Opinion
No. 2 CA-IC 2018-0004
03-18-2019
ERNEST D'ANGELO, Petitioner Employee, v. THE INDUSTRIAL COMMISSION OF ARIZONA, Respondent, BHP COPPER, INC., Respondent Employer, CONTINENTAL CASUALTY COMPANY, Respondent Insurer.
COUNSEL Brian Clymer, Attorney at Law, Tucson By Brian Clymer Counsel for Petitioner Employee Lundmark, Barberich, LaMont & Slavin P.C., Phoenix By R. Todd Lundmark and Janet S. Weinstein P.C., Phoenix By Janet S. Weinstein Counsel for Respondent Jones, Skelton & Hochuli P.L.C., Phoenix By Gregory L. Folger and Sean M. Moore Counsel for Respondents Employer and Insurer
THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
NOT FOR PUBLICATION
See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f); Ariz. R. P. Spec. Act. 10(k). Special Action - Industrial Commission
ICA Claim No. 0000F061065
Insurer No. 3J436632B2
Jacqueline Wohl, Administrative Law Judge
AWARD SET ASIDE
COUNSEL Brian Clymer, Attorney at Law, Tucson
By Brian Clymer
Counsel for Petitioner Employee Lundmark, Barberich, LaMont & Slavin P.C., Phoenix
By R. Todd Lundmark and Janet S. Weinstein P.C., Phoenix
By Janet S. Weinstein
Counsel for Respondent Jones, Skelton & Hochuli P.L.C., Phoenix
By Gregory L. Folger and Sean M. Moore
Counsel for Respondents Employer and Insurer
MEMORANDUM DECISION
Judge Vásquez authored the decision of the Court, in which Presiding Judge Staring and Judge Brearcliffe concurred. VÁSQUEZ, Judge:
¶1 In this statutory special action, Ernest D'Angelo challenges the award of the administrative law judge (ALJ) requiring him to reimburse BHP Copper, Inc. and Continental Casualty Company (collectively, "Continental") for a missed medical examination. D'Angelo argues Continental waived its right to reimbursement by not timely submitting the legal authority supporting its position or documentation of the cost of the exam. Alternatively, he contends the ALJ erred in ordering reimbursement because the record contains no evidence of the cost of the exam or its reasonableness. For the following reasons, we set aside the award.
Factual and Procedural Background
¶2 We view the facts in the light most favorable to upholding the award. Hackworth v. Indus. Comm'n, 229 Ariz. 339, ¶ 2 (App. 2012). However, the relevant facts are undisputed. In March 1982, D'Angelo suffered an industrial injury when an elevator door closed on his right hand. The claim was accepted for benefits, and D'Angelo has been receiving supportive medical maintenance benefits and permanent disability benefits since 1993.
¶3 In March 2017, D'Angelo's physician prescribed a treatment plan including oxycodone for pain, but Continental denied authorization of the drug as part of his supportive care and recommended a weaning program. After D'Angelo requested a hearing to challenge that determination, Continental scheduled an independent medical examination (IME) with Dr. Randall Prust in July 2017.
¶4 On August 8, 2017, the day before the first hearing, Continental filed a motion for reimbursement of expenses related to the IME, arguing D'Angelo had failed to appear for the appointment and did not call to cancel or reschedule. The next day, before D'Angelo testified, he requested that Continental be required to cite the legal authority supporting its request and to state the amount for which it sought reimbursement. Continental explained it had filed the motion "just to be on record, showing that . . . D'Angelo did miss the IME," but it did not yet have an amount because it had not received a bill from Dr. Prust. With regard to authority, Continental stated it "didn't think there was really a need for [it] to cite case law" but it would do so at the ALJ's request. Continental's attorney added, "I would like to know why . . . D'Angelo missed the IME. And if appropriate, we would like to reset the exam."
¶5 The ALJ first noted, "[I]t was my understanding that there was a regulation which addressed [reimbursement]." However, because D'Angelo planned to testify about the missed IME, the ALJ recommended moving forward with the hearing, explaining to Continental: "[I]f [this] continues to be an issue after you hear the reason for the missed appointment, then . . . you can provide us with . . . your authority for requesting it and the amount."
¶6 During direct examination, D'Angelo testified that he knew about the IME but had "completely forgot." He explained that missing the appointment was "[a]bsolutely not" intentional and that he had "[n]ever" missed an exam related to his industrial injury before. Continental did not ask any questions about the missed IME during cross-examination. At the end of the hearing, Continental stated it was in the process of scheduling another IME.
¶7 Shortly after the hearing, D'Angelo sent a letter, relaying his understanding that Continental would provide the legal authority supporting its motion for reimbursement before he needed to respond. After completion of the rescheduled IME in September 2017, the ALJ held two additional hearings, receiving testimony from both Dr. Prust and D'Angelo's physician. During those subsequent hearings, the motion for reimbursement was not discussed.
¶8 In January 2018, the ALJ issued its decision upon hearing, ordering that D'Angelo be weaned from oxycodone, as recommended by Dr. Prust. The ALJ also found that D'Angelo had "missed his medical examination without an adequate reason" and, therefore, ordered him to reimburse Continental "for the costs associated with the missed medical examination."
¶9 D'Angelo filed a request for review, arguing, in part, that the ALJ had erred in finding him responsible for the costs of the missed IME. He reasoned that (1) the request for reimbursement had been waived because Continental failed to present supporting legal authority or the amount of the request or (2) the award could not stand because the ALJ had received no evidence showing the amount of the request and whether that amount was reasonable, thereby infringing on his due process rights. D'Angelo also asserted that the award effectively reduced his "benefits without a vote of the people" in contravention of the Arizona Constitution. Attached to its response, Continental, for the first time, provided an invoice from Dr. Prust, showing $2,575 due for the missed IME. In a subsequent letter, D'Angelo urged the ALJ not to consider the invoice as evidence because Continental had not followed the appropriate evidentiary rules or provided an adequate explanation for the tardy disclosure. The ALJ affirmed the award. This petition for special action followed. We have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(2), 23-951(A), and Rule 10, Ariz. R. P. Spec. Act.
Article XVIII, § 8 of the Arizona Constitution provides, in part: "The percentages and amounts of compensation provided in house bill no. 227 enacted by the seventh legislature of the state of Arizona, shall never be reduced . . . except by initiated or referred measure as provided by this Constitution." House Bill No. 227 was a workers' compensation act enacted in 1925 that identified "percentages and amounts . . . to which claimants are entitled." Naslund v. Indus. Comm'n, 210 Ariz. 262, ¶ 20 (App. 2005) (quoting Adkins v. Indus. Comm'n, 95 Ariz. 239, 244 (1964)).
Discussion
¶10 The sole issue on appeal is the propriety of the award ordering D'Angelo to reimburse Continental for the cost of the missed IME. D'Angelo argues Continental waived its right to claim reimbursement by failing to submit "evidence of the exam's cost and the legal authority for its position prior to the close of the record." Alternatively, he contends the ALJ erred in ordering the reimbursement because "at the time of the . . . [a]ward [Continental] had submitted no evidence of the exam's cost and whether it was reasonable."
As he did below, D'Angelo also maintains the rule allowing for reimbursement, Arizona Administrative Code R20-5-114(B), "violate[s] Article 18, Section 8 of the Arizona Constitution by reducing D'Angelo's workers' compensation benefits without a vote of the people." However, because we set aside the award for other reasons, we need not address this argument. See Fragoso v. Fell, 210 Ariz. 427, ¶ 6 (App. 2005) ("Courts should decide cases on nonconstitutional grounds if possible, avoiding resolution of constitutional issues, when other principles of law are controlling and the case can be decided without ruling on the constitutional questions." (quoting In re $315,900 U.S. Currency, 183 Ariz. 208, 211 (App. 1995))).
¶11 On appeal, the parties agree that the ALJ's order for reimbursement was based on Arizona Administrative Code R20-5-114(B) (hereinafter, "Rule 114(B)"). That rule provides:
If a claimant unreasonably fails to attend or promptly advise of the claimant's inability to attend an examination under this Section, the party requesting the examination may charge the claimant or deduct from the claimant's entitlement to present or future temporary or permanent disability compensation, any reasonable expense of the missed appointment.A.A.C. R20-5-114(B).
¶12 Turning to D'Angelo's first argument, he relies on two cases—Estate of Wesolowski v. Industrial Commission, 192 Ariz. 326 (App. 1998), and A.J. Bayless Markets, Inc. v. Industrial Commission, 134 Ariz. 243 (App. 1982)—to contend that Continental waived its claim for reimbursement by failing to provide legal support for its position and the cost of the missed IME "in a timely fashion." We find those cases distinguishable. In Estate of Wesolowski, the special fund waived its right to present an affirmative defense by not raising it before the ALJ during the hearing process. 192 Ariz. 326, ¶¶ 7-11. In A.J. Bayless, the petitioners waived their right to cross-examine the authors of a medical report by failing to timely notify the ALJ of their desire to do so after receiving the report. 134 Ariz. at 245. By contrast, the overarching issue here—Continental's request for reimbursement—was raised before the ALJ, both in a motion and at the first hearing.
¶13 D'Angelo is correct that the failure to raise an issue below generally waives it on appeal. See Stephens v. Indus. Comm'n, 114 Ariz. 92, 94 (App. 1977) ("This court will not consider on review an issue not raised before the Industrial Commission where the petitioner has had an opportunity to do so."). However, the decision to find waiver is discretionary. See Noriega v. Town of Miami, 243 Ariz. 320, ¶ 27 (App. 2017); see also City of Tucson v. Clear Channel Outdoor, Inc., 209 Ariz. 544, n.9 (2005) (describing rule of waiver as "rule of prudence, not of jurisdiction"). The reason underlying the waiver rule is to allow the ALJ an opportunity to address all of the issues on their merits. See T.W.M. Custom Framing v. Indus. Comm'n, 198 Ariz. 41, ¶ 4 (App. 2000); see also Cont'l Lighting & Contracting, Inc. v. Premier Grading & Utils., LLC, 227 Ariz. 382, ¶ 12 (App. 2011).
¶14 Although Continental failed to provide the legal authority supporting its motion for reimbursement below, which could support a finding of waiver, cf. State v. Lopez, 217 Ariz. 433, ¶ 4 (App. 2008) (objection on one ground does not preserve issue on another), the ALJ nonetheless addressed the issue, apparently relying on Rule 114(B), see Cont'l Lighting & Contracting, 227 Ariz. 382, ¶ 12. The Industrial Commission (IC) rules, including Rule 114(B), are contained in the Arizona Administrative Code. See A.R.S. § 23-921(B) (IC may make all rules "reasonably required in the performance of its duties"); see also Martinez v. Indus. Comm'n, 175 Ariz. 319, 322 (App. 1993). The Code is "part of the record in each action or proceeding without reference" thereto, A.A.C. R20-5-101(B), and "[t]he Commission deems all parties to have knowledge of [the rules]," A.A.C. R20-5-101(C). Notably, the ALJ suggested to D'Angelo at the first hearing that the authority for Continental's request was in the Code, and D'Angelo admits on appeal that Rule 114(B) was the basis for the award. This therefore undermines application of the waiver rule here.
¶15 Continental conversely suggests that waiver does not apply because under Rule 114(B) it did not need to ask the ALJ's "permission" before billing D'Angelo for the missed IME. We agree that the plain language of Rule 114(B) does not contain any such requirement; rather, it provides, if a claimant "unreasonably fails to attend" an IME, the party requesting the exam "may charge the claimant or deduct from the claimant's [benefits] any reasonable expense of the missed appointment." See Martinez, 175 Ariz. at 321 (when language is plain and unambiguous, courts must follow as written). However, the issue was squarely before the ALJ because of Continental's motion for reimbursement. Moreover, Continental recognizes that even if it had billed D'Angelo without first filing a motion for reimbursement, D'Angelo still could have requested a hearing on the matter. See A.R.S. § 23-941(A) ("[A]ny interested party may file a request for a hearing concerning a claim.").
¶16 Continental's failure to provide the cost of the missed IME until the filing of its response to the request for review put D'Angelo at a disadvantage. See City of Tempe v. Fleming, 168 Ariz. 454, 456 (App. 1991) (waiver justified where opposing party might have responded differently had issue been raised below). However, at the time Continental filed its motion for reimbursement, it did not know the amount because it apparently had not received a bill from Dr. Prust. And the record does not show when Continental received the bill. Accordingly, because the doctrine of waiver is discretionary and because the ALJ addressed Continental's motion for reimbursement, we decline to apply waiver here. Cf. Larson v. Indus. Comm'n, 114 Ariz. 155, 158 (App. 1976) ("The question, however, was not presented to the Industrial Commission and therefore we will not consider it for the first time here.").
The motion for reimbursement was filed on August 8, 2017, and the response to the request for review was not filed until March 9, 2018. Dr. Prust's invoice is dated August 25, 2017.
¶17 Turning to D'Angelo's next argument, he contends the ALJ "erred as a matter of law" in ordering the reimbursement because the award "was not based on substantial evidence." He reasons that the ALJ received no evidence of the cost of the missed IME and, therefore, could not find that those costs were reasonable, as required by Rule 114(B). In addition, he maintains the award "violated [his] due process rights by denying him the opportunity to question the reasonableness of the charge by cross-examination."
¶18 In issuing an award, an ALJ must "state [it]s resolution of conflicting evidence on material and important issues, find the ultimate facts, and set forth [its] application of law to those facts." Mace v. Indus. Comm'n, 204 Ariz. 207, ¶ 4 (App. 2003) (quoting Post v. Indus. Comm'n, 160 Ariz. 4, 8 (1989)). As mentioned above, this court views the evidence in the light most favorable to affirming the award. Hackworth, 229 Ariz. 339, ¶ 2. However, we will set aside an award that is not supported by substantial evidence. See Roberts v. Indus. Comm'n, 162 Ariz. 108, 110 (1989); see also Lovitch v. Indus. Comm'n, 202 Ariz. 102, ¶ 16 (App. 2002) (we will affirm if award is reasonably supported by evidence).
¶19 Here, D'Angelo testified that he had missed the IME because he "completely forgot." The ALJ found that D'Angelo "missed his medical examination without an adequate reason" and concluded that "he is responsible for the costs associated with that examination." Yet, the record from the hearings is devoid of evidence showing the cost of the missed IME. D'Angelo was ordered to "reimburse [Continental] for the costs associated with the missed medical examination by Dr. Prust," but those costs were not specified in the award. Indeed, they could not have been included in the award because the amount was not yet known.
¶20 As D'Angelo points out, Rule 114(B) only allows for reimbursement of a "reasonable expense." However, the ALJ made no finding about the cost of the missed IME or whether it was reasonable. See Mace, 204 Ariz. 207, ¶ 4. As noted above, it could not have done so given that it received no such evidence during the hearings. See Sw. Nurseries v. Indus. Comm'n, 133 Ariz. 171, 174 (App. 1982) (fact-finding process in IC case ends at conclusion of last scheduled hearing). And because our review is limited to the record before the ALJ, see Shockey v. Indus. Comm'n, 140 Ariz. 113, 116 n.1 (App. 1983); see also Wood v. Indus. Comm'n, 126 Ariz. 259, 261-62 (App. 1980), we cannot say substantial evidence supports the ALJ's award, see Macias v. Indus. Comm'n, 139 Ariz. 182, 184 (1984) (substantial evidence did not exist where there was "no evidence").
Dr. Prust's invoice shows a balance of $2,575 for a "no show-full fee." Although we express no opinion as to the reasonableness of this amount, we think the inquiry requires, at a minimum, consideration of the doctor's rate, time actually expended, or missed opportunity to see others. Cf. Schweiger v. China Doll Restaurant, Inc., 138 Ariz. 183, 187-88 (award of reasonable attorney fees under A.R.S. § 12-341.01 requires consideration of reasonable billing rate and hours reasonably expended).
¶21 Continental, nevertheless, argues that it submitted substantial evidence of the missed IME's cost—specifically, the invoice from Dr. Prust—as part of its response to the request for review. It compares this situation to an award of attorney fees in a civil case, where a party "submit[s] evidence of its attorneys' fees and/or costs after the court issues a ruling that awards them as sanctions." We are unpersuaded by the analogy.
¶22 In a civil case, there are numerous rules detailing how and when a trial court enters judgment. See Ariz. R. Civ. P. 54, 58; see also Ariz. R. Civ. App. P. 8, 9. Generally, a judgment is not final until all the issues, including the amount of an attorney fees award, are resolved. See Ariz. R. Civ. P. 54(a)-(c), (g)-(h); see also Bollermann v. Nowlis, 234 Ariz. 340, ¶ 8 (2014) ("Rule 54(b) prohibits the entry of final judgment absent a determination of all issues, including attorneys' fees, except upon express direction from the trial court.").
¶23 By contrast, in an IC case, "[u]pon the conclusion of any hearing," an ALJ shall "make an award in accordance with [its] determination." A.R.S. § 23-942(A). Generally, "[t]he award is final when entered." § 23-942(D). When a party files a request for review, the ALJ must base its decision upon review on the existing record and legal memoranda submitted by the parties; the ALJ cannot receive new evidence. See A.R.S. § 23-943(E). Thus, the amount of a missed IME and whether it is reasonable are factual determinations that must be rendered as part of the decision upon hearing and based upon the evidence presented throughout the hearing process. See Mace, 204 Ariz. 207, ¶ 4; see also Sw. Nurseries, 133 Ariz. at 174.
¶24 Continental additionally argues that D'Angelo never challenged the amount of the missed IME below and that he should not be allowed to do so on appeal. However, D'Angelo had no opportunity to do so below until Continental had filed its response to the request for review. Contrary to Continental's suggestion otherwise, there was no procedural mechanism for D'Angelo to challenge the amount in a reply to Continental's response. See § 23-943(A) (if party files request for review, other interested party can respond). And although D'Angelo sent a letter at that point, his request therein—which is consistent with his argument on appeal—was that the invoice not be considered at all. See § 23-941(F) (ALJ not bound by formal rules of procedure but must achieve substantial justice).
¶25 Notably, because Continental failed to provide the amount of the invoice until its response to the request for review, D'Angelo had no opportunity to cross-examine Dr. Prust about it. See A.J. Bayless, 134 Ariz. at 245 ("Whenever the Commission receives any kind of evidence, either in testamentary or documentary form, there must be full and complete opportunity to cross-examine the person or persons giving such evidence."). Such testimony could have established the reasonableness—or lack thereof—of the $2,575 amount. For example, D'Angelo could have asked Dr. Prust how the "full fee" charged to him differs from the amount he would have been paid by Continental, and evidence could have been adduced or offered as to whether the amount claimed is customary.
D'Angelo asserts the ALJ's award "violate[s] the [IC]'s own fee schedule for missed consultations by ordering D'Angelo to pay the full cost of the missed examination." He points to the Arizona Physicians' and Pharmaceutical Fee Schedule, which provides that missed appointments be compensated at fifty percent. Continental, however, contends that the fee schedule only applies to attending physicians, not IME physicians like Dr. Prust. Given that we liberally construe the workers' compensation act, which has the remedial purpose of compensating and protecting employees, we see no reason why the fee schedule would apply to D'Angelo's treating physician but not Dr. Prust. See Mail Boxes, Etc., U.S.A. v. Indus. Comm'n, 181 Ariz. 119, 122 (1995); see also Bridgestone Retail Tire Operations v. Indus. Comm'n, 227 Ariz. 453, ¶ 10 (App. 2011).
¶26 In conclusion, without evidence of the cost of the missed IME presented during the hearings and D'Angelo having a full and fair opportunity to challenge the evidence, the ALJ was unable to find the ultimate facts and apply the law to those facts. See Mace, 204 Ariz. 207, ¶ 4; see also A.A.C. R20-5-114(B). Consequently, we cannot say substantial evidence supports the award. See Roberts, 162 Ariz. at 110; see also Lovitch, 202 Ariz. 102, ¶ 16.
Disposition
¶27 For the foregoing reasons, the award is set aside.