ILG v. United Parcel Service, Inc.

Present: Kinser, C.J., Lemons, Millette, Goodwyn, and Mims,
JJ., and Russell and Koontz, S.JJ.

JOHN A. ILG
OPINION BY
v. Record No. 111439 SENIOR JUSTICE LAWRENCE L. KOONTZ, JR.
June 7, 2012
UNITED PARCEL SERVICE, INC., ET AL.

FROM THE COURT OF APPEALS OF VIRGINIA

This appeal of a workers' compensation case involves an

employer's application to suspend benefits pursuant to Code

§ 65.2-708 for the alleged unjustified refusal of an injured

employee to accept vocational rehabilitation services provided

by the employer under Code § 65.2-603. The issue presented is

whether the employee should be permitted to offer evidence

that the refusal is justified because of a disabling injury

which arose out of the same industrial accident for which he

was awarded benefits, but which was not expressly designated

in the award as a compensable injury.

BACKGROUND

This case, which twice has been reviewed by the Workers'

Compensation Commission and the Court of Appeals, has a

lengthy and complex procedural history. For purposes of this

appeal, however, we may confine our discussion of the facts

and proceedings to those relevant to the issue presented,

making reference to the more complete expression of the

background of the injury, the award of compensation, and
ancillary proceedings stated in the Court of Appeals' first

review of the case in United Parcel Service v. Ilg, 54 Va.

App. 366, 368-71, 679 S.E.2d 545, 546-47 (2009) (hereinafter

"Ilg I").

On February 12, 2007, John A. Ilg, a delivery truck

driver employed by United Parcel Service for twenty-three

years, suffered an injury by accident when he fell from his

employer's truck during the course of his employment. On

April 26, 2007, Ilg, pro se, filed a claim for workers'

compensation benefits with the Commission, stating in the

claim that he had suffered an "injury to right hand and right

knee." United Parcel Service and its workers' compensation

carrier, Liberty Insurance Corporation (hereinafter

collectively "UPS"), accepted the claim and voluntarily paid

either temporary total or temporary partial disability

benefits from February 13, 2007 to February 16, 2007 and

temporary total disability benefits from February 17, 2007

going forward.

Subsequently, on June 29, 2007, Ilg and UPS executed an

original agreement to pay benefits and three supplemental

agreements memorializing the prior voluntary payments of

benefits. The nature of the injury was listed in the original

agreement only as "Pain in Right Knee" and in each of the

supplemental agreements as "Pain in rt knee." No reference

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was made to an injury of the right hand. On July 12, 2007,

the Commission issued an award order approving the original

and supplemental agreements.

On November 6, 2007, an attorney retained by Ilg after

the entry of the July 12, 2007 order sent a letter to the

Commission requesting the records of Ilg's claim. The letter

further advised the Commission that Ilg had suffered injuries

to his right hand and his head in addition to the injury to

his right knee and requested a hearing to determine whether

Ilg was entitled to any additional benefits. The Commission

responded by supplying the requested records, but neither

referenced the assertion of the additional injuries nor took

any action on the request for a hearing.

On February 25, 2008, Dr. Randall Peyton prepared and

signed two fitness for duty evaluations of Ilg. In one form,

Dr. Peyton opined that based on Ilg's continuing "knee pain"

he was fit for restricted duty performing "[m]edium work." In

the other form, Dr. Peyton opined that Ilg was "unable to work

in any capacity" because of the injuries to his "R knee/R

hand." Dr. Peyton further indicated that the condition of the

hand was worsening because of "work-hardening therapy" Ilg was

undergoing and that Ilg "is supposed to have this operated

on." Based on the fitness for duty evaluation stating that

Ilg could perform medium level work, UPS directed him to

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participate in vocational rehabilitation. Ilg declined to do

so, citing Dr. Peyton's second report that Ilg was unable to

work in any capacity.

UPS then filed an application with the Commission for a

Code § 65.2-708 review hearing, seeking to suspend Ilg's

benefits under the July 12, 2007 order for unjustifiably

refusing to participate in vocational rehabilitation pursuant

to Code § 65.2-603. UPS included in its application Dr.

Peyton's report that Ilg was available for medium work. Ilg

opposed the application, submitting Dr. Peyton's report that

indicated Ilg was unable to work in any capacity. A senior

claims examiner denied the application, finding that UPS had

not established probable cause of an unjustified refusal. The

examiner opined that the failure of the original and

supplemental agreements to mention the injury to Ilg's right

hand was "likely due to poor preparation" of the forms and

that the injury to Ilg's right hand was included in the July

12, 2007 award of compensation benefits. The Commission

upheld that decision.

UPS appealed the Commission's decision denying the

application for a Code § 65.2-708 review hearing to the Court

of Appeals. In reversing the judgment of the Commission in

Ilg I, the Court, relying on American Furniture Co. v. Doane,

230 Va. 39, 42-43, 334 S.E.2d 548, 550-51 (1985) (hereinafter

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Doane), expressed the view that "a medical condition not

causally related to the work-related accidental injury for

which benefits were originally awarded" could not serve as the

basis for the employee refusing to cooperate with vocational

rehabilitation. Ilg I, 54 Va. App. at 374, 679 S.E.2d at 549

(emphasis added). The Court further stated that UPS'

"application to suspend benefits should have been granted

unless [Ilg]'s hand condition, which prevented his cooperation

with vocational rehabilitation, was the subject of an

enforceable award finding that the hand condition was the

result of the work-related accident." Id.

The Court further concluded that the claims examiner

erred in presuming that Ilg's hand injury was included in the

July 12, 2007 award of compensation benefits, and, as "that

issue was never raised, or addressed, by the parties for . . .

consideration," it had never been established that Ilg's hand

injury was causally related to the February 12, 2007

compensable accident. Id. at 379, 679 S.E.2d at 551. The

Court also found that in reviewing the claims examiner's

decision, the Commission had incorrectly placed upon UPS "the

burden of presenting medical evidence in their application

showing the hand injury was 'pre-existing' or was 'unrelated

to' the industrial accident." Id. For these reasons, the

Court reversed the Commission's decision denying UPS'

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application and directed the Commission "to place this case on

the hearing docket." Id. Ilg did not appeal this decision to

this Court.

Upon remand, a deputy commissioner found that Ilg

justifiably refused to cooperate with UPS' rehabilitation

efforts because he suffered from a total disability and, thus,

had no obligation to participate in vocational rehabilitation.

In a divided decision, the Commission reversed the deputy

commissioner's decision. A majority of the Commission

concluded that the decision in Ilg I required the Commission

to consider only whether "to terminate an outstanding award

which only covered the claimant's knee" because "[t]here was

no award or agreement relating to the hand injury." The

majority reasoned that "[t]o allow [Ilg] to establish a

justification for his refusal by relying upon a causal

connection between his hand injury and the compensable

accident would allow [him] to convert this proceeding from one

under Code § 65.2-708 to a proceeding under Code § 65.2-704,

which the Court of Appeals held was prohibited." (Emphasis

added.) Thus, the majority concluded that Ilg was precluded

from asserting the hand injury as a defense to UPS' assertion

that his refusal to participate in vocational rehabilitation

was unjustified.

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 Commissioner Diamond dissented. In her view, the

majority had misinterpreted the decision in Ilg I as rendering

"a final decision on [UPS'] application in which [Ilg] could

not defend . . . with evidence and testimony concerning his

right hand." Rather, the Court in her view merely determined

that the denial of the application for a hearing had been

wrongly denied. Because the evidence plainly showed that Ilg

had not been released by Dr. Peyton, Commissioner Diamond

would have upheld the deputy commissioner's determination that

Ilg's refusal to participate in vocational rehabilitation was

justified.

Ilg appealed this decision to the Court of Appeals. In a

memorandum opinion, the Court, again relying on Doane, 230 Va.

at 42-43, 334 S.E.2d at 550, affirmed the Commission's

decision suspending Ilg's benefits. Ilg v. United Parcel

Service, Inc., Record No. 2314-10-4, slip op. at 7 (July 12,

2011) (hereinafter Ilg II). The Court agreed with the view

expressed by the majority of the Commission that allowing Ilg

to assert that his hand injury arose from the February 12,

2007 accident would convert the Code § 65.2-708 proceeding to

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a proceeding under Code § 65.2-704. ∗ Id., slip op. at 6. In a

footnote, the Court indicated, however, that in its prior

opinion in Ilg I "the pertinent question concerned whether

'the commission erred in rejecting the hearing application'

. . . and so only this ground of relief was properly before

[the Court]. Moreover, our opinion left open the possibility

that Ilg would seek a formal award for his hand injury" under

Code § 65.2-704. Id., slip op. at 7 n.5.

We awarded Ilg an appeal to address the following

assignments of error:

1. The Virginia Court of Appeals erred in its
opinion of July 12, 2011, by holding that claimant
cannot respond to the Employer’s unjustified refusal
of vocational rehabilitation allegation with
evidence that he suffers from other accident-related
conditions that render him totally disabled.

2. The Court of Appeals’ decision erroneously held
that claimant cannot prove justification for his
refusal of vocational rehabilitation services by
showing totally disabling accident-related
conditions that render such services premature.

3. The Court of Appeals erred in affirming the
Commission’s implicit finding that claimant was
guilty of an “unjustified” refusal of vocational
rehabilitation services.

∗
Essentially, Code § 65.2-704 addresses an original
determination that an employee has suffered a compensable
injury, whereas Code § 65.2-708 addresses a change in
condition which permits the Commission to make an award
ending, diminishing, or increasing the compensation previously
awarded.

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 DISCUSSION

Before addressing the merits of Ilg's appeal, we first

consider a challenge raised by UPS asserting that Ilg I

decided the issue of whether Ilg's hand injury was causally

related to the February 12, 2007 accident because the Court of

Appeals found that the claims examiner erred in making the

assumption that this was so and the Commission further erred

in placing the burden on UPS to present evidence to the

contrary in its application. UPS asserts that under the "law

of the case" doctrine Ilg was prohibited from raising these

issues on remand, especially as he failed to appeal the

judgment in Ilg I to this Court.

This challenge is readily resolved by reference to the

Court of Appeals' observation in Ilg II that "the pertinent

question [in Ilg I] concerned whether 'the commission erred in

rejecting the hearing application' . . . and so only this

ground of relief was properly before [the Court]." Ilg II,

slip op. at 7 n.5. Indeed, the Court had observed in Ilg I

that the "issue [of whether Ilg's hand injury was compensable]

was never raised, or addressed, by the parties for . . .

consideration" by the claims examiner or the Commission. 54

Va. App. at 379, 679 S.E.2d at 551. As no hearing had been

conducted in the Commission prior to Ilg I, no determinations

of fact or consideration of which party had the burden of

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proof on a given issue were necessary to the Court of Appeals'

decision that UPS' application for a hearing had been

improperly denied. Thus, the Court's observations on these

matters were merely part of its discussion of the "pertinent

question" and as such are not dispositive determinations of

law or fact. Accordingly, the law of the case doctrine does

not apply to these issues or limit their consideration by the

Commission on remand or of the appellate courts in reviewing

its decision.

We now begin our consideration of the merits of Ilg's

appeal by reviewing Doane, the case relied upon by the Court

of Appeals in both Ilg I and Ilg II to support its conclusion

that an employee may not assert "a medical condition not

causally related to the work-related accidental injury for

which benefits were originally awarded" as the basis for the

employee refusing to cooperate with vocational rehabilitation.

The Court of Appeals reasoned that allowing the employee to do

so would convert a Code § 65.2-708 proceeding to a proceeding

under Code § 65.2-704 by making a de facto award for the

injury that was not the subject of the prior award.

In Doane, the employee was awarded temporary total

disability for a back injury arising out of and in the course

of employment. After a deputy commissioner found that an arm

impairment which prevented the employee from performing

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selective employment was not causally connected to the

industrial accident for which an award of benefits had been

made, the employee's compensation was suspended because of her

unjustified refusal of selective employment. Doane, 230 Va.

at 42, 334 S.E.2d at 550. The Commission reinstated benefits,

concluding that the offered selective employment must be

within the employee's capacity at the time offered, regardless

of whether that capacity was affected by an unrelated injury.

Id.

Reversing the Commission, we held that employment

suitable to an employee's capacity meant employment within the

employee's residual capacity resulting from the industrial

accident because an employer "is liable for the condition of

an employee resulting from an industrial accident. But an

employer is not liable for conditions not causally related to

the employee's work." Id. (emphasis added). Thus, we

concluded that "[a]n employer, therefore, is absolved of

liability for compensation if the employee refuses selective

employment because of a physical condition unrelated to the

original industrial accident and arising since the accident."

Id. at 43, 334 S.E.2d at 550 (emphasis added).

As indicated by the emphasized language in the passages

quoted above, our focus in Doane was on whether the employee's

asserted justification for refusing selective employment was a

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condition causally related to the original industrial

accident, not whether it arose from the specific injury

described in the award of compensation benefits which the

employer sought to suspend. The rationale of Doane does not

resolve the inquiry in this case because Ilg's asserted

justification for refusing to participate in vocational

rehabilitation is not "unrelated to the original industrial

accident." Indeed, both UPS and the Commission were aware

from his original application that Ilg claimed benefits for

"injury to right hand and right knee" resulting from the

industrial accident. Accordingly, under the facts presented

here, the inquiry is whether it was necessary for Ilg to first

obtain an award of benefits under Code § 65.2-704 for his hand

injury in order to assert a disability arising from that

injury as justification for refusing to accept and participate

in vocational rehabilitation offered under an earlier award of

benefits for his knee injury arising from the same industrial

accident.

The Commission and the Court of Appeals found that

permitting an employee to justify a refusal to accept

vocational rehabilitation services based on a disabling injury

arising from an industrial accident, but not expressly

denominated as included in a prior award, would amount to a

"de facto" award for the injury which would convert a Code

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§ 65.2-708 proceeding into a Code § 65.2-704 proceeding.

Thus, they concluded that Ilg's failure to have the July 12,

2007 order reflect that he had suffered a compensable injury

to his right hand in addition to a compensable injury to his

right knee in the February 12, 2007 accident barred him from

asserting his hand injury as a justification for refusing to

participate in vocational rehabilitation. We disagree.

Previously, we have not had occasion to address a case in

which the issue presented was whether an employee receiving

workers' compensation benefits for partial or total disability

has unjustifiably refused to participate in vocational

rehabilitation offered by the employer under Code § 65.2-603.

There are obvious differences between what may be reasonably

expected of the employee to participate in vocational

rehabilitation and that which may be reasonably expected when

selective employment is offered by the employer under Code

§ 65.2-510. Nevertheless, in Doane and subsequently in

Ballweg v. Crowder Contracting Co., 247 Va. 205, 209, 440

S.E.2d 613, 615 (1994), we stressed that when an employer

offers selective employment to an injured employee "suitable

to his residual capacity, the burden of persuasion shifts to

the employee to show justification for refusing the offer."

We are of opinion that this principle is equally applicable to

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cases involving the refusal to participate in vocational

rehabilitation offered under Code § 65.2-603.

In the present case, Ilg had filed a claim with the

Commission for injuries to his right knee as well as his right

hand. UPS accepted that claim and voluntarily paid disability

benefits to Ilg. Dr. Peyton provided UPS with his medical

opinion that Ilg was "unable to work in any capacity" because

of injuries to his right knee and right hand. Ilg sought to

justify his subsequent refusal to participate in vocational

rehabilitation based on his hand injury. Under such

circumstances, it would be the height of form over substance

to find that an asserted injury related to the industrial

accident for which benefits have been awarded cannot justify

the employee's refusal of the employer's offer of selective

employment or of vocational rehabilitation unless that injury

is also the subject of a prior award pursuant to Code § 65.2-

704. If the Commission in considering an employer's

application under Code § 65.2-708 concludes that the refusal

is justified, this does not result in an award of benefits for

the asserted injury. Rather, the result is merely that the

employee continues to receive benefits in accord with the

original award.

Accordingly, we hold that the Court of Appeals erred in

determining that Ilg was precluded from asserting that his

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refusal of vocational rehabilitation was justified because he

remained fully disabled by his hand injury related to the

industrial accident for which he was receiving benefits for

his compensable knee injury. Because there has not yet been a

determination by the Commission as to whether the disability

related to Ilg's right hand in 2008 was, in fact, causally

related to the February 12, 2007 accident, we express no

opinion on that issue, but will remand the case to the Court

of Appeals for remand to the Commission for an evidentiary

proceeding where the burden will be on Ilg to show that his

refusal to participate in vocational rehabilitation was

justified in light of his hand injury.

In the Commission and in the Court of Appeals it was

suggested that Ilg might have been, and might yet be, entitled

to request a Code § 65.2-704 proceeding to determine if he is

entitled to compensation for the injury to his hand, or any

other injury, arising from the February 12, 2007 accident.

However, that issue has not been raised by either party in

this appeal. We express no opinion thereon except to note

that nothing herein should be interpreted as barring Ilg from

seeking to pursue such a claim if he chooses to do so.

CONCLUSION

For these reasons, we will reverse the judgment of the

Court of Appeals and remand the case to the Court with

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instruction to remand the case to the Commission for further

proceedings consistent with this opinion.

Reversed and remanded.

JUSTICE MIMS, concurring.

I concur with the Court’s analysis and in the judgment

but write separately to stress that this case is decided

narrowly. Reading the holding broadly, one might conclude

that an employee who relies on an injury that is related to an

accident for which benefits have been awarded, but which

injury is not itself the subject of the award, could prolong

his receipt of benefits by foregoing or delaying treatment.

That is beyond the scope of the Court’s holding today.

Accordingly, persistent failure to treat, or unreasonable

delay in treatment of, an injury found to justify an

employee's refusal of selective employment or vocational

rehabilitation may be a change of condition under Code § 65.2-

708, thereby affording the employer the opportunity for a

review hearing to assert that benefits should be suspended if

the failure or delay is found to be unjustified under Code

§ 65.2-603(B).

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