RICHARD RAUSCH, Applicant

SNE ENTERPRISES INC, Employer

NATIONAL UNION FIRE INS CO, Insurer

An administrative law judge (ALJ) for the Worker's Compensation Division of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and order in that decision as its own, except that it makes the following modifications:

1. Delete the third paragraph beginning on page 6 of the ALJ decision, and substitute:

"Applicant Rausch was 25 years, 9 months old and earning $520 per week as of the September 1, 2001 date of injury. The next issue, then, is the appropriate wage on which to compute the benefits accruing for permanent disability or death under Wis. Stat. § 102.11(1)(g) which provides:

'102.11(1)(g) If an employee is under 27 years of age, the employee's average weekly earnings on which to compute the benefits accruing for permanent disability or death shall be determined on the basis of the earnings that the employee, if not disabled, probably would earn after attaining the age of 27 years. Unless otherwise established, the projected earnings determined under this paragraph shall be taken as equivalent to the amount upon which maximum weekly indemnity is payable.'

"The court of appeals has discussed the commission's role in applying Wis. Stat. § 102.11(1)(g) as follows:

'The statute does not ask the Commission to determine what a twenty-seven year old would have received for the work the younger employee was doing at the time of injury; rather, the statute directs the Commission to determine what the younger worker would probably earn in the job that he or she would hold after attaining the age of twenty-seven. In adopting sec. 102.11 (1)(g), the legislature recognized that a young worker's wages may be utterly inadequate to form a reliable basis on which to compute his or her probable earnings as a mature member of the labor force. In fixing an award to a young employee, the Commission need not assume that the injured worker would have remained in the same job or at the same company until the age of twenty-seven. In addition to the actual earnings at the time of injury, the Commission may consider the qualifications of the employee and his or her educational level and experience.'

Evans Brothers v. LIRC, 113 Wis. 2d 221, 227-28 (Ct. App. 1983).

"In addition, the supreme court--considering a predecessor to Wis. Stat. § 102.11(1)(g) with essentially identical language but for a statutory age of 21--addressed the question of whether the projected average weekly earnings should be based on what the worker would earn immediately upon reaching the stated age, or upon an unlimited amount of time after reaching that age. Badger Carton Company v. Industrial Commission, 195 Wis. 327, 330, 218 N.W. 190 (1928). The court concluded that the proper construction of the statute requires:

'a consideration of what the employee would probably earn within a reasonable time after arriving at majority; and in fixing the award the commission is entitled to consider, among other things, in addition to the actual earnings prior to the injury, the qualifications of the employee, his education and experience. [Emphasis added.]'

Id., 195 Wis. at 330-31.

"Applicant Rausch's vocational expert, Ms. Honl, asked Applicant Rausch if he intended to continue working as a factory worker, and he replied negatively. She noted it was not uncommon for a younger worker to start off in unskilled employment and then obtain more skills. When she asked what he planned to do instead of factory work, he offered the job of professional athlete, specifically a professional quarterback. Ms. Honl opined that it does not matter that his alternative career choice was unrealistic--what was important was that he intended to change jobs.

"However, Applicant Rausch worked for the employer from 1994 to 2001, a seven-year period of employment from ages 19 to 26. He has never attended post high school education or training. His stated desire to be a professional athlete is not necessarily the same as expressing a desire to increase one's earning potential. Applicant Rausch's career path to the point of injury--his educational attainment and work experience--simply does not indicate he would have been working somewhere besides the named employer within a reasonable time after attaining age 27.

"Thus, the record, including Mr. Armstrong's hearing testimony on the point (January 23, 2007 transcript, page 173), rebuts the maximum wage presumption under Wis. Stat. § 102.11(1)(g). The average weekly earnings that Applicant Rausch, if not disabled, probably would have earned within a reasonable time after attaining the age of 27 is determined to be $602 per week, which was the applicant's actual average weekly wage at the time of injury, plus three annualized five percent increases."

2. Delete the fifth and sixth (last) paragraphs beginning on page 6 of the ALJ's decision and substitute:

"Applicant Rausch is entitled to permanent total disability benefits beginning December 13, 2005 and continuing for the remainder of his life. The sum of $22,826.58 is accrued to December 28, 2007, representing a total of 106 weeks and two days. Beginning January 28, 2008, Applicant Rausch is entitled to the sum of $930.24 per month for life, subject to redetermination of the social security reverse offset set as of January 1, 2008,(1) and periodically thereafter, as well as adjustment to reflect the end of the attorney fee on July 15, 2015.

"The total currently due Applicant Rausch, then, is $30,458.41, which equals the amount due in temporary disability benefits ($22,351.83) plus the amount due in permanent total disability benefits ($22,826.58), less the amount previously paid ($14,720.00).

"Attorney's fees are payable in the amount of $1,676.86 on the award of temporary total and permanent total disability benefits as of December 28, 2007. Pursuant to § 102.26, Wis. Stats., attorney's fees shall be paid at a rate of $186.07 per month on the amount paid to Applicant Rausch beginning on January 28, 2008, subject to redetermination of the social security reverse offset as of January 1, 2008 and periodically thereafter. The attorney's fees are payable as long as the applicant may survive, with the limitation that no attorney's fee is payable beyond July 15, 2015. Costs advanced in the amount of $2,158.19 shall also be awarded, and paid from the social security reverse offset savings rather than deducted from the applicant's award.(2)"

3. Delete the first three paragraphs of the ALJ's Interlocutory Order, and substitute the second, third and forth paragraphs of the Commission's Interlocutory Order as set out below.

NOW, THEREFORE, the Labor and Industry Review Commission makes

The findings and order of the administrative law judge, as modified, are affirmed.

Within 30 days, the employer and its insurer shall pay all of the following:

1. To the applicant, Richard J. Rausch, Thirty thousand four hundred fifty-eight dollars and forty-one cents ($30,458.41) in accrued disability compensation.

2. To the applicant's attorney, William Wulf, One thousand six hundred seventy-six dollars and eighty-six cents ($1,676.86) in fees and ($2,158.19) in costs.

Beginning on January 28, 2008, and continuing on the 28th day of each month until July 15, 2015, the employer and its insurer shall pay, subject to redetermination of the social security reverse offset as of January 1, 2008 and periodically thereafter, all of the following:

1. To the applicant, Nine hundred thirty dollars and twenty-four cents ($930.24) per month for life.

2. To the applicant's attorney, One hundred eighty-six dollars and seven cents ($186.07) per month during the applicant's life.

As of July 15, 2015, the applicant is entitled to the full amount of his permanent total disability compensation (without deduction for an attorney fee) for life, again subject to the social security reverse offset if any as redetermined through that date, paid on a monthly basis based on his average weekly wage as set out above.

Within 30 days of the date of this order, the employer and its insurer shall also pay the medical expenses as set out in the fourth paragraph of the ALJ's Interlocutory Order.

Jurisdiction is reserved for such further findings and orders as may be warranted consistent with this decision.

Dated and mailed January 15, 2008
rauschr . wmd : 101 : 9 ND §§ 4.14, 5.31

James T. Flynn, Chairman

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner

1. Posture.

The applicant was a production worker, a job his vocational expert classifies as unskilled, at the time of his injury. He was injured when a window fell onto his right great toe. The applicant's toe became infected, and he developed bacterial endocarditis, an infection of the heart lining. He ultimately had to undergo surgery to replace the mitral valve in his heart.

In a decision issued in November 2003, ALJ Cathy Lake found that the injury at work caused the development of the heart condition requiring surgery. The commission affirmed that decision in November 2004. The applicant now seeks additional temporary total disability from about the time of ALJ Lake's first decision to December 2005, with permanent total disability thereafter.

The applicant testified he can only walk about a 100 yards, and that he becomes quickly exhausted by physical activities. However, his permanent total disability claim is based largely on psychological issues--cognitive dysfunction due to loss of oxygen to the brain from the heart condition, and depression. These conditions, he contends, have left him permanently and totally disabled on a vocational basis.

ALJ Lake found the applicant permanently and totally disabled based on the opinions of the applicant's doctors Kirkhorn and Waltonen and that of the applicant's vocational expert, Ms. Honl. Since the applicant was not yet 26 when injured, the ALJ expanded his wage to the statutory maximum under the "younger worker presumption" in Wis. Stat. § 102.11(1)(g).

On appeal, the employer and its insurer (collectively, the respondent) challenge the finding of permanent total disability arguing that (1) the opinions of its medical and vocational experts are more credible than those of the applicant, and (2) Dr. Kirkhorn and Dr. Waltonen's reports are insufficient for a finding of permanent total disability anyway as they do not set work restrictions. The respondent also asserts that the applicant's wage rate should not have been expanded to the maximum under Wis. Stat. § 102.11(1)(g).

2. Discussion.

a. Credibility of experts on extent of disability

With regard to the credibility of the medical and vocational experts, the ALJ observed the applicant testify and found his testimony credible. The applicant has undergone a very significant surgery, especially for a younger man, which has had damaging psychological effects. Further, the surgery was necessitated by a serious heart condition and a life-threatening infection.

Dr. Kirkhorn points out that the applicant was a B student who finished high school a year early. Now, however, even Dr. Lynch believes now that that the applicant would benefit from therapy to improve his cognitive functioning. (January 2007, transcript, pages 194.) The applicant's former girlfriend, Jaime, testified to a decline in his mental functioning, energy level, etc., after the injury. The medical notes indicate she consistently gave that same story to the applicant's doctors whom she generally saw with him, even after she and the applicant ended their romantic relationship.

The applicant's cognitive problems or deficits are documented by the reports of Drs. Waltonen and Kirkhorn. There is at least some objective of pathology in the brain in the head CT and brain MRI--the later of which specifically refers to "multiple sites of septic emboli." On this record, the commission must reject Dr. Lynch's conclusion that the applicant's cognitive deficits are pre-existing to the extent they were not invented. Like the ALJ, the commission credits Dr. Waltonen's diagnosis of "anoxic encephalopathy," his testing showing significant cognitive impairment, and Dr. Kirkhorn's conclusion regarding the disabling effect of his cognitive deficits and other medical problems.

b. Work restrictions and loss of earning capacity

The next question is whether Dr. Kirkhorn's and Dr. Waltonen's reports are insufficient for a finding of permanent total disability anyway as they do not formally set work restrictions. Work restrictions following an injury are often set to prevent reinjury, but also help establish what a worker can and cannot do vocationally and provide a basis for determining permanent partial disability based on diminished earning capacity.(3) However, an injury causing diminished or limited cognitive functioning, verified here by Dr. Waltonen's testing, remains compensable even if the psychological injury is less amenable than a physical injury to formal doctor's restrictions.

Dr. Kirkhorn estimated the disability from the cognitive dysfunction due to the cerebral insult from the anoxic episode to be 70 percent compared to permanent total disability. This represents a significant cognitive loss--with expected vocational effects that a vocational expert may reasonably estimate or predict--even if Dr. Kirkhorn did not directly prohibit or limit work involving, say, reading, extensive memory use, or calculating numbers. That is, a vocational expert may reasonably offer a prediction of the vocational effect of a brain injury based on evidence that it causes as significant a cognitive impairment as is present here.

In this case, Ms. Honl's opinion incorporates not only the disability rating given by Dr. Kirkhorn, but also his opinion that--given the cognitive testing results--the applicant cannot function at a competitive level. She reasonably concluded that, given the effect of the work injury on the applicant's functioning, he is permanently and totally disabled on an odd-lot basis. That is, the applicant has made a prima facie case that he has been injured in an industrial accident and, because of his injury, age, education, and capacity, he is unable to secure any continuing and gainful employment. The burden of showing that the applicant is in fact employable and that jobs do exist for him thus shifts to the respondent. In this case, the record, including Mr. Armstrong's report, does not make that showing. See Balczewski v. DILHR, 76 Wis. 2d 487, 495 (1977); Beecher v. LIRC, 2004 WI 88, ¶¶ 54-59, 273 Wis. 2d 136.

c. Younger worker presumption.

The commission modified the ALJ's decision to set the average weekly wage for the calculation of permanent total disability at $602, as explained above. However, the commission reaches this result only with reluctance.

Significant changes in the labor market have occurred since the time of Badger Carton and Evans Brothers decisions, resulting in a work force that not only changes employers with much greater frequency, but that is also expected to learn new skills more often. The accelerated rate of change confronting workers today suggests that a person's wage throughout his or her working life may have little relationship to his or her wage, or even his or her wage expectations, at age 27 or "a reasonable time" after reaching that age. Had it been permitted to look at the probable wages throughout the applicant's career, rather than being limited to the probable wages within a reasonable time after attaining age 27, the commission would not have found the maximum wage presumption to have been rebutted.

cc:
Attorney William A. Wulf
Attorney Bonni D. Fredrick

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(1)( Back ) The department has informed the commission that the necessary figures to make the January 1, 2008, redetermination are not yet available.

(2)( Back ) Pursuant to Wis. Stat. ¶ 102.44(5), when an award is subject to the social security reverse offset, attorney fees and costs are paid from any reverse offset savings. See: Memo from Chris M. Faulhaber, W.C. Division Administrator, to all insurance carriers and self-insured employers, regarding "Social Security Reverse Offset Section 102.44(5)," August 1, 1987, point I.7., reprinted at Neal and Danas, Worker's Compensation Handbook, Appendix 4F (5th ed. 2007).

(3)( Back ) In general, awards for permanent disability in cases of nonscheduled injuries must be based on some kind of prediction of impairment of loss of earning capacity. Pfister & Vogel Tanning Co. v. DILHR, 86 Wis. 2d. 522, 528 (1976); Northern States Power Co. v. Industrial Commission, 252 Wis. 70, 76 (1947).

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