Nix v. Freightliner Corp.

931 P.2d 836, 145 Or. App. 560, 1997 Ore. App. LEXIS 53
Court of Appeals of Oregon·Decided January 22, 1997·No. 93-02704; CA A87100·Published·Cited by 1 cases

Opinion

LANDAU, J.

Claimant seeks review of an order of the Workers’ Compensation Board (Board) holding that an award of attorney fees is subject to an offset based on prior overpayment of compensation. Claimant contends that the Board’s own rules expressly prohibit such an offset. Employer contends that the Board’s construction of its rules to allow an offset in the circumstances of this case is a reasonable one and should be upheld. We conclude that the Board’s rules unambiguously prohibit offsetting an award of attorney fees based on prior overpayments. We therefore reverse the order and remand the case for reconsideration.

We take the facts, which are not in dispute, from the Board’s order. Claimant was compensably injured in 1990 and initially received an award of 11 percent unscheduled permanent partial disability. Employer did not pay the award; it requested reconsideration, and, as a result, the award was reduced to 1 percent disability. Employer paid the 1 percent award. Meanwhile, an administrative law judge ordered employer to pay the 10 percent difference, which it owed pending its reconsideration request, and authorized an offset against future compensation for the overpayment. The overpayment offset totaled $3,200.

Claimant filed a claim for aggravation in 1992. Ultimately, the Board concluded that claimant was entitled to an additional 12 percent permanent partial disability. The Board further concluded that claimant’s attorney was entitled to attorney fees in an amount equivalent to 25 percent of the increased compensation. That increase was valued at $3,840. Because employer was entitled to a $3,200 credit against the increased award of disability compensation, the question arose whether claimant’s attorney fees of 25 percent were to be based on the award before or after the offset. If the offset were to be credited before the award, claimant’s attorney would be entitled to $160, which is 25 percent of $640, the difference between the $3,840 aggravation award and the $3,200 offset. If, on the other hand, the offset were to be credited after the award, claimant’s attorney would be entitled to $960, which is 25 percent of the entire $3,840 aggravation award.

[563] The Board held that claimant’s attorney fees should be divided into two parts. The first part, the Board concluded, consists of a fee based on 25 percent of an “actual increase” in compensation of $640, the difference between the aggravation award and the offset. The Board required employer to pay this amount, $160, directly to claimant’s attorney. The second part, the Board held, consists of a fee based on 25 percent of the remaining $3,200, which already had been paid to claimant and is subject to an employer offset. The Board required claimant to pay that amount, $800, to her attorney.

On review, claimant argues that the Board erred in failing to order employer to pay the entire $960 in fees to her attorney directly, without first offsetting the $3,200 overpayment. According to claimant, OAR 438-15-085(2) expressly provides that attorney fees to be paid out of compensation are not subject to an offset for prior overpayments. Employer contends that the Board’s decision is compelled by our decision in Volk v. America West Airlines, 135 Or App 565, 899 P2d 746 (1995), rev den 322 Or 645 (1996). It further contends that, in the light of Volk and the deference with which we review the Board’s application of its own rules, we must affirm the Board’s decision to offset the award of compensation for the prior overpayment before determining the attorney fee to be paid directly to employer.

We review the Board’s decision for errors of law. ORS 183.482(8); Armstrong v. Asten-Hill Co., 90 Or App 200, 202, 752 P2d 312 (1988).

OAR 438-15-085(2) provides:

“An attorney fee which has been authorized under these rules to be paid out of increased compensation awarded by a referee, the Board or a court shall not be subject to any offset based upon prior overpayment of compensation to the claimant.”

(Emphasis supplied.) We had occasion to review the proper application of that rule in Weyerhaeuser Co. v. Sheldon, 86 Or App 46, 738 P2d 216 (1987).1 That case, as the one before us [564] now, involved a prior overpayment. The question arose whether that overpayment must be offset against a subsequent award of compensation before payment of attorney fees to claimant’s attorney. The Board held that the employer was not entitled to offset the overpayment against the increase in compensation before paying attorney fees to claimant’s attorney. We affirmed, holding that the rule

“provides that, even though there has been an overpayment for which an employer may otherwise be entitled to an offset in some amount from the increased award of compensation, the allowable offset is reduced by the amount necessary to cover an approved attorney fee payable out of the increased award.”

Id. at 49.

We conclude that the rule is directly applicable and that its terms unambiguously preclude the Board from doing what it did in this case, that is, subjecting attorney fees to be paid out of increased compensation to an offset based on a prior overpayment of compensation to claimant.

We reject employer’s contention that we should defer to the Board’s implicit conclusion that the rule does not apply to this case. The Board’s supposed construction of the rule cannot be squared with the language of the rule itself. Under the interpretive principles described by the Supreme Court in Don’t Waste Oregon Com. v. Energy Facility Siting, 320 Or 132, 142, 881 P2d 119 (1994), we defer to an agency’s construction of its own rules as long as that construction “is consistent with the wording of that rule.” Id. at 142. In this case, the rule states that attorney fees to be paid out of compensation “shall not be subject to any offset based upon prior overpayment of compensation to the claimant.” The Board’s decision to subject the award of attorney fees in this case to an offset based upon the prior overpayment to claimant is directly at odds with the rule and cannot be justified by any reasonable construction of its wording.

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Nix v. Freightliner Corp., 931 P.2d 836, 145 Or. App. 560, 1997 Ore. App. LEXIS 53 (Or. Ct. App. 1997).

931 P.2d 836 (Nix v. Freightliner Corp.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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