Smiley v. State, 2015 VT 42
By Andrew Delaney
We’ve made the “SOL” joke more than once amongst this collection of luminous legal analysis. Are you going to tell me recycling isn’t important and a good thing? Yeah, I didn’t think so.
The joke as such is that the abbreviation for statute of limitations (SOL) is the same as for a colloquial phrase meaning one’s luck has run out, and the bottom line is often the same. As an example: “Miss the SOL and you’re SOL, skipper.”
This is one of those weird cases in which the SCOV says something along the lines of “Got this right; got that wrong. But it’s all good anyway—affirmed.” Cryptic as that is, let’s see if we can shed a little light on the situation . . .
This is an appeal of summary judgment in a workers’ compensation case. Mr. Smiley injured his ankle in January 1996 while on the job as a game warden. In July of ’96, his doc wrote a bunch of stuff in the medical notes—the SCOV identifies seven points—basically saying Mr. Smiley was six months post-surgery and these things usually take a year to resolve; Mr. Smiley had declined physical therapy at that time and was back to work, though he still had trouble with stairs; Mr. Smiley was to follow up if he thought he needed physical therapy in the future and would be seen “as needed.”
In between the injury and the doctor’s note, the Department of Labor added a rule that places the burden on employers to determine whether claimants have permanent impairment once they reach end medical result—employers are supposed to do this within 45 days.
Flash forward fourteen years to 2010. Mr. Smiley asks for a permanency rating. The adjuster approves. He gets one at 1%. He gets a second opinion—still 1%. Adjuster denied the claim on the basis that the SOL had run, but offers to pay if Mr. Smiley would waive interest and penalties. Mr. Smiley asked for a hearing, and the adjuster responded with a SOL defense.
The State moved for summary judgment, arguing in part that it hadn’t “waived its statute-of-limitations defense by scheduling claimant’s permanency evaluation.” The commissioner ruled for the State on that point. The State again moved for summary judgment, this time arguing that the employer-is-responsible-for-figuring-out-the-permanency rule didn’t apply; that the SOL did; and Mr. Smiley’s claim was time-barred. “[T]he commissioner granted the State’s motion for summary judgment, concluding as a matter of law that Rule 18(a) did not apply retroactively and claimant knew or should have known that he had reached a medical end result as of July 8, 1996.”
The SCOV notes that its review is limited to three certified questions. First, whether or not the State waived its SOL defense by arranging for the permanency evaluation. Second, whether the claim was barred by the SOL. Third, whether the commissioner’s decision not to apply the employer-has-to-figure-out-permanency rule was correct. The SCOV defers to the commissioner on findings within her wheelhouse, but does whatever it wants with the stuff outside it.
Mr. Smiley’s first argument is that the commissioner should’ve found that the State waived the SOL defense by arranging his permanency evaluation. Second, he argues that the commissioner got the summary judgment standard backwards, making inferences in favor of the State (when the standard for summary judgment requires inferences to be made in favor of the non-moving party). Next, he argues that the commissioner screwed up by determining that the employer-has-to-figure-out-permanency rule didn’t apply. The State, somewhat predictably, says the commissioner got everything right.
The SCOV’s analysis starts with the waiver thing. A waiver of a known right generally requires both knowledge and intent. The way the majority frames the issue, you just know that this argument isn’t gonna fly: “In this case, claimant is not alleging the existence of an express waiver, but rather asks this Court to find a waiver based solely on the insurance adjuster’s agreement, at claimant’s request, to schedule a permanent impairment evaluation.” Do we need to go on? We already know it’s going to end badly.
Essentially, the majority reasons that there’s no unequivocal waiver of the SOL here. The majority points out that a party may want to assess the damage before deciding whether to raise the defense. There’s also “nothing in the record” that indicates the adjuster intended to waive the SOL. Okay, look, I may just be a simple country law-yer, but that sounds to me like some Russell’s-teapot reasoning. Didn’t Mr. Smiley raise a y’all-can’t-be-makin’-inferences-in-favor-of-the-moving-party argument? Are we just going to pretend that didn’t happen?
Ah well. Moving right along in a roundabout way, the majority hops to the third question: whether the State was barred from raising the SOL because it didn’t follow the employer-has-to-figure-out- permanency rule. The majority first looks at whether the rule applies here, and next, whether a failure to follow the rule tolls the SOL.
The rule was promulgated months before Mr. Smiley (allegedly) reached end medical result. While generally a new rule will not affect an already pending case, there’s an exception for rules that are solely procedural or remedial in nature. The commissioner reasoned that this rule was substantive, but the majority disagrees. The majority reasons that the rule is purely procedural because it provides a method for ensuring an already existing right, but doesn’t change the nature of that right. In other words, Mr. Smiley would be entitled to permanent impairment compensation under either the old law or the new law—just the way it’s gone about has changed with the rule change.
The majority then turns to whether the employer’s failure to follow the rule tolls the SOL. The commissioner didn’t get to this because she concluded the rule was inapplicable. The way the majority analyzes this question is interesting. See, the majority figures that the SOL can be tolled by statutory duty, equitable estoppel, or equitable tolling. The majority explains that there’s no statutory duty here. There’s a rule, yes, but no statute. Furthermore equitable estoppel or tolling require some misleading on the other side’s part, generally. So, to make a long story short, the commissioner’s rule is beyond the scope of her powers and doesn’t toll the SOL. “The commissioner has no power to create a tolling provision by rule if it is inconsistent with the statute.”
But that doesn’t end it for the majority. Nope. Now we gotta talk about laches. Laches is a fancy legal way of saying if you don’t do anything about something for too long it’s gonna stand. It’s applied when delay “works disadvantage to another.” So the elements of laches can succinctly be described as delay and disadvantage.
The SCOV majority finds both those elements satisfied here. There’s a fourteen-year delay and then there’s the 12% interest, so the delay works “a unique kind of prejudice to the employer.” The majority concludes that though the rule was in effect and would apply, Mr. Smiley’s claim is barred by the SOL or alternatively laches, and affirms the commissioner’s decision.
Justice Robinson concurs and dissents, noting “at the outset that this conversation necessarily takes place in something of a time warp.” Justice Robinson notes that under current law, so long as a claim itself is timely filed, subsequent claims for benefits are not time-barred by the SOL. She points this out “not because the majority’s focus on pre-2004 law is inappropriate; it is not. Claimant here was injured in 1996.” The reason is that workers’ compensation claims really are open-ended and that it’s not unusual to file a claim for benefits years after an initial injury. “This is one of the most striking features distinguishing workers’ compensation from its tort-law cousin.”
The focus of Justice Robinson’s dissent really is that “the majority’s opinion is a limited response to a case that arose in the context of a since-abandoned statutory scheme.” Justice Robinson emphasizes that the majority’s there-was-an-end-medical-result-because-the-doctor-said-these-things-usually-resolve-within-a-year analysis is a bit weak. The burden is usually on the employer to demonstrate end medical result and the majority is being a wee bit presumptuous here. A “successful return to work” ain’t the same thing as “end medical result.”
When Justice Robinson looks at the case, she notes that an attempt to discontinue benefits based on “end medical result” would’ve failed. In that light, while Mr. Smiley probably reached end medical result at some point along the way, the SCOV is just guessin’ when that was—there’s nothing in the record to pin down a date.
Justice Robinson clarifies that she’s not arguing that employer’s failure to establish end medical result “tolled” the SOL; she’s “arguing that the clock never started running in the first place, because the power and the responsibility to establish a condition precedent to the ticking of the clock—claimant’s medical end status—fell to employer.” Justice Robinson agrees with the first part of the majority’s opinion—that the rule applies—but not the second part. She doesn’t think the claim is time-barred at all.
When you consider the original purpose of workers’ compensation—to keep businesses and employers moving along by taking the guesswork out of employer-based torts and the like in the spirit of compromise—it’d seem to me that there’s a compromise here too. After all, the idea is to compensate workers without exposing employers to giant tort judgments. Maybe use laches to bump out the interest or something? Ah, but what do I know? I just write the summaries.