BEFORE THE WORKERS' COMPENSATION BOARD OF
THE STATE OF OREGON

In the Matter of the Adoption of
Rules and Permanent Amendments to
the Rules of Practice and Procedure
for Contested Cases Under the Workers’
Compensation Law, Relating to OAR 438
Divisions 006 and 015 (Prehearing
Procedures for Multiple Employer/
Insurer Cases, and Attorney Fees
Involving Unreasonable Conduct Under
ORS 656.262(11)(a)).
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WCB ADMIN. ORDER 3-2003





ORDER OF ADOPTION

          1. On October 15, 2003, the Workers’ Compensation Board filed a Notice of Proposed Rulemaking hearing with the Secretary of State, giving notice of its intent to adopt permanent rules of practice and procedure relating to OAR 438-006-0064 (Prehearing Matters Regarding Multiple Employer/Insurer Cases) and OAR 438-015-0110 (Attorney Fees in Cases Involving ORS 656.262(11)(a)). Copies of the notice were distributed to the Oregonian, the Associated Press, and the Capitol Press in the Capitol Press Room on October 16, 2003. The notice was published in the Secretary of State’s November 2003 Administrative Rule Bulletin.

          On November 3, 2003, copies of the notice, as well as the proposed rules, were also mailed to all interested parties whose names appear on the Board’s mailing list. Notice of the hearing was published in the September/October issue of the Board’s News and Case Notes, which was posted on the Board’s website on November 14, 2003. This notice was also published in the October 2003 issue of the Workers’ Compensation Section Newsletter, which was distributed to all Section members of the Oregon State Bar in early November 2003. On November 3, 2003, notice of this hearing was also posted on the Board’s website at: http://www.cbs.state.or.us/external/wcb/wcbrule/rules.htm.

          Thereafter, in accordance with the notice, a public hearing was conducted by Roger C. Pearson, Managing Attorney, on December 5, 2003 at Salem, Oregon. The record of the public hearing was closed at 5:00 p.m. on December 8, 2003.

          2. Three individuals offered testimony at the scheduled hearing. In addition, eight written comments were received from practitioners, insurers, Board staff, and the Workers’ Compensation Division (WCD). Copies of the transcript of the public hearing and of all written comments received are available for public inspection and copying at the offices of the Board, 2601 25th St. SE, Suite 150, Salem, Oregon 97302-1282, during normal working hours from 8:00 a.m. to 5:00 p.m., Monday through Friday.

          3. Order of Adoption for Rules (Exhibit A). The Board has thoroughly reviewed and considered all comments pertaining to its proposed permanent rules. A written summary of the comments is also included in the record.

          As explained in the Board’s October 7, 2003 Statement of Need (incorporated by this reference), the Board proposed to adopt new rules to provide: (1) prehearing procedures for cases involving more than one potentially responsible employer or insurer (OAR 438-006-0064); and (2) assessed attorney fees where the carrier unreasonably delays or unreasonably refuses to pay compensation, or unreasonably delays acceptance or denial of a claim under ORS 656.262(11)(a) (2003) (OAR 438-015-0110). This action was proposed to implement statutory changes to ORS 656.262(16), ORS 656.283(4), and ORS 656.262(11)(a) made by the 2003 legislature in Senate Bill 63 (SB 63) and Senate Bill 620 (SB 620) that become effective January 1, 2004. The proposed rules are contained in Exhibit A, attached and incorporated by this reference. After completing its review and consideration of the comments presented in response to the proposed rules, the Board has reached the following conclusions.

OAR 438-006-0064

SB 63 becomes effective January 1, 2004. ORS 171.022. SB 63 added ORS 656.262(16) to provide that, in accordance with ORS 656.283(4), the Administrative Law Judge (ALJ) assigned a request for hearing for a claim for compensation involving more than one potentially responsible employer or insurer may specify what is required of an injured worker to reasonably cooperate with the investigation of the claim as required by ORS 656.262(14). In addition, SB 63 amended ORS 656.283(4) by adding subsection (b) to provide processing procedures for cases where an initially scheduled hearing is postponed because of the need to join one or more potentially responsible employers or insurers. Under such circumstances, ORS 656.283(4)(b) (2003) provides that the assigned ALJ shall reschedule the hearing as expeditiously as possible after all potentially responsible employers and insurers have been joined in the proceeding and the medical record has been fully developed.

ORS 656.283(4)(b) (2003) also directs the Board to adopt rules for such cases that:
(1) require the parties to participate in any prehearing conferences required to expedite the hearing; and (2) authorize the ALJ conducting the hearing to: (a) establish a prehearing schedule for investigation of the claim, including but not limited to interviewing the claimant; (b) make prehearing rulings necessary to promote full discovery and completion of the medical record required for determination of the issues arising from the claim; and (c) specify what is required of the claimant to meet the obligation to reasonably cooperate with the investigation of claims.

In light of these statutory amendments, the Board has proposed amending its rules to provide for the prehearing procedures required by the statutory amendments. The proposed rule tracks the statutory requirements enumerated in ORS 656.262(16) and ORS 656.283(4). Furthermore, in accordance with the statutory amendments, the Board has proposed that the rule be effective January 1, 2004, and applicable to all cases where a postponement motion under this rule is filed on or after January 1, 2004.

In response to the Board’s proposed rule, a comment raised a question about the effect OAR 438-006-0064(3) might have on the timing of the docketing of a hearing for a future date. The comment also questioned whether the proposed language in OAR 438-006-0064(3) could support an argument that, once a case is set for hearing, further medical evidence would be prohibited.

Another comment did not recommend modification of the proposed rule. The comment stated that the objective of the amended statute is to avoid multiple postponements in responsibility cases resulting from the repeated identification of new employers and/or insurers who potentially may be responsible for the claimant’s condition. Consistent with this objective, the comment stated, a reasonable reading of the statutory language and proposed rule is that the assigned ALJ should not engage in the act of rescheduling the hearing until after all potentially responsible employers and insurers have been identified and joined. The comment noted that once all such parties have been joined, the assigned ALJ, via a teleconference with the parties’ attorneys, can fix a reasonable timeline for the submission of medical reports and/or depositions, and then determine a date for the hearing that is beyond the evidence submission timeline. Finally, the comment noted that there may be instances (as with non-responsibility cases) where unforeseen circumstances arise prior to the scheduled hearing date that lead to a request for a postponement or continuance, but that nothing in the enabling statute or proposed rule precludes an ALJ from granting a postponement or continuance of the hearing if the requirements of OAR 438-006-0081 or OAR 438-006-0091 are satisfied.

Another comment proposed numerous amendments to the proposed rule that would require a series of mandatory prehearing conferences and procedural deadlines. This commentator explained that the concern addressed by the statutory changes was to keep responsibility cases moving and provide certainty about the procedures for processing such cases. Describing the Board’s proposed rule as too general, this commentator was concerned that case processing would vary among the ALJs. Consistent with this latter comment, another commentator recommended that the Board’s proposed rule provide more specific time frames and/or at least a mandatory prehearing conference to insure that the hearing process kept moving.

After considering these comments, the Board has decided not to modify the proposed rule. The Board bases its decision on the following grounds.

Because this is the inception of the rule, the Board considers it best to simply track the language of the statute, providing the ALJs with broad discretion as they address the procedural issues arising from the rule. Under such a system, an ALJ can, on a case-by-case basis, schedule mandatory conferences and establish specific deadlines through interim rulings (as authorized by the terms of proposed rule sections (1) and (2)(a), (b), and (c)). The Board believes that more specific requirements in its administrative rules at the outset (before parties and ALJs have had the opportunity to see how issues will "play out" and what problems they might encounter) would be overly restrictive and would not allow the ALJs to accommodate unforeseen contingencies.

In addition, the Board intends to monitor the effectiveness of this rule and its accompanying interpretations through its case review process, as well as through feedback from the Presiding ALJ. Regarding the latter, the Board will look to the Presiding ALJ to consult with the ALJs and periodically update the Board regarding the effectiveness of this administrative rule. The Board can then revisit the rule at a future date to determine if amendments are warranted.

In conclusion, the Board finds for the reasons expressed in its Statement of Need, and those discussed herein, that the proposed rule is reasonable, necessary, and proper. Accordingly, the Board adopts this proposed rule as a permanent rule, contained in Exhibit A and incorporated by this reference.

OAR 438-015-0110

SB 620 becomes effective January 1, 2004. ORS 171.022. SB 620, in relevant part, amended ORS 656.262(11)(a) to provide for attorney fees assessed by the Director, an Administrative Law Judge, the Board, or the Court proportionate to the benefit to the injured worker where the insurer or self-insured employer unreasonably delays or unreasonably refuses to pay compensation, or unreasonably delays acceptance or denial of a claim. ORS 656.262(11)(a) (2003) also directs the Board to adopt rules for establishing the amount of the attorney fee, giving primary consideration to the results achieved and to the time devoted to the case. In addition, SB 620 provided that an attorney fee awarded under ORS 656.262(11)(a) (2003) may not exceed $2,000, absent a showing of extraordinary circumstances.

In light of these statutory amendments, the Board has proposed a rule to provide for assessed attorney fees under such circumstances, as required by the statutory amendments. In doing so, the Board has tracked the statutory requirements enumerated in ORS 656.262(11)(a) (2003), including the directive to give primary consideration to the results achieved and the time devoted to the case. Furthermore, in accordance with Section 3 of SB 620, the Board has proposed that the rule be effective January 1, 2004, and applicable to all claims for which an order relating to the issue on which attorney fees are sought has not become final on or before the effective date of the Act, regardless of the date of injury.

Several written comments were received suggesting, for the purpose of consistency, that the Board adopt a proposed "matrix" from a "SB 620 Advisory Committee" convened by the Workers’ Compensation Division (WCD) regarding administrative rulemaking arising from ORS 656.385(1). One of these comments quoted testimony presented before the Management Labor Advisory Committee (MLAC) regarding development of a "matrix" for attorney fees. In addition, another comment presented suggested text for incorporating the "matrix" into the Board’s proposed rule. In addition, three people appeared at the hearing to offer oral comments. Two people supported adopting the suggested text presented by the written comment. The third witness, in oral comments and in subsequent written comments, supported the Board’s proposed rule, but added that if the Board should decide to include a matrix in its rule, the appropriate matrix is the one proposed by the WCD Advisory Committee.

After considering these comments, the Board has decided to adopt the rule, as previously proposed. The language of OAR 438-015-0110 tracks the language in ORS 656.262(11)(a) (2003), as well as the Board’s longstanding rules regarding the determination of a reasonable attorney fee under OAR 438-015-0010(4).(1) Moreover, ORS 656.262(11)(a) (2003) requires the Director (through WCD) to apply the Board’s administrative rules in determining a penalty-related attorney fee under that statute. In contrast, under ORS 656.385(1) (2003), the Director (through WCD) is authorized to adopt rules regarding attorney fees concerning medical treatment and vocational assistance disputes pursuant to ORS 656.245, 656.260, 656.327, or 656.340. Because the proposed "matrix" pertains to those medical and vocational matters under ORS 656.385, while the Board’s proposed rule concerns penalty-related issues under ORS 656.262(11), the Board does not share the commentators’ concerns regarding potential inconsistencies.

Furthermore, although the Board’s rule does not require the use of a matrix to determine a reasonable assessed penalty-related attorney fee under amended ORS 656.262(11)(a), nothing precludes either WCD or WCB from considering the matrix in applying the Board’s rules when primarily considering the factors of the results achieved and the time devoted to the case, along with the other factors in OAR 438-015-0010(4), to determine a reasonable attorney fee.(2) Finally, as with the "multiple employer/insurer" rule (OAR 438-006-0064), the Board will monitor such attorney fee awards through its case review process, as well as through the Presiding ALJ, and, if it appears appropriate, the Board can reexamine the rule at a future date.

In conclusion, the Board finds for the reasons expressed in its Statement of Need, and those discussed herein, that the proposed rule is reasonable, necessary, and proper. Accordingly, the Board adopts this proposed rule as a permanent rule, contained in Exhibit A and incorporated by this reference.

          4. Under the authority granted by ORS 656.726(5), the Board finds that:

a. All applicable rulemaking procedures have been followed; and

b. The rules being adopted are reasonable, necessary and proper.

PURSUANT TO THE AMERICANS WITH DISABILITIES ACT GUIDELINES, ALTERNATIVE FORMAT COPIES OF THE RULES WILL BE MADE AVAILABLE TO QUALIFIED INDIVIDUALS UPON REQUEST TO THE BOARD.

          Consequently, in accordance with its Notice of Proposed Rulemaking, the Board adopts the attached rules, as set forth in Exhibit "A," incorporated by this reference, as permanent rules of the Workers’ Compensation Board, to become effective January 1, 2004 and to apply to the following cases in the following manner:

          (1) Amendments to OAR 438-006-0064 shall apply to all cases where a postponement motion under that rule is filed on or after January 1, 2004.

          (2) Amendments to OAR 438-015-0110 shall apply to all claims for which an order relating to the issue on which attorney fees are sought has not become final on or before January 1, 2004, regardless of the date of injury.

          The Board further orders that notice of this Order of Adoption, along with a certified copy of the amended rules, be filed with the Secretary of State and that a copy of the aforementioned notice and amended rules be filed with the Legislative Counsel within 10 days after filing with the Secretary of State as required by ORS 183.715.


          1.  In this regard, the Board notes that amended ORS 656.262(11)(a) provides that "primary consideration" should be given to the results achieved and to the time devoted to the case in determining a reasonable attorney fee award; the statute does not provide that these are the sole factors in such a determination.

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          2. In other words, if WCD chooses to look to its attorney fee matrix as a guideline for determining a reasonable attorney fee award under amended ORS 656.262(11)(a), such a practice would not violate the Board's rule, provided that the requirements set forth in that rule were applied and considered.

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