*1 in- рetitioner's include showing would treating physician or expert or use
tent to claim testimony support [his]
counselor unusually distress; a claim
of mental distress; allegation of or an mental
severe psychiatric or mental type of specific sought has petitioner which
injury for
treatment." court. by direction
Entered and National & COMPANY
CRAWFORD Pittsburgh, Co. Fire Ins. Union
Appellants, BAKER-WITHROW,
Penny T.R.
Appellee.
No. S-10141. of Alaska. Court
Supreme 19, 2003.
Dec. Cook, Wilson, & Gro-
Zane D. Schuhmann Inc., Fairbanks, seclose, Appellant Craw- Company. ford & Baker-Withrow, se, Pole. Penny pro North Justice, FABE, Before: Chief EASTAUGH, BRYNER, MATTHEWS, CARPENETI, Justices.
OPINION MATTHEWS, Justice. 28.80.155(0) requires Alaska Statute to no- Compensation Board Alaska Workers' when it deter- tify of Insurance the Division frivolously un- mines that an insurer claim. fairly controverted must de- receiving notice the division Upon *2 termine whether the insurer has committed subsection the board notify must the Divi- practice an unfair claim settlement under AS sion of Insurance when such finding 21,36.125. presented question The here is made, and when so notified the division whether board determination of unfair must determine whether the insurer has appealable controversion is a final order. committed an unfair claim settlement it We hold that is because the board's deci- practice. Critical to our determination of sion-making process completed has been appealability is whether thе board's find- its determination has an adverse effect on ing binding in subsequent proceedings it binding insurer since on the Division division, conducted or whether the of Insurance. relitigate insurer can its contr- oversion was frivolous or unfair orig- as an In an order on reconsideration entered inal matter proceedings before the 28, 2000, July Compen- the Alaska Workers' division. regulations, The practices, sation Board determined that Crawford & procedures, any, if of the Division of In- Company unfairly had frivolously contro- surance concerning the effect of board verted claims Penny submitted Baker- .155(0) findings under subsection will be 80, 1996, August Withrow on and November important in determining whether such 5, 1997. In an earlier order the board also findings binding. are No evidence or in- found that Crawford "did not act formation regulations, as such practices, faith." finding This was not modified on procedures presented. has been dispositional reconsideration. The portion of provided: the board's order Accordingly, It 1s ORDERED: Based on the finding the insur- That this case is RemanDED to the su- er has committed frivolous or unfair perior cоurt with instructions controversion, we will copy send a of this findings as to any regu- [the] existence of decision to the Division of Insurance to de- lations, practices, procedures or of the Di- termine if the insurer has committed an vision of Insurance concerning whether practice. unfair claim settlement findings .155(0) board under subsection are treated binding. In provided The order also order to it "is a make final findings such superior decision" and that court should "[plroceedings request supplemental Superior must be instituted in memoranda Cоurt within parties and the days...." State of Alaska. In appealed Crawford this order addition, court, superior may superior court which authorize held that there discovery yet evidentiary conduct an was not a final administrative order to if, hearing judgment court, in the from because the Division of Insur- hearing such a is needed. yet ance had not This court will determined whether Craw- REtam pending receipt ford had committed an unfair claim settle- the findings superior from the court. ment From the superior court's dismissal on only On remand the evidencе submitted to grounds, these appealed to this superior court was the affidavit of Robert court. We entered an stating: interim order Lohr, the Director of the Division of Insur in this case is whether the ance. He stated that the division would not finding
board's Compa Crawford and re-examine a finding board of frivolous contr- ny frivolously unfairly or controverted oversion duty and that it was the division's Baker's claim is an order. The determine whether the frivolous controver AS 23.30.155(o).1 pursuant was made sion amounted to an unfair practice trade
Under the terms of that under AS 21.36.125.2 He observed that 23.30.155(0) provides: 1. AS mine if the insurer has committed an unfair promptly notify practice The board shall claim settlement the division under AS 21.36.125. of insurance if the board determines that the employer's frivolously unfairly insurer has provides: 2. AS 21.36.125 controverted due under (a) person may A not commit chapter. receiving After notice from the following practices: acts or board, the division of insurance shall deter- finding was not bind- controversion frivolous an unfair necessary for elements Insurance, but could Division of ing on the "mаy be similar claim settlement The court by the division. reversed frivo not be finding of necessary for a board those congruent." as a basis finding served found that controversion, they are lous if and determined court found referral 3 *3 compro- of a for the offer a claim or denial of policy provisions (1) misrepresent facts or policy; coverage settlement; or relating of an insurance mise to pay (16) a or of settlement offer a form promptly acknowledge and act to fail by prohibited AS any judgment in manner rеgarding a claim aris- upon communications 21.89.030; policy; ing an insurance under AS (17) in contained violate a provision implement reasonable adopt to and fail claims; investigation of 21.07. prompt for standards (b) do not cre- of section pay without a reason- a claim provisions refuse to a private action for imply cause of a ate or infor- investigation all of the available of able of this section. violation for explanation of the basis and an mation compro- of for an offer thе claim or denial of full, states: Lohr affidavit 3. In settlement; mise coverage deny of claims affirm or fail to Lohr, duly being sworn first Robert A. completion of time of the a reasonable within states: statements; proof-of-loss of Alaska's Division the director for 1. I am to make attempt in faith to fail knowledge of the personal I have Insurance. claims in equitable of prompt settlement in this affidavit. facts contained clear; liability is which present the divi- to this affidavit I offer practice pattern of com- engage or in a intеrplay understanding between of sion's recovery litigate of for pelling 23.30.155(0) insureds and AS 21.36.125 AS by policies offer- under insurance amounts due understand- practices based on that division's ulti- substantially the amounts ing less than ing. by brought those mately Compensa- in actions recovered Workers' When the Alaska finding that a frivolous a Board makes tion insureds; third-party occurred, claim- compel or an insured the Divi- it notifies controversion liability is clear to .155(o). a case in which ant in Insurance, of sion pursuant recovery due under litigate of an amount dеtermination of a will not re-examine division offering policy by by an amount di- the board. The an insurance controversion frivolous findings objectively relitigate basis of reasonable the factual have an does not vision does finding docu- not been of frivolous and that has led to the law and fact the board that controversion, relitigate division nor will the file; in the insurer's mented contr- that a frivolous conclusion low an unreasonably attempti advertising printed by oversion occurred. reference settlement statutory duty deter- appli- is to an accompanying included in 4. The division's or matter controversion the frivolous mine cation; unfair constitutes an trade of the board attempt on the basis found to settle a claim so, 21.36.125, if AS practice of without been altered application that has an violation insured; appropriate. The elements penalties are what of the the consent finding claim set- necessary of an unfair for a payment without includ- make a claims to those neces- practice be similar tlement cоverage which under ing of the a statement finding controver- made; sary of frivolous for a board payment is sion, congruent. they A are not third- to an insured or known make may be controversion board of frivolous appealing an policy party of claimant determi- usually to the would be relevant or of an insured award in favor arbitration practice, claim settlement compel- of an unfair nation purpose of third-party for the claimant ques- necessarily dispositive but it is not third-party to ac- ling claimant insured or tiоn. compromise than the less cept or a settlement finding of a board the case that It is still arbitration; awarded in amount relevant, pro- may be frivolous controversion investigation or payment delay question of persuasive on the unnecessary bative and by requiring submission claims practice unfair claim settlement reports whether an substantially repetitive claims or such occurred-and forms; AS 21.36.125 has under proof-of-loss provides foundation for often one prompily claims under settle fail purpose pоlicy investigation of influenc- [decision]. portion for the and ultimate of a practice-and general It is the division's portions ing other under settlements stay an case-to in the instant one followed policy; under provide a reasonable promptly fail to 21.36.125, pending the outcome policy insurance explanation basis in the finding. of a board applicable law for to the facts in relation the Division of Insurance should find that go long nations will way toward establish- Crawford had committed an unfair ing claim an unfair claim company then the could The fact that decision of the Divi order. Under the interim order the sion of Insurance determining that Crawford appealability ripe is now for decision be- had committed unfair claim prac fore this court.
tices would
not,
itself be
does
A party
view,
to an
adju
administrative
our
destroy
finality
of the board's
proceeding
right
dicative
has the
order. The Division of Insurance
a sepa
agency
rate
final administrative
from the Alaska Workers' Com
order
pensation
Board and proceedings before the
court.4 But
it
sometimes
is difficult to deter
agency
mine whether an
order is final for the
division are separate from proceedings be
*4
purposes
appeal.5
of
We have observed that
fore the board. The
gives
division
binding
the
in
test used Alaska to
finality
determine
effect to the board's frivolous controversion
"essentially
practical
State,
one."6 In
determination and asks whether the frivolous
Department
Game, Sport
Fish &
Fish
controversion also
constitutes
unfair claim
of
Meyer
Division v.
we stated that one meа
practice,
settlement
or some of the elements
finality
of
sure
"is
ageney
the
has
of an unfair claim
settlement
This
completed
decisionmaking process,
its
and
use of the board's determination and the fact
process
whether the result of that
that
that
the
requires
determination
Division of
one
7
directly
will
parties."
affect the
are,
Insurance action
in
view,
our
direct ef
fects
impart
sufficient
to
finality to the
present
In the
case this standard is met.
order.
board's
completed
The board has
its decision-making
рrocess as to whether the
findings
board's
in
subject
must be
controversions
question were frivolous. The result of
appellate
the
point.8
review at some
If review
directly
order will
affect Crawford
delayed
because were
until a
appeal
direct
of Division
the order
mandates an
by the
of
proceedings
Insurance
that found an un
Division of Insurance as to whether Craw-
fair claim
practice
based on the
ford has committed unfair claim settlement
board's
frivolous controversion determina
practices
may
and
tion,
serve as a foundational
an anomalous situation
pres
would be
fact supporting a determination that Craw-
ent. The correctness of the decision of the
ford has
practices.
committed such
pro-
In
Division of Insurance would not necessarily
ceedings before the Division of
Instead,
Insurance the
be under review.
the
ques
critical
board's
frivolous controversion
determina-
tion could
legal
be the
evidentiary
and
suffi
questioned
tions cannot be
evidentiary
on
ciency
of the determinations
by
made
thе
legal grounds
and thus will
binding.
be
Workers' Compensation Board in the collat
Since the elements of a frivolous or unfair
proceeding.
eral
judi
The rules governing
28.30.155(0)
controversion under AS
are simi-
cial
of ageney
review
provide
action
lar to the unfair claim
practice
agency
from which the
is taken has
defined in AS 21.36.125(a)(6)-failing to "at-
responsibility
the
preparing
for
the "record
tempt
in
faith
prompt
of proceedings
agency"
before the
including a
equitable settlement of
claims which
typed
liabil-
transcript.9
agency
party
is a
ity
clear"-the
board's determi-
may
the
that
argue
brief
posi-
its
601(b);
R.App.
44.62.560(a).
Maid,
State,
Alaska
P.
182,
6. Matanuska
Inc. v.
620 P.2d
(Alaska 1980)
184
Lines,
Freight
5. See Mukluk
Inc. v. Nabors Alaska
1365,
Inc.,
(Alaska 1995)
408,
(Alaska
7. 906 P.2d
Drilling,
1973),
(quoting
1370
411
"
Massachusetts,
788, 797,
Franklin v.
505 U.S.
quoted
where we
the observation that
'final' in
(1992)).
S.Ct. 2767,
tion.10
therefore
invalid and
findings were
of
the Division
board's
of
from a decision
must
imposed
the division
that sanctions
questioned
determinations
that
Insurance
premised on
they were
Compensation Board
be reversed
Workers'
made
much
would be
findings,
in the
there
ready answer
having no
the board's
ais
course,
might
be
part of both
answers
money
rules. Of
on the
appellate
effort
wasted
of Insurance.
the Division
necessary to
if
they should be
improvised,
delay
But the
than the
appeal.
is worse
right
that waste
party's
Whether
preserve
highlights
current
improvisation
in the division's
inherent
need
pur-
adhere to
for оur
problem
enough
is to
to the
It is
fairly
answer
debatable.
better
finality ex
of
is not so
standards
the answer
poses
the established
to observe
look to "whether
Meyer
delay
pressed
so
sided,
possibility
nor is the
one
decisionmaking
completed
critical,
application
its
agency on the
as to cast doubt
directly
result "will
adminis-
Meyer
and whether
process"
standards
case of
this
parties."
affect
finality.
trative
holding
consequence of our
practical
One
reasons,
judgment of
above
For the
frivolous оr
is REVERSED
court
superior
28.80.155(0)is
under AS
unfair controversion
court
is REMANDED
case
delay the Division
be
the merits
to review
instructions
with
*5
to whether
as
determination
Insurance's
appeal.
arguments on
Crawford's
claim set
an unfair
has committed
affidavit
in his
Lohr stated
tlement
Justice,
FABE,
dissenting.
Chief
general
the division's
that
it is
that
conclusion
disagree with the court's
I
and
stay an
post-set-
Al
Board's
finding.12
Compensation
of a board
appeal
the
the Workers'
pending
Company
and
finding that Crawford
tlement
reasons for
the
though
can understand
we
Penny
unfairly
frivolously
controverted
and
required by law. Un
it
not
practice,
this
final, appealable
a
claim is
Baker-Withrow's
entered,
final administrative
stay is
a
less
reasoning
from the court's
depart
I
an
order.
though
binding
even
have
effect
orders
created
court has
grounds. The
several
there
on
Thus
pending.13
them is
appeal from
frequently will
appeal
that
right
to an
the
inves
to the division's
legal impediment
is no
Furthermore,
the Board's
appellee.
no
appeal of have
during the
tigation going forward
identifying final
finding fails our test
Moreover,
if we wеre
decision.
the board's
it does not
agency orders
ap-
not
decision is
that
to hold
any action. The
to take
require Crawford
an
conducts
the division
pealable until after
on the
effect
determination,
has no direct
finding therefore
a
investigation and makes
to be con-
not need
And we do
company.
consequences.
practical
be other
there would
repre-
party
by
of a
duplicated
the interests
602(b).
frequent-
be
R.App.
board
P.
Alaska
counsel,
supe-
by
we recommend
appeal
sented
party
cases on
ly participates
as a
notify the
decision
of this
court on remand
rior
it has an institutional
that
when it determines
independent
in the
interest
that it has an
board
parties.
of the
separate
the interest
interest
participation
proceeding and invite the
board
order the
our interim
On remand under
behalf.
attorney general on the board's
nonparticipation
stated in
filed
notice
part:
relevant
at 1370.
906 P.2d
Compensation Board
Workers'
The Alaska
independent
interest
it has no
supra
bas determined
note 3.
See
only
The Attor
appeal
of its decision.
in this
the
participate on
ney
will not
Alaska State
office
798 v.
Pipeliners
General's
Union
See
undersigned
ad
Rights,
the
behalf unless
Board's
Human
Comm'n for
1984) ([In
proceeding
the
party
(Alaska
it believes
a consolidated
letter from
vised
receives
independent
interest or
an
order
Board has
[administrative]
to enforce
an action
Rule 514(f).
order,
enforcement
App.
appeal
of that
under Alaska
and the
the Court
notice from
the order
may
befоre
judgment
be entered
stay
imposes
court
unless the
reviewed
has an interest
in this case
Because the board
action.").
cause of
not
enforcement
validity
that will
sustaining
of its orders
the
preclusive
out,
cerned with the
points
effect
Board
part
take
in an
Board's
as even Crawford admits it is
appeal
protect
its own interests.5 Unfor
binding
on the Division of Insurance.
tunately,
in this case the Board has deter
Finally, allowing
type
this
will de- mined it has no
represented
interest not
lay
investigations,
the Division's
to the detri-
one of
pаrties.6 By
allowing
appeal,
this
ment of the workers'
scheme
by leaving
a pro
litigant
se
like Baker-
public policy
and the
behind it.
I would Withrow
own,
to handle it on her
the court
affirm
court's dismissal of Craw-
and the Board
asking
are
compen
workers'
ford's
respectfully
therefore
dis-
sation
help
claimants to
police claim settle
sent
opinion
from the court's
judgment.
practices
ment
by serving
private
attor
neys general,
without
of the rewards that
determining
"The test for
judg
whether a
normally attend fulfilling such a
gui
role in a
essentially
ment is оr is not final
practical
tam action or a citizen suit. Although Bak
one
."1
turning
Without even
to our
er-Withrow has
task,
chosen to take on the
I
finality,
doctrine on
I believe that the court's
many
doubt
position
claimants
her
holding cannot meet
simple
standard of
will do the same. We will be
deciding
left
pragmatism
many
because in
cases there will
appeals
only
based
upon
arguments
appellee
be no
defend the
the court
appellants-a
notably poor way of getting at
today allows. A claimant
like Baker-With-
the truth of the matter.
row
already
money
received the
she
needs to
pay
make her whole
lawyer.
her
The one-sided nature
type
of this
of appeal
employer
If the
appeals only the controver
should at
pique
least
our suspicion that
finding,
sion
and compensation is not at
is not the sort of order we
stake,
employee
has no reason to defend
ought to consider final
appealable.
To
appeal.
She will be no better off if the
determine whether
the administrative order
affirm
courts
they
Board than if
reverse
is final
appealable,
the court uses the
it.
way,
And she has no
other than her own
*6
two-part
State,
test laid out in
Department of
funds,
out-of-pocket
pay
lawyer
her
Game, Sport
Fish &
Fish
Meyer,
Division v.
appellant
chase the
through
appeals proc
the
asking
agency
"whether
the
completed
has
below,
ess.2
I explain
As
only
the
direct
decisionmaking process,
its
and whether the
effect of the
ancillary
Board's
finding of friv
process
result of that
directly
one that will
olous or unfair controversion is that the Divi
affect
parties."7
agree
the
I
with the court
sion of Insurance will
an investigation
initiate
that
the Board
completed
its decision-
into whether
employer
the
or insurer has making process
case,
in this
but I would hold
engaged in unfair claim
prac
that
finding
the
of frivolous
unfair
contr-
investigation
tices-an
that
beyond
must look
oversion will not directly affect Crawford and
the facts of the original claimant's case.3 Company within
meaning Meyer.
the
of
The Division
undertakes this
in
public interest,
the
not to advancе the
We have not
analyze
claimant's
had occasion to
what
goal
The claimant has no direct
it means for an agency
"directly
decision to
s.4
outcome,
investigation's
stake
the
parties."
or even
affect the
juris-
Cases from other
it happens
or not. As the court
dictions that
question
have considered the
Maid,
State,
182,
1. Matanuska
Inc. v.
620 P.2d
section.");
action
for a violation
of this
O.K.
(Alaska 1980) (citations
185
quota-
Lumber,
and internal
have that in the record suggestion no and concrete But there'is definite impose that cy orders is at work govern preclusion any or otherwise of formal sort parties on obligations Massachus proceedings. In Franklin Division's the behavior. their test, Meyer the of our etts,8 source the Lohr, Di A. Robert affidavit filed The the held that Court Supreme States United Insurance, does Division rector [the "whether hinges on finality question of open findings are not the Board's state that sufficiently di impact 'is decision's] agency only mandato again, But the relitigation. effect has a 'direct immediate' rect trigger the findings is to ry of those effect Appealable day-to-day business.'"9 ... on essentially execu an This is investigation. denies obligation, an "imposes action agency appeal.14 an not warrant and does tive action relationship." legal fixes right, or the Board's states that further controversion Director Lohr frivolous finding Board's "relevant, probative the only triggers It be finding would of these. does none required not an of whether the investigation. Crawford on persuasive action, nor is any finding to take ... has oc the Board's unfair claim any action. "binding barred company imply This does not curred." change in the compels no finding Rather, Board's court. that worries effect" no legal status is Its bеhavior. company's Division makes clear affidavit Lohr's finding. The it was before than different finding good evidence the Board's views on Crawford effect current only possible practice, but unfair claim settlement an damage is Such reputation. harm to its conclusively establish not finding does an "inherent is also only speculative not determination. element public administra open [an] incident{ ] the Board's itself concedes allow and insufficient process" tive be- investigation has even on effect have a conclusive before does gun. of In- Division "The Division's decision: whether Craw- only determine can surance non- the Board's holding that The court's claims settlement an unfair ford committed directly affects Crawford dispositive frivolously or whether Crawford practice, not concern that by an unwarranted driven [Tihere benefits.... unfairly controverted last chance is Crawford's immediate Claims Settle- provisions of the Unfair are no finding, challenge the directly to correlate Act that ment Practices *7 "binding give it will Insurance Division of a frivo- making a determination Board 12 necessary, appeal is An immediate effect." Thus, unfair controversion." lous or find reasons, the Board's because the court legally conclusive finding is not "will unfair controversion ing of frivolous to rebut will be able irrebuttable. establishing an unfair way toward go long a question that is finding's relevance "failing to 'at practice" claim any of the com- the Division: before prompt and good faith tempt have been 21.86.125 violations of AS pany's in which lHabil of elaims equitable to become frequently as so clear," two "committed ity is Op.at985. 12. 2767, 788, 797, L.Ed.2d S.Ct. 120 112 8. 505 U.S. (1992). 636 21.36.125(a)(6)). (quoting Op. at 985 796-97, (quoting Abbott S.Ct. 2767 112 Id. at 152, 87 136, 387 U.S. Gardner, v. Laboratories (1967)) (second 1507, alter L.Ed.2d 681 SEC, 18 Inc. v. S.Ct. Controls, Waste International Cf. 117, (S.D.N.Y.1973)(holding F.Supp. 119 362 original). ation in investigation initiating is "not that an order (5th n. 6 1303, 1309 Marsh, 775 F.2d v. 10. Geyen entered as order is until a final reviewable omitted). Cir.1985) (citation omitted). (citation investigation") result of the Through Oregon By Gov't & v. State 11. Brian 1359, Comm'n, Or.App. 126 Ethics (1994). 1362-63 practice." company trade will also be any appeal
able to adverse determination SISTERS OF PROVIDENCE IN WASH- that relies on the Board's finding. ap This INGTON, Hospital, Providence d/b/a peal, to which the will party, Division be a Anchorage, Washington nonprofit sufficient safeguard rights. Crawford's corporation, Anchorage Providence There no call provide for us to compa Group, Anesthesia Medical Appellants, ny with an extra before investiga v. any tion has led to about practices, Crawford's let alone before it has CLINIC, INC., A.A. PAIN corpo- an Alaska begun. even ration, Borrello, Michael T. M.D., and Management Alaska Clinic, Pain LLC, Finally, granted the court has insurers two Appellees. ancillary levels of of an Bоard, first to the court and then to Clinic, Inc., A.A. Pain and Michael T. court, ensuring Division investi Borrello, M.D., Cross-Appellants, gation triggered by such a finding will be delayed years. It is prac the Division's stay tice to its while an triggering pending. This Sisters of Washington, Providence in d/b/a delay will weaken the ability Division's Hospital, Providence Anchorage, regulate oversee and the workers' compensa Washington nonprofit corporation,
tion industry. insurance respect Our for the Anchorage Providence Anesthesia Medi- public policy embodied Alaska's workers' Group, cal Manage- Alaska Pain compensation away laws should warn us Clinic, LLC, ment Cross-Appellees. impeding the Division's work. Under the S-10390, Nos. S-10419. legislature enacted, scheme the employees "relinguish[ rights they ] whatever had at Supreme Court of Alaska. common law in exchange for a recovery sure under the statutes." Em Dec. ployers must be held to account for their end limited, liability deal-their they required are play by the rules and com pensate their workers in faith.17 The
delaying tactics that the court sanctions in
this decision will dilute the Division of Insur ability
ance's police bargain. reasons,
For all of these I respectfully
dissent.
*8
Lumber,
Id.;
O.K.
21.36.125(6)