Bar Journal - Fall 2004
An Old Conflict: Due process and the demand for efficiency in the administration of Workers' Compensation Appeals - did Appeal of Edward Fay seek the right balance?
By: Beth Deragon
In 1991 New Hampshire’s workers’ compensation procedure was completely overhauled to rescue a system on the verge of collapse. The previous system relied on the resources and formal processes of the Superior Court for appellate review and had practically ground to a stop. The cost, number and adversarial nature of the cases brought before the court had escalated and become so unmanageable that the backlog threatened to defeat the essential purpose of the workers’ compensation system prescribed by RSA 281-A. The consequence of the deliberate Superior Court process was that many people had to wait an unreasonable amount of time for their cases to be resolved and when their case finally was heard, Superior Court rules limited the extent to which their voices were heard, thus denying many claimants their opportunity to present their entire story to the tribunal.2 The 1991 reforms created a new process that replaced the \Superior Court’s role with a new tribunal – the Compensation Appeals Board ("CAB") that would review and decide appeals in cases initially heard and ruled on by hearing officers employed by the New Hampshire Department of Labor.3
Thirteen years later, there is uncertainty as to the meaning of the de novo standard of review that the CAB applies to the cases it hears. The Board has interpreted it to mean that it may determine any issue originally before the hearing officer below. The Supreme Court has held the Board may consider and determine only those issues raised by an appealing party – that de novo refers only to the standard of review, not the scope. This article aims to illustrate that the de novo standard currently applied by the CAB conforms with legislative intent and CAB founders’ and practitioners’ understanding of that standard while the New Hampshire Supreme Court has been promulgating a de novo standard that originates from a 1970’s unemployment de novo standard of review that some of the CAB founders specifically aimed to avoid.
THE FAY DECISION
The Court’s current understanding of the CAB’s de novo standard of review is reflected in its most recent decision in this area, Appeal of Edward Fay, where the Court held that the CAB exceeded its authority when it ruled on issues that were not raised at the department of labor hearing.4 The Court made clear its understanding by stating that, "The board’s de novo review is limited to issues raised in the department of labor proceedings being appealed."5 However, the Court went further. It held that a decision made by the hearing officer on issues actually raised at the hearing could not be reviewed because neither party appealed that portion of the decision.6
In the Fay case, there were two hearings before labor department hearing officers on issues related to the same work-related injury. The first hearing, held in December 1999, addressed whether there was a causal relationship between Fay’s November 1999 injury and his employment.7 The hearing officer found that there was a causal relationship between Fay’s November 1999 injury and his employment and therefore Fay had a compensable claim that was the responsibility of his employer, Elliot Hospital ("employer").8 At the time of the injury, Fay’s personal physician opined that he had a "full-time, full-duty work capacity" and that Fay did not "lose any time" as a result of his injury.9 The hearing officer for this December 1999 proceeding determined that he had no occasion to rule on the extent of Fay’s disability and therefore did not.10 There was no appeal.
The second labor department hearing in this case took place almost 2˝ years later, resulting from the refusal by Fay’s employer to pay chiropractic, gastrointestinal and mental health counseling bills that Fay claimed were related to his compensable injury.11 By the time of the second hearing, in May 2002, Fay had not worked at his original place of employment since December 1999, but had been employed at a restaurant which he left in March 2000 to continue his firewood business.12 Between the hearings, Fay underwent two medical evaluations: first a functional capacity evaluation in 2001 and then an independent medical evaluation in 2002 regarding the extent of his disability.13 The evaluations concluded that Fay had a, "full-time, light duty work capacity" at the time of the evaluations.14 Fay sought to secure benefits on the basis of this new evidence. At the May 2002 hearing, the hearing officer concluded that: (1) Fay continued to be disabled by his workplace injury and thus was entitled to temporary partial disability benefits and vocational rehabilitation assistance; (2) The employer had continuing responsibility for medical bills related to Fay’s back injury, including chiropractic bills; and, finally, (3) The employer was not responsible for the mental health or gastrointestinal bills because Fay did not prove that they were a result of his work-related injury of November 1999.15
Fay appealed the hearing officer’s denial of his claim for payment of the mental health and gastrointestinal bills to the CAB. Following a de novo hearing, the CAB found that: (1) Fay did not prove that he was disabled from the November 1999 injury; (2) The employer was responsible for medical bills related to his back injury on or before December 21, 1999; and (3) Fay did not establish that his mental health bills and other medical bills related to his anxiety problem [gastrointestinal] were the result of his November 1999 injury.16 Fay appealed the first and third of these rulings to the New Hampshire Supreme Court. DATE OF SUPREME COURT DECISION... The Court held that although Fay appealed to the CAB for a de novo hearing, he only raised one specific issue and the CAB should have ruled on that issue alone and no other.17 This assertion is the crux of the Court’s understanding of de novo as applied to the CAB’s standard of review of labor department hearing officer’s decisions. Out of Fay there emerged a two-part test defining the CAB’s standard of review: (1) The issue presented for CAB review must have been addressed by the hearing appealed from18 and; (2) The issue must have been raised in the appeal to the CAB. The Supreme Court has maintained that the CAB is without jurisdiction to consider and determine any other issue, regardless of whether such issues might be related to the issues that were the subject of the appeal. In the Fay case, the only way the CAB could lawfully reach the question of whether Fay was disabled by a statutory injury was if the defendant, who lost on that issue before the hearing officer, were to reopen the question by appealing it. As the employee was satisfied with the hearing officer’s overall disposition, no appeal on that issue was made.
Some practitioners have said that the only way they believe they can responsibly respond to Fay is to automatically file cross appeals in the face of an opposing party’s appeal, thus assuring that they preserve their client’s rights to have the CAB consider all relevant issues. This Fay-generated practice will burden the CAB process with the complexity and possible confusion of multiple appeals where only one issue is truly being contested. There is also some concern that Fay may reward a sharp practice when litigating against a pro se claimant: filing a last-minute appeal on an issue upon which one did not prevail, with the expectation that the typical pro se litigant will not respond in time with cross-appeals. It is the thesis of this paper that the Supreme Court’s narrow understanding of the CAB de novo review jurisdiction is not sound. However, it is clear that Fay is consistent within the Court’s decisions concerning the meaning of de novo review since its pronouncement on the subject in 1974 in Chaisson v. Adams.19
EVOLUTION OF THE DE NOVO STANDARD
The contemporary judicial understanding of CAB de novo review evidenced in Fay has its genesis in the decision Chaisson v. Adams and the body of law resulting from it.
The scope of de novo review was originally defined by the Court in Chaisson v. Adams, Harkeem v. Adams and Nizza v. Adams for the Superior Court’s appellate review of unemployment compensation proceedings.20 The Court’s interpretation in these cases of the de novo standard hinged in part upon the language of the unemployment compensation statute, RSA 282:5 (G)(3), (since repealed) and in part upon its presumed purpose: "The appeals procedure, as expressly set forth in RSA 282:5 (G)(3), requires only that a claimant’s petition set forth specifically the grounds upon which it is claimed the decision is in error" and therefore, "The Superior Court’s de novo review takes place within the parameters set by the claimant’s petition."21 In Nizza the Court explained the reasons supporting the requirements of the statute, "The purpose of this requirement is to allow the claimant the opportunity to prepare a case to rebut the specific reasons for denial of benefits to him. Without this narrowing of the issues the claimant would have to be prepared to present evidence and persuade the trier on all the statutory criteria, a requirement that would deprive the plaintiff of due process of law."22
The Court later applied the unemployment proceeding de novo review standard to a workers’ compensation appeal in Charles & Nancy, Inc. v. Zessin.23 In that case, the Court cited Harkeem v. Adams and Nizza v. Adams and the language above that defined the de novo standard of review. In the last workers’ compensation case reviewed by the Court before the adoption of the new CAB system, Leccacorvi v. N.H. Workers’ Comp. Com mission,24 the Court in reviewing the Superior Court’s ruling reiterated, "The Superior Court’s de novo review of department of labor workers’ compensation decisions is limited to issues raised in the proceedings being appealed."25
In 1998, the Court reviewed a CAB decision in Appeal of Brian Staniels26 and applied its understanding of the Superior Court’s de novo standard of review to the CAB. The Court cited Leccacorvi stating that, "The [board’s] de novo review of department of labor workers’ compensation decisions is limited to issues raised in the [department of labor] proceedings being appealed."27 This substitution of the word "board" for "Superior Court" is the clearest indication of the Supreme Court’s view that the 1991 statutory overhaul did not change the scope of review in appeals. This CAB standard of de novo review, enunciated by the Court in Staniels, was applied again to CAB decisions in Appeal of Rainville and Appeal of Currin.28 This line of cases culminates in 2003 with Appeal of Edward Fay in which the Court cites the same language in Currin and Rainville that defines its understanding of the CAB standard of de novo review which, in turn, is based on the line of cases beginning with Chaisson.
From its decision in Chaisson to its decision in Fay, the Court has defined de novo review in terms taken from unemployment and workers’ compensation cases appealed from the department of employment security and the department of labor to the New Hampshire Superior Court without regard to the 1991 shift from judicial to party-lay administrative appeal processes. In doing this, the Court has imposed upon the CAB review process the very burdens its creators intended to eliminate by the removal of the Superior Court and its more formal process from the administration of appeals in the workers’ compensation system. The Court’s imposition of this standard to present-day workers’ compensation cases conflicts with the intention of the legislature and the CAB creators, which was to create a new, more efficient means of providing a full review of workers’ compensation grievances.
ORIGIN AND PURPOSE OF THE CURRENT SYSTEM
In 1989, Governor Gregg issued Executive Order Number 89-4.29 Its purpose was to
address, "an urgent and substantial need to review and evaluate the performance of the State’s workers’ compensation system in order to ensure the system’s consistent, affordable, and equitable operation; and [the necessity] to provide an effective long-term solution which acknowledges growth and its effect on the varied interests involved in the system …. ."30 It was with these objectives in mind that the Governor’s Task Force issued its proposals, stating in its introduction, "In most states, the workers’ compensation system has either already broken down or is on the verge of breaking down. Workers’ compensation as originally conceived was based on the concept of ‘liability without fault.’ Under this concept, the fundamental purpose is a swift, certain and assured remedy without litigation. The system was never meant to create adversarial relationships between employer and employee. A system that was so simple in concept has become highly complex in its application."31
Hearing Officer: informal hearings held in Concord and at other locations throughout the state.
Case merits and facts: require all available evidence be disclosed.
Compensation Review Commission: Appeals Board.
Case merits and facts: plus record from Step 1 hearing. Can only present evidence that was unknown at the date of Step 1 hearing.
Questions of Law only
The Task Force elaborated on the sources of problems in the system that they were charged with resolving. "As a result of the additional administrative burdens, lack of sufficient staff, increasing complexity of the system and lack of management consistency, many inefficiencies and lack of attention to detail problems exist in the overall administration of the workers’ compensation system. There appears to be widespread agreement among participants in the system that the current New Hampshire workers’ compensation system is much too adversarial and does not provide for prompt hearings."32 One of the most substantial changes proposed by the Task Force was the redesign of the hearings process to include a new appeals board. This new hearing process, "…should allow for a swift resolution of all disputes realizing that the central issue underlying all disputes is the awarding of benefits – their duration and amount. Lengthy delays of the hearings process are a major factor in the upward cost spiral and are unfair to both injured employees and their employers."33 The Task Force proposed the configuration of the hearing process as follows:34
Significantly, the Task Force, in Step 2, called what is now the CAB the "Compensation Review Commission." As is evident from the criteria section of the proposal, the compensation review commission would be considering all information from the hearing plus any evidence unknown at the date of the hearing. An appeal to the Superior Court was the stage at which the Task Force limited the standard of review to, "questions of law only." Interestingly this understanding of the Step 2 standard of re view is reflected in the language of the Labor Department’s regulations:
Lab 201.01 ‘De novo hearing’
‘De novo hearing’ means a new hearing which is not bound by the findings and rulings of a previous hearing before the commissioner or hearing officer and which allows the parties to introduce new evidence or evidence not considered by the hearing officer or commissioner at such a hearing, subject to the provisions of Lab 206.35
Additionally, the purpose behind the Task Force is currently reflected in the language of Lab 202.01 ‘Purpose of these Rules’:
The following rules are to assist interested parties in understanding and conforming to hearings procedures established to promote and assure the conduct of a full, fair and adequate exposition of issues and the expeditious resolution of disputes. These rules are to be construed to secure the just, speedy and inexpensive determination of every proceeding.36
There is no indication that either party in Fay drew the Court’s attention to these regulations.
The Legislature, having received the Task Force recommendations, sent it to the committee which amended it, "while still remaining within the original intent of the Governor’s Workers’ Compensation Task Force Report."37 "This bill does allow for a more timely appeal and provides for a just outcome. The bill allows the Labor Commission to more efficiently work with the employee, the employer and insurers for the benefit of a more cost-effective system of compensation."38 The committee proposed the following change, "… 1. Redesigns the hearing process by creating a compensation review commission to hear appeals on decisions of the commissioner before such appeals are taken to court. Any party aggrieved by a decision of the board may appeal to the Supreme Court."39
The changes made to the workers’ compensation system were in response to a system on the verse of collapse. New Hampshire took a proactive approach to resolving the problem, and for a time it made New Hampshire a role model for other states in this area. The Journal of the New Hampshire Senate Special Session of December 14, 1989 attests to the high regard in which the new workers’ compensation system was held. Senator Blaisdell stated, "Conference of insurance legislators have marked New Hampshire as one of the model states on workers’ compensation from what we have done. I just returned from a conference …. and our model is this [state]. The model in New Hampshire’s bill is the model for the country in workers’ compensation."40
New Hampshire practitioners implemented this new workers’ compensation model and wrote instructive articles for other practitioners to be able to efficiently utilize the new structure. Two articles that explained the workers’ compensation appeals process illustrate the difference in practitioner’s understanding of the de novo standard of review pre-CAB formation and post-CAB formation.
In an article written in 1989 (before the implementation of the new workers’ compensation structure) an appeal to the Superior Court is described:
"The statute provides that on appeal, ‘a full trial shall be had before a Justice of the Superior Court, without jury, and within thirty (30) days thereafter, the Court shall make its award, setting forth its findings of fact and law applicable thereto’.41 The issue or issues to be heard by the Superior Court on appeal are limited to issues raised before the Department of Labor."42 "The parties may introduce any and all relevant evidence that is available to them unless it must be excluded under the applicable evidentiary and procedural rules that apply to Superior Court trials."43
The same article, under a section titled ‘practical considerations,’ states that, " It must be remembered that the trial of the appeal is conducted in the same manner as any other issue to Court case. … but in Superior Court, the strict Rules of Evidence do apply and this type of testimony must be presented by live testimony or by deposition."44
In an article written in 1992 (after the new workers’ compensation structure had been implemented) the author states that, "The intent of the law is that appeals to the Board move very quickly."45 The CAB is "designed to remedy the serious problem" of backlog in the Superior Courts.46
Most significantly, the article describes practitioners’ understanding of the de novo standard of review applied by the CAB to hearing officer decisions:
"The significance of the "de novo" perspective is that the Board is not determining whether the Hearing Officer below erred on a matter of law or misconstrued the facts. The Board hears the matter as if it were tried for the first time before that tribunal. It is solely upon the state of the record and the evidence presented in the course of that hearing that a decision is made. In the conduct of the hearings the formal Rules of Evidence do not apply.47 The Board members do review the written decision from the Department of Labor primarily to determine the scope of issues properly before it. This is because the issues properly before the Appeal Board are limited to those issues which were litigated before the Department of Labor."48 (emphasis added).
Therefore, after the implementation of the new CAB system, the scope of review shifted from the Superior Court approach that entailed the observance of the Rules of Evidence and preservation of issues below to one in which the Rules of Evidence do not apply and that the CAB reviews the case as if it is hearing it for the first time with original jurisdiction. The CAB consults the hearing officer’s decision only in the context of ascertaining the scope of the matter to be decided. The legal practitioner’s understanding of the standard of review observed by the CAB is consistent with that of the designers of the CAB.
The committee that oversaw the design of the CAB comprised representatives from labor, the insurance industry and legislators. Its main objective was to create a an efficient but open system so that a claimant would have every chance to be heard and to keep down the costs of bringing a claim forward. The CAB’s designers considered the de novo standard that was being implemented by the unemployment appeals system and specifically rejected that model, as they did not want the claimant restricted as to the matter brought forward for review.49 The designers also considered using an Administrative Law Judge to hear appeals, but rejected it because as too costly a step. The designers ultimately decided on the scope of review in use today, that conforms to the same objectives of the Governor’s Task Force and has been embodied in Labor Department rules. This de novo standard promotes efficiency and allows for the claimant’s appeal to be given full review by the CAB, consistent with the vision of the CAB’s founders and legislative intent.
The CAB model today, as attested to by a study of appeals board cases prepared for the legislature in the fiscal year 2001, does not produce skewed results and most importantly does not have a backlog of cases. For example, in the fiscal year 2001, although 70 percent of the appeals to the CAB were by the claimant, the CAB held for the claimant in 48 percent of the appeals and for the carriers in 41 percent of the appeals (7 percent were mixed and 4 percent were the successive carrier).50 Appeals are being heard in a timely manner and decisions by the CAB are forthcoming within 30 days.
The Court’s current understanding of the CAB de novo standard of review as exemplified in their recent Fay opinion does not account for the goals of the Governor’s Task Force, legislative intent and current practice of workers’ compensation law. The Court’s reversion to the narrow de novo standard used in unemployment compensation cases dating from 1974 presents the members of the CAB and practitioners with procedural and evidentiary problems. Although the Rules of Evidence do not apply to workers’ compensation hearings or CAB reviews, the court’s insistence that the CAB hear only particular issues appealed suggests that some procedure will have to be used in order to ensure that the issue being appealed to the CAB is properly preserved below. A requirement of specific grounds for appeal implies challenge to particular acts such as the consideration of certain evidence or to procedural decisions. Deciding evidentiary issues will be untenable for the CAB since the CAB is a mixed board, comprising one attorney and two non-attorneys. In addition, the Court’s understanding of CAB de novo review will result in discrepancies of evidentiary rulings among the various compensation appeal panels since CAB opinions do not bind subsequent CAB decisions.
The Court’s reversion in the recent Fay opinion to the narrow de novo standard of review specifically rejected by the task force, legislature and CAB designers will result in the proliferation of the same inefficiencies that propelled the workers’ compensation system into a state of near collapse thirteen years ago. The workers’ compensation system that will eventually evolve will be cumbersome, adversarial, protracted and user-unfriendly – flaws that the founders were resolved to avoid. Even if the view of some practitioners that the Fay holding streamlines the workers’ compensation appeal process is accepted, thereby making that process more efficient, due process will be affected in the cases where a claim is brought pro se.
Although named the Compensation Appeals Board, the CAB from its inception, as evidenced in the task force report, legislative intent and practitioners’ understanding of the standard of review today, was intended to be a review board. Today the CAB efficiently hears and decides cases based on that principle and most decidedly meets the purposes set forth by Governor Gregg in 1989, "to ensure the system’s consistent, affordable, and equitable operation." Fay’s failure to consider the value of efficiency threatens the CAB process with the burdens it was created to mitigate.
- Paul L. Salafia & Donna M. Daneke, New Hampshire Workers’ Compensation Manual § 1.01, at 1-2 (3d ed., Matthew Bender 2004) (Citing Arthur Larson & Lex K. Larson, Larson’s Workers’ Compensation Law ch. 1 (Matthew Bender 1997).
- N.H. Exec. Or. 89-4 (1989); N.H. Task Force on Workers’ Compensation Rpt., 1 (August 31, 1989).
- RSA 281: A42-a; RSA 281-A: 43I(b).
- 150 N.H. 321, 324-325 (2003).
- Id. at 324 (Citing Appeal of Rainville, 143 N.H. 624, 629 (1999)).
- Id. at 324-325.
- Id. at 322.
- Id. at 322-323.
- Id. at 323.
- Id. at 324.
- Id. at 324-325.
- Appeal of Staniels, 142 N.H. 794, 796 (1998).
- 114 N.H. 219, 220 (1974).
- Chaisson v. Adams, 114 N.H. 219, 220 (1974); Harkeem v. Adams, 117 N.H. 687, 692 (1977); Nizza v. Adams, 118 N.H. 383, 385-386 (1978).
- 114 N.H. 219, 220 (1974); 117 N.H. 687, 692 (1977).
- 118 N.H. 383, 385-386 (1978).
- 118 N.H. 556, 558 (1978).
- 135 N.H. 91, 94 (1991).
- Citing Charles & Nancy, Inc. v. Zessin, 118 N.H. 556, 558 (1978).
- 142 N.H. 794, 796 (1998).
- 143 N.H. 624, 629 (1999); 149 N.H. 303, 307 (2003).
- N.H. Exec. Or. 89-4 (1989).
- N.H. Task Force on Workers’ Compensation Rpt., 1 (August 31, 1989).
- Id. at 8.
- Id. at 9.
- N.H. Admin. R. Ann., Dept. of Lab. Hrgs. Part. Lab. 201 (2003).
- N.H. Admin. R. Ann., Dept. of Lab. Hrgs. Part. Lab. 202 (2003).
- N.H. H. J., Reg. Sess. 318 (1990).
- Id. at 334.
- N.H. Sen. J., Spec. Sess. 564, 1064 (1990).
- Thomas W. Kelliher, The Appeals Process, Continuing Legal Education Program, 132, 133 (1989).
- Id. at 133 (Citing Nizza v. Adams, 118 N.H. 383, 383 (1978); Charles & Nancy, Inc. v. Zessin, 118 N.H. 556, 556 (1978)).
- Id. at 133, 134 (Citing Feuerstein v. Gilmore, 127 NH 715 (1986)).
- Id. at 137, 138.
- Peter S. Wright, Jr., Practice Before the Workers’ Compensation Appeals Board, Continuing Legal Education Program, 138 (1992).
- Id. at 138.
- Id. at 145.
- Id. at 141 (Citing Charles & Nancy, Inc. v. Zessin, 118 N.H. 556, 558 (1978).
- Interview with Robert Morneau, Member Compensation Appeals Board 1991-2006, (February 5, 2004).
- Robert Morneau, Fiscal Year 2001: Workers’ Compensation Appeals Board Cases (2001).
Beth Deragon, Class of 2005, Franklin Pierce Law Center, Concord, New Hampshire.