Opinion
No. 1 CA-IC 12-0025
04-25-2013
VINTAGE PLASTERING, Petitioner Employer, COLORADO CASUALTY CO., Petitioner Carrier, v. THE INDUSTRIAL COMMISSION OF ARIZONA, Respondent, JOAQUIN CAMARGO, Respondent Employee,
Cross & Lieberman, P.A. By Lawrence H. Lieberman Attorneys for Petitioners Employer and Carrier Andrew Wade, Chief Counsel The Industrial Commission of Arizona Attorney for Respondent Snow & Carpio, PLC By Erica Gonzalez-Melendez Attorneys for Respondent Employee
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED
EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
Ariz. R. Crim. P. 31.24
MEMORANDUM DECISION
(Not for Publication -
Rule 28, Arizona Rules
of Civil Appellate
Procedure)
Special Action - Industrial Commission
ICA Claim No. 20092-510200
Carrier Claim No. 10379030
Administrative Law Judge Robert F. Retzer
AWARD SET ASIDE
Cross & Lieberman, P.A.
By Lawrence H. Lieberman
Attorneys for Petitioners Employer and Carrier
Phoenix Andrew Wade, Chief Counsel
The Industrial Commission of Arizona
Attorney for Respondent
Phoenix Snow & Carpio, PLC
By Erica Gonzalez-Melendez
Attorneys for Respondent Employee
Phoenix HALL, Judge ¶1 This is a special action review of an Industrial Commission of Arizona (ICA) award and decision upon review for unscheduled permanent partial disability benefits. Two issues are presented on appeal:
(1) whether the administrative law judge (ALJ) erroneously applied the equal measure rule to his determination of the respondent employee's (claimant's) loss of earning capacity (LEC); andBecause we find that the ALJ erred by calculating the claimant's post-injury LEC based on "earnings" instead of "earning capacity," we set aside the award.
(2) whether the ALJ erred by failing to find that the claimant had a duty to mitigate his damages by working forty hours per week post injury.
I. JURISDICTION AND STANDARD OF REVIEW
¶2 This court has jurisdiction pursuant to Arizona Revised Statutes (A.R.S.) sections 12-120.21(A)(2) (2003), 23-951(A) (2012), and Arizona Rule of Procedure for Special Actions 10. In reviewing findings and awards of the ICA, we defer to the ALJ's factual findings, but review questions of law de novo. Young v. Indus. Comm'n, 204 Ariz. 267, 270, ¶ 14, 63 P.3d 298, 301 (App. 2003). We consider the evidence in a light most favorable to upholding the ALJ's award. Lovitch v. Indus. Comm'n, 202 Ariz. 102, 105, ¶ 16, 41 P.3d 640, 643 (App. 2002).
II. PROCEDURAL AND FACTUAL HISTORY
¶3 The claimant was working as a laborer for the petitioner employer, Vintage Plastering (Vintage), on August 29, 2009. He lifted a bucket of sand and experienced low back and left leg pain. He filed a workers' compensation claim for lumbar strain and back pain, and the petitioner carrier, Colorado Casualty Company (Colorado), accepted the claim for benefits. ¶4 Colorado submitted a recommended average monthly wage calculation of $2,887.50 to the ICA. The calculation was based on the claimant's actual earnings during the thirty days preceding his industrial injury. The ICA adopted this recommendation, and issued a notice of average monthly wage in that amount. Colorado then timely protested the ICA's notice of average monthly wage. Colorado argued that the claimant's wages during the thirty days preceding his industrial injury were significantly inflated and were not an accurate representation of his average monthly wage. ¶5 Following an ICA hearing, the ALJ entered an award for an average monthly wage in the amount of $2,175.91. The ALJ based the average monthly wage on the claimant's earnings for the entire year before his industrial injury. He concluded that it was "the fairest way to calculate the applicant's average monthly wage . . . because the applicant was in the construction business and that business is subject to weather conditions, supply problems, lack of jobs and the economy. . . ." The parties allowed the ALJ's award to become final. ¶6 Following an independent medical examination (IME), Terry E. McLean, M.D., reported that the claimant was medically stationary with a 5% permanent impairment based on "a probable symptomatic disk [sic] protrusion/lateral recess stenosis at L3-4 with resultant left L4 radiculitis" and "permanent work restrictions." Based on Dr. McLean's recommendation, a functional capacity evaluation (FCE) was performed to assess the claimant's physical capabilities and his ability to return to work. The claimant and Colorado filed LEC position statements with the ICA, and the ICA entered an award for unscheduled permanent partial disability benefits. ¶7 The ICA found that the claimant had a 5% permanent impairment, which resulted in a 36.28% reduction in monthly earning capacity, and an entitlement to disability benefits in the amount of $434.14 per month. The claimant timely protested the ICA's award and asserted that he had "a greater reduction in his monthly earning capacity as a result of his industrial injury." One ICA hearing was scheduled. In preparation for the hearing, the parties filed labor market reports, medical records, and the FCE report. ¶8 No testimony was taken at the ICA hearing, but there was a discussion on the record between the ALJ and the attorneys. The ALJ stated that the issue was the claimant's LEC and the effect of Elias v. Industrial Commission, 175 Ariz. 507, 858 P.2d 652 (App. 1992), on that determination. He provided the following background:
It should be noted for the record that the applicant's average monthly wage was set in the amount of $2,175.91, and that was by my award of March 14, 2011, and this was after a hearing on the issue of average monthly wage. The basis for that wage was that the applicant was a construction worker and he had -- his hours varied quite a bit. And in my award, I go over all that. And rather than take the highest week's or the lowest, I averaged the whole year, and that's how that average monthly wage was determined. We did find that he earned $16.50 per hour. And even though I¶9 The parties stipulated that the claimant is currently employable as a parking lot cashier or in a similar capacity and can earn a roll-back wage of $8.00 per hour. But they disagreed as to the effect of Elias on the claimant's LEC. The ALJ entered an award for permanent partial disability benefits finding that pursuant to our opinion in Elias, the claimant's post-injury LEC should be based upon 30.43 hours of work per week. He summarily affirmed his award on administrative review, and Colorado brought this special action.
didn't state it in the award, based on the average monthly wage, I would average about 30.43 per week.
Wages earned during the thirty days preceding an industrial injury are the presumptive average monthly wage, but the ALJ has broad discretion to use an expanded wage base when the presumptive base does not realistically reflect earning capacity, i.e., unrepresentative wages during the month before the injury. See Davis v. Indus. Comm'n, 134 Ariz. 293, 295-96, 655 P.2d 1345, 1347-48 (App. 1982); Elco Veterinary Supply v. Indus. Comm'n, 137 Ariz. 46, 47-48, 668 P.2d 889, 890-91 (App. 1983).
The emphasis in setting an average monthly wage is on what the employee has actually earned for his labors. Harvey Auto Supply Inc. v. Indus. Comm'n, 25 Ariz.App. 274, 276, 542 P.2d 1154, 1156 (1975).
In an ICA proceeding, parties may stipulate to any fact or issue after a request for hearing is filed. See Arizona Administrative Code R20-5-152.A.
Post-injury earnings are rolled back to date of injury wage levels to obtain an accurate comparison of the claimant's preinjury earnings and his industrially related post-injury reduction in earning capacity. Whyte v. Indus. Comm'n, 71 Ariz. 338, 346, 227 P.2d 230, 235 (1951).
III. DISCUSSION
¶10 In establishing an LEC, the object is to determine as nearly as possible, whether the claimant can sell his services in the open, competitive labor market and for how much. Davis v. Indus. Comm'n, 82 Ariz. 173, 175, 309 P.2d 793, 795 (1957). The burden of proving an LEC is on the claimant. See, e.g., Zimmerman v. Indus. Comm'n, 137 Ariz. 578, 580, 672 P.2d 922, 924 (1983). ¶11 The claimant can meet his burden by presenting evidence of his inability to return to his date-of-injury employment and by making a good faith effort to obtain other suitable employment or by presenting testimony from a labor market expert to establish his residual earning capacity. See D'Amico v. Indus. Comm'n, 149 Ariz. 264, 266, 717 P.2d 943, 945 (App. 1986). In determining a claimant's residual earning capacity, the ALJ must consider
any previous disability, the occupational history of the injured employee, the nature and extent of the physical disability, the type of work the injured employee is able to perform subsequent to the injury, any wages received for work performed subsequent to the injury and the age of the employee at the time of injury.See A.R.S. § 23-1044(D) (Supp. 2012). ¶12 A claimant's entitlement to permanent disability benefits requires a comparison of his preinjury average monthly wage with his post-injury earning capacity. See A.R.S. § 23-1044(C) (Supp. 2012). In Whyte v. Industrial Commission, 71 Ariz. 338, 227 P.2d 230 (1951), the Arizona Supreme Court held that the statutorily mandated comparison must be made using the same standard or "yardstick." Id. at 344, 227 P.2d at 233. This reciprocity principle known as the "equal measure rule" is applied to ensure that when comparing the average monthly wage and the post-injury earning capacity, courts adjust for inflation and consider other factors affecting compensation. The factors have included overtime, shift differential, and whether compensation includes or excludes expenses associated with the job, i.e., such as travel. See Schuck & Sons Const, v. Indus. Comm'n, 213 Ariz. 74, 78-79, ¶ 19, 138 P.3d 1201, 1205-06 (App. 2006). ¶13 In Elias, this court considered another factor, part-time versus full-time employment. The Elias claimant was a nurse, and she historically voluntarily worked only part-time. 175 Ariz. at 507, 858 P.2d at 652. Her date of injury average monthly wage was based on her part-time earnings. Id. When her claim closed with a permanent impairment, the carrier sought to have her post-injury earning capacity based on suitable, reasonably available full-time work as a secretary. Id. The ALJ adopted that position and found that based on full-time secretarial work, the claimant had no LEC. Id. at 508, 858 P.2d at 653. On appeal, this court set aside the award. Id. at 509, 858 P.2d at 654. We held that because the claimant's average monthly wage was based on part-time employment, her post-injury earning capacity could not be based on full-time employment. Id. ¶14 In this case, the claimant was unable to return to his preinjury employment and both parties relied on testimony from labor market experts to establish suitable, reasonably available post-injury employment. The parties agreed that the claimant could earn $8.00 per hour as a parking lot cashier. But they disagreed as to whether the claimant's LEC should be calculated based on 30.43 or 40 hours of work per week. In that regard, the ALJ held:
3. [S]ince the applicant's average monthly wage was based on 30.43 hours per week the undersigned finds the applicant's earning capacity should be based on 30.43 hours per week and therefore, finds the applicant to have an earning capacity of $1,054.83 (30.43 x $8.00 x 4.333), a loss of earning capacity of $1,121.08 ($2,175.91 - $1,054.83), entitling him to $616.59 per month in benefits ($1,121.08 x 55%). See Elias v. Industrial Commission, 175 Ariz. 507 858 P.2d 652 (1992).¶15 On appeal, Vintage argues that the ALJ erred by limiting the claimant's post-injury work to 30.43 hours per week. We agree. This court previously has held that a loss of earnings is not synonymous with a loss of earning capacity. We have recognized that "the purpose of workmen's compensation is to reimburse injured workers for loss of earning capacity, not loss of earnings." Franco v. Indus. Comm'n, 130 Ariz. 37, 40, 633 P.2d 446, 449 (App. 1981). ¶16 We find guidance in Arden-Mayfair v. Industrial Commission, 158 Ariz. 580, 764 P.2d 341 (App. 1988). In Arden-Mayfair, the claimant sustained an industrial injury while employed full-time as a meat cutter. Id. at 581, 764 P.2d at 342. He filed a workers' compensation claim, which was found compensable. Id. His claim eventually closed with an unscheduled permanent partial impairment. Id. The ICA then entered its findings and award for permanent disability benefits, and both parties protested. Id. ¶17 At the Arden-Mayfair ICA hearing, the claimant testified that he performed part-time maintenance work at a townhouse complex and attended a full-time vocational rehabilitation program. Id. at 582, 764 P.2d at 343. Although the uncontroverted hearing evidence established that the claimant could obtain suitable, reasonably available full-time employment in the open labor market, his labor market expert rejected that evidence. Id. Instead, he based his opinion on the claimant's current part-time maintenance work. Id. The ALJ adopted that opinion and based the claimant's LEC based on his part-time employment. Id. at 584, 764 P.2d at 344. ¶18 On appeal, this court set aside the ALJ's award. We found that the uncontradicted evidence established that the claimant was physically capable of working full-time. For that reason, his labor market expert's opinion to the contrary was incompetent because he "based his opinion on loss of earnings rather than loss of earning capacity." 158 Ariz. at 584, 764 P.2d at 345. ¶19 In this case, Vintage hired the claimant to work full-time. During his lengthy employment with Vintage, the claimant worked less than forty hours some weeks and in excess of forty hours other weeks. But throughout his employment, the claimant was considered a full-time employee. Thus, unlike the employee in Elias, who "never sought nor wanted full-time employment," 175 Ariz. at 509, 858 P.2d at 654, the claimant here always was employed on a full-time basis. ¶20 At the LEC hearings, the uncontradicted evidence established that the claimant remains physically capable of working full-time within the recommended physical limitations. The claimant also has a duty to mitigate his damages by minimizing his loss of earnings. See Hoffman v. Brophy, 61 Ariz. 307, 314, 149 P.2d 160, 163 (1944). ¶21 We believed that the ALJ erroneously compared the claimant's preinjury earnings (average monthly wage) with his prospective post-injury earnings instead of his post-injury earning capacity. The concept of earning capacity is broader than earnings alone. Both A.R.S. § 23-1044(D) and Arizona case law require the consideration of additional factors in order to determine an LEC. Because we find that the ALJ focused on post-injury earnings to the exclusion of the other factors, we set aside the award.
Professors Larson have also recognized this distinction in their treatise. See 4 Arthur Larson and Lex K. Larson, Larson's Workers' Compensation Law § 81.01[1] at 81-2 (2012).
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______________________
PHILIP HALL, Judge
CONCURRING: ______________________
MARGARET H. DOWNIE, Presiding Judge
______________________
MAURICE PORTLEY, Judge