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COURT OF APPEALS
DECISION
DATED AND RELEASED
August 20, 1996
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NOTICE
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62(1), Stats.
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This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports.
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No. 96-0470
STATE
OF WISCONSIN IN
COURT OF APPEALS
KENNETH VERHAAGH,
†Plaintiff-Appellant,
CROWN MEDIA, INC.,
Involuntary
Plaintiff,
v.
LABOR & INDUSTRY
REVIEW
COMMISSION, BRILLION
IRON
WORKS and NATIONAL
FIRE
INSURANCE,
Defendants-Respondents.
APPEAL from a judgment
of the circuit court for Brown County:
VIVI L. DILWEG, Judge. Affirmed.
Before Cane, P.J.,
LaRocque and Myse, JJ.
MYSE, J. Kenneth Verhaagh appeals a circuit court
judgment affirming a determination by the Labor & Industry Review
Commission, which denied him a default order based upon his employer's,
Brillion Iron Works, failure to file a timely answer to his complaint and
LIRC's determination that his current medical problems are unrelated to his
employment with Brillion. Verhaagh
contends that LIRC erred by refusing to grant a default order when it made no
finding that the failure to file a timely answer was the result of a mistake,
inadvertence, or excusable neglect and further that there is no substantial
evidence for LIRC's conclusion that his current medical difficulties are
unrelated to his employment. Because we
conclude that LIRC did not abuse its discretion by refusing to grant a default
order and that there is substantial evidence sustaining LIRC's conclusion that
his current medical problems are unrelated to his past employment with
Brillion, we affirm the circuit court's judgment.
Kenneth Verhaagh worked
for Brillion Iron Works from 1964 until 1989, a vast majority of which involved
trimming castings with a portable grinder.
In 1985, he was hospitalized with pneumonia and diagnosed with having an
alpha-1 antitrypsin (A1AT) deficiency which increases the probability of
developing emphysema. The medical
evidence indicated that this condition is a genetic deficiency resulting from a
protein enzyme relationship that can be aggravated by inhaling outside irritants.
At the time of his illness, Verhaagh was a smoker and his physicians
strongly advised Verhaagh that he quit smoking, which he did. They further advised that he not work in
dusty conditions, such as the grinding area which contained levels of dust exceeding
recommended exposure levels.
Verhaagh returned to
employment in the inspection area which he alleges also had unacceptable levels
of dusty irritants in the air. After
four years, his condition deteriorated to the point where his physicians recommended
that he terminate his employment. He
was subsequently awarded social security benefits based on a finding that he
was totally disabled and was diagnosed with emphysema associated with A1AT
deficiency.
Verhaagh filed his
initial application for hearing on May 26, 1993, claiming that the emphysema
was related to his employment. Brillion
filed its answer on July 12, 1993, and the matter was ultimately scheduled for
hearing. Verhaagh applied for a default
order based on the untimeliness of Brillion's answer. The motion was denied by the administrative law judge who was
affirmed by LIRC in its decision.
Verhaagh first claims
that LIRC erred by failing to grant his motion for a default order based on
Brillion's untimely filing of an answer.
Verhaagh contends that whether he is entitled to a default order
presents a question of law which this court should resolve independently of
LIRC's determination. Verhaagh further
argues that LIRC's failure to find surprise, inadvertence, or excusable
neglect, which is the standard used by the court in determining whether to
extend time for answering in a civil lawsuit, Hansher v. Kaishian,
79 Wis.2d 374, 388-89, 255 N.W.2d 564, 572 (1977), renders LIRC's failure to
grant his motion for default reversible as a matter of law because LIRC has
advanced no reasons in support of its decision.
Finally, Verhaagh argues
that because the worker's compensation law is a remedial statute it should be
construed liberally so as to provide benefits to employees, LIRC's failure to
set forth adequate reasons for denying his motion for a default order is a
basis for reversing LIRC's denial.
We do not agree that the
standard of review is one of law; nor do we agree that the civil law standards
applied to courts in extending time to answer controls an administrative agency's
determination of whether to grant default judgment. Further, LIRC's failure to grant the motion for default order is
not compelled by a liberal construction applied to the worker's compensation
act. We first address the question of
the standard of review to be applied to LIRC's denial of Verhaagh's motion for
a default order. Section 102.18(1)(a), Stats., provides: "All
parties shall be afforded opportunity for a full, fair, public hearing after
reasonable notice, but disposition of application may be made by a compromise,
stipulation, agreement, or default without hearing."
The use of the term
"may" in the foregoing statute clearly submits the issue of default
orders to the LIRC's discretion. See
Theodore Fleisner, Inc. v. DILHR, 65 Wis.2d 317, 325-26, 222 N.W.2d
600, 606 (1974) (department using its discretionary authority over procedural
matters in refusing to adjourn hearing to permit additional testimony). The exercise of discretion by an
administrative agency is reviewed in the same fashion as applied to the
exercise of discretion by the courts of this state. In re Altshuler, 171 Wis.2d 1, 8, 490 N.W.2d 1, 3
(1992). The review of an exercise of
discretion for both administrative agencies and courts is whether the exercise
of discretion was made based upon the relevant facts by applying a proper
standard of law and represents a determination that a reasonable person could
reach. Marten Transp. v. Hartford
Specialty Co., 194 Wis.2d 1, 13, 533 N.W.2d 452, 455 (1995); Loy
v. Bunderson, 107 Wis.2d 400, 414-15, 320 N.W.2d 175, 184 (1982).
In reviewing an
administrative agency's discretionary decision, we defer to the administrative
agency as we defer to trial courts because the exercise of discretion is so
integral to the efficient functioning of both the administrative agency and the
courts. The burden to demonstrate an erroneous
exercise of discretion rests on the party claiming the exercise of discretion
was improper. Colby v. Colby,
102 Wis.2d 198, 207-08, 306 N.W.2d 57, 62 (1981).
We now turn to the issue
as to whether LIRC failed to apply the proper legal standard in its
determination to deny Verhaagh's application for default order. Verhaagh contends that the surprise, mistake
or excusable neglect standard enunciated in Hedtcke v. Sentry Ins. Co.,
109 Wis.2d 461, 326 N.W.2d 727 (1982), is the standard that must be applied by
LIRC. Hedtcke, however,
in enunciating the standard to be applied to courts was interpreting §
801.01(2), Stats., which is
contained within the rules of civil procedure.
In general, with exceptions not applicable here, the rules of civil
procedure apply to the courts of this state but are not applicable to
administrative agency proceedings. State
ex rel. Thompson v. Nash, 27 Wis.2d 183, 189-90, 133 N.W.2d 769, 773
(1965); see Layton School of Art & Design v. WERC, 82
Wis.2d 324, 262 N.W.2d 218 (1978).
Because of the limited
application of the rules of civil procedure to the administrative agencies of
this state, we reject Verhaagh's contention that the appropriate legal standard
to be applied by LIRC in determining whether to grant his motion for a default
order is based upon a finding of surprise, mistake, or excusable neglect. Rather, the agency is entitled to exercise
its discretion based upon its interpretation of its own rules of procedure, the
period of time elapsing before the answer was filed, the extent to which the
applicant has been prejudiced by the employer's tardiness and the reasons, if
any, advanced for the tardiness.
In this case, Brillion
has advanced no reasons for its failure to file a timely answer. The answer was filed within three days of
the time required for answering. The
only prejudice asserted by Verhaagh is the requirement that he submit to a
hearing which did not occur until one year later. Requiring an applicant to prove his entitlement to benefits is
not prejudice. It is contemplated by
the worker's compensation act and is the threshold requirement for those
eligible for benefits. The fact that
the hearing could not be held for one year is a reflection of the demands made
upon LIRC and the unique circumstances of this specific case. The length of time to hearing cannot be
confused with the necessity of a hearing at which the applicant is required to
demonstrate his entitlement to benefits.
We find no prejudice in Brillion's relatively short delay in filing the
required answer and reject Verhaagh's suggestion that the necessity of
participating in a hearing should be treated as prejudice.
Because the delay in
answering was relatively short, Verhaagh was not prejudiced by the delay. Additionally, Brillion asserted a bona fide
defense to the claim arguing that the emphysema arose from smoking and not from
irritable particulates in the air from his employment. The law does not look kindly on defaults, Dugenske
v. Dugenske, 80 Wis.2d 64, 68, 257 N.W.2d 865, 867 (1977), and the
ability of all parties to assert their claim and defense before an appropriate
tribunal will not lightly be discarded.
LIRC's decision to give Brillion the opportunity to assert its defense,
under the circumstances of this case, cannot be reversed on appeal as an
erroneous exercise of discretion.
Finally, we consider
Verhaagh's claim that the worker's compensation statute and the liberal
interpretation required to provide benefits for employees mandates the granting
of Verhaagh's motion for a default judgment.
We agree that because the worker's compensation act is a remedial
statute, ambiguities in interpretation should be resolved in favor of the
employee. Such a rule of construction,
however, does not authorize the creation of statutory provisions not adopted by
the legislature. The legislature
specifically provided that default orders were matters submitted to the sound
exercise of discretion by the administrative agency. Section 102.18(1)(a), Stats. There is nothing in the act suggesting that
default orders must be granted absent a showing of excusable neglect. Indeed, the application of the civil law
standard to administrative agencies is erroneous. Nothing in the worker's compensation act mandates the granting of
a default order based upon the tardy filing of a pleading by a party.
We next consider
Verhaagh's assertion that there is no substantial evidence supporting LIRC's
conclusion that his emphysema was unrelated to his employment. Our standard of review as to whether
substantial evidence exists requires affirming the administrative agency's
determination as long as it is a determination that could have been reached by
a reasonable finder of fact. Barnes
v. DNR, 178 Wis.2d 290, 306, 506 N.W.2d 155, 162 (Ct. App. 1993). The conclusion reached by the administrative
agency need not be supported by the preponderance of the evidence. Chicago & N.W.R.R. v. LIRC,
98 Wis. 2d 592, 607, 297 N.W.2d 819, 825-26 (1980). Indeed, it may be contrary to the weight of evidence. Id. If, however, a reasonable finder of fact could reach the
conclusion reached by the agency, we are required to affirm the agency's
determination even though it may not be the conclusion that we would have
reached were we the finder of fact. Id.
The record discloses
substantial evidence from which the administrative agency could have concluded
that the irritants in the air associated with his employment aggravated his
A1AT condition and was ultimately a cause of his development of emphysema. The agency, however, is not compelled to
reach that conclusion. Both Doctors
Stevenson and Fishburn concluded that Verhaagh's chronic lung disease was the
result of long-term cigarette smoking.
They opined that Verhaagh's A1AT deficiency coupled with his smoking
accelerated his obstructive lung disease.
Doctor Slightam
apparently expressed a contrary opinion in that Verhaagh's daily emersion of
foreign particulates in the air as part of his work environment irritated and
eventually damaged his respiratory apparatus.
Doctor Slightam also expressed reservations about the conclusions of
other physicians that the lung disease was related to non-industrial causes. The weight and credit to be given the
testimony of witnesses, including medical experts, is uniquely within the
province of the factfinder. Goranson
v. DILHR, 94 Wis.2d 537, 556, 289 N.W.2d 270, 279 (1980). In this case, there was substantial medical
opinion that the applicant's chronic lung disease was unrelated to his work
environment but was the product of a genetic condition which was aggravated by
long-term cigarette smoking averaging a pack a day. While contrary medical evidence was also received, it is LIRC's
unique function to resolve the conflicts of evidence and reach facts as they
determine appropriate.
We conclude that
substantial evidence supports LIRC's determination that Verhaagh's current
chronic lung disease is unrelated to his past employment. A reasonable finder of fact could rely upon
the conclusions of two medical experts each of whom felt that Verhaagh's
genetic condition was aggravated by heavy long-term cigarette smoking and not
his work environment. Because this
medical evidence is sufficient to meet the substantial evidence test, we are
required to sustain LIRC's finding of fact.
Section 102.23(6), Stats.;
Goranson, 94 Wis.2d at 554, 289 N.W.2d at 278. Verhaagh's contention that there is no
substantial evidence to sustain LIRC's factual determination must fail. The trial court's judgment affirming LIRC's
decision must therefore be affirmed.
By the Court.—Judgment
affirmed.
