Butler v. Huttig Building Products

Butler v. Huttig Building Products (2002-113); 175 Vt. 323; 830 A.2d 44

2003 VT 48

[Filed 23-May-2003]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 2003 VT 48
  	
                                No. 2002-113


  Jean Butler	                                 Supreme Court

                                                 On Appeal from
       v.	                                 Commissioner of Labor and 
                                                 Industry

  Huttig Building Products	
                                                 January Term, 2003

  R. Tasha Wallis, Commissioner

  Richard H. Munzing of Weber, Perra & Munzing, P.C., Brattleboro, for
    Plaintiff-Appellant.

  Keith J. Kasper of McCormick, Fitzpatrick, Kasper & Burchard, P.C,
    Burlington, for Defendant-Appellee.


  PRESENT:  Amestoy, C.J., Dooley, Johnson and Skoglund, JJ., and Allen, C.J.
            (Ret.), Specially Assigned


       ¶  1.  ALLEN, C. J.  (Ret.), Specially Assigned.   Claimant suffered
  serious injuries in a workplace accident, and appeals from an order of the
  Department of Labor and Industry terminating his workers' compensation
  benefits due to fraud.  We reverse and remand the Commissioner's decision
  on claimant's right to permanent disability benefits, but affirm the
  remainder of her order. 
   
       ¶  2.  The undisputed facts are as follows.  On February 24, 1997,
  while working for defendant Huttig Building Products as a tractor-trailer
  driver, claimant was seriously injured after 1,000 pound glass doors fell
  on his head at a loading dock.  His injuries included fractures and
  dislocations in his spine, trauma to his left knee, ruptured disks in his
  back, and a central spinal cord contusion.  Upon being struck, claimant
  immediately lost consciousness and suffered paralysis of his arms and legs. 
  Claimant underwent three surgeries to address his spinal injuries, and was
  discharged from the hospital at the end of March 1997.  At that time,
  claimant was still unable to walk and required help from others to engage
  in daily living activities.  After his release, claimant received treatment
  for pain, depression, headaches, and other problems.  He also received
  extensive physical and occupational therapy and home nursing services. 
  Claimant obtained workers' compensation benefits for his injuries,
  including temporary disability, medical, and vocational rehabilitation
  benefits.

       ¶  3.  On September 13, 2000, defendant filed a so-called Form 27 with
  the Workers' Compensation Division of the Department of Labor and Industry
  notifying claimant that it was discontinuing temporary disability payments
  and medical benefits effective September 22, 2000.  Defendant cited
  claimant's fraudulent activity as the reason for terminating payments, and
  filed supporting evidence to substantiate its allegations of fraud.  On
  October 26, 2000, the Commissioner of the Department of Labor and Industry
  approved the Form 27.  The following day, claimant filed a notice and
  application for a hearing to contest the termination of his benefits.  In
  his application for hearing, claimant sought restoration of his temporary
  total disability compensation, in addition to medical and vocational
  rehabilitation benefits and attorneys' fees.  
   
       ¶  4.  Initially, the Director of the Workers' Compensation Division
  denied claimant's request for a hearing, explaining that the Department was
  investigating defendant's allegations of fraud separately under 21 V.S.A. §
  708 to determine whether to issue an administrative penalty for claimant's
  conduct.  The Director asserted that claimant was not entitled to a hearing
  on the termination of his benefits, but that claimant would be offered an
  opportunity for a hearing on the administrative penalty if one issued. 
  After corresponding with claimant's counsel, the Director reversed herself. 
  A hearing on defendant's termination of workers' compensation benefits was
  held in May and June, 2001.

       ¶  5.  Prior to the hearing, claimant and defendant stipulated to some
  facts concerning claimant's fraud.  Specifically, claimant admitted that he
  falsified (1) two medical notes from one of his doctors, Dr. Katz, (2)
  three receipts for the Fitness Barn, the place claimant performed physical
  therapy exercises, seeking reimbursements for overpayments claimant
  allegedly made, and (3) mileage reimbursement requests on eight separate
  dates for medical treatments claimant never received.  The mileage and
  Fitness Barn reimbursements claimant falsified totaled $1,463.96.  One of
  the falsified notes from Dr. Katz increased the dosage for certain
  medications claimant was taking, including an increase in the pain killer
  OxyContin.  

       ¶  6.  Claimant's fraud went beyond the facts to which he stipulated,
  however.  The Commissioner found that claimant sought mileage reimbursement
  for four trips to see Dr. Katz that claimant never made.  Claimant also
  lied to his health care providers and exaggerated his symptoms in their
  presence.  Claimant tried to deceive his physicians as well as the workers'
  compensation hearing officer by presenting himself as having a claw-like
  deformity in his hands known as "main en griff posture."  He alleged that
  his hands were cold, stiff, and required gloves because of the deformity,
  and he wore gloves to the hearing.  A videotape made without claimant's
  knowledge contradicted those claims.  The tape showed claimant holding a
  gun in snowy weather without gloves and without any sign of a claw-like
  deformity, or any difficulty in performing fine motor movement.  
   
       ¶  7.  Ultimately, the Commissioner upheld defendant's Form 27
  termination and denied claimant further benefits.  The Commissioner
  concluded that claimant's deceptive practices were ongoing, and that "what
  he tells to health care providers cannot be trusted."  Although the
  Commissioner denied claimant's request to reinstate his benefits, she found
  that claimant's work-related injuries were undisputed and left him with a
  significant permanent impairment.  The extent of the permanent disability
  had not been determined at that time, however.  

       ¶  8.  Following the Commissioner's denial of claimant's motion to
  reconsider, claimant appealed to this Court.  The Commissioner certified
  three questions (FN1) for our determination in accordance with 21 V.S.A. §
  672, which we have reworked into a single question for clarity: Which, if
  any, compensation benefits should claimant forfeit because of his fraud? 
  As we explain, the answer to that question is all benefits, except
  claimant's right to permanent disability benefits.
                       
       ¶  9.  We first note that claimant does not contest the
  Commissioner's factual findings.  In that case, we confine our review to
  the Commissioner's legal conclusions.  Longe v. Boise Cascade Corp., 171
  Vt. 214, 218, 762 A.2d 1248, 1253 (2000).  If the Commissioner's
  conclusions are supported by the findings and reflect the correct
  interpretation of the law, we will affirm the Commissioner's decision. 
  Id., 762 A.2d  at 1252-53.  Although we defer to the Commissioner's
  interpretation of the Workers' Compensation Act, we will not affirm an
  unjust or unreasonable interpretation of it.  Clogdo v. Rentavision, Inc.,
  166 Vt. 548, 550, 701 A.2d 1044, 1045 (1997).  In addition, we will not
  disturb a discretionary decision by an administrative agency unless the
  decision demonstrates the agency abused its discretion, see Piche v. Dep't
  of Taxes, 152 Vt. 229, 234, 565 A.2d 1283, 1286 (1989), or exercised it in
  an unrestrained manner.  Lemieux v. Tri-State Lotto Comm'n, 164 Vt. 110,
  113, 666 A.2d 1170, 1172 (1995).  

       ¶  10.  Claimant argues that the Commissioner's decision to terminate
  all of his workers' compensation benefits, including permanent disability
  benefits, was disproportionate to claimant's fraud and amounted to an abuse
  of discretion.  Defendant counters that claimant's fraud was so pervasive
  that the Commissioner properly exercised her discretion by refusing to
  approve any further compensation for his injuries.  While we in no way
  condone claimant's fraud, we agree that the Commissioner abused her
  discretion by terminating claimant's right to permanent disability
  benefits.

       ¶  11.  To resolve the present dispute, we must review the
  Commissioner's interpretation of the Workers' Compensation Act.  When
  construing the Act, we seek to implement the Legislature's intent as
  expressed in the words of the Act itself.  See Colwell v. Allstate Ins.
  Co., 2003 VT 5,  7, ___ Vt. ___, 819 A.2d 727 (Court construes statutes to
  implement legislative intent found in the statute's plain language).  We
  consider the relevant statutes at issue here in pari materia because they
  are part of the same statutory scheme governing workers' compensation.  See
  id. at  20 (statutes that are closely related must be considered in
  reference to each other).  We now examine the relevant provisions of the
  Act.
   
       ¶  12.    Workers who are injured during the course of their
  employment are entitled to compensation for their injuries.  21 V.S.A. §
  618.   The Act requires employers to provide the injured worker with
  medical, temporary and permanent disability, and in certain cases,
  vocational rehabilitation benefits.  See 21 V.S.A. § 640 (medical); id. §
  642 (temporary total disability); id. § 646 (temporary partial disability);
  id. § 644 (permanent total disability); id. § 648 (permanent partial
  disability); id. § 641 (vocational rehabilitation).  Being a remedial
  statute, we construe the Workers' Compensation Act liberally so that
  injured employees receive benefits "unless the law is clear to the
  contrary."  St. Paul Fire & Marine Ins. Co. v. Surdam, 156 Vt. 585, 590,
  595 A.2d 264, 266 (1991); Montgomery v. Brinver Corp., 142 Vt. 461, 463,
  457 A.2d 644, 646 (1983); Quinn v. Pate, 124 Vt. 121, 124, 197 A.2d 795,
  797 (1964); see also 21 V.S.A. § 709 (rule that statutes in derogation of
  common law must be strictly construed shall not apply when construing Act).  

       ¶  13.  The Act provides only two clear bases for terminating workers'
  compensation benefits following a compensable workplace injury. (FN2)  
  First, temporary disability benefits, whether partial or total, terminate
  once the worker's disability ends.  21 V.S.A. §§ 643, 647.  Second, all
  benefits under the Act are subject to forfeiture for fraud.  Id. § 708(a). 
  In cases of fraud, the Act vests discretion in the Commissioner to require
  forfeiture of "all or a portion" of workers' compensation benefits.  Id. 
  The obvious intent of § 708(a) is to deter and sanction false claims for
  compensation, and to relieve employers from having to pay claims they would
  not otherwise be responsible for under the Act.  By allowing the
  Commissioner to determine whether a claimant should forfeit all or some of
  the benefits to which the claimant is entitled, the Act also evidences an
  intent that the sanction be proportional, or have some relationship, to the
  claimant's fraud.  As claimant points out, the Commissioner's rules
  implementing § 708(a) reflect that proportionality requirement.  See Vt.
  Workers' Compensation & Occupational Disease Rules 45.5230,
  45.5231.1-45.5231.3 (codified at 3 Code of Vt. Rules, 24 010 005-3 (2001)). 
  Thus, forfeiture under § 708(a) must be no harsher than necessary to deter
  fraudulent claims and to ensure that the employer does not pay for a
  benefit to which the injured worker is not entitled under the Act.

       ¶  14.  We have no trouble upholding the Commissioner's decision to
  terminate claimant's right to any further medical or temporary disability
  benefits considering the extent of claimant's fraudulent activity in this
  case. (FN3)  Claimant fraudulently sought reimbursement for expenses
  related to his medical treatment, falsified documents to increase the
  dosage of certain medications his doctors prescribed, and exaggerated his
  symptoms.  Thus, denying him any additional medical and temporary
  disability benefits is reasonably related to the types of benefits claimant
  fraudulently sought.  While the Commissioner's sanction is no doubt harsh,
  it appears necessary to deter claimant from engaging in further deception,
  and it was within the Commissioner's discretion.
            
       ¶  15.  Denying claimant any compensation for his permanent disability
  went beyond the bounds of the her discretion, however.  Claimant is
  entitled under §§ 644 and 648 to permanent disability benefits according to
  the Commissioner's unchallenged finding that his disability is permanent. 
  We believe the Legislature did not intend § 708(a) to relieve an employer
  from its obligation under the Act to provide permanent disability benefits
  to an injured worker where the permanent nature of the worker's compensable
  injury is undisputed as it is in this case.  In other words, denying a
  claimant his or her statutory right to permanent disability benefits does
  not further the intent of § 708(a) to cull out false claims where the claim
  of permanent disability is not in fact false.
   
       ¶  16.  We understand the Commissioner's concerns, which defendant
  shares, that claimant's conduct has severely impaired his credibility, and
  that what claimant tells his physicians is not entirely trustworthy.  But
  those issues pertain to the extent of claimant's disability and not to its
  existence or permanency.  We expect that the forfeiture sanction we affirm
  here will serve to deter claimant from any further deception regarding his
  injuries.  Moreover, when claimant seeks to establish the extent of his
  permanent disability, § 708(a) allows the Commissioner to fashion an award
  to account for the uncertainty claimant's own misconduct has created about
  the extent of his disability. 

       ¶  17.   Claimant also argues that we should reverse the
  Commissioner's decision and reinstate all of his benefits because the
  Commissioner did not follow the proper procedure for terminating his
  benefits under § 708(a).  Specifically, claimant argues that the statute
  entitles him to a pretermination hearing, and that the employer has no
  right to use Form 27 to cease paying benefits on the basis of fraud. 
  Considering that claimant was afforded a hearing on defendant's
  allegations, and in light of our decision on his substantive argument, we
  need not decide the issue because any alleged procedural error was
  harmless.  V.R.C.P. 61 (Court must ignore harmless errors). 

       We answer the certified question as follows: Claimant's fraud
  justifies the termination of his temporary disability, medical, and
  vocational rehabilitation benefits, but not his right to permanent
  disability benefits.  The cause is remanded for further proceedings
  consistent with this opinion.  


                                       FOR THE COURT:



                                       _______________________________________
                                       Chief Justice (Ret.)


------------------------------------------------------------------------------
                                  Footnotes


FN1.  The questions the Commissioner certified were the following: 

    1.	Does claimant's fraud justify the approval of Form 27 and
        discontinuance of claimant's compensation benefits?  

    2.	If not, do claimant's activities warrant the discontinuance of
        some benefits?

    3.	Is the claimant's appeal to the Vermont Supreme Court timely?

  As to the last question, defendant concedes that claimant's appeal was
  timely, and our review of the record supports that conclusion. 

FN2.  We do not mean to imply that an employee may continue to receive benefits
  even after his injury has healed.  Once a compensable injury is
  established, the employee has a right to compensation, which may be
  terminated only where the Act clearly so provides.  See 21 V.S.A. § 618
  (establishing employee's right to compensation for workplace injuries); St.
  Paul Fire & Marine Ins. Co., 156 Vt. at 590, 595 A.2d  at 266 (employee
  entitled to benefits unless law clearly establishes otherwise).

FN3.  Claimant has not explained what vocational rehabilitation benefits he
  was receiving, and the Commissioner's decision is also silent on this
  point.  Thus, we cannot determine whether or how claimant's fraud affected
  those benefits.  Because we do not have an adequate record to examine
  claimant's argument relative to the vocational rehabilitation benefits the
  Commissioner terminated, we have no basis to disturb the Commissioner's
  conclusion on that issue.