Employer's Right to Controvert Reemployment Stipend Benefits During an Eligibility Evaluation is Reestablished

      The Alaska Workers' Compensation Board issued a decision in
Lawhorne v. Alaska Garden & Pet Supply, Inc., AWCB Decision No.
06-0213 (July 28, 2006), that reestablished an employer's right to
controvert AS 23.30.041(k) reemployment stipend benefits during a
reemployment eligibility evaluation.

      The Supreme Court had long ago held that the presumption of
compensability applies to reemployment benefits. Earlier Board panels
complied and found that the presumption attached by virtue of a referral
for an eligibility evaluation, allowing an employer to controvert with
substantial evidence negating an element of a claim for reemployment
benefits. In this case, the employer had a medical opinion that the
employee could return to her job at the time of injury and otherwise had no
ratable permanent impairment.

      In October 2004, a split in the Board decisions was created in Wagner
v. Furniture Enterprises of Alaska, Inc., AWCB #04-0253. In Wagner, the
Board declared the presumption inapplicable once an employee enters
"the reemployment process" upon being referred out for an evaluation.
The Board went so far as to award stipend benefits, for the weeks during
which the evaluation occurred, to an employee who had already been found
ineligible and who was in fact working during the time he was being
evaluated. The Board also did not allow an offset for his wages. The
Superior Court affirmed this decision.

      In its recent Lawhorne decision, the Board reviewed the split in case
law and reaffirmed an employer's right to controvert benefits
reemployment stipend benefits. In this case, the employee's claim for
benefits was controverted (based on an IME report) prior to her referral
for an eligibility evaluation. Relying on Wagner, the employee argued she
should receive reemployment stipend benefits from the date of her referral
forward. The Board applied the presumption of compensability and
concluded that the employer had rebutted the presumption with substantial
evidence (the IME report). The Board denied the employee's request for
stipend benefits, finding that the employer's controversion, which preceded
the referral, was legitimate and protected the employer from any obligation
to provide stipend benefits. The Board also specifically disagreed with the
Wagner decision, finding the decision "defies logic."

      A key factor in the holding of this case is that the claim was
controverted prior to the employee's referral for an eligibility evaluation. It
is unclear whether the decision extends to controversions of benefits after
referral. Given this uncertainty, you are advised to contact an attorney if
you have any questions about whether a controversion is appropriate in a
particular case.

      The full text of this decision can be found at:
http://146.63.134.55/workcomp/2006/06-0213.doc

========

      We are pleased to offer this information to help keep you informed.
But since we are lawyers, we include the following caveat: the information
contained herein is not intended as legal advice. Independent research and
analysis may be required in order to determine what effect recent decisions
or changes may have on your unique situation.

========
Copyright © 2003 Russell, Wagg, Gabbert & Budzinski, P.C.
All rights reserved.

Employer's Right to Controvert Reemployment Stipend
Benefits During an Eligibility Evaluation is Reestablished

RUSSELL, WAGG, GABBERT & BUDZINSKI