OPINION ENTERED: JANUARY 5, 2009
CLAIM NO. 87-18864
CR & R TRUCKING CO., INC.
(AS INSURED BY OLD REPUBLIC INSURANCE COMPANY) PETITIONER
VS. APPEAL FROM HON. CHRIS DAVIS,
ADMINISTRATIVE LAW JUDGE
NOLAN NEWCOMB;
CR & R TRUCKING CO., INC.,
(AS INSURED BY LIBERTY MUTUAL INSURANCE COMPANY)
and HON. CHRIS DAVIS,
ADMINISTRATIVE LAW JUDGE RESPONDENTS
REVERSING AND REMANDING
* * * * * *
BEFORE: GARDNER, Chairman, COWDEN and STIVERS, Members.
STIVERS, Member. The issue before the Board concerns the apportionment of medical expenses in a post award medical fee dispute where the claimant, Nolan Newcomb (“Newcomb”), sustained two injuries while the employer was insured by two separate carriers. Hon. Chris Davis, Administrative Law Judge (“ALJ”) assessed all liability against the Old Republic Insurance Company (“Old Republic”) for a proposed MRI. On appeal, Old Republic argues the ALJ inappropriately saddled it with all liability for the disputed medical benefits, both factually and as a matter of law. In the alternative, it argues the ALJ should have followed the apportionment set forth by the ALJ in the original opinion.
Newcomb sustained work related back injuries in the course of his employment with CR & R Trucking (CR & R) on December 4, 1981 and April 28 and April 29, 1987. At the time of Newcomb's 1981 injury CR & R was insured by Old Republic. At the time of Newcomb’s 1987 injuries, CR & R was insured by Liberty Mutual Insurance Company (“Liberty Mutual”). In an opinion rendered January 29, 1990 ALJ Ronald McDermott found Newcomb to be totally occupationally disabled due to the work injuries. The ALJ apportioned 70% of the disability to the December 4, 1981 injury with one third attributable to the arousal of preexistent dormant conditions and the remaining 47% attributable to the 1981 injury itself. The ALJ further determined the April 1987 injuries produced an additional 30% occupational disability rendering Newcomb totally occupationally disabled. The 30% was apportioned 15% to the arousal of preexistent dormant conditions and the remainder to the injuries of April 28 and 29, 1987. No specific apportionment was made regarding the payment of Newcomb's medical treatment.
On December 17, 2007 CR & R Trucking as insured by Liberty Mutual, filed a medical fee dispute/motion to reopen to contest the reasonableness and necessity of an MRI scan of Newcomb's lumbar spine. Liberty Mutual moved to join Old Republic as a party on the grounds it should have joint liability for medical bills. It does not appear Old Republic was ever made a party to the claim. Copies of the various pleadings were served on Old Republic by Liberty Mutual first at an address in Pikeville Kentucky and then by Newcomb at an address in Greensburg, Pennsylvania. Finally on June 24, 2008 counsel for Old Republic filed an entry of an appearance in response to a motion to submit and requested an extension of proof time. From the hearing order filed July 21, 2008 it is apparent the hearing was waived and both parties were ordered to file briefs. The August 20, 2008 hearing order is signed by attorneys for Newcomb, Old Republic and Liberty Mutual.
A short review of the pertinent facts follows. Newcomb was born April 22, 1944 and has an 11th grade education. The December 4, 1981 injury occurred while Newcomb was lifting a jack and sustained an onset of pain in his low back radiating into his left leg. After a period of temporary disability he returned to work at his regular job duties until December 1986 when he underwent surgery on the lumbar spine. He then returned to work on April 10, 1987. Newcomb sustained another work injury on April 28, 1987 when he bent down after filling a hose. He sustained a sudden onset of low back pain radiating into his leg. He returned to work the following day, and again while bending down, sustained another onset of back pain. The medical evidence in the original claim indicated a diagnosis of status post disk surgery and degenerative changes of the lumbar spine. As previously stated Newcomb was found to be totally occupationally disabled as a result of the two injuries. The ALJ in the original opinion stated "The 1981 injury was clearly the most severe and required surgery, the success of which may be questioned." Concerning the 1987 injuries, the ALJ noted Newcomb, following his recovery from surgery, was able to work up until these events, but was in pain, and at the time had a 70% pre-existing active disability. The ALJ determined the injuries of April 1987 produced an additional 30% occupational disability rendering Newcomb totally occupationally disabled.
The medical evidence on reopening from Dr. Ravvin indicated he first saw Newcomb on May 19, 2004. After treating Newcomb conservatively, Dr. Ravvin performed a lumbar fusion at L4-5 in December 2004. Following recovery from surgery, Newcomb symptoms improved until November 2007 when he was again referred to Dr. Ravvin for complaints of low back pain radiating in the left leg. An MRI was recommended to determine if the L5-S1 disk had degenerated to the point Newcomb required surgical intervention.
Dr. Glen Hamilton performed a utilization review at the request of Liberty Mutual. After reviewing medical records available to him and being unable to speak with the treating physician, Dr. Hamilton determined the MRI was not medically necessary or appropriate. His review of the medical records indicated the treating physician was not planning on performing surgery and the results of the test would not significantly alter the treatment plan.
The ALJ reviewed medical evidence in the record. He framed the two issues as the reasonableness and necessity of the proposed MRI and the work relatedness/causation of it "specifically, which date of injury." The ALJ chose to rely on Dr. Ravvin's evidence and found the MRI to be reasonable, necessary and work related. Concerning apportionment of the liability for the cost of the MRI the ALJ held:
It is clear from Judge McDermott's opinion that he considered the 1981 date of injury, the more significant one. It is also clear from the record that the 1981 injury necessitated a surgery in December 1986 (prior to the second date of injury). It is from this surgery, and its aftermath, that the Plaintiff’s problems flow. The responsible party shall be that party on the risk for the 1981 date of injury.
Thereafter, Old Republic filed a petition for reconsideration, arguing the ALJ erroneously found the entirety of the MRI scan to be the responsibility of the 1981 injury. Citing Derr Construction v. Bennett, 873 S.W. 2d 824 (Ky. 1994) it argued the apportionment of medical benefits was prohibited. In response Liberty Mutual argued the courts in Phoenix Manufacturing Co. v. Johnson, 69 S.W.3d 64 (Ky. 2001) and Sears Roebuck & Co. v. Dennis, 131 351 (Ky. App. 2004) have held under certain circumstances there may be apportionment of medical benefits. The ALJ overruled the petition for reconsideration as a re-argument of the claim. Old Republic now appeals to this Board.
On appeal, Old Republic continues to argue the ALJ erred in apportioning all liability for the contested medical benefits to the 1981 injury date. Old Republic argues pursuant to Derr Construction Co. v. Bennett, supra liability should have been placed on Liberty Mutual for the entirety of any medical treatment incurred by Newcomb. It argues, in the alternative, the ALJ should follow the apportionment set forth by the ALJ in the original opinion.
KRS 343.020(1) provides in pertinent part:
In addition to all other compensation provided in this chapter, the employer shall pay for the cure and relief from the effects of an injury or occupational disease the medical, surgical and hospital treatment, including nursing, medical, and surgical supplies and appliances, as may reasonably be required at the time of the injury and thereafter during disability. . . .
In Derr Construction v. Bennett, supra, the Supreme Court stated:
Because KRS 342.020 does not exempt an employer from liability for any portion of a worker’s medical expenses in those instances where the work-related injury constitutes a progression or worsening of a prior, active work-related condition, we hold that the employer is responsible for the medical expenses necessary for the cure and relief of the arthritic condition in claimant’s knees.
Id. at 828.
In Derr, the court rejected the notion that the Special Fund could be liable for some portion of medical expenses for a cumulative trauma injury that was incurred during successive employments. In Phoenix Manufacturing Co. v. Johnson, supra, the court explained that “Derr v. Bennett did not address the liability of employer’s successive insurance carriers.” Id. at 69. In Johnson, the court sanctioned apportionment of equal medical expenses between an employer’s successive insurers primarily because the carriers had formally agreed to that amount in a settlement.
Since the holdings in Derr and Johnson, the Board’s unflagging position has been that apportionment of medical benefits may be had in only the most unusual circumstances, where there is a clear demarcation between the treatment required as a result of successive injuries.
In Sears Roebuck & Co. v. Dennis, supra, the court cited with approval the Board’s statement that “[w]hile it is true in general that the last employer would be responsible for medical expenses, there are occasions where medical expenses can be clearly distinguished as resulting from distinct and separate events and body parts.” Id. at 356. In Dennis, a worker injured his back while working for Radio Shack and sustained a permanent partial disability. He later returned to work for a second employer and re-injured his back, additionally sustaining a psychological impairment. An ALJ concluded the claimant was totally occupationally disabled as a result of the combined effects of the two injuries. The evidence revealed, however, the second injury to the back was only temporary in nature and did not result in any additional impairment. The ALJ concluded that medical expenses attributable to the back injury remained the liability of the first employer. The court explained: “[w]hile [KRS 342.020(1)] does not specifically provide for apportionment of medical expenses, it does not prohibit dividing those expenses among different employers and/or insurance carriers when the circumstances so warrant.” Id. at 356. The court affirmed the decision of the ALJ, noting the claimant had sustained distinct injuries affecting different body parts and the first employer’s obligation to pay for the treatment to the claimant’s back “was wholly in harmony with pertinent statutes and precedent.” Id. at 357.
A case with facts remarkably similar to those in the case sub judice is Res-Care, Inc. v. Fritz, 2004-CA-002167-WC, 2005 WL 564279, (rendered March 11, 2005 and designated not to be published.) In that case, the worker first injured her back in 1997 and the injury resulted in permanent impairment. In 2000, while working for a second employer, she re-injured her back and this second injury in combination with the first resulted in permanent total disability. The second employer was adjudged liable for payment of total disability income benefits with a reduction for the permanent partial disability benefits payable by the first employer. The ALJ further concluded that both employers shared joint and several liability for the medical expenses. The ALJ arrived at this conclusion because the injuries were equally responsible for the resulting low back impairment and subsequent disability. The Board reversed the ALJ and concluded the second employer was solely liable for payment of medical benefits following the second injury. The Court of Appeals affirmed, referencing a portion of the Board’s decision as follows:
In order for there to be an apportionment of medical expenses, there must be substantial evidence of record to support that apportionment. The ALJ may not arbitrarily assign an apportionment. Clearly, the ALJ may not impose joint and several liability for medical expenses. Here, our review of the record fails to produce any evidence to support any type of apportionment between the two injuries. Based upon the evidence of record, we believe the liability for medical expenses related to the low back condition following the February 16, 2000, injury must be the responsibility of Res-Care.
The ALJ stated in his order ruling on the petition for reconsideration that his reason for apportionment was the equal apportionment of the functional impairment rating. We believe that apportionment of a functional impairment rating standing alone is an insufficient basis for apportioning medical benefits. Certainly there can be situations where a first injury produces a smaller impairment rating than the second injury yet causes the majority of the need for medical treatment. Likewise, a first injury may produce a greater impairment than the second and yet not necessitate a great deal of medical treatment.
Slip opinion at pp. 3-4.
We agree with Old Republic the ALJ erred in apportioning all liability for the contested medical benefits to the 1981 injury. The ALJ's apportionment is clearly contrary to applicable case law. As previously observed the apportionment of medical expenses may be had in only the most unusual circumstances, where there is a clear demarcation between the treatment required as a result of successive injuries. The standard in Derr Construction, in consecutive injury cases, is that liability for medical benefits is placed on the carrier at risk for the second injury. Thus, Liberty Mutual, the carrier at risk for the second injury, would be liable for the MRI recommended by Dr. Ravvin. An apportionment could only be made if evidence is contained in the record which establishes a medical basis for reasonably assigning liability for medical benefits between the two injuries. Dividing medical expenses based either on impairment or disability is not a legal basis for such an apportionment. Here the record contains a dearth of evidence concerning a basis for apportionment of medical expenses. Dr. Ravvin's records chronicle his treatment of Newcomb and document his reasons for recommending an MRI. Dr. Hamilton merely addresses the issue of reasonableness and necessity of the MRI. Accordingly, Liberty Mutual must be liable for the contested medical expenses.
For the foregoing reasons, the opinion and award of the ALJ assessing medical benefits against Old Republic is hereby REVERSED and this matter is REMANDED for an entry of an award in conformity with the views expressed in this opinion.
ALL CONCUR.
COUNSEL FOR PETITIONER:
HON J GREGORY ALLEN
P O BOX 1350
PRESTONSBURG KY 41653
COUNSEL FOR RESPONDENT:
HON W BARRY LEWIS
P O BOX 800
HAZARD KY 41702
COUNSEL FOR RESPONDENT:
HON ROBERT GREENE
P O BOX 512
PIKEVILLE KY 41502
ADMINISTRATIVE LAW JUDGE:
HON CHRIS DAVIS
410 WEST CHESTNUT ST STE 700
LOUISVILLE KY 40202
