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

JOHN KOWALCHUK, Applicant

SUNNY SLOPE GRADING INC, Employer

REGENT INSURANCE CO, Insurer

WORKER'S COMPENSATION DECISION
Claim No. 93053333

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

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on the applicable law, records and evidence in this case, the commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The applicant suffered a compensable back injury in 1993. On appeal, he claims he has a new injury, or an exacerbation of his 1993 injury, causing him to miss work in July 1995. He seeks compensation for the resulting temporary disability and medical expenses, as well as additional permanent partial disability for loss of earning capacity.

The employer and the insurer (collectively, the respondent) contend that the applicant's claim for disability and medical expenses from a new injury or re-injury in July 1996 should be denied because there was no such injury or re-exacerbation. The respondent concedes the employer fired the applicant for missing work on one day, July 6, 1996. However, the respondent contends that the applicant invented a new injury or re-exacerbation as an attempt to justify retroactively his failure to report for work for purely personal reasons on July 6, 1996, despite specific instructions to report to work due to the high volume of work. It argues that there should be no award for loss of earning capacity on this record.

The applicant, who was born in 1957, worked for the employer from April 1987 to July 1996. He was a mechanic, fixing the employer's construction equipment and vehicles. He worked considerable overtime, sometimes working up to 60 hours in a week.

The applicant initially hurt his back at work in August 1993. After the applicant underwent laminectomy surgery, the employer conceded temporary disability to January 1995 and permanent partial disability at 15 percent compared to permanent total disability on a functional basis.

The applicant was able to return to work subject to a 45- hour per week, nine-hour per day restriction. The employer generally accommodated the applicant's restrictions. When he returned to work, the applicant evidently did somewhat less actual work as a mechanic. In addition to mechanic's work, the applicant delivered machines to the employer's job sites, and drove a vibrating compactor. His hourly pay rate remained the same, or increased, but his weekly pay was less than he had averaged before the injury, due to his restriction to 45 hours per week. The applicant continued to work until he was discharged by the employer on July 8, 1996.

In prior years, the applicant has taken vacation in the week after July 4, because that is when his wife's employer had its annual plant shutdown. In 1996, however, because of unusual amounts of rain, the employer was behind in its construction work. Its management told the mechanics, including the applicant, that they would not get summer vacations.

Nonetheless, on Friday, July 5, the applicant mentioned his desire for time off the following week to the employer's vice president (John Christianson). The applicant told vice president Christianson of his intention to take vacation, and to so inform the owners. Christianson had no initial response, but mentioned the applicant's statement to one of the owners (Tom Brubakken). Brubakken told Christianson to tell the applicant that if that was all he thought of this job, he would be fired.

Christianson then told the applicant he needed to firm up his schedule for the following day, Saturday, July 6. According to Christianson, the applicant told him that he was going on vacation the following day and that the owners could fire him if they did not like it.

Later in the day, the applicant contacted Christianson again by phone and asked for the owner's telephone number. The applicant then called Tom Brubakken, an owner, sometime during the early evening of Friday, July 5. The applicant asked Brubakken why he (the applicant) could not have a week off work. Brubakken reiterated that, due to the backlog of work, none of the mechanics could take a summer vacation. The applicant protested, according to Brubakken, that his wife was off work and that he had planned for company. Brubakken did not relent. At the end of the conversation, the applicant then mentioned that his back was hurting and stated he needed time off for that reason. November Transcript, page 58.

According to the employer's witnesses, this was the first time that the applicant mentioned his back. For his part, the applicant denies ever telling Christianson or Brubakken that he needed time off work simply for a planned summer vacation. The commission reads the applicant's testimony to mean that while he used the word "vacation" in these conversations, he never implied the vacation was for anything but his back.

There is a substantial amount of testimony from witnesses offered to corroborate the employer's version of events. The applicant told Dean Castona, who sold machine parts to the employer, sometime before July 3, 1996, that he would be off work around the Fourth of July but had not told anyone. When Castona asked if that was wise, the applicant responded: "If they don't like it, fuck them. They can fire me."

The applicant told Joel Bierle, the employer's other mechanic, he was going on vacation for the week after July 4, and that he wanted Bierle to remind the owners. When Bierle asked if the front office knew about the time off, the applicant responded "they've had nine years notice" in reference to his practice of taking that week off work in prior years.

Two other points worth are noting in co-worker's Bierle's testimony. First, Bierle acknowledged that the mechanics, specifically including the applicant, were told to expect to work over the weekend of July 6-7. This supports the testimony of the employer's vice president and owners on that point, and undercuts the credibility of the applicant's testimony that he did not recall that conversation.

Second, Bierle testified that he and the applicant discussed operation of the "lowboy" tractor-trailer rig. The applicant complained about the mental stress involved in operating it without running over someone on the work site, but never complained of physical discomfort.

At any rate, the applicant did not report for work on Saturday, July 6. When he reported on Monday, July 8, he was discharged. The employer informed him he was discharged for missing work the previous Saturday.

The next day, Tuesday, July 9, 1996, the applicant returned to the office of George Bartl, M.D., who had treated him for the original work injury in 1993. The applicant had not seen Dr. Bartl for seven months.

The applicant told Dr. Bartl he was working nine-hour days, and hurting every day. He told the doctor the employer was agitating him to work longer hours. He also told the doctor he was required to perform work he could not do. He then told the doctor the employer fired him because he could not work to their demands.

Dr. Bartl took the applicant off work as of July 9. Tests (an MRI and EMG) were ordered. These tests disclosed nothing abnormal. Indeed, Balaraju Ghandhavadi, M.D., who perfumed the EMG tests on July 23, 1996 (and who had also treated the applicant for the original work injury) reported that in some respects the July 1996 test results were better than a January 1994 test done after the initial work injury. Exhibit 3. On July 30, 1996, after reviewing the test results, Dr. Bartl saw no reason why the applicant could not return to work full-time. The applicant did not return to Dr. Bartl until February 1997. Exhibit J, pages 12-13.

Dr. Gandhavadi submits a practitioner's report dated in June 1995. Exhibit H. The practitioner's report indicates the applicant had disability in August 1996 caused by work. Exhibit H. Dr. Gandhavadi's report also refers to an attached office note for work restrictions, but the commission could find no actual work restrictions in the notes attached to exhibit H.

Dr. Bartl prepared a letter dated May 1, 1997, indicating the applicant should limit his work to 45 hours or less per week. Exhibit D. Dr. Bartl later prepared a practitioner's report dated June 10, 1997, in which he diagnosed a temporary traumatic aggravation of the pre-existing degenerative arthritic changes, caused by work. Exhibit G. In another practitioner's report, evidently dated June 24, 1997, Dr. Bartl opined the applicant sustained an aggravation of a prior work related injury beyond normal progression, and that he was able to work subject to a restriction to 45 hours per week.

The record also contains reports from vocational experts concerning the applicant's loss of earning capacity. The applicant's expert, Michael Ewens, rated loss of earning capacity at 40 to 45 percent assuming he remained employed with Sunny Slope Grading at 45 hours per week, and 55 to 60 percent if he were required to obtain other employment in the general labor market. Mr. Ewens' first estimate relies on the loss of overtime hours with Sunny Slope Grading, Inc., where the applicant had worked up to 60 hours per week before his work injury. Mr. Ewens' second estimate also factors in the lower hourly pay rate the applicant could expect to earn in the general labor market in suitable work as an assembler, maintenance mechanic, maintenance person and vehicle mechanic.

The respondent's vocational expert, Michael Campbell, initially rated loss of earning capacity at 15 to 25 percent in a report prepared in July 1996 before the applicant was discharged from Sunny Slope Grading, Inc. Mr. Campbell's range was based largely on his comparison of the applicant's pre-injury earnings of about $56,000 per year, and his estimate of post-injury annual earnings with the employer at $46,170.

After the applicant lost his job with the employer, Mr. Campbell re-calculated loss of earning capacity based on the applicant's ability to work in the general labor market as a mechanic. He estimated a 25 to 30 percent loss assuming a 45- hour week, and 20 to 25 percent loss if the applicant were able to find lighter work at which he could work more overtime hours.

The first issue before the commission is whether the applicant sustained a new injury, or exacerbation of the applicant's 1993 injury, on or about July 6, 1996. The commission, like the ALJ, concludes not.

The applicant did not report an injury or exacerbation of pain in July 1996 to the employer until his final conversation with Brubakken, co-worker Bierle's testimony indicates the applicant did not complain the compactor lowboy operation was physically difficult, and Dr. Bartl's medical records contain no objective evidence of a new injury or basis for increased or exacerbated symptoms. Moreover, after considering the record as a whole, the commission concludes the re-injury claim was invented by the applicant to justify his failure to report for work for personal reasons. The respondent is not liable for additional temporary disability or medical expenses for treatment beginning after July 6, 1996.

The second question is whether the applicant should receive permanent partial disability based on loss of earning capacity, and, if so, how much. Wis. Stats. § 102.44(6)(a), (b), (f) and (g) provide as follows:

(a) Where an injured employe claiming compensation for disability under sub. (2) or (3) has returned to work for the employer for whom he or she worked at the time of the injury, the permanent disability award shall be based upon the physical limitations resulting from the injury without regard to loss of earning capacity unless the actual wage loss in comparison with earnings at the time of injury equals or exceeds 15%.

(b) If, during the period set forth in s. 102.17 (4) the employment relationship is terminated by the employer at the time of the injury, or by the employe because his or her physical or mental limitations prevent his or her continuing in such employment, or if during such period a wage loss of 15% or more occurs the department may reopen any award and make a redetermination taking into account loss of earning capacity.

(f) Wage loss shall be determined on wages, as defined in s. 102.11. Percentage of wage loss shall be calculated on the basis of actual average wages over a period of at least 13 weeks.

(g) For purposes of this subsection, if the employer in good faith makes an offer of employment which is refused by the employe without reasonable cause, the employe is considered to have returned to work with the earnings the employe would have received had it not been for the refusal.

The department's interpretative footnote to Wis. Stat. § 102.44(6) provides:

141(1) 102.44(6) provides that in cases of non-scheduled injury permanent partial disability is to be determined on the basis of the physical limitations without regard to loss of earning capacity where the employe has returned to work for the same employer as at the time of injury at a wage loss of less than 15 percent. A good faith offer of employment refused by the employe without reasonable basis has the same effect as actual reemployment. The claims subject to this section including those upon which an award is issued remain open for the period of the statute of limitations in the event that there is a termination of the employment or a wage loss of 15% or more occurs.

Thus, if a time-of-injury employer rehires an injured worker at least 85 percent of his pre-injury wage, it does not have to pay an award based on loss of earning capacity. (2) However, the department retains jurisdiction to reopen and resolve the loss of earning capacity issue in the event a subsequent separation from the time-of-injury employer causes a wage loss of at least 15 percent. (3)

The first question, then, is whether and when the applicant suffered a wage loss of more than 15 percent. In this case, the applicant earned less than 85 percent of his pre-injury wage when he returned to work in January 1995. According to the employer's own figures, the applicant averaged 84.9 percent in the first 13 weeks of his re-employment (excluding the week of March 13 through 18, 1995). Even as late as the 26th week after returning to work (again excluding March 13 through 18 and July 10 to 15, 1996), the applicant's weekly wage was still under 84.7 percent (though at times during that period the average was greater than 85 percent.) On this record, the commission concludes the applicant is eligible for loss of earning capacity under Wis. Stat. § 102.44(6) based on his wages after returning to work with Sunny Slope Grading, Inc.

The next issue is what effect, if any, his subsequent discharge from employment with Sunny Slope Grading, Inc., should have on his claim for loss of earning capacity. As noted above, under Wis. Stat. § 102.44(6)(b), the department or commission may reopen an award for loss of earning capacity if a worker's employment is subsequently terminated by an employer. Likewise, where, as here, a worker returns to work at less than eighty-five percent of the pre-injury wage, and then is discharged from that work, the wage loss caused by the discharge ordinarily will be relevant to the worker's loss of earning capacity.

The commission has recognized an exception for a discharge under circumstances in which the worker's actions leading to the discharge may be equated refusing work without reasonable cause. (4) Thus, in cases where the commission is satisfied that a worker's actions which led to his discharge from the time-of-injury employer were tantamount to an unreasonable refusal of work which he could have performed, the commission has refused to "reopen" the loss of earning capacity award based on the separation. Likewise, if the applicant's actions which led to his discharge in this case were tantamount to a refusal of work, the effect of the resulting separation on the applicant's earning capacity will not be considered, and the estimate of loss of earning capacity will be calculated as if the applicant were still working at Sunny Slope Grading, Inc. See: Wis. Stat. § 102.44(6)(g).
The applicant points to the recent supreme court holding in Brakebush Bros. v. LIRC, 210 Wis. 2d 623 (1997). In that case, the supreme court held that duty pay temporarily survives a discharge for misconduct. However, the commission has suggested that the Brakebush holding, which deals a conceded injury causing temporary disability, might not apply to loss of earning capacity cases involving discharges for conduct tantamount to a refusal of work. Mark Wellsandt v. Chippewa County, WC claim 93050745 (LIRC, November 28, 1997). The reason for this is simple: the law dealing with temporary disability includes no equivalent of Wis. Stat. § 102.44(6)(b) and (g) which provide a statutory mechanism for ending loss of earning capacity liability in the event of a discharge for conduct tantamount to a refusal of work. (5)

The question, then, is whether the applicant's actions leading to his discharge were tantamount to a refusal of work. The commission concludes they were. As discussed above, the applicant's testimony that he needed the time off over the weekend of July 6 and 7, 1996 because of his back is simply not credible. As explained in the memorandum opinion attached to his decision, the ALJ who presided at the hearing agrees with this credibility assessment. The applicant simply refused, with little notice and for personal reasons unrelated to his physical condition, to work on July 6 despite having adequate advance notice that his presence was required. The commission concludes the employer acted reasonably in discharging the applicant under these circumstances, and that the actions leading to the discharge were tantamount to an unreasonable refusal of work within the applicant's restrictions.

Consequently, the applicant's loss of earning capacity must be determined based on his loss upon returning to work, without consideration of his subsequent separation. As set out above, applicant's vocational expert Ewens rated loss of earning capacity at 40 to 45 percent, assuming the applicant was employed with Sunny Slope Grading, Inc., at 45 hours per week. Respondent's vocational expert Campbell rated loss of earning capacity at 15 to 25 percent based on his comparison of the applicant's pre-injury earnings of about $56,000 per year with his estimate of post-injury annual earnings of $46,170 at Sunny Slope Grading, Inc.

Of these two estimates, the commission finds Mr. Campbell's more credible. The commission therefore awards loss of earning capacity at twenty percent, the mid-point of the range offered by Mr. Campbell.

In crediting Mr. Campbell's estimate, the commission notes the applicant earned $44,122.62 (6) in the year from January 8, 1995 to January 6, 1996, a figure much closer to the $46,170 estimated by Mr. Campbell than the $30,000 to $35,000 estimated by Mr. Ewens. The applicant's actual wage when compared to earnings of $52,264.30 in the 52 weeks preceding his injury (7) was 15.58 percent. As a result, the commission concludes Mr. Ewens over-estimated the applicant's actual wage loss and, consequently, his loss of earning capacity.

In addition, the commission notes that Mr. Ewens' report includes the apparently lower-paying jobs of class A assembler, class B assembler, and maintenance person when estimating the applicant's earning capacity on the general labor market. The commission believes Mr. Campbell more credibly considered only mechanic jobs given the applicant's prior employment, skills, and relatively minor work restrictions. While the commission does not base its estimate of loss of earning capacity on the applicant's earning capacity in the general labor market for the reasons explained above, Mr. Ewens' inclusion of the assembly and maintenance jobs seems calculated to skew the applicant's post- injury earning capacity downward and his loss of earning capacity upward, raising questions about the overall credibility of Mr. Ewens' report.

After considering the relevant factors under Wis. Stat. § DWD 80.34, then, the commission therefore finds that the applicant has sustained permanent partial disability based on loss of earning capacity at 20 percent. The applicant's permanent partial disability on a functional basis, including the previously-paid permanent disability rated at 15 percent compared to permanent total disability, is merged in to the award for loss of earning capacity.

The applicant is therefore entitled to 200 weeks of permanent partial disability at the weekly rate of $152 (the statutory maximum for injuries sustained in 1993). This amounts to a total award for permanent disability of $30,400, of which the employer has previously paid $22,800, leaving an additional award under this order of $7,600. As of August 4, 1998, 186 of the 200 weeks of permanent partial disability have accrued, so that of the additional 50 weeks of permanent disability awarded under this order, 36 weeks ($5,472) have accrued and 14 weeks ($2,128) are unaccrued.

The applicant agreed to a 20 percent attorney fee on additional amounts awarded under Wis. Stat. § 102.26. The future value of the fee is thus $1,520 (0.20 times $7,600). However, as of August 4, 1998, only the first 36 weeks of the award upon which the fee is based has accrued, 14 weeks remain unaccrued. As a result, the fee is subject to an interest credit of $4.27 which reflects its present value of $1,515.73. The fee, together with costs of $185.95 shall be paid to the applicant's attorney within 30 days.

The amount to be paid to the applicant within 30 days is $4,191.65. This equals the 36 weeks of the additional accrued permanent partial amount awarded ($5,472), less accrued attorney fees ($1,094.40), less costs ($185.95).

The amount remaining to be paid to the applicant as it accrues is $1,702.40. This equals the unaccrued 14 weeks ($2,128), less the future value of the fee on the accrued weeks ($425.60). The remaining amount shall be paid in monthly installments of $658.67.

ORDER

The findings and order of the administrative law judge are modified to conform to the foregoing and, as modified, are affirmed in part and reversed in part.

Within 30 days from the date of this decision, the employer and the insurer shall pay all of the following:

1. To the applicant, John S. Kowalchuk, Four thousand one hundred ninety-one dollars and sixty-five cents ($4,191.65) in permanent disability compensation.

2. To the applicant's attorney, Steven G. Kmiec, the sum of One thousand five hundred fifteen dollars and seventy-three cents ($1,515.73) in attorney fees and One hundred eighty-five dollars and ninety-five cents ($185.95) in costs.

Beginning on September 4, 1998, and continuing on the third day of each month beginning thereafter, the employer and the insurer shall pay to the applicant Six hundred fifty-eight dollars and sixty-seven cents ($658.67) per month until the sum of One thousand seven hundred two dollars and forty cents ($1,702.40) has been paid.

Dated and mailed: July 29, 1998
kowaljo.wrr : 101 : 5  ND § 5.23

/s/ David B. Falstad, Chairman

Pamela I. Anderson, Commissioner

/s/ James A. Rutkowski, Commissioner

MEMORANDUM OPINION

The commission conferred about witness credibility and demeanor with the administrative law judge who presided at the hearing. Transamerica Ins. Co. v. ILHR Department, 54 Wis. 2d 272, 283-84 (1972). The administrative law judge stated that he did not regard the applicant's version of the events leading to his discharge as credible, noting that the testimony of the other witnesses essentially corroborated the respondent's version. He believed the applicant chose not to work on July 6 for purely personal reasons, then thought better of his decision and reported to work the next week. The commission adopts the ALJ's credibility assessment.

The body of this decision generally addresses the issues raised by the parties in their respective petitions. However, additional explanation is warranted with respect to the issue of whether, upon returning to work for the employer in January 1995 following the 1993 injury, the applicant sustained an actual wage loss of more than 15 percent. This question is analytically separate from the issue of additional wage loss occurring as a result of the subsequent discharge by the employer in July 1996. The question of the extent of wage loss upon returning to work in January 1995 depends to a large extent on the period of time used for comparison.

The relevant figures are provided by the respondent in exhibit 5 and the appendix to its second reply brief. The applicant earned $52,264.30 in the 52 weeks prior to his injury (during which he actually worked 51 weeks and had one week of unpaid vacation (8) ), and $44,122.62 in the fifty-two weeks after his return to work (during which he worked 50 weeks and had two weeks of unpaid vacation.) This amounts to 15.57 percent wage loss. If another week is added to the period after the applicant's return to work so that period contains 51 weeks of work, the "return to work" wages increase to $44,932.62, which in turn reduces the actual wage loss to 14.02 percent.

On the other hand, when one compares the wages the applicant earned in the first thirteen weeks in which he actually worked after returning in January 1995 ($11,093.84) with one quarter of the 52-week average before the injury ($13,066.07), the wage loss is 15.09 percent. Although this exceeds 15 percent by only a slim margin, one must recall that the pre-injury 13-week base in effect includes a quarter week of unpaid vacation while the "return to work" 13-week base does not, thus understating the actual wage loss. Indeed, the figures in the respondent's appendix to its second reply brief indicate that the applicant's cumulative average wage loss was as high as 16.4 percent through the first 15 weeks after he returned to work, and that it was not until the first 26 weeks that the wage loss dipped below 15 percent to stay.

The respondent asserts that the commission should calculate the applicant's actual wage loss based on the 52-week figures, asserting that this is a more reasonable comparison to the 52- week period upon which the pre-injury average weekly wage is based. The statutory language referring to a calculation of wage loss over a 13-week period in Wis. Stat. § 102.44(6)(f), the respondent contends, sets out a minimum period, not a maximum period, for determining actual wage loss.

It is true that the 13-week time period set out in Wis. Stat. § 102.44 is a statutory minimum. If a worker suffers a wage loss of more than 15 percent over only twelve weeks, he may not claim workers compensation. But the most reasonable reading of Wis. Stat. § 102.44(6)(f) is that, if a worker suffers a wage loss over a period of at least 13 weeks, he or she is entitled to a claim for loss of earning capacity. This is the interpretation recently endorsed at the circuit court level in Garold Faul v. LIRC, case no. 96 CV 487 (Wis. Cir. Ct., October 10, 1997).

The commission acknowledges that, in some cases, a 13-week period for calculating wage loss upon returning to work may not fairly reflect actual wage loss. For example, if a seasonal layoff or unpaid vacation occurs in 13-week period, it could unfairly understate wages and overstate wage loss. Likewise, the commission retains the discretion to disregard a specific 13-week period if the record establishes that the wage loss during that period was due to normal seasonal reduction in work which occurs ever year. However, that has not been shown in this case and, indeed, the figures provided by the respondent did not include the week of unpaid vacation in week ending on March 18, 1995.

cc: ATTORNEY WILLIAM R SACHSE JR
PETERSON JOHNSON & MURRAY SC

ATTORNEY STEVEN G KMIEC
KMIEC LAW OFFICES

Appealed to Circuit Court. Affirmed March 24, 1999. Appealed to Court of Appeals. Affirmed March 1, 2000. [Court of Appeals decision]

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Footnotes:

(1)( Back ) Wis. Stat. § 102.44(6)(a).

(2)( Back ) Wis. Stat. § 102.44(6)(b).

(3)( Back ) See: Wis. Stat. § 102.4(6)(g); Terry Ann Mallette v. Hartford Finishing Inc., claim no. 93036016 (LIRC, July 31, 1995), affirmed case no. 95 CV403 (Wis. Cir. Ct. Dodge County, March 22, 1996); and cases cited therein. See also: Janice Groehler v. Horton Manufacturing, WC case no. 93031849 (LIRC, June 5, 1996), affirmed sub no. Horton Manufacturing v. LIRC, case no. 97-1613 (Wis. Ct. App., February 17, 1997).

(4)( Back ) Similarly, Wis. Admin. Code § DWD 80.34(1)(h) states that efforts to obtain (and, by extension, to maintain) suitable employment are relevant in determining loss of earning capacity.

(5)( Back ) Exhibit 5 and appendix to respondent's second reply brief.

(6)( Back ) Exhibit 5. The vocational experts assumed slightly higher pre-injury earnings of $52,500: exhibit C, page 6 and exhibit 1, page 4.

(7)( Back ) Exhibit 5 contains no stub for a check dated July 21, 1993 to cover the period from July 12 to July 17, 1993.