Appellant/Cross-Respondent

vs.

STATE COMPENSATION INSURANCE FUND

Respondent/Cross-Appellant/Insurer for

PETE'S PLACE

Employer.

This appeal is from the Findings of Fact; Conclusions of Law; Order entered by Stephen L. Wallace, hearing examiner for the Montana Department of Labor and Industry (DLI), on December 28, 1993. The order affirmed a Rehabilitation Panel determination that the first appropriate rehabilitation option for Mary L. Pedersen (Pedersen) is option "c". Additionally Pedersen was ordered to repay the difference between wage supplement benefits and the total rehabilitation benefits which she had received as a result of DLI's June 30, 1993 Interim Order Provisionally Reinstating Total Rehabilitation Benefits. On January 7, 1994, Pedersen appealed. On January 12, 1994, the State Compensation Insurance Fund (State Fund) cross-appealed from that portion of the hearing examiner's order which affirmed the Interim Order.

Based on the record, which consists of the DLI file transmitted to the Court, Pedersen suffered an industrial injury on October 5, 1990. The law in effect at the time of the injury, now repealed,⁽¹⁾ provided a specific procedure for determining rehabilitation options for injured workers. The procedure initially requires the insurer to designate a rehabilitation provider. § 39-71-1014(a), MCA (1989). The designated provider determines the first appropriate rehabilitation option for the injured worker. § 39-71-1015(a), MCA (1989). Where the worker in fact does not return to work, the DLI is then required to designate a rehabilitation panel to evaluate the worker and recommend a first appropriate rehabilitation option. § 39-71-1017, MCA (1989). Following the issuance of the panel's report, the DLI must consider the report and issue its own "initial order of determination" specifying the first appropriate option for the worker. § 39-71-1018(1), MCA (1989). The initial order triggers the right to a hearing before the DLI. § 39-71-1018(2), MCA (1989). After a hearing the DLI is required to issue a "final order," which in turn triggers the right of appeal to this Court. Section 39-71-1018(3) and (4), MCA (1989).

The procedures prescribed by statute were followed. Additionally, in June of 1993, Pedersen, relying on this Court's decision in Montana Health Network v. Nelson, WCC 9212-6649, issued on April 9, 1993⁽²⁾, filed a Motion for Reinstatement of Total Rehabilitation Benefits. Over the State Fund's objection the hearing examiner issued an Interim Order Provisionally Reinstating Total Rehabilitation Benefits, providing in relevant part:

Therefore, IT IS HEREBY ORDERED, the Insurer, upon written application through the claimant's attorney, will reinstate total disability benefits pending a Final Order of the Department. The Claimant shall be obligated to repay the differential if option "c" is found to be correct. [Emphasis added.]

After filing her appeal in this Court, Pedersen filed a motion seeking leave to present additional evidence to the Court. The motion was accompanied by an affidavit of Pedersen stating that she has recently attempted to work as a keno caller but was unable to perform the job. The motion is denied. ARM 24.5.350 provides that additional evidence may be presented to the Court if it is shown that the additional evidence is material and that there were good reasons for failure to present it in the proceeding before the department. Pedersen testified regarding her abilities at the time of the hearing before the department and had ample opportunity to present evidence and facts regarding her limitations and ability to work. The events described in the affidavit occurred after the hearing and may raise issues concerning Pedersen's credibility since her claim that she could not continue working as a keno caller is based only on her assertion. In the proceeding below she made a similar claim of inability to work. This Court will not conduct a de novo review of that claim.

Mary L. Pedersen is 38 years old. She has a GED and attended college for one year. Her work history includes teacher assistant, cook, child care worker, cashier, waitress, cement finisher and sawmill worker. She raises and shows "Akita" dogs. Ms. Pedersen was injured in a prior industrial accident on October 8, 1984, which resulted in an emergency laminectomy and excision of the L5-S1 disc. Also, on January 3, 1985, she was in an automobile accident which resulted in a hemilaminotomy and a foramenotomy at the C5-6 and C6-7 levels.

The injury at issue in this proceeding happened on October 5, 1990, when Pedersen was working for Pete's Place, a day care center. The injury occurred when Pedersen was leaning over a dishwasher "trying to unload it, and I couldn't even get up." (Pedersen Dep. at 36.) Pedersen went to Dr. Carpenter, who took her off work for six weeks. She returned to work and the same thing happened again, resulting in her being off work for a "couple of months." She tried to return to work for a third time but was unable to continue. Dr. Carpenter then advised her that she could not return to work (Id. at 36) and referred her to Dr. Weinert at St. Peter's Hospital to participate in a functional restoration program. (Id at 36.) Dr. Weinert is a physiatrist specializing in physical and rehabilitation medicine.

Ms. Pedersen entered the restoration program on March 2, 1992. By letter dated June 9, 1992, Jayne Davis, Program/Case Coordinator, provided Dr. Carpenter with a closing report concerning Pedersen's participation in the program. Ms. Davis concluded with the observation that "Mary's current functional capabilities for occupational re-entry are in the light to sedentary category as defined by the dictionary of occupational titles." Regarding the physical therapy aspect of the program she reported that Pedersen did not meet all of the goals which had been set. This was in part due to Pedersen's unwillingness to try certain activities until the final week of the program. "By the last week, her self reports and her behaviors were more consistent and she was earnestly able to view herself as less disabled." (Ex. 4, pp. 1-3.)

The State Fund referred Pedersen to the Rehabilitation Consortium on March 16, 1992. On March 30, 1992, Colleen Lordemann did an "intake" interview, which is an initial assessment done to determine whether a person will be able to return to the work they were doing at the time of the injury. (Tr. at 50.) Based on this interview and information from Dr. Weinert, Ms. Lordemann determined that Pedersen could not return to her time-of-injury job but was capable of sedentary to light work. (Id. at 53.) She compiled a list of alternative occupations within Pedersen's physical limitations. Included in the list were keno writer, auto rental clerk, cashier II, hotel desk clerk, receptionist, telemarketer, ward clerk, video rental clerk, parking lot attendant, transitional living manager and line cook. (Id. at 53,54.) Ms. Lordemann determined that the identified jobs existed in both the local and statewide labor market. (Ex. B.) Pedersen offered no evidence rebutting Ms. Lordemann's conclusions concerning the availability of the positions of video rental clerk, casino cashier and keno caller. The hearing examiner found Ms. Lordemann to be a credible and reliable witness with regard to her professional opinions.

On June 5, 1992, Dr. Weinert prepared a report giving Pedersen an impairment of 11 percent of the whole person. There are no further medical reports from Dr. Weinert, nor is there any indication that Pedersen has been seen by Dr. Weinert since this report.

Job analyses for six different positions were presented to Dr. Weinert between July and November of 1992. On July 31, 1992, Dr. Weinert medically approved the position of "Casino Cashier." This position may require lifting of up to 20 pounds, but is qualified with the statement "can lift less." It allows for two 15 minute breaks per shift and gives the employee the option of sitting or standing. (Ex. 1 at 1; Tr. at 63.) On August 3, 1992, Dr. Weinert approved the position of "Transitional Living Manager." However, this position was not approved by the rehabilitation panel because the panel determined that it is not typically available in Pedersen's job pool. (Ex. B.) On November 9, 1992, Dr. Weinert approved the positions of "Keno Writer" and "Video Rental Clerk." A keno writer may be required to bend or squat as many as 20 times per shift for short durations. (Ex. 2 at 5.) The position of video rental clerk occasionally requires lifting TVs or VCRs which may weigh from 15 to 30 pounds. (Ex. C.) Dr. Weinert disapproved of the position of "Parking Lot Attendant." He approved "Desk Clerk" but limited Pedersen to four hours per day in that position.

On September 28, 1992, Dr. Weinert wrote a letter to the insurer concerning Pedersen's functional capabilities. He wrote:

[M]s. Pedersen's functional capabilities are in the sedentary to light physical demand level. She should do no lifting greater than 20 lbs. she should be allowed frequent positional changes in her vocation and should not be required to stand in a stationary position for more than 30 minutes at a time. She should not do any bending or lifting from floor level.

(Ex. 6 at 4.)

Mark Weggenman is a counselor for the Job Training Partnership Act (JTPA). His position requires him to meet with individuals and assess whether they are eligible for services of the JTPA. The goal of the JTPA is "to obtain permanent full-time employment in whatever occupation that that person has chosen." (Tr. at 18; emphasis added.) Weggenman apparently met with the claimant once in 1990.⁽³⁾ Based on this single interview he concluded that the JTPA program could not offer her any training "much less a placement possibility given, you know, the fact she could barely even sit, you know, in my office for 10 to 15 minutes." (Id. at 26.)

In September of 1992 Pedersen was referred to Social Rehabilitation Services (SRS). She was interviewed by Cathy Drynan, a rehabilitation counselor, and referred to Dr. Werner for a physical examination. Following an examination in September of 1992, Dr. Werner recommended a pain clinic/physical therapy. He further noted, "[S]he should probabably [sic] be trained in a sedentary occupation." (Ex. 7 at 2.) In a June 10, 1993 letter to Pedersen's counsel, Dr. Werner declined to complete a functional capacity assessment form. He again recommended that Pedersen participate in a pain clinic and pointed out that Dr. Hinde "felt Mary should at least be able to advance to the level of light work and possibly light-medium work."⁽⁴⁾ (Ex. 7 at 3.)

In December of 1992, SRS found Pedersen eligible for rehabilitation. The goal of SRS is employment in a position that the person can handle physically and mentally. (Tr. at 9.) Ms. Drynan found that Pedersen had several functional limitations which interfered with her employment potential, however, a vocational plan was drawn up and efforts were made to place Pedersen in a teaching assistant position. Ms. Drynan did not develop position descriptions or job analyses. Ms. Drynan worked with Pedersen until July 12, 1993.

While working with SRS, Pedersen looked for work at a pet store, a veterinary clinic, an animal shelter and Wal-Mart. She also looked for work as a teaching assistant. She declined one job offer and was otherwise unsuccessful in all attempts to secure employment. In some instances her failure was due to the lifting requirements exceeding 20 pounds. (Tr. at 44.)

In January, 1993 Pedersen was evaluated by Joe Beneventi, a vocational counselor at Montana Career Development Services. Her test results led him to conclude that she should look into retraining options. In reaching his conclusion he considered the fact that she did not offer any ideas regarding the types of training she would like to pursue and that she was not interested in clerical work or in any programs offered through Helena Vo-Tech Center. He also noted that she did not seem to be interested in retraining options and did not think that retraining would lead to employment that she could do given her back condition. (Ex. 3.)

Ms. Pedersen was evaluated by Dr. James D. Hinde on May 24, 1993. His assessment included the observation that if her social security application did not work out she would need to "consider a vocational option and I think she has good potential to advance, at least to consistency at the light work level and possibly the light-medium level." Pedersen has applied for and been denied social security disability benefits on at least two occasions. A third application was being pursued in May of 1993. (Ex. 5 at 4.)

The hearing examiner for the DLI observed Pedersen and specifically found:

The undersigned finds that credibility and the degree to which subjective complaints may limit the Claimant's functional capacities to be critical to this case.

Following this statement, the hearing examiner went on to say:

Therefore, certain professional observations of the staff at Helena Industries and of the Restoration Program, particularly to psychologists are set forth here and accepted as fact. [Emphasis added.]

Following that statement, the hearing examiner set forth several of the professional observations indicating that Pedersen is unmotivated to return to work and exaggerates her symptoms. (Findings of Fact 22.) While not expressly stated, it is clear that the hearing examiner did not find Pedersen's assertions concerning her pain and inability to work wholly credible.

Section 39-71-1018, MCA, provides for an appeal to the Workers' Compensation Court from the DLI's final order. Review of that order is governed by section 2-4-704(2), MCA, which provides in relevant part:

(2) The court may not substitute its judgement for that of the agency as to the weight of the evidence on questions of fact. The court may affirm the decision of the agency or remand the case for further proceedings. The court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because:

(a) The administrative findings, inferences, conclusions, or decisions are:

. . .

(ii) in excess of the statutory authority of the agency;

. . .

(v) clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record;

(vi) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion;

. . .

A hearing examiner's findings of fact must be overturned on judicial review where they are "clearly erroneous in view of the reliable, probative and substantial evidence on the whole record. State Compensation Mutual Insurance Fund v. Lee Rost Logging, 252 Mont. 97, 102, 827 P.2d 85 (1992) (quoting section 2-4-704(2)(a)(v), MCA.) The Court will not reweigh the evidence and the findings of the administrative agency will be upheld if they are supported by substantial credible evidence in the record. Nelson v. EBI Orion Group, 252 Mont. 286, 288, 829 P.2d 1 (1992). Where the findings are based on conflicting evidence the Court's function is to determine whether there is substantial evidence to support the findings and not to determine whether there is sufficient evidence to support contrary findings. Little v. Structural Systems, 188 Mont. 482, 614 P.2d 516 (1980).

Pedersen argues that the hearing examiner's decision must be reversed because "(1) it is clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; (2) it is arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion; and (3) it is in violation of statutory provisions."

Initially, the Court must determine whether the hearing examiner's findings are clearly erroneous in view of the reliable, probative and substantial evidence as a whole. I find that they are not clearly erroneous and are supported by substantial evidence.

Pedersen, who is 38 years old, has a GED and one year of college education. The medical evidence shows that she is capable of at least sedentary work. Pedersen is restricted to lifting more than 20 pounds; bending; prolonged sitting and standing are contraindicated; and she suffers from pain. Nonetheless, Dr. Weinert, who specializes in physical and rehabilitation medicine, medically approved positions of casino cashier, video rental clerk and keno writer for Pedersen. Dr. Hinde, who performed an evaluation on May 24, 1993, did not contradict Dr. Weinert's approvals. Moreover, as a part of his assessment of Pedersen, he wrote:

Vocational dysfunction. The patient is applying for social security disability. She is up for her third go-around. If this does not work out, she'll need to consider a vocational option and I think she has good potential to advance, at least to consistency at the light work level and possibly the light-medium level. Again, addressing the above will be very important.

(Ex. 5; emphasis added.) At no time did he state that Pedersen could not return to light duty work.

Following his first examination of Pedersen, Dr. Werner, who is a family physician, noted that Pedersen "should probably be trained in a sedentary occupation." He did not discuss what sedentary jobs Pedersen might be able to do nor was he asked if the job analyses which had been approved by Dr. Weinert were within Pedersen's abilities. Upon re-evaluation of Pedersen in June of 1993, Dr. Werner suggested that any functional capacity assessment of Pedersen be done by Dr. Weinert or Dr. Hinde. He also noted Dr. Hinde had reported that Pedersen should at least be able to advance to the level of light work and possibly light-medium work.

Thus, no substantial medical evidence was presented at hearing which would contradict Dr. Weinert's medical approval of the positions of casino cashier, video rental clerk and keno caller.

Pedersen relies on the vocational testimony of Cathy Drynan and Mike Weggemann as refuting the opinions of Colleen Lordemann. The weight given by the hearing examiner to the testimony of these individuals, however, was appropriate and was not clearly erroneous. Ms. Lordemann was specifically retained to evaluate Pedersen and make recommendations consistent with the stated goal of the Workers' Compensation Act of returning the disabled worker to work with a minimum of retraining as soon as possible after the injury. The focus of Mr. Weggemann's program is "to obtain permanent full-time employment in whatever occupation that that person has chosen." Ms. Drynan developed and attempted to assist Pedersen in her job search. Neither developed or analyzed job positions for the purpose of returning Pedersen to work with a minimum of retraining as soon as possible.

Pedersen also insists that she cannot go back to work. Her credibility in making this assertion was clearly at issue in the proceeding below. While the hearing examiner's findings might have been even more express, he found that Pedersen's subjective pain complaints and her insistence that she is incapable of working did not overcome the medical and vocational evidence. The hearing examiner was in the best position to observe Pedersen's testimony and determine the weight to be given to that testimony. The Court will not substitute its judgment for that of the trier of fact.

Pedersen has not persuaded me that the hearing examiner's findings were clearly erroneous in view of the evidence presented.

Pedersen's second grounds of appeal must also be rejected. That ground -- alleging arbitrary or capricious action or abuse of discretion -- is typically invoked with regard to procedural rulings. See Steer, Inc. v. Department of Revenue, 245 Mont. 470, 475, 803 P.2d 601 (1990); but see Silva v. City of Columbia Falls, 258 Mont. 329, 335 852 P.2d 671 (1992) (applying the arbitrary or capricious standard of review to a Police Commissioner's decision which fixed the date disability benefits were to commence). Even if the standard can be used in reviewing findings of fact and conclusions of law, the hearing examiner's decision in this case did not amount to an abuse of discretion. As already discussed, it was supported by substantial credible evidence. A decision which is supported by reliable, probative and substantial evidence cannot be characterized as arbitrary or capricious or an abuse of discretion.

Finally, the decision below did not violate statutory provisions. The hearing examiner properly considered the return to work options specified by section 39-71-1012, MCA.

Having considered and rejected all of the grounds advanced by Pedersen in support of her appeal, the DLI Order finding option (c) to be the most appropriate option must be affirmed.

Remaining for decision is the State Fund's cross-appeal asking the Court to reverse the Interim Order Provisionally Reinstating Total Rehabilitation Benefits and Pedersen's request that the Court reverse the hearing examiner's order directing her to repay the total rehabilitation benefits she received under the Interim Order.

The authority of the DLI to order payment of total rehabilitation benefits was addressed in an April 22, 1994 decision in State Compensation Insurance Fund v. Mark Allen Peterson, WCC No. 9404-7039. In that case the Court held that an insurer cannot be required to pay total rehabilitation benefits after the DLI issues its "initial order of determination." The applicability of that decision in this case should be obvious. The hearing examiner erred in ordering interim benefits in the first place. Therefore, his order directing Pedersen to repay those benefits is not erroneous. Reil v. State Compensation Insurance Fund, 254 Mont. 274, 837 P.2d 13334 (1992)(holding that moneys received pursuant to a judgment that is subsequently reversed must be repaid). Moreover, the interim order stated that Pedersen would have to repay the benefits if option (c) were approved. Pedersen therefore accepted the benefits with the understanding that she might have to repay them.

The Interim Order of the DLI is therefore reversed but the hearing examiner's order directing Pedersen to repay benefits received by her pursuant to the Interim Order is affirmed.

The decision of the DLI which finds option (c) under section 39-71-1012, MCA (1989) to be the most appropriate rehabilitation option for Mary L. Pedersen is affirmed.

The Interim Order of the DLI is reversed but the hearing examiner's order directing Pedersen to repay benefits received by her pursuant to the Interim Order is affirmed.

DATED in Helena, Montana, this 8th day of August, 1994.

(SEAL)

/s/ Mike McCarter
JUDGE

c: Mr. Shaun R. Thompson
Mr. Charles G. Adams

1. 1991 Laws of Montana, ch. 574, § 14.

2. Later, on June 9, 1993, the Workers' Compensation Court issued an Order Withdrawing April 9, 1993 order on appeal.

3. Weggenman testified that he did not have claimant's "whole background" in front of him and was not aware of her complete job background. (Tr. at 27.)

4. Dr. Hinde's evaluation is discussed later in this decision.