SAIF appeals an order of the Workers’ Compensation Board affirming the referee’s imposition of penalties against SAIF because of its failure to request that the Workers’ Compensation Department designate a paying agent pursuant to ORS 656.307. That statute directs the department to enter such an order when there is an issue between two or more employers or their insurers regarding responsibility for payment of compensation. We affirm.
Claimant suffered a compensable back injury in 1976. SAIF was responsible, and it processed the claim to closure. In 1978 and 1979, claimant sustained two compensable aggravations of his condition, and SAIF again paid those claims. On December 8, 1979, while EBI insured his employer, claimant experienced further problems with his back following a fall at work. Four days later, he requested postponement of a hearing on the extent of the disability related to his previous aggravations, because he had “sustained either a new injury and/or an aggravation of his SAIF claim * * *” and he was not at that time medically stationary.
On December 19, 1980, EBI denied claimant’s new injury claim on two grounds:
1. “There is no evidence to substantiate the compensability of your injury.”
2. “If your present condition is compensable, it is as a result of an aggravation of your previous injury of which State Accident Insurance Fund is the carrier and should be contacted.”
On January 12,1981, claimant wrote to both EBI and SAIF. He requested that EBI rescind its denial and withdraw the contention of noncompensability, and he filed an aggravation claim with SAIF. On February 4, EBI amended its denial to deny on the basis of nonresponsibility only. On February 5, in response to a letter from SAIF requesting additional information, claimant’s attorney sent the requested information and asked “that if SAIF denies Claimant’s aggravation claim, that it does so exclusively on the basis of responsibility and not on the basis of compensability of the most recent claim.” He included the report of Dr. Cockburn, the only medical opinion on compensability in the case, which stated:
*501“* * * while delivering beer on December 8, 1980, he [claimant] slipped on ice and fell onto his left hip. In the examiner’s opinion, he experienced an entirely new injury, not an aggravation of his old injury. He was injured in the same area of his body but by an entirely different injury.
Hi * * *
“The diagnosis for this injury: Strain, cervical and lumbar spine, acute, due to fall.”
On February 23, 1981, claimant notified SAIF that EBI had withdrawn its contention of noncompensability and requested that SAIF request an order designating a paying agent so that claimant could receive temporary disability benefits pending the determination of responsibility for his claims. ORS 656.307.
The next day, SAIF denied the claim:
“In addition, the documentation available to SAIF does not establish the compensability of a new injury or a claim for aggravation.”
Although claimant requested that SAIF amend its denial and reminded SAIF that its denial precluded the issuance of an ORS 656.307 order, SAIF continued to deny compensability. At the hearing, SAIF continued to deny compensability. The only medical evidence on compensability or responsibility was the report of Dr. Cockburn. The referee found the claim compensable and assigned responsibility to EBI.
Claimant requests imposition of penalties against SAIF on three grounds: (1) its failure to pay interim compensation pending its denial, (2) the alleged lateness of its denial, and (3) the unreasonableness of its denial.1 The referee declined to award penalties on the first two grounds because of irregularities in the presentation of the aggravation claim to SAIF. The referee concluded, however, that SAIF’s denial of compensability was “totally without merit,” and he imposed *502the maximum penalty of 25 percent of the temporary total disability benefits due claimant because of both SAIF’s unreasonable refusal to concede compensability and its refusal to allow an ORS 656.307 order to issue. The Board affirmed.
SAIF appeals the penalty issue. The only medical evidence states unequivocally that claimant sustained an entirely new injury and not an aggravation. No legitimate basis existed for contending that the claim was not compensable as to at least one of the insurers. SAIF contends, however, that it had a legitimate doubt as to its “liability” on the claim and that, therefore, its denial of compensability was reasonable. SAIF confuses responsibility with compensability. OAR 436-54-332, “Designation And Responsibility of a Paying Agent,” defines “Compensable Injury” as “an accidental injury, or accidental injury to prosthetic appliances, arising out of and in the course of employment requiring medical services or resulting in disability or death.” “Responsibility” is also defined in OAR 436-54-332 as “liability under the law for the acceptance and processing of a compensable injury claim.” If an employer or its insurer were allowed to deny compensability whenever its “liability” was in question, an ORS 656.307 order would never issue, because the question of each insurer’s liability is always presented in an aggravation/new injury claim. Clearly, that would defeat the purpose of the statute, which is to provide compensation when only the liability of each insurer and not compensability is at issue. We conclude that SAIF’s argument lacks merit.
SAIF also argues that, while claimant’s actions were procedurally permissible, they constituted an improper manipulation of the compensation system to obtain benefits. It hypothesizes that, because there was no evidence of an aggravation, claimant brought a “frivolous” aggravation claim to secure temporary total disability payments through the issuance of an ORS 656.307 order. Although the only medical report in the record does not support an aggravation claim, the evidence shows that claimant sustained an injury to the same part of his body that already had sustained two earlier compensable injuries, the last occurring the previous year. We conclude that, under these circumstances, it was not unreasonable for claimant to make an aggravation claim in the event that his new injury claim was denied. Claimant had advanced the possibility of an aggravation before EBI denied and before Dr. *503Cockburn gave his opinion. A claimant is not required to exhaust “new injury” contentions before proceeding on an aggravation claim. Further, the procedure utilized by claimant is granted by statute. Unless and until the legislature amends the statute, an insurer has the duty to comply with the statute requiring it to request a paying agent when the issue is responsibility but not compensability. Because SAIF failed unreasonably to follow the statutory scheme, a penalty was authorized.
SAIF contends that, even if its actions were unreasonable, no authority exists for imposition of this penalty. ORS 656.262(9) allows penalties for unreasonable delay or refusal to pay compensation or for unreasonable delay in acceptance or denial of a claim. SAIF contends that there is no penalty for unreasonable denial of the compensability of a claim. SAIF’s denial in this instance, however, resulted in the delay of temporary total disability payments that would have otherwise issued had a paying agent order been requested. We conclude that imposition of a penalty is authorized under these circumstances. See Elliott v. Loveness Lbr. Co., 61 Or App 269, 656 P2d 378 (1983).
SAIF finally contends that, even if a penalty could be assessed under ORS 656.262(9), there exists no “amounts then due” to claimant from SAIF on which to assess penalties, because it was not found to be the responsible insurer. SAIF would have us read the statute to add the words “from the insurer against whom the penalty is assessed” after the words “amounts then due.” No authority exists for that construction, and it would defeat the purpose of penalties to encourage insurers to withhold benefits.
Affirmed.

 Claimant also asked for a penalty against EBI for unreasonable denial of compensability and for unreasonable failure to request a paying agent order. EBI stipulated to the unreasonableness of its first denial of compensability, but the referee declined to award a penalty, because EBI denied within 14 days of the injury and, thus, no interim compensation was due on which a penalty could be based. The referee also denied a penalty for EBI’s failure to request a paying agent, because an order could not be issued unless all involved insurers stipulated to compensability, and SAIF refused to stipulate.