Special Fund Division v. Industrial Commission

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

SPECIAL FUND DIVISION, Petitioner Party in Interest,

v.

THE INDUSTRIAL COMMISSION OF ARIZONA, Respondent,

LA PALMA CORRECTIONAL CENTER, Respondent Employer,

NEW HAMPSHIRE INSURANCE/AIG, Respondent Carrier,

STEPHANIE L. LANE, Respondent Employee.

No. 1 CA-IC 15-0023
FILED 6-21-2016

Special Action - Industrial Commission

ICA Claim No. 20102-940008
Carrier Claim No. 710-722421
J. Matthew Powell, Administrative Law Judge

AWARD AFFIRMED

COUNSEL

Special Fund Division, Phoenix
By Stephen D. Ball
Counsel for Petitioner Party in Interest

Industrial Commission of Arizona, Phoenix
By Jason M. Porter
Counsel for Respondent
Jones, Skelton & Hochuli, PLC, Phoenix
By Gregory L. Folger, Jennifer B. Anderson
Counsel for Respondents Employer and Carrier

Snow, Carpio & Weekley, PLC, Phoenix
By Brian A. Weekley
Counsel for Respondent Employee

OPINION

Judge John C. Gemmill delivered the opinion of the Court, in which
Presiding Judge Andrew W. Gould and Judge Margaret H. Downie joined.

G E M M I L L, Judge:

¶1 This is an apportionment dispute between respondent
employer and carrier (collectively “New Hampshire”) and petitioner party
in interest, Special Fund Division (“the Special Fund”) of the Industrial
Commission of Arizona (“ICA”). The Special Fund seeks review of an ICA
award and decision upon review granting apportionment.

¶2 Before working for employer La Palma Correctional Center,
the respondent employee, Stephanie L. Lane, served in the military for
several years, completed a tour of duty in Iraq, and thereafter experienced
post-traumatic stress disorder, depression, and anxiety. The issue
presented is whether her outpatient treatment at a Veterans Administration
clinic in Casa Grande (“VA clinic”) for preexisting conditions constituted
“treatment in a recognized medical or mental institution” within the
meaning of Arizona Revised Statutes (“A.R.S.”) section 23-1065(C)(3)(n).
Applying standard principles of statutory interpretation, we conclude that
the statute includes outpatient treatment and is not limited to inpatient
treatment. We therefore affirm the award and decision upon review of the
administrative law judge (“ALJ”).

BACKGROUND

¶3 In October 2010, the employee injured her low back while
working in La Palma’s warehouse. She filed a worker’s compensation claim
that was accepted for benefits. Her claim was eventually closed with an
unscheduled permanent partial impairment. The ICA then entered its

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Opinion of the Court

findings and award for a 75.79% loss of earning capacity (“LEC”) and
permanent disability benefits in the amount of $1,104.04 per month.1

¶4 The respondent carrier, New Hampshire, protested the ICA’s
findings and award, and requested apportionment of the employee’s
permanent disability benefits based on her “significant preexisting
psychiatric disabilities from her military service prior to [her]
employment.”2 The ALJ entered an order joining the Special Fund as a
party.

¶5 A hearing was held to address the issue of apportionment.
The employee testified that prior to her industrial injury in 2010, she had
received outpatient medical and mental healthcare at the VA clinic.
Thereafter, the ALJ entered an award granting apportionment in
accordance with A.R.S. § 23-1065(C)(4). The Special Fund timely requested
administrative review, and the ALJ summarily affirmed the award. The
Special Fund now seeks review by this court. This court has jurisdiction
under A.R.S. §§ 12-120.21(A)(2), 23-951(A), and Arizona Rule of Procedure
for Special Actions 10.

ANALYSIS

¶6 The primary purpose of the apportionment statute, A.R.S. §
23-1065, is to promote the hiring and retention of disabled or handicapped
workers. See Special Fund Div. v. Indus. Comm’n (Sordia), 224 Ariz. 29, 32, ¶
10 (App. 2010). Before the enactment of the statute, “an employer that
hired an individual with a preexisting injury who then suffered an
industrial injury was required to fully compensate the individual for both
the preexisting injury and the permanent physical impairment.” Id. Section
23-1065 ameliorates the employer’s burden by providing reimbursement
from the Special Fund for one-half the amount of compensation for loss of
earning capacity or permanent total disability, see § 23-1065(C)(4), when an

1 The ICA makes the initial determination of whether a permanent
impairment has resulted in an LEC. See A.R.S. § 23-1047(A).

2 The employee also protested the ICA’s findings and award. Both her
protest and New Hampshire’s protest regarding the amount of the LEC and
disability benefits have been resolved and are not before this court. This
apportionment dispute does not impact the employee’s permanent
disability benefits. The question is simply whether New Hampshire
shoulders the entire burden or shares the burden with the Special Fund.

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employer has knowingly employed or retained a person with a qualifying
impairment who later suffers an industrial injury, Sordia, 224 Ariz. at 31, ¶
3.

¶7 To obtain apportionment, New Hampshire must establish
that the employee’s preexisting condition fits within A.R.S. § 23-
1065(C)(3)(n):

C. In claims involving an employee who has a preexisting
physical impairment that is not industrially-related and,
whether congenital or due to injury or disease, is of such
seriousness as to constitute a hindrance or obstacle to
employment or to obtaining reemployment if the employee
becomes unemployed, and the impairment equals or exceeds
a ten per cent permanent impairment evaluated in accordance
with the American medical association guides to the
evaluation of permanent impairment, and the employee
thereafter suffers an additional permanent impairment not of
the type specified in § 23-1044, subsection B, the claim
involving the subsequent impairment is eligible for
reimbursement, as provided by subsection D of this section,
under the following conditions:

‫٭٭٭٭‬

3. The employee’s preexisting impairment is due to one
or more of the following:

‫٭٭٭٭‬

(n) Psychoneurotic disability following treatment in
a recognized medical or mental institution.

(Emphasis added.)

¶8 The parties agree that all the prerequisites for reimbursement
under § 23-1065(C)(3)(n) are satisfied in this situation, with one exception.
That is, New Hampshire and the Special Fund disagree only about whether
the employee’s VA clinic outpatient treatment for her preexisting
psychoneurotic condition constitutes “treatment in a recognized medical or
mental institution” within the meaning of A.R.S. § 23-1065(C)(3)(n). The

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ALJ concluded that the statutory language did not require inpatient
treatment.3

¶9 Whether New Hampshire is entitled to reimbursement under
A.R.S. § 23–1065(C) is an issue of statutory interpretation that we review de
novo. See Special Fund Div. v. Indus. Comm’n (Karen Lane), 232 Ariz. 110, 112,
¶ 10 (App. 2013); Special Fund Div. (Sordia), 224 Ariz. at 31, ¶ 7; New Sun Bus.
Park, LLC v. Yuma County, 221 Ariz. 43, 45, ¶ 4 (App. 2009). “We first look
to the plain language of the statute as the most reliable indicator of its
meaning.” Special Fund Div. (Sordia), 224 Ariz. at 31, ¶ 8. Statutory language
is normally given its ordinary, common meaning unless it appears from the
context that a different meaning is intended. See A.R.S. § 1-213. “If the
language is clear and unambiguous, we give effect to that language and do
not employ other methods of statutory construction.” State v. Pledger, 236
Ariz. 469, 471, ¶ 8 (App. 2015). See also Prince & Princess Enters., LLC v. State
ex rel. Ariz. Dep’t of Health Servs., 221 Ariz. 5, 6, ¶ 5 (App. 2008).

3 The ALJ explained:

There is no Arizona case law construing the statutory phrase
“treatment in a recognized medical or mental institution.”
Neither does it appear that any other state with a similar
provision has had occasion to interpret the language.
However, common sense and established law regarding the
purpose of the apportionment statute support the carrier’s
interpretation. As stated in the carrier’s legal memorandum,
its “interpretation would more effectively promote the Act’s
purpose of encouraging employers to hire employees with
preexisting psychiatric injuries. The vast majority of
psychiatric and mental health patients are treated on an
outpatient basis. Limiting apportionment to disabilities
following inpatient psychiatric treatment would have the
perverse effect of discouraging employers from hiring the
very people who are most likely to be productive employees
because their less serious conditions allowed for outpatient
care.” Accordingly, it is concluded that the word “in” in
A.R.S. § 23-1065(C)(3)(n) merely pertains to the location
where the qualified treatment is provided. Treatment
provided inside, within or at a qualified medical or
psychiatric institution is sufficient.

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Opinion of the Court

¶10 Applying the ordinary and common usage of the words,
treatment “in a recognized medical or mental institution” does not convey
a requirement of inpatient as opposed to outpatient treatment. Rather, the
language requires only that the employee receive treatment “in” a
recognized medical or mental institution. The VA clinic is such an
institution, and this employee received treatment at — and within or “in”
— the institution.

¶11 If the legislature had intended to limit this qualifying and
preexisting condition to one requiring inpatient treatment in a medical or
mental institution, it would have used appropriate words to convey that
meaning. For example, § 23-1065(C)(3)(n) could have been drafted or
amended to state “[p]sychoneurotic disability following inpatient treatment
in a recognized medical or mental institution” or “[p]sychoneurotic
disability following confinement for treatment in a recognized medical or
mental institution.” (Hypothetical additional words italicized.) See, e.g.,
Ga. Code Ann. § 34-9-361(13) (“[p]sychoneurotic disability following
confinement for treatment in a recognized medical or mental institution for a
period in excess of six months”) (emphasis added). Our legislature, however,
did not include these additional words and we will not engage in “judicial
legislation.” See Morgan v. Carillon Investments, Inc., 207 Ariz. 547, 552, ¶ 24
(App. 2004), aff’d, 210 Ariz. 187 (2005). “The choice of appropriate statutory
language rests with the legislature, and therefore, it is up to the legislature,
if it so desires, to amend or clarify the meaning” of § 23-1065(C)(3)(n). See
Nordstrom, Inc. v. Maricopa Cty., 207 Ariz. 553, 557-58, ¶ 15 (App. 2004).

¶12 The Special Fund contends that the language “in a recognized
medical or mental institution” should be interpreted to mean “inpatient”
treatment at such a facility. In support of that interpretation, it argues that
a “mental institution,” as defined by the American Psychological
Association’s Dictionary of Psychology, is for patients “unable to function .
. . as outpatients.” We decline to apply this technical meaning to words that
have a discernible ordinary meaning, as here. And even if the term “mental
institution” is usually associated with inpatient treatment, such an
institution may also direct and provide outpatient treatment. Further, the
Special Fund’s interpretation based on “mental institution” does not
address the additional statutory term “medical . . . institution.” This record
reveals that the VA clinic is an institution that provides outpatient
treatment for both medical and mental or psychological conditions. See
Obregon v. Indus. Comm’n, 217 Ariz. 612, 615, ¶ 16 (App. 2008) (explaining
that “each word or phrase in a statute must be given meaning so that no
part is rendered void, superfluous, contradictory, or insignificant”).

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¶13 The Special Fund also argues for its preferred interpretation
on the basis that this preexisting condition is the only one listed in the
statute that requires treatment in a “recognized medical or mental
institution.” We agree that it is important to compare the language and
structure of § 23-1065(C)(3)(n) with the other conditions listed in § 23-
1065(C)(3), and we agree with the Special Fund that this particular language
is intended to be limiting. But the conclusion reached from such a
comparison does not mandate the Special Fund’s interpretation of the
statute. The additional language in subsection (n) requires treatment in a
“recognized . . . institution” as opposed to routine psychological counseling
in a doctor’s office. Nonetheless, this statutory language is insufficient to
limit qualifying preexisting impairments to those for which inpatient
treatment was received.

CONCLUSION

¶14 Based on a plain reading of A.R.S. § 23-1065(C)(3)(n), we
affirm the award and decision upon review.

:AA

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