Nolan v. Joseph painting/continental

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

ALFRED P. NOLAN, Petitioner Employee,

v.

THE INDUSTRIAL COMMISSION OF ARIZONA, Respondent,

JOSEPH PAINTING COMPANY, Respondent Employer,

CONTINENTAL WESTERN INSURANCE COMPANY,
Respondent Carrier.

No. 1 CA-IC 19-0025
FILED 3-31-2020

Special Action - Industrial Commission
ICA Claim No. 20112-920342
Carrier Claim No. 10068951
The Honorable Amy L. Foster, Administrative Law Judge

AFFIRMED

COUNSEL

Law Office of Eric C. Awerkamp, Mesa
By Eric C. Awerkamp
Co-Counsel for Petitioner Employee

Toby Zimbalist, Esq., Phoenix
By Toby Zimbalist
Co-Counsel for Petitioner Employee
Industrial Commission of Arizona, Phoenix
By Gaetano J. Testini
Counsel for Respondent

Lundmark Barberich LaMont & Slavin PC, Phoenix
By Kirk A. Barberich
Counsel for Respondent Employer and Carrier

MEMORANDUM DECISION

Judge Samuel A. Thumma delivered the decision of the Court, in which
Judge Randall M. Howe and Chief Judge Peter B. Swann joined.

T H U M M A, Judge:

Alfred P. Nolan challenges an Industrial Commission of
Arizona (ICA) award finding that his earning capacity increased since the
closure of his claim in 2015. Nolan argues that, because the 2015 closure was
based on a stipulated earning capacity of 20 work hours per week,
Respondents are precluded from showing that he can now work a 40-hour
week. Concluding that Gallegos v. Indus. Comm’n, 144 Ariz. 1 (1985) is
controlling, and that sufficient evidence supports the findings, the award is
affirmed.

FACTS AND PROCEDURAL HISTORY

Nolan was injured in July 2010 while working for Respondent
Employer Joseph Painting when he fell about 20 feet into a wastewater tank
that he was coating with resin. He suffered serious injuries including
broken ribs, a broken hip, a punctured lung, injuries to his spine, right
shoulder and wrist and a traumatic hernia that required implants.

When Respondent Carrier Continental Western Insurance
Company issued a notice in September 2014 closing the claim with no
permanent impairment, Nolan filed a challenge. The parties then settled the
case by signing a stipulation and requesting that the Administrative Law
Judge (ALJ) issue an award. Among other things, the stipulation provided
Nolan was medically stationary; had an unscheduled, permanent, whole
person impairment; and was entitled to permanent partial disability

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benefits of $832.36 per month, based on a 20-hour work week. The ALJ
adopted the stipulations and issued a corresponding award in July 2015.

In March 2018, Respondents filed a Petition for
Rearrangement or Readjustment, claiming Nolan had no medical
restrictions limiting him from working 40 hours per week as a parking lot
cashier. In June 2018, the ICA issued a summary award finding Nolan was
entitled to a reduced benefit based on a 40-hour work week. Nolan
requested a hearing.

At the hearing, Nolan and Doctors J. Carvel Jackson and
Kevin Ladin testified. Dr. Jackson evaluated Nolan in April 2012 and had
been treating him since August 2016, while Dr. Ladin performed an
independent medical examination in October 2018. The material dispute
between their testimony was Dr. Jackson’s opinion that Nolan should not
work more than 20 hours per week, while Dr. Ladin found no medical
reason why he could not work 40 hours per week. The parties stipulated
that parking lot cashier was a proper job for Nolan. Nolan argued
Respondents were precluded from arguing that Nolan could work 40 hours
per week given the 2015 stipulation that he could only work 20 hours per
week and that Respondents failed to show an increased earning capacity
compared to July 2015 that met the criteria for rearrangement. See Ariz. Rev.
Stat. (A.R.S.) § 23-1044(F) (2020).1

The ALJ found that the 2015 award did not preclude her from
addressing the alleged increase in earning capacity. She also found more
probably correct Dr. Ladin’s testimony that Nolan could work 40 hours per
week. Thus, the ALJ concluded that Respondents had met the criteria for
rearrangement by showing an increase in earning capacity and reduced
Nolan’s loss of earning capacity to $508.17 per month. The ALJ affirmed on
review, finding Respondents had shown a change in Nolan’s ability to work
more than 20 hours per week as compared to the 2015 award. Nolan timely
seeks review by this court.

1 Absent material revisions after the relevant dates, statutes cited refer to

the current version unless otherwise indicated.

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DISCUSSION

I. The ALJ Properly Found Res Judicata Did Not Preclude
Rearrangement.

This court defers to the ALJ’s factual findings but reviews
questions of law de novo. Young v. Indus. Comm’n, 204 Ariz. 267, 270 ¶ 14
(App. 2003). The primary obstacle to Nolan’s preclusion argument is
Gallegos v. Indus. Comm’n, 144 Ariz. 1 (1985). A review of res judicata
principles in worker’s compensation cases provides context for Gallegos.

Compared to typical civil litigation, finality principles are
applied differently in worker’s compensation cases. See Stainless Specialty
Mfg. Co. v. Indus. Comm’n, 144 Ariz. 12, 16 (1985). An accepted but closed
claim may be reopened upon a showing of a “new, additional or previously
undiscovered temporary or permanent condition.” A.R.S § 23-1061(H). This
provision acknowledges the difficulty of accurately predicting the future
physical condition of an injured worker. “‘[O]ne of the main advantages of
the reopening device [is] that it permits a commission to make the best
estimate of disability it can at the time of the original award, although at
that moment it may be impossible to predict the extent of future disability,
without having to worry about being forever bound by the first appraisal.’”
Stainless Specialty, 144 Ariz. at 16 (quoting 3 Arthur Larson, The Law of
Workers’ Compensation § § 81.31(a) at 15–554.16 to 554.18). Under A.R.S. § 23-
1044(F), either party can petition for rearrangement of disability benefits
when a loss of earning capacity has occurred due to a change in the
worker’s physical condition (Subsection 1), due to non-physical factors
(Subsection 2) or when the worker’s earning capacity has increased
(Subsection 3).

These provisions form a system by which benefits can
consistently reflect the changing circumstances of the worker’s condition
and the job market. “[C]ompensation cases balance the need for finality and
judicial efficiency against the need for continuing jurisdiction to effectuate
the purposes of the act and to accommodate changes in earning capacity
caused by either the employee’s physical condition or the labor market.”
Pima County Bd. of Sup’rs v. Indus. Comm’n, 149 Ariz. 38, 43 (1986).

As applied, Respondents relied on Subsection 3, which allows
for adjustment of benefits upon a “showing that the employee’s earning
capacity has increased” after an award. A.R.S. § 23-1044(F)(3). In Gallegos, a
worker filed a rearrangement petition to show a reduced earning capacity
under Subsections 1 and 2. 144 Ariz. at 2. In that case, the worker

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temporarily could not work after he hurt his back. Id. When he could work
again, he got a new job with a moving company at almost double his prior
hourly rate. Id. He lasted six weeks before his doctor told him he could not
be doing that type of work and he got a new job for a reduced hourly rate.
Id. Meanwhile, the ICA issued an award finding no loss of earning capacity
based on the erroneous understanding that he was still working as a mover
at the higher rate. Id. That award became final when no party protested it.
Id. Three years later, the worker petitioned for rearrangement, arguing his
earning capacity was lower than what was stated in the award. Id. The ICA
denied his petition because his “actual” earning capacity had not changed
since the award was issued, even though the award declared that it was
higher. Id.

The Arizona Supreme Court reversed that denial. After
discussing res judicata principles under the rearrangement statute, Gallegos
stated that both parties were bound by the final factual findings in the
award, regardless of the error:

[S]ubsection 2 of the rearrangement statute
[A.R.S. § 23–1044(F)(2)] is applicable to all
situations where, subsequent to the final award,
there has been a reduction in earning capacity
causally related to the previous injury. Where
the first award has become final, the question of
change is to be measured by comparing the facts
determined by the final findings and award
with those existing at the time of the
rearrangement petition, even if the earlier
findings have been made incorrectly.

Id. at 5-6.2

Even though Gallegos addressed Subsections 1 and 2 of the
rearrangement statute, the same rationale applies to Subsection 3. As
applied, the stipulated lost earning capacity incorporated into the 2015
award was based on a 20-hour work week. Further, the stipulation leading
up to the 2015 award did not preclude reopening or rearrangement. Under

2 In a more recent case, this court held that Gallegos applies to
rearrangement, but not reopening. Cornelson v. Indus. Comm’n, 199 Ariz.
269, 273 (App. 2001) (rejecting Epstein’s Custom Carpentry v. Indus. Comm’n,
155 Ariz. 284 (App. 1987), which held Gallegos applied to both
rearrangement and reopening).

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Gallegos, the date of comparison for purposes of determining a change in
earning capacity in this case is the July 2015 award, which found Nolan’s
earning capacity was based on a 20-hour work week. Both parties are bound
by that finding. Nolan cannot preclude Respondents from showing that he
now has an increased earning capacity when compared to that final award.

Nolan also argues that, because the consensus medical
opinion in 2015 was that he should be able to work 40 hours per week,
Respondents have failed to show any change in earning capacity by
showing that he can now work 40 hours per week. But this ignores the
stipulated factual basis of the 2015 final award that established a 20-hour
work week, which is precluded by Gallegos. Even if the 20-hour work week
finding was erroneous, the parties are bound by it. For these reasons, the
ALJ’s decision properly applied Gallegos.

II. The Evidence Supports the Award.

Nolan argues the evidence does not support the ALJ’s
adoption of Dr. Ladin’s opinion over Dr. Jackson’s. “The burden of proof
normally lies with the party seeking rearrangement.” Pima County Bd. of
Sup’rs v. Indus. Comm’n, 149 Ariz. 38, 45 (1986). This court does not re-weigh
evidence and, when reasonable evidence supports an ALJ’s factual finding,
it will be affirmed. Kaibab Indus. v. Indus. Comm’n, 196 Ariz. 601, 608 ¶ 21,
609 ¶ 25 (App. 2000).

In Pima County Board of Supervisors, the Arizona Supreme
Court stated:

Subsection 3 [A.R.S. § 23-1044(F)(3)] effectively
allows the carrier to petition for rearrangement
whenever there has been any increase in
earning capacity. There is no need to show a
causal relationship between the injury and the
increased earning capacity. All that is necessary
is that the increase occur. Therefore, in actions
under [S]ubsection 3, anything that
demonstrates increased earning capacity is
relevant. This furthers the policy of the act to
compensate workers only for lost earning
capacity.

149 Ariz. at 44 (citation omitted). Applying this standard, and recognizing
the conflicting testimony by Drs. Jackson and Ladin, Nolan has shown no

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abuse of discretion in the ALJ’s factual findings. The ALJ’s adoption of Dr.
Ladin’s opinion over Dr. Jackson’s was not error.

CONCLUSION

The award is affirmed.

AMY M. WOOD • Clerk of the Court
FILED: AA

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