STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

JOSEPH GUNZEL, Applicant

GAJESKI CONSTRUCTION, Employer

WEST BEND MUTUAL INS COMPANY, Insurer

WORKER'S COMPENSATION DECISION
Claim No. 92045568

An administrative law judge (ALJ) for the Worker's Compensation Division of the Department of Workforce Development (Department of Industry, Labor and Human Relations prior to July 1, 1996) 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.

ORDER

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

Dated and mailed October 30, 1996
gunzejo2.wsd : 101 : 1  ND § 5.39

Pamela I. Anderson, Chairman

Richard T. Kreul, Commissioner

David B. Falstad, Commissioner

MEMORANDUM OPINION

The employer and the insurer (collectively, the respondent) have petitioned the commission for review, contending that the ALJ erred in finding the applicant entitled to vocational rehabilitation benefits.

An injured worker who is "receiving instructions" under the federal vocational rehabilitation law (and its successor statutes) is entitled to travel and maintenance expenses under sec. 102.61, Stats., and compensation at the rate for temporary total disability under sec. 102.43 (5), Stats. However, once the department or the commission finds a work injury causing permanent disability or restrictions, those agencies must generally defer to the determination of DVR (1)  as to whether the injured worker is eligible for vocational rehabilitation services, including retraining. Thus, if DVR certifies the injured worker for retraining, the applicant is eligible in most cases for vocational rehabilitation benefits under sec. 102.43 (5) and 102.61, Stats.

However, the commission or the department may deny vocational rehabilitation benefits under ch. 102, Stats., to an injured workers, depsite DVR certification, under two circumstances:

1. DVR's interpretation of the vocational rehabilitation law is entirely outside the scope of reasonable interpretation and so a clear abuse of administrative power; or

2. Highly material facts were misrepresented to, or withheld from, DVR during the certification process.

The Supreme Court set out these guidelines in Massachusetts Bonding & Ins. Corp. v. Industrial Commission, 275 Wis. 505, 512 (1957), based on its belief that the legislature did not intend to give the Industrial Commission (and so its successors DILHR, DWD and LIRC) any power to interpret the vocational rehabilitation laws. The court went on to say:

"We conclude that any power of review given to the Industrial Commission is limited.

"Unless it is shown before the commission that highly material facts were misrepresented to or withheld from the state board [DVR] or that the state board has applied an interpretation of the rehabilitation laws which is entirely outside the reasonable scope of interpretation and hence a clear abuse of administrative power, the Industrial Commission must find that any applicant who is receiving aid from the state board is also entitled to it."

Of course, the limits on department or commission power apply only to the first forty weeks of vocational retraining, at least with respect to benefits under sec. 102.43 (5), Stats. If the commission finds retraining unreasonable (though not an abuse of administrative power), it may end benefits under sec. 102.43 (5), Stats., after the first 40 weeks, even if DVR has authorized a longer program. (2)

The respondent raises two arguments: First, DVR abused its authority by failing to follow its own procedures during the certification process. Second, that the ALJ erred in concluding that the retraining program to which the applicant was certified only restored, but did not improve, the applicant's earning capacity. See IND 80.49 (1), Wis. Adm. Code.

The respondent's strongest argument is that DVR abused its authority or power by not following its own policy requiring job placement efforts. (3) However, the commission and the courts have held that DVR's failure to follow its own rules is not automatically a clear abuse of administrative power. (4) Moreover, the commission has, on numerous occasions in the past, faced the specific issue of whether DVR's failure to comply fully with its policy regarding job placement efforts before certifying an injured worker for retraining amounted to a clear abuse of administrative power. (5) The ALJ appropriately cited the commission's guiding principle in such cases: whether a worker's job search was reasonable and adequate despite a lapse in compliance with DVR policy. (6)

In this case, the commission agrees with the ALJ that DVR did not abuse its administrative power based on DVR's departure from its normal job placement practice. First, Ms. Smallwood, the first job placement expert the applicant saw, opined the applicant would not find work paying more than $6.00 per hour, far less than 85 percent of his pre-injury wage. The respondent attempts to downplay this by suggesting that Ms. Smallwood did not know about the applicant's actual experience. But nothing in the record supports this inference, especially as Ms. Smallwood was provided with Mr. Schulte's evaluation according to Mr. Yockey. Thus, given Ms. Smallwood's impression that job placement efforts would be futile, DVR's ultimate decision not to provide them does not seem like an abuse of power.

Of course, the fact that the insurer did not subsequently provide its own placement services through Mr. Iwinski is complicated by the applicant's refusal to turn over his income tax records. However, DVR agrees that this was not required or even necessary. DVR evidently applies its "85 percent rule" based on a worker's last hourly wage, not his or her annual salary in prior years. Even the respondent's attorney agreed the applicant had no duty to turn over the tax records. Further, the applicant's unrefuted testimony was that he did not understand his job with the employer to be seasonal, and the employer offered no country testimony. Thus, it was not unreasonable for DVR to apply its eighty-five percent rule based on the applicant's hourly wage than on earnings in prior years.

Finally, DVR director Truesdell eventually "waived" job placement activities with Mr. Klegg of Curative Rehabilitation Services after a formal administrative hearing. Thus, DVR's departure from policy here may not be characterized as capricious. To the contrary, it seems like a considered decision, based on a careful examination of the record after a hearing.

The respondent next asserts the ALJ erred in concluding that the 2-year electromechanical technology program at a VTAE institution would restore, but not improve, the applicant's earning capacity. The respondent contends this program goes beyond simply restoring the applicant's earning capacity and potential, but in fact increases or enhances it. In support of its position, the respondent asserts that Ms. Smallwood opined the applicant's pre-injury earning capacity was $6.00 per hour.

As best as the commission can tell, however, $6.00 was Ms. Smallwood's estimate of the applicant's post-injury capacity. A good indication of the applicant's pre-injury earning capacity is what he was paid by the employer $11.00 per hour. Another good indication would be the median wage for carpentry work, about $15.21 per hour. (7) Using these more reasonable figures to estimate the pre-injury earning capacity for this 15-year carpenter makes it clear that the VTAE retraining for electromechanical technology only restored the applicant's earning capacity and potential. Indeed, Mr. Iwinski all but admitted as much at the hearing.

On this basis, the commission must conclude that the ALJ properly concluded that the primary purpose of the retraining program for which the applicant was certified was to restore his earning capacity. Indeed, there is little evidence that the retraining program increased the applicant's earning capacity in any sense. (8) DVR did not abuse its administrative power in certifying the applicant to the electromechanical technology training, nor is there any reason to end benefits after 40 weeks under sec. 102.43 (5), Stats.

cc: ATTORNEY MICHAEL B KULKOSKI
OLSON KULKOSKI GALLOWAY & VESELY SC

ATTORNEY PETER S NELSON
MENN NELSON SHARRATT TEETAERT & BEISENSTEIN LTD

Footnotes:

(1)( Back ) The division of vocational rehabilitation in the department of health and social services prior to July 1, 1996.

(2)( Back ) The "forty week presumption" has been expanded to eighty weeks for cases with dates of injury after May 4, 1994. 1993 Wis. Act 370 SECTION; sec. 102.03 (4), Stats. Since the date of injury in this case is in 1992, though, the "forty-week" presumption applies here.

(3)( Back ) See "DVR Special Procedures for Processing Workers Compensation Referrals," sec 2330 (9), at Neal & Danas, Workers Compensation Handbook, App 4F, pages 4-24 and 4- 25 (3d ed. 1990).

(4)( Back ) In Sommer v. Peter Pirsch & Sons Company & LIRC, Court of Appeals case no. 87-1333, District II unpublished decision (March 30, 1988), the court considered DVR's failure to contact an employer about placement and retraining progress or to conduct a general job search. The court acknowledged that DVR had not followed its policy, but pointed out that the Sommer had self-referred, been laid off by the employer because it had no work for him, and had conducted his own job search. On this basis, the court found no abuse of administrative power.

(5)( Back ) Marcia Hellmer v. Sheboygan County Comprehensive Health Center, claim no. 88-041428 (LIRC, April 7, 1992); Terri Strzyzewski v. Jerome Foods, Inc., claim no. 92012367 (LIRC, October 19, 1994); Timothy Allen v. Hallbeck Group Design, claim no. 87-013647 (LIRC, May 12, 1992); Leider v. Rocky Knoll Health Care, claim no. 910353377 (LIRC, July 19, 1993), LIRC reversed Manitowoc County Circuit court case no. 93-CV-391 (August 29, 19994), slip op. at page 5, circuit court affirmed, court of appeals case no. 94-2717, unpublished district II decision (June 21, 1995); Gina Derosso v. LIRC, Milwaukee county circuit court case no. 95-CV-006716 (June 20, 1996); and Christine Schellin v. LIRC, Dodge County circuit court case no. 93-CV-538 (March 13, 1995), slip opinion at page 11.

(6)( Back ) Hellmer, supra, at page 4.

(7)( Back ) See exhibit R. Mr. Iwinski testified that this included both union and non-union workers, suggesting that the figure was high for non-union workers. Be that as it may, $6.00 per hour is clearly far below the applicant's pre-injury capacity.

(8)( Back ) The fact that an injured worker's retraining may amount to higher wages than he had before the injury does not mean it was an abuse of discretion to authorize such retraining. In Beloit Corporation v. LIRC, 152 Wis. 2d 579, 590 (Ct. App., 1989), the court approved the commission's finding that virtually any retraining will result in some increase in earning capacity. The Beloit Corp. case dealt with DVR vocational rehabilitation training that sent a young laborer to college to become an engineer. The court concluded that while training increased the injured worker's earning capacity, that did not make it unreasonable. The court specifically noted that vocational retraining is undertaken to restore earning potential, as well as earning capacity. Beloit Corp., at 591. The court approved of the commission's finding that the purpose of the training was to use his ambition, intellect and remaining natural assets to restore his pre-injury capacity. It affirmed LIRC's finding of vocational rehabilitation benefits beyond 40 weeks. The commission recently reached a similar result in Hellmer, supra. In that case, the commission recognized almost every time an injured worker is trained there will be some increase in wage because a trained worker is almost always worth more than an untrained one. Instead of looking solely at the effect on the applicant's earning potential the commission looks to see if the primary purpose of the retraining program is to restore earning capacity or improve upon it. See also Julie Galston v. Oshkosh B'Gosh, WC claim no. 91026029 (LIRC, January 24, 1996.)

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