Arizona Dept. of Public Safety v. Industrial Commission

OPINION

CONTRERAS, Judge.

This is a special action review of an Arizona Industrial Commission award for permanent partial disability based upon respondent employee’s (claimant’s) current employment. The issue presented for review is whether the Administrative Law Judge erroneously excluded a labor consultant’s opinion that claimant’s date of injury employment as an administrative sergeant for petitioner employer Arizona Department of Public Safety (DPS) was suitable and would have been available to him except for a post-injury termination for misconduct. Because we conclude that the exclusion was harmless and the job related misconduct does not justify a forfeiture of permanent disability benefits, we affirm the award.

Claimant was a DPS patrolman for approximately seven years. By 1977, he had been promoted to an administrative sergeant, a supervisory position. In December 1977, claimant strained his neck at work. Petitioner carrier State Compensation Fund (Fund) accepted compensability. By early February 1978, claimant had resumed regular work. His claim was ultimately closed with a 5% permanent physical impairment but without permanent disability.

In July 1980, DPS terminated claimant for off-duty misconduct involving an extramarital affair, an altercation, and a drinking problem. Claimant brought an administrative appeal within the merit system, but the termination was upheld.

In March 1981, claimant filed a petition to reopen the neck injury claim. The Fund accepted reopening. In May 1982, the Fund changed claimant’s disability status from temporary total to temporary partial because he was working as a bar manager. In March 1983, the claim was reclosed because claimant’s symptoms had decreased and he had declined surgery. Claimant also stipulated that he had no loss of earning capacity, and an award was entered to that effect.

In April 1984, claimant again filed a petition to reopen the claim. The Fund also accepted this petition. While the claim remained open, the Fund periodically adjusted claimant’s temporary disability status, but the record is unclear whether temporary partial benefits were actually paid. In February 1988, the Fund reclosed the claim with the same 5% permanent physical impairment.

In March 1988, the Fund submitted an earning capacity recommendation to the Industrial Commission. See generally A.R.S. § 23-1047, subd. A. This recommendation indicated that claimant could not return to his regular work at DPS but that he had a monthly earning capacity of some $1020.00 as an administrative assistant in a financial institution. The Industrial Commission rejected this recommendation and found that claimant had a monthly earning capacity of some $770.00 as a security guard. The Fund protested this award, and a hearing was scheduled. See generally Le Duc v. Industrial Comm’n, 116 Ariz. 95, 567 P.2d 1224 (App.1977).

At the ensuing hearing, claimant acknowledged that the July 1980 termination from DPS resulted from an “incident off duty” involving an affair, an altercation, and a drinking problem. Claimant conceded that his current physical condition would enable him to work as an administrative sergeant for DPS. Claimant also testified that since the termination, he had worked only sporadically and that until the February 1988 termination notice, the Fund had paid him temporary disability benefits except when he was able to work. Finally, claimant testified that after the termi*277nation, he had found suitable work as an eligibility worker for the Arizona Department of Economic Security (DES).

Also appearing at the initial and at a continued hearing were a medical expert, a DPS supervisor, and two labor consultants. Neurosurgeon William Helme, M.D., testified that claimant’s neck condition resulted in functional limits but that the positions of administrative sergeant and eligibility worker were suitable. The DPS supervisor testified that DPS employs some 40 administrative sergeants. Finally, both labor consultants testified concerning claimant’s current earning capacity in the general labor market. The Fund also sought its consultant’s opinion about whether claimant could have continued to work for DPS as an administrative sergeant except for his termination caused by his misconduct. The Administrative Law Judge excluded this evidence. The Fund responded with the following argument and offer of proof:

The reason that I would like to go into this area, Your Honor, is because it’s pertinent as to what his present earning capacity would be. But for his misconduct, that misconduct occurred after the date of injury, and it would be the defendants’ position that that misconduct should not weigh in the determination as to what his earning capacity is.
Otherwise, what we would do is we will allow people to damage their earning capacity after the injury and then the defendants become responsible for their reduced loss of earning capacity and that is not the intent of the Workers’ Compensation System, nor would it be just to the defendants, as they have no control over the applicant doing that.
It would be analogous, Your Honor, to, for example, an injured workman moving to a new location, new geographic area in which the job availability is considerably lower causing him to have a reduced earning capacity simply because of there not being a market in this new geographic location for his skill. That type of behavior, actually—
THE JUDGE: I think that is an adequate enough explanation. At this time, why don’t you make an offer of proof if you feel it is appropriate.
MR. ANDERSON: I believe the evidence would show, Your Honor, that it’s Mr. Taylor’s opinion that he would be able to continue on in a position as a sergeant with the Department of Public Safety even to today performing administrative work which would have been within the limitations — physical medical limitations which were a result of this injury of 12/22/77, and as a result of that, he would have no loss of earning capacity due to this injury. That would conclude my offer of proof.

The Administrative Law Judge then issued the award for permanent partial disability based upon claimant’s current earning capacity as an eligibility worker for DES. Regarding the Fund’s argument that claimant’s current disability was unrelated to the industrial injury because he was terminated from DPS for misconduct, the Administrative Law Judge found that the Fund had “offered no authority for this position nor has the court been able to find authority to support such finding.” On administrative review, the Fund again cited no authority for its position. A substituted Administrative Law Judge1 summarily affirmed the award. The Fund then brought this special action.

On review before the court, the Fund for the first time cites authority that it contends supports its defensive position. Claimant substantively answers the Fund’s argument and also asserts that laches and estoppel apply to the Fund’s defense. The Fund did not file a reply brief.

A failure to reply to arguments raised in an answering brief may justify a summary disposition of an appeal. See, e.g., Turf Irrigation and Water Waterworks Supply v. Mountain States Tel. & Tel. Co., 24 Ariz.App. 537, 540 P.2d 156 (1975). In the present case, claimant asserted below that the Fund’s defensive position was both un*278reasonably late and inconsistent with the position it had previously taken before the Commission. The Administrative Law Judge, however, did not rely on laches or estoppel. Although the Fund nevertheless should have replied to the applicability of these doctrines, we exercise our discretion to address the substantive merits of the Fund’s defense.

The Fund presents its argument in terms of procedural harmful error resulting from the exclusion of the labor consultant’s opinion. We disagree that this exclusion was harmful. See generally, e.g., Pima Community College v. Industrial Comm’n, 137 Ariz. 137, 669 P.2d 115 (App.1983) (error harmless if excluded testimony could not have swayed result). Expert opinion was unnecessary because claimant himself conceded that the DPS position remained suitable and it is uncontroverted that claimant would have no lost earning capacity if he was still working for DPS. The real issue is not the exclusion of the unnecessary opinion, but the substantive effect of the termination which was due to claimant’s misconduct. We therefore turn to the Fund’s argument and the authority presented to support and rebut it.

The first premise of the argument is the general principle that a compensable disability must result from the industrial injury. The second premise is the uncontro-verted assertion that claimant would have no loss of earning capacity if he had not been terminated from DPS for post-injury misconduct. From these premises, the Fund concludes that claimant’s current loss of earning capacity is unrelated to his industrial injury.

To support this argument, the Fund cites one statute and three cases: A.R.S. § 23-1044, subd. C; Hoppin v. Industrial Comm’n, 143 Ariz. 118, 692 P.2d 297 (App.1984); Bryant v. Industrial Comm’n, 21 Ariz.App. 356, 519 P.2d 209 (1974); and Todd v. Hudson Motor Car Co., 328 Mich. 283, 43 N.W.2d 854 (1950), cited in United Riggers Erectors v. Industrial Comm’n, 131 Ariz. 258, 640 P.2d 189 (App.1981). To rebut this argument, claimant cites Schnatzmeyer v. Industrial Comm’n, 77 Ariz. 266, 270 P.2d 794 (1954), Fletcher v. Industrial Comm’n, 120 Ariz. 571, 587 P.2d 757 (App.1978), and Oquita v. Industrial Comm’n, 120 Ariz. 610, 587 P.2d 1187 (App.1978).

Section 1044, subd. C of Title 23 prescribes how compensation for unscheduled industrial injuries is to be computed. Compensation is provided “where the injury causes permanent partial disability for work” based upon “the amount which represents ... [the] reduced monthly earning capacity resulting from the disability.” A.R.S. § 23-1044, subd. C (emphasis added).

Hoppin involved a claimant with multiple sclerosis. The court indicated that any disability resulting exclusively from the natural progression of this disease after the industrial injury would be noncompensable. See Hoppin v. Industrial Comm’n, 143 Ariz. at 125, 692 P.2d 297 (dictum).

Bryant involved an impaired but nondis-abled worker, who left his post-injury employment to take a more lucrative position. When the opportunity proved illusory, he was unable to return to the post-injury employment because of general economic conditions. His petition to rearrange was denied, and this court affirmed:

While this Court is not holding that a disabled workman must return to his former employment if he is able and remain there, we are holding that where the predominant cause of an injured workman’s changed economic status is of his own making and is similar to the risks encountered by all members of society, the Industrial Commission will not subsidize the injured worker for his miscalculations to the exclusion of the uninjured members of the work force.

Bryant v. Industrial Comm’n, 21 Ariz.App. at 357-58, 519 P.2d 209 (emphasis added).

Todd involved a partially disabled worker who was terminated from a light-work position for gambling. He subsequently found equivalent work, but he claimed compensation for the intervening unemployment. This claim was denied because the worker’s misconduct, not the industrial injury, *279caused the unemployment. See Todd v. Hudson Motor Car Co., 43 N.W.2d at 857.

Finally, Schnatzmeyer established that a compensable disability need only be partially related to the industrial injury. See Schnatzmeyer v. Industrial Comm’n, 77 Ariz. at 270-71, 270 P.2d 794. Fletcher and Oquita applied this principle to partially disabled workers who lost their light-work positions because of general economic conditions. Cf. Fletcher v. Industrial Comm’n, 120 Ariz. at 572-75, 587 P.2d 757 (rearrangement denied because unemployment wholly unrelated to industrial injury) with Oquita v. Industrial Comm’n, 120 Ariz. at 610-12, 587 P.2d 1187 (rearrangement permitted because, although loss of light-work position was the result of economic conditions, evidence established that industrial injury contributed to subsequent inability to compete for suitable and available work).

The present case significantly differs from the cited authority. On one hand, the disabilities in Hoppin, Bryant, Todd, and Fletcher were wholly unrelated to the industrial injuries. In Bryant, for example, rearrangement was denied not because the worker would have remained employed if he had not left his secure position, but because his current unemployment resulted from general economic conditions. In contrast, the current claimant’s disability is partially work-related because he is unable to perform heavy-duty work that would pay as much as his former relatively high paying light-work position as an administrative sergeant. On the other hand, except for Todd, none of the cited cases involved misconduct. As for Todd, the sanction for misconduct was a temporary loss of compensation, not a forfeiture of permanent disability benefits. The current case admittedly involves misconduct, however, the sanction that the Fund seeks is forfeiture.

The parties have not cited Larson, but he directly discusses the problem of misconduct and forfeiture:

If the record shows no more than that the employee, having resumed regular employment after his injury, was fired for misconduct, with the impairment playing no part in the discharge, it will not support a finding of compensable disability. But if to this record there is added evidence that the claimant has been hampered by his impairment in obtaining or holding other employment, the question is not quite so one-sided ____
It is true that claimant’s successful return to his regular job is logically an almost insuperable obstacle to [a] finding of disability. Perhaps the only way in which the penalty for a moment’s fighting can be adjusted to something more appropriate than forfeiture of all compensation rights would be legislation comparable to those Unemployment Compensation provisions which handle discharge for misconduct and voluntary quitting by a penalty of a limited number of weeks’ compensation rather than complete loss of benefits.

2 A. Larson, Workmen’s Compensation Law § 57.64(a) at 10-264 to -269 (1989) (footnotes omitted) (emphasis added).

We note that courts in other jurisdictions have rejected the draconian and severe consequence of forfeiture. See, e.g., Fielding v. George A. Hormel Co., 439 N.W.2d 12 (Minn.1989); Marsolek v. George A. Hormel Co., 438 N.W.2d 922 (Minn.1989). Indeed, Michigan cases after Todd have concluded that the effect of the industrial injury on the job search after discharge is relevant. See, e.g., Scott v. Kalamazoo College, 77 Mich.App. 194, 258 N.W.2d 191 (1977).

The Workers’ Compensation Act is remedial and must be liberally interpreted to effectuate its purpose. See, e.g., Circle K Store #1131 v. Industrial Comm’n, 165 Ariz. 91, 796 P.2d 893 (1990). In our opinion, the ultimate sanction of forfeiture is contrary to this remedial purpose. The Administrative Law Judge properly considered the effect of claimant’s industrial injury on his post-discharge employability. Cf. Dunn v. Industrial Comm’n, 160 Ariz. 343, 773 P.2d 241 (App.1989) (position that impaired worker could have performed and obtained but for pre-injury felony conviction did not realistically represent earning *280capacity after industrial injury). Furthermore, because the Fund did not argue that claimant’s benefits should be temporarily suspended, we reserve for another day the question of whether an Administrative Law Judge has discretion in the appropriate case to temporarily suspend benefits when a claimant’s own misconduct partially contributes to his lost earning capacity. Cf. Marsolek v. George A. Hormel Co., 438 N.W.2d at 923-24 (benefits suspended until worker demonstrates that industrial injury affected ability to find or hold new employment).

For the foregoing reasons, the award is affirmed.

TAYLOR, P.J., concurs.

. Pending administrative review, Administrative Law Judge Whitley resigned and this case was transferred to Administrative Law Judge Bayles for the decision upon review.