ALASKA WORKERS'' COMPENSATION BOARD

ALASKA WORKERS' COMPENSATION BOARD P.O Box 25512 Juneau, Alaska 99802-5512 MICHAEL W PEACOCK, Deceased Employee, And CHRISTIE PEACOCK, Employee's Daughter / Beneficiary, Claimant, And STATE OF ALASKA, DEPARTMENT OF NATURAL RESOURCES, (Self-insured) Employer, v WARD NORTH AMERICA, Adjuster, Defendant ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) FINAL DECISION AND ORDER AWCB Case No 199309661 AWCB Decision No 01-0177 Filed with AWCB Juneau, Alaska on September 12, 2001 We heard the claim of the employee's beneficiary ("beneficiary") for a finding of an unfair and frivolous controversion by the employer's former adjuster, Ward North America ("Ward North"), by means of a teleconference from our office in Juneau, Alaska, on November 7, 2000 and on August 14, 2001 The employee's daughter, Ms Peacock, represented herself Attorney General paralegal assistant Tina Paige appeared for the employer as an observer Attorney Patricia Zobel represented Ward North Although Board Member Nancy Ridgley heard this case, she was subsequently replaced Accordingly, we MICHAEL W PEACOCK (deceased) v WARD NORTH AMERICA decided this case with a two-member panel, a Board quorum under AS 23.30.005(f) We closed the record at the conclusion of the hearing on August 14, 2001 ISSUE Should we refer Ward North to the Division of Insurance under AS 23.30.155(o), or to the Self-insurance Administrator under AAC 45.182(d)(2), for frivolously or unfairly controverting the employee's claim for benefits? CASE HISTORY AND BRIEF SUMMARY OF THE RELEVANT EVIDENCE The employee was slain by a deranged camper in Icy Bay, Alaska, while working as a forester for the employer on May 21, 1993 The employer provided death benefits under AS 23.30.215 to Ms Peacock, who was then fourteen years old Ms Peacock graduated from high school, then enrolled in the University of Alaska, Anchorage ("UAA") in the fall semester of 1997 In an affidavit dated October 25, 2000, Ms Peacock testified her welding instructor, Mr Chittenden, advised that she could enter a welding apprenticeship program with the Plumber and Steamfitters’ Local Union 367, and that her training in the union program could be accredited for certain number of academic hours at UAA At the November 7, 2000 hearing, Steve Miller, training coordinator for Local Union 367, testified concerning her participation in the apprenticeship program Mr Miller testified that the union apprenticeship program has developed a cooperative arrangement with UAA for 38 hours of academic credit at the university for successful completion of the certificate of apprenticeship Northern Adjusters was the company handling the employer’s workers’ compensation claims at that time, and Jackey Zamber was the adjuster handling Ms Peacock’s benefits Ms Peacock asked the adjuster whether the union program would qualify under AS 23.30.395(7) to allow her benefits to continue In a letter dated December 23, 1997, Ms Zamber responded that the union program would qualify as a vocational or technical school, enabling the employee to receive benefits for the first four years of the five-year program The adjusting documents in the record indicate Ms Peacock continued to report to and correspond with her adjusters concerning her progress in the union apprenticeship MICHAEL W PEACOCK (deceased) v WARD NORTH AMERICA program for approximately the next three years During that period the employee continued to receive death benefits under AS 23.30.215 In July 2000 the contract to adjust the employer’s workers’ compensation claims was taken over by Ward North On September 15, 2000, Ward North sent a notice to Ms Peacock, controverting her death benefits and notifying her she had been overpaid death benefits for the years since she turned 19 and entered the union program The Controversion Notice indicated that her apprentice program did not qualify as a vocational school, trade school, or college under AS 23.30.395(7) The adjuster suspended benefits effective September 1, 2000 At the hearing on August 14, 2001, attorney Paul Hoffman testified George Erickson, adjuster supervisor for Ward North, informally consulted with him on or about September 2000 concerning whether a union apprenticeship qualified as a vocational, technical, or trade school Mr Hoffman testified he gave Mr Erickson the opinion that an apprenticeship program may, or may not, fall within the definition of a trade school under AS 23.30.395(7) He further testified that one should look to the intent of the statute to determine its coverage in this instance In the hearing, Ward North’s attorney also indicated to us that Mr Erickson had consulted with her on this topic Richard Wagg, Esq also testified in the hearing as an expert witness Since Ms Peacock received an apprentice’s wage of over $11.00 per hour during her field work (though not during her class work), he believes the statute would not cover her situation He testified the decision on this issue is a case of first impression, and that it was appropriate to controvert death benefits in order to bring the matter to us for a decision Ms Peacock filed a Workers’ Compensation Claim on September 29, 2000, requesting the reinstatement of her death benefits, a penalty, and interest In a prehearing conference on October 10, 2000, her claim was amended to include a request for a finding of a frivolous and unfair controversion The Attorney General’s office entered an appearance for the employer, and filed an Answer to the claim on October 23, 2000 In the Answer, the employer admitted Ms Peacock’s union apprenticeship program had been approved by the employer, and that under collateral estoppel she is entitled to the death benefits, penalties, and interest It asserted the employee apparently intended to interface the union training with the UAA Associate degree MICHAEL W PEACOCK (deceased) v WARD NORTH AMERICA in Apprenticeship Technologies In the Answer it asserted the employer had no knowledge of the controversion until Ms Peacock filed a claim It asserted it promptly investigated the matter and ordered Ward North to restore the benefits The record reflects the death benefits were restored on October 6, 2000 In the October 10, 2000 prehearing conference, Mr Erickson agreed Ward North, not the employer, would pay Ms Peacock penalties and interest The Prehearing Summary for that date records that Ms Peacock asserted Ward North, acting independently, had frivolously and unfairly controverted her benefits, and that she wished to litigate no claim against the employer The claim was heard, in part, on November 7, 2000, and continued The hearing was reconvened, and concluded on August 14, 2001 In the November 7, 2000 hearing session, we gave an oral order, clarifying that based on the controlling Prehearing Summary, we had jurisdiction over the claim of a frivolous and unfair controversion against only Ward North, not the employer AAC 45.065(c) At the hearing Ms Peacock testified concerning the history of her claim She testified her attempts to sort out her death benefits had been rebuffed by Ward North She argued her claim had been unfairly and frivolously controverted The employer filed a brief in the first hearing session, in which it argued Ward North had acted without consulting the employer, the employer subsequently ordered the benefits restored, and Ms Peacock specifically withdrew her claim against the employer It asserted it should be dismissed from the case In the second hearing session, the employer appeared only to observe Ward North noted that it no longer has the contract to adjust the employer’s claims, and that Mr Erickson has retired It asserted these circumstances are unrelated to the incidents addressed in this hearing In its brief and in the hearing, Ward North argued the apprenticeship program is not a vocational or trade school within the meaning of AS 23.30.395(7) It argued that, even if we find the program fits within the statutory definition, the controversion was a case of first impression, and it was based on a reasonable opinion It asserts the controversion was made in good faith MICHAEL W PEACOCK (deceased) v WARD NORTH AMERICA Ward North also argued collateral estoppel is inapplicable to this claim because there were no earlier adjudications or issue preclusion It argued neither implied waiver nor equitable estoppel applied because the employer never explicitly promised to pay death benefits to her, based on the apprenticeship program alone It also argued our jurisdiction under AS 23.30.155(o) is limited to insurers, and does not cover independent adjusters FINDINGS OF FACT AND CONCLUSIONS OF LAW I THE ADJUSTER’S RESPONSIBILITY TO PROVIDE BENEFITS AS 23.30.090 provides, in part: Self-insurance certificates An employer authorized as a selfinsurer shall provide claims facilities through its own staffed adjusting facilities located within the state, or independent, licensed, resident adjusters with power to effect settlement within the state AS 23.30.020 provides, in part: Chapter Part of Contract of Hire This chapter constitutes part of every contract of hire, express or implied, and every contract of hire shall be construed as an agreement on the part of the employer to pay compensation in the manner provided in this chapter for all personal injuries sustained AS 23.30.045 provides, in part: Employer's Liability for Compensation (a) An employer is liable for and shall secure the payment to employees of the compensation payable under AS 23.30.041, 23.30.050, 23.30.095, 23.30.145, and 23.30.18023.30.215 AS 23.30.030 provides, in part: (3) As between the insurer and the employee or the employee's beneficiaries, notice to or knowledge of the occurrence of the injury on the part of the insured employer is notice or knowledge on the part of the insurer Under AS 23.30.045(a) employers have the affirmative duty to provide workers' compensation insurance to injured workers Under AS 23.30.020 the provisions of the Alaska Workers' Compensation Act are considered as a matter of law to be an integral part of the employee's employment contact, and the employer is directly responsible for the provisions of the employment contract We hold insurers fully responsible for the liabilities MICHAEL W PEACOCK (deceased) v WARD NORTH AMERICA of the employer, and we deem the insurer directly responsible for knowledge and information in the possession of its client, the employer AS 23.30.030 See White v Harbor Plumbing & Heating, AWCB Decision No 99-0018 (January 27, 1999) By analogy we here deem this employer’s agent adjuster, Ward North, responsible for information held by the employer concerning the history of Ms Peacock’s claim II ESTOPPEL The Alaska Supreme Court has recognized our equitable powers, but only as necessarily incident to the exercise of our statutory adjudicative responsibilities Blanas v The Brower Co., 938 P.2d 1056, 1062 (Alaska 1997); Schmidt v Beeson Plumbing & Heating, 869 P.2d 1170, 1175 (Alaska 1994); and Land & Marine Rental Co v Rawls, 686 P.2d 1187, 1191 (Alaska 1984) We have applied the equitable remedy of estoppel to our decisions See, e.g., Bathony v State of Alaska, D.E.C., AWCB Decision No 01-0091 (May 8, 2001); Devereaux v City of Hoonah, AWCB Decision No 96-0058 (February 8, 1996) The elements of estoppel are: "[A]ssertion of a position by word or conduct, reasonable reliance thereon by another party, and resulting prejudice." Wausau Ins Companies v Van Biene, 847 P.2d 584, 588 (Alaska 1993) Based on the evidence in the record, we find that Ms Peacock was informed by the employer and its agent / adjuster at the initiation of her apprenticeship that the cooperative training arrangement between UAA and the union fell within the meaning of a trade or vocational school for purposes of AS 23.30.395(7), and that she would continue to be entitled to the receipt of death benefits under AS 23.30.215 We find the employer and its agent / adjuster continued to provide benefits to her for approximately three years of the union program We find Ms Peacock acted in reasonable reliance on that representation We also find she suffered significant prejudice when Ward North controverted her death benefits, asserting the benefits were overpaid since she began the union program at age 19 We find the employer and Ward North are clearly barred from acting on the controversion under the equitable doctrine of estoppel We note the employer’s immediate recognition of this Whether or not a prospective controversion would have been frivolous is moot We find Ward North’s controversion retroactive to age 19, without warning and at such a late date, was patently unfair MICHAEL W PEACOCK (deceased) v WARD NORTH AMERICA III FRIVOLOUS OR UNFAIR CONTROVERSION AS 23.30.155(o) provides: (o) The board shall promptly notify the division of insurance if the board determines that the employer's insurer has frivolously or unfairly controverted compensation due under this chapter After receiving notice from the board, the division of insurance shall determine if the insurer has committed an unfair claim settlement practice under AS 21.36.125 Although Ward North employer eventually paid all claimed benefits, it initially AAC 45.182(d)(2) provides: [I]f the board determines a self-insured employer frivolously or unfairly controverted compensation due, the board will, at the time its decision and order are filed, provide a copy of the decision and order to the commissioner’s designee for the self-insured employer records for consideration in its renewal application for self-insurance Although Ward North employer eventually paid all claimed benefits, it initially controverted all Ms Peacock’s benefits The Alaska Supreme Court held in Harp v Arco Alaska, Inc., 831 P.2d 352, 358 (Alaska 1992) that an employer or insurer must have specific evidence for a good faith controversion: A controversion notice must be filed in good faith to protect an employer from imposition of a penalty For a controversion notice to be filed in good faith, the employer must possess sufficient evidence in support of the controversion that, if the claimant does not introduce evidence in opposition to the controversion, the Board would find that the claimant is not entitled to benefits Id at 358 We have applied the court's reasoning from Harp to our decisions concerning all sections of AS 23.30.155, and held that a controversion not made in good faith is frivolous and unfair for purposes of AS 23.30.155(o) See, e.g., Waddell v Eagle Hardware and Garden, Inc., AWCB Decision No 98-0206 (August 11, 1998); Stair v Pool Arctic Alaska Drilling, AWCB Decision No 98-0092 (April 13, 1998) We consistently require an employer or insurer to have specific evidence on which to base a controversion See, Lincoln v TIC - The Industrial Co., AWCB Decision No 97-0212 (October 20, 1997) In this case, as noted above, we find Ward North should be deemed responsible for knowledge of the full history of Ms Peacock’s death benefits claim We find the evidence clearly estopped the employer and its agents from a retroactive controversion We find Ward MICHAEL W PEACOCK (deceased) v WARD NORTH AMERICA North unfairly controverted her claim Because Ward North was clearly estopped from controverting the death benefits, we conclude the controversion was also frivolous Nevertheless, AS 23.30.155(o) gives us jurisdiction to refer insurers to the Division of Insurance for investigation to determine if the insurer has committed an unfair claim settlement practice AAC 45.182(d)(2) gives us jurisdiction to refer self-insured employers to the Self-insurance Administrator for investigation In the instant case we have no insurer The October 10, 2000 Prehearing Conference Summary retained jurisdiction over only Ward North, not the employer AAC 45.065(c) Based on the unique facts of this case, we find the terms of AS 23.30155(o) and AAC 45.182(d)(2) not apply to the adjuster Consequently, we must deny and dismiss Ms Peacock’s claim, requesting us to refer Ward North to the Division of Insurance, or the Self-insurance Administrator, for investigation under AS 23.30155(o) or AAC 45.182(d)(2) IV REFERRAL TO THE DIVISION OF INSURANCE Although we cannot to refer Ward North to the Division of Insurance, or the Selfinsurance Administrator, for investigation under AS 23.30155(o) or AAC 45.182(d)(2), we take administrative notice of our agency’s October 5, 2000 procedural memo, Memorandum 4B:2000, which directs us to send copies of all decisions and orders related to frivolous controversion to the Division of Insurance and / or the Self-insurance Administrator Accordingly, we direct that copies of this decision and order be forwarded to those offices for their information ORDER We find Ward North’s Controversion Notice dated September 15, 2001 was frivolous and unfair We deny and dismiss Ms Peacock’s claim, requesting us to refer Ward North to the Division of Insurance, or the Self-insurance Administrator, for investigation under AS 23.30155(o) or AAC 45.182(d)(2) We direct the staff of the Workers’ Compensation Division to send courtesy copies of this decision and order to the Alaska Division of Insurance and the Self-insurance Administrator MICHAEL W PEACOCK (deceased) v WARD NORTH AMERICA Dated at Juneau, Alaska this 12th day of September, 2001 ALASKA WORKERS' COMPENSATION BOARD /s/ William Walters William Walters, Designated Chairman /s/ Richard Behrends Dick Behrends, Member Board Term Expired Nancy Ridgley, Member APPEAL PROCEDURES This compensation order is a final decision It becomes effective when filed in the office of the Board unless proceedings to appeal it are instituted Proceedings to appeal must be instituted in Superior Court within 30 days of the filing of this decision and be brought by a party in interest against the Board and all other parties to the proceedings before the Board, as provided in the Rules of Appellate Procedure of the State of Alaska RECONSIDERATION A party may ask the Board to reconsider this decision by filing a petition for reconsideration under AS 44.62.540 and in accordance with AAC 45.050 The petition requesting reconsideration must be filed with the Board within 15 days after delivery or mailing of this decision MODIFICATION Within one year after the rejection of a claim or within one year after the last payment of benefits under AS 23.30.180, 23.30.185, 23.30.190, 23.30.200 or 23.30.215 a party may ask the Board to modify this decision under AS 23.30.130 by filing a petition in accordance with AAC 45.150 and AAC 45.050 CERTIFICATION I hereby certify that the foregoing is a full, true and correct copy of the Final Decision and Order in the matter of MICHAEL W PEACOCK deceased employee and CHRISTIE PEACOCK employee's beneficiary / claimant; and STATE OF ALASKA, DEPARTMENT OF , self-insured employer; v WARD NORTH AMERICA / defendants; Case No 199309661; dated and filed in the office of the Alaska Workers' Compensation Board in Juneau, Alaska, this 12th day of September, 2001 Susan N Oldacres, Workers' Compensation Technician ... Juneau, Alaska this 12th day of September, 2001 ALASKA WORKERS' COMPENSATION BOARD /s/ William Walters William Walters, Designated Chairman /s/ Richard Behrends Dick Behrends, Member Board Term... OF ALASKA, DEPARTMENT OF , self-insured employer; v WARD NORTH AMERICA / defendants; Case No 199309661; dated and filed in the office of the Alaska Workers' Compensation Board in Juneau, Alaska, ... against the Board and all other parties to the proceedings before the Board, as provided in the Rules of Appellate Procedure of the State of Alaska RECONSIDERATION A party may ask the Board to reconsider