GARY DAVIS v. STATE OF IDAHO INDUSTRIAL SPECIAL INDEMNITY FUND (2017)

PETITION FOR REHEARING

(Filing Fee: $71.00)

COME NOW the above-named Respondents, Hammack Management, Inc., and Idaho State Insurance Fund, by and through their counsel of record, Elam & Burke, PA, and hereby petition this Court, pursuant to Rule 42 of the Idaho Appellate Rules, to rehear its decision in the above-entitled matter, which decision was issued on February 24, 2017.

I. SUMMARY OF BASES FOR REHEARING

This Petition for Rehearing is brought for the following reasons:

1. The Court erred in holding the Industrial Commission (“Commission”) had jurisdiction to re-open the case, based on Williams v. Blue Cross of Idaho, 151 Idaho 515, 260 P.3d 1186 (2011).

2. The Court erred in holding the Stipulation for Entry of Award Against Defendants (“Stipulation”) violated Idaho Code § 72-318(2).

3. The Court erred in applying Corgatelli v. Steel West, Inc., 157 Idaho 287, 335 P.3d 1150 (2014) retroactively.

II. LEGAL BASES FOR REHEARING

A. The Holding in Williams does not provide the Commission Jurisdiction Over the Dispute over the Terms of the Stipulation for Entry of Award Against Defendants

The Supreme Court erred when it held that the Claimant had a right to re-open a long-final, non-appealable decision of the Commission pursuant to Williams v. Blue Cross of Idaho, 151 Idaho 515, 260 P.3d 1186(2011). Williams is factually and procedurally distinguishable from the present matter and does not create a new appellate right to be used by a claimant who has failed to seek reconsideration, rehearing or appeal of a final decision of the Commission.

In Williams, the claimant sought the entry of a declaratory judgment against Blue Cross, which was not a party to the underlying lump sum settlement agreement between the claimant and employer/surety. Therefore, the only procedural avenue through which the claimant could clarify his rights under the lump sum settlement agreement with the employer/surety relative to Blue Cross' third party subrogation rights was through a petition for declaratory ruling. The claimant in Williams was not attempting to re-litigate his rights with respect to the employer/surety in the underlying lump sum settlement agreement.

In this case, however, the Claimant is relitigating a final, non-appealable decision of the Commission. Claimant had two existing statutory methods to have the Commission's approval of the voluntary Stipulation between he and the Employer/Surety reconsidered or overturned. First, the Claimant could have moved for reconsideration of the Commission's approval of the Stipulation under Idaho Code § 72-718, but did not. Second, the Claimant could have appealed the Commission's final approval of the Stipulation to this Court under Idaho Code § 72-724, but also did not. Upon the expiration of the required time frames for reconsideration and appeal, the Commission's approval of the Stipulation was final under Idaho Code § 72-718. Nothing in the Worker's Compensation Act permits the decision to be further appealed, re-opened or re-litigated.

Williams does not establish that a claimant who has failed to avail himself of his statutory rights to seek reconsideration, modification or appeal of a final decision of the Commission under Idaho Code §§ 72-718, 72-719 or 72-724 may later re-open the same matters previously adjudicated by the Commission in its final decision by filing a petition for a declaratory ruling. In Williams, this Court's holding was limited to the factual situation where the employer/surety and employee had entered into a settlement agreement (which was approved by the Commission), but the agreement did not address the rights of a third party thereto, pursuant to Idaho Code § 72-707. 151 Idaho at 519, 260 P.3d at 1190. Idaho Code § 72-707 provides the Commission with jurisdiction to determine questions that arise under the Worker's Compensation Act not settled by agreement or stipulation of the interested parties with the approval of the Commission. See Idaho Code § 72-707(“All questions arising under this law, if not settled by agreement or stipulation of the interested parties with the approval of the commission, except as otherwise herein provided, shall be determined by the commission.”) (emphasis added).

In this case, the parties voluntarily and contractually settled the issue of the payment of income benefits in the Stipulation. Idaho Code § 72-707 does not provide the Commission with statutory authority to revisit or reopen the matters already adjudicated and agreed to by the parties to the Stipulation. The Court's opinion here extends the holding of Williams to create a new right of appeal of a statutorily final decision of the Commission - an appellate right that does not exist under the Worker's Compensation Act and which is bound neither by time nor by substance. No decision of the Commission relative to the matters it has adjudicated may be final at any time if the claimant may re-open and re-litigate the matters adjudicated by filing a later petition seeking a declaratory ruling.

Establishing this new appellate right is contrary to the statutory finality of a Commission's order under Idaho Code § 72-718 as well as the concept of res judicata. Since the Worker's Compensation Act is a purely statutory scheme, the Court should not judicially insert a new appellate right into worker's compensation law.

B. The Stipulation Does Not Violate Idaho Code § 72-318(2)

The Court erred in holding the Commission exceeded its statutory authority in approving the Stipulation and consequently that the Commission's June 2014 order approving the Stipulation entered into between the parties was void. The Court held that the Commission's approval of the Stipulation violated Idaho Code § 72-318(2) since the agreement recognized the credit for the payment of permanent partial impairment benefits. As noted in the dissenting opinions of Justice Eismann and Justice Morton, this court has repeatedly held that § 72-318(2) deals with the waiver of future claims, not the ability of a claimant to compromise and settle an existing claim. See Davis v. Hammack Mgmt., Inc., No. 43863, 2017 WL 727767, at *8 (Idaho Feb. 24, 2017) (Eismann, J., dissenting) (“[A] settlement agreement resolving an existing claim arising from past injuries does not violate Idaho Code § 72-318(2).”). The Stipulation in this case resolves an existing claim based on a past injury and does not therefore violate § 72-318(2). This holding underpins the majority opinion and warrants rehearing. The Court's decision severely hampers the ability of parties to negotiate settlements of contested claims and come to a final resolution of the benefits owed to an injured worker.

The Legislature has provided claimants with specific statutory avenues to challenge purported legal errors. Davis chose not to avail himself of those remedies. He did not file a timely motion for reconsideration with the Commission or a timely appeal to this Court. The Commission had jurisdiction over the parties and the subject matter when it approved a settlement agreement negotiated at arms-length by the parties. With that jurisdiction comes the right of the Commission to make an error of law. By not timely appealing the final decision of the Commission, Davis should be foreclosed from re-opening this case. This Court explained why 75 years ago:

And furthermore, in Hamlin v. University of Idaho, 61 Idaho 570, 573, 574, 104 P.2d 625, an industrial accident case, we held that where the Industrial Accident Board has jurisdiction of the subject matter and of the parties, as in the case at bar, it has jurisdiction to commit error, applying to awards of industrial accident boards the rule applicable to nisi prius courts. To permit appellant to reopen this case would subject to attack every award and decision of the board heretofore rendered and thus create great confusion and uncertainty in that there never could be any finality to the awards and decisions of the Industrial Accident Board. As this court held in Zapantis v. Central Idaho Mining & Milling Co., 61 Idaho 660, 669, 106 P.2d 113, 116, where the identical question under discussion was presented, “There must be an end to litigation.” To the same effect: Fackenthall v. Eggers Pole & Supply Co., 62 Idaho 46, 108 P.2d 300, 302.

Bower v. Smith, 63 Idaho 128, 118 P.2d 737, 739 (1941).

The Court's decision will produce great confusion amongst the worker's compensation bar and will result in the re-opening and re-litigating of cases long closed. The Legislature, in Idaho Code § 72-718, provided that the Commission's decisions are final and conclusive as to the matters adjudicated, subject only to the rights of petitioning for reconsideration, modification or appeal that are expressly stated the Worker's Compensation Act. There is no statutory basis that provides a claimant with the option to collaterally attack a final decision by filing a petition for declaratory ruling at any time in the future. This is especially problematic where parties are permitted, like here, to apply decisions of this Court retroactively.

Absent fraud or manifest injustice, these final, non-appealable cases should not be reopened.

Once a determination is made regarding the degree of a claimant's permanent disability, compensation for that disability may be awarded either through periodic payments, I.C. §§ 72-408, -409, or through a single lump sum payment, I.C. § 72-404. The particular method of compensation is left largely to the discretion of the parties, subject to the approval of the Industrial Commission, I.C. §§ 72-404, 72-711. However, once a lump sum compensation agreement is approved by the commission, that agreement becomes an award and is final and may not be reopened or set aside absent allegations and proof of fraud.

Harmon v. Lute's Const. Co., 112 Idaho 291, 293, 732 P.2d 260, 262 (1986):

Upon approval, the agreement is for all purposes considered to be an award by the Commission. Id. The approved agreement constitutes a final decision of the Commission which is subject to a motion for reconsideration or rehearing pursuant to I.C. § 72-718.

Drake v. State, Indus. Special Indem. Fund, 128 Idaho 880, 882, 920 P.2d 397, 399 (1996).

As Justice Eismann noted in his dissent in this case, “Claimant's award in this case is final, and it may not be reopened pursuant to Idaho Code section 72-719(1), nor does it violate Idaho Code section 72-318(2) as we have construed that statute.” Davis v. Hammack Mgmt., Inc., No. 43863, 2017 WL 727767, at *8 (Idaho Feb. 24, 2017) (Eismann, J., dissenting).¹

C. The Court erred in applying Corgatelli v. Steel West, Inc., 157 Idaho 287, 335 P.3d 1150 (2014) retroactively.

The practical effect of the Court's opinion is to apply the Court's holding in Corgatelli v. Steel West, Inc., 157 Idaho 287, 335 P.3d 1150 (2014) to all past final, non-appealable decisions by the Commission the subject of which included credits to employers for previously paid permanent physical impairment (PPI) benefits. Such retroactive application of Corgatelli to past, final, non-appealable decisions of the Commission is contrary to Idaho law under the retroactivity test set forth in BHA Investments, Inc. v. City of Boise, 141 Idaho 168, 108 P.3d 315 (2004).

When the Stipulation was approved on June 26, 2014, this Court had not held that the Commission lacked the statutory authority to approve lump sum settlement agreements and compromise agreements that included credits for PPI payments against disability benefits. The Corgatelli holding did not exist. Pursuant to the law as it existed at the time, the parties voluntarily included in their Stipulation a credit to the employer for PPI payments, pursuant to the calculation set forth by this Court in Carey v. Clearwater Cnty. Road Dep't, 107 Idaho 109, 686 P.2d 54 (1984). That voluntary Stipulation was then approved by the Commission. That approval was a final order of the Commission under Idaho Code § 72-718.

On August 25, 2014, this Court, in Corgatelli, held for the first time that the Commission lacks the statutory authority to enter an award, following a hearing, that provides for credits to employers for previously paid PPI benefits. As of that same date, the time for Claimant to seek reconsideration of by the Commission or to appeal the Commission's approval of the Stipulation to this Court had expired and Claimant had not availed himself of either avenue of relief. Therefore, as of August 25, 2014, the Commission's approval of the Stipulation was past, final and non-appealable.

This Court has now held that, pursuant to an opinion rendered in August 2014, the Commission's final approval of the Stipulation in June 2014 is void. Such a holding is a retroactive application of Corgatelli to a past, final, non-appealable decision. This Court has previously held that newly-issued decisions of this Court cannot be retroactively applied to past, final, non-appealable cases. BHA Investments, Inc. v. City of Boise, 141 Idaho 168, 173, 108 P.3d 315, 320 (2004). However, by holding that the Claimant may re-open this past, final, non-appealable award of the Commission by filing a petition for declaratory ruling and, thereafter, holding that that the rule announced in Corgatelli applies to that past, final, non-appealable decision, the Court has opened the door for all similar past, final, non-appealable decisions of the Commission to be re-opened for application of the Corgatelli rule.²

When deciding whether to limit the retroactive application of a decision, the Court weighs three factors: (1) the purpose of the decision; (2) the reliance upon the prior law; and (3) the effect upon the administration of justice if the decision is applied retroactively. BHA, 141 Idaho at 173, 108 P.3d at 320, citing Thompson v. Hagan, 96 Idaho 19, 523 P.2d 1365 (1974). The first factor is balanced against the other two to determine whether to limit the retroactive application of the decision. Id., citing Jones v. Watson, 98 Idaho 606, 570 P.2d 284 (1977).

The last two factors undoubtedly weigh in favor of not applying Corgatelli to decisions that were past, final, and non-appealable when it was released. Prior to June 2014, the Commission approved stipulations and agreements between parties and entered decisions in contested cases that provided PPI payment credits to employers based upon the calculation set forth in this Court's Carey decision. The Court's holding in this case - allowing for the reopening of a final, past, non-appealable decision of the Commission to apply the Corgatelli rule - has effectively eliminated the finality of each and every one of those decisions, opening the floodgates for perhaps decades-old final awards and decisions of the Commission to be revisited. This would have a severely negative effect on the administration of justice. In the words of the Commission itself, if the Court's opinion stands without modification to limit the retroactive application of Corgatelli, “[t]he Commission would do little else but revisit many thousands of long-resolved claims.․” Gary Davis, Claimant, Petitioner Herein, IC 15-000107, 2005-501080, 2015 WL 7294592, at *7 (Idaho Ind. Com. Oct. 6, 2015). Such a flood of reopened cases long believed to be final could ultimately find their way to this Court for many years to come.

III. CONCLUSION

1. Respondents will file their supporting brief within fourteen (14) days of the filing of this Petition for Rehearing.

2. Subject to the Court's approval, Respondents request oral argument.

ELAM & BURKE, P.A.

By:

Geoffrey M. Baker, Of the firm

By:

Matthew C. Parks, Of the firm

Attorneys for Respondents/Cross-Respondents, Hammack Management, Inc. and Idaho State Insurance Fund

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on the 17th day of March, 2017, I caused a true and correct copy of the foregoing document to be served as follows:

Rick D. Kallas x U.S. Mail ELLSWORTH, KALLAS & DEFRANCO, PLLC ____ Hand Delivery 1031 East Park Boulevard ____ Federal Express Boise, Idaho 83712 ____ Via Facsimile Attorneys for Appellant/Cross-Respondent Kenneth L. Mallea X U.S. Mail MALLEA LAW OFFICES _____ Hand Delivery 78 SW 5th Avenue, Suite 1 _____ Federal Express P.O. Box 857 _____ Via Facsimile - 342-3299 Meridian, Idaho 83680 Attorneys for Respondent/Cross-Appellant

Matthew C. Parks

FOOTNOTES

1.   Idaho Code § 72-719(3) similarly does not allow this matter to be re-opened because far more than five years have passed since the date of the accident in 2005.

2.   It is also possible that the Court's holding could be applied more broadly to encompass decisions of other state agencies and the courts.