Special Fund v. haner/valley Schools

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

SPECIAL FUND DIVISION, Petitioner,

v.

THE INDUSTRIAL COMMISSION OF ARIZONA, Respondent,

JOHNNY HANER, Respondent Employee,

VALLEY SCHOOL WORKERS COMPENSATION POOL d/b/a DEER
VALLEY UNIFIED SCHOOL DISTRICT, Respondent Employer,

VALLEY SCHOOLS WORKERS COMPENSATION GROUP, Respondent
Carrier.

No. 1 CA-IC 20-0052
FILED 11-9-2021

Special Action - Industrial Commission
ICA Claim No. 20191-140023
Carrier Claim No. 33481
The Honorable Jonathan Hauer, Administrative Law Judge

AFFIRMED

COUNSEL

Industrial Commission of Arizona, Phoenix
By Stephen D. Ball
Counsel for Petitioner
Industrial Commission of Arizona, Phoenix
By Gaetano J. Testini
Counsel for Respondent

Arizona Injury Law Group PLLC, Phoenix
By Weston S. Montrose
Counsel for Respondent Employee

Jardine, Baker, Hickman & Houston, PLLC, Phoenix
By K. Casey Kurth
Counsel for Respondent Employer and Carrier

OPINION

Presiding Judge Randall M. Howe delivered the opinion of the court, in
which Judge Brian Y. Furuya and Judge Michael J. Brown joined.

H O W E, Judge:

¶1 The Special Fund Division (“Fund”) of the Industrial
Commission of Arizona (“ICA”) challenges an award that made it
responsible for a portion of the expenses of Johnny Haner’s disability
benefits under A.R.S. § 23–1065(C) because Deer Valley Unified School
District knew about Haner’s pre-existing medical conditions while he
worked for Deer Valley. The Fund argues that an employee’s credible
testimony that he informed his supervisor of his pre-existing medical
conditions is insufficient evidence to establish knowledge for
apportionment of expenses under the statute without evidence that the
respondent employer acknowledged that the employee had pre-existing
conditions. We affirm. Credible testimony that an employee told his
employer about his pre-existing conditions is sufficient to support
apportioning expenses of disability benefits under A.R.S. § 23–1065(C).

FACTS AND HISTORY

¶2 In 2015, Haner applied for a job as a custodian with Deer
Valley. Paul Florek hired him and became his direct supervisor. Haner was
injured on the job in April 2019, and his worker’s compensation claim was
accepted. After he was treated and his claim was closed with an
unscheduled permanent partial disability in July 2019, the ICA Claims
Division determined that Haner had suffered no loss of earning capacity.

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 SPECIAL FUND v. HANER/VALLEY SCHOOLS
Opinion of the Court

Haner disagreed and requested a hearing. He also requested
reimbursement for expenses that he incurred in traveling for treatment.

¶3 Before the hearing on those issues, Deer Valley and its carrier,
Valley Schools Workers Compensation Group, notified the administrative
law judge (“ALJ”) that, due to Haner’s pre-existing diabetes and 2013 heart
surgery, they were seeking apportionment of the expenses of his disability
benefits under A.R.S. § 23–1065(C), which generally provides that the Fund
may reimburse employers that knowingly employ persons with qualifying
pre-existing conditions who later suffer a work injury. The Fund joined the
proceeding as a party in interest.

¶4 The ALJ heard testimony from Haner and others over several
days. Haner testified that when he was hired, he told Florek that he had
diabetes and had undergone heart bypass surgery. The ALJ found that
Haner was a credible witness and, relying solely on Haner’s testimony,
determined that Deer Valley knew about those pre-existing conditions
before he was injured. The resulting award, therefore, apportioned
responsibility for payment of disability benefits between the Valley Group
and the Fund.

¶5 The Fund requested administrative review of the award,
arguing that the Valley Group did not meet its burden of proving that Deer
Valley knew about Haner’s pre-existing conditions because it failed “to
provide any testimony or writing from the employer evidencing
knowledge of applicant’s heart condition and diabetes.” The Fund argued
that without direct evidence that Florek or another Deer Valley
representative acknowledged Haner’s pre-existing conditions, the record
was insufficient to find that Deer Valley knew about them. The ALJ
summarily denied the review request, and this special action review
followed.

DISCUSSION

¶6 When this court reviews the ICA’s findings and conclusions,
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 (App. 2003). We consider
the evidence in the light most favorable to upholding the award. Lovitch v.
Indus. Comm’n, 202 Ariz. 102, 105 ¶ 16 (App. 2002). Here, the Fund does not
dispute Haner’s testimony, but argues that his testimony, which the ALJ
found credible, is insufficient by itself to support the ALJ’s finding that Deer
Valley knew about his pre-existing conditions.

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 SPECIAL FUND v. HANER/VALLEY SCHOOLS
Opinion of the Court

¶7 The expense of disability benefits may be apportioned
between the Fund and the employer or its carrier when the employer
knowingly hires an employee with a significant non-work-related physical
impairment that “is of such seriousness as to constitute a hindrance or
obstacle to employment,” and the employee later suffers a work-related
impairment. A.R.S. § 23–1065(C). If the statutory prerequisites are satisfied,
the Fund must reimburse the employer or carrier a portion of the disability
benefits to which the worker is entitled. A.R.S. § 23–1065(C)(4). This
provision promotes hiring workers who have pre-existing conditions.
Burrell, 191 Ariz. at 153 ¶ 10; Special Fund Div. v. Indus. Comm’n (Lane), 240
Ariz. 104, 105 ¶ 6 (App. 2016).

¶8 The statutory prerequisites to apportionment include proof of
the employer’s knowledge of the worker’s pre-existing condition. This
means that the employer must know about the pre-existing condition when
it hires the employee or must continue employing the worker after it
becomes aware of the condition. A.R.S. § 23–1065(C)(2). Here, the only
prerequisite to apportionment that the Fund challenges is whether Deer
Valley knew of Haner’s pre-existing conditions. Direct evidence before the
ALJ that Haner told Florek of his pre-existing conditions allowed the judge
to draw the inference that Florek, and by extension Deer Valley, knew about
them. This is sufficient evidence of the employer’s knowledge. See Burrell,
191 Ariz. at 155 ¶ 17 (stating ALJs “are more than capable of weighing the
credibility of testimony and evaluating whether the employer has met its
burden of demonstrating that it possessed the requisite knowledge at the
requisite time”).

¶9 The Fund asserts that this is inadequate without direct
evidence of what Florek did with the information, or other information that
Deer Valley acknowledged it knew of Haner’s pre-existing conditions. But
this argument ignores that a valid inference from Haner’s testimony that he
told Florek of his pre-existing conditions is that Florek, and consequently
Deer Valley, knew of those conditions. Evidence that Florek acknowledged
that he understood the meaning of Haner’s statement to him would
certainly make the case stronger, but its absence does not detract from the
sufficiency of Haner’s testimony.

¶10 The ALJ has the “duty to resolve all conflicts in the evidence
and to draw all warranted inferences,” Aguayo v. Indus. Comm’n, 235 Ariz.
413, 416 ¶ 11 (App. 2014), and he did so. Therefore, we reject the Fund’s
argument.

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 SPECIAL FUND v. HANER/VALLEY SCHOOLS
Opinion of the Court

CONCLUSION

¶11 The evidence supports the apportionment portion of the
award. We affirm.

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

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