GREGORY VEATCH, Employee, v. CITY OF DULUTH/SPIRIT MOUNTAIN RECREATION AREA AUTH., SELF-INSURED, Employer/Appellant, and POLINSKY MED. REHAB. CTR. and PREFERRED ONE CMTY. HEALTH PLAN, Intervenors.

 

WORKERS= COMPENSATION COURT OF APPEALS

NOVEMBER 10, 2003

 

HEADNOTES

 

EXCLUSIONS FROM COVERAGE - INTOXICATION; STATUTES CONSTRUED - MINN. STAT. ' 176.021, SUBD. 1; ARISING OUT OF & IN THE COURSE OF - SUBSTANTIAL EVIDENCE.  Where the employer essentially argued only that, given the employee=s positive post-injury drug test, the employee could have been engaging in the use marijuana on the job and may have been experiencing its physical effects, the compensation judge=s conclusion that the employer did not prove that the employee was intoxicated at the time of his work injury and that his intoxication was the proximate cause of his injury was not clearly erroneous and unsupported by substantial evidence.

 

ARISING OUT OF & IN THE COURSE OF - SUBSTANTIAL EVIDENCE.  Where the employer failed to introduce any evidence that the employee was prohibited from seeking materials for his work on a different part of the employer=s premises, and where the employer failed to introduce its drug and alcohol policy into evidence, the compensation judge=s refusal to find that the employee, who tested positive for marijuana following his work injury, was engaged in a prohibited act at the time of his work injury was not clearly erroneous and unsupported by substantial evidence.

 

PENALTIES - SUBSTANTIAL EVIDENCE; STATUTES CONSTRUED - MINN. STAT. ' 176.225, SUBD. 1.  Where the employer presented no credible evidence to support either of its defensesBthat the employee was intoxicated at the time of his work injury and that the employee was engaged in a prohibited act at the time of that injuryBthe compensation judge=s awarding of a penalty against the employer under Minn. Stat. ' 176..225, subd. 1, on grounds that its denial of primary liability was frivolous, was not clearly erroneous and unsupported by substantial evidence.

 

Affirmed.

 

Determined by Pederson, J., Wilson, J., and Johnson, J.

Compensation Judge:  Donald C. Erickson.

 

Attorneys:  Cynthia Albright, Assistant City Attorney, City of Duluth, Duluth, MN, appeared for Appellant. Eric W. Beyer, Falsani, Balmer, Peterson & Quinn, Duluth, MN, appeared for Respondent.

 

OPINION

 

WILLIAM R. PEDERSON, Judge

 

The self-insured employer appeals from the compensation judge=s determination that the employee=s claimed work-related injury arose out of and in the course and scope of his employment and from the judge=s award of penalties under Minn. Stat. ' 176.225, subd. 1(a).  We affirm.

 

BACKGROUND

 

On August 28, 2001, Gregory Veatch [the employee] sustained an injury to his right knee while he was employed by Spirit Mountain Recreation Area Authority [the employer].  Shortly after the injury, the employee was taken to the Denfeld Medical Center for evaluation and an x-ray.  While there, the employee provided a urine sample.  Analysis of the urine sample revealed a concentration of 896 nanograms[1] of a marijuana metabolite per milliliter of urine, and, based in part on this positive test result, the self-insured employer denied liability for workers= compensation benefits.[2]

 

On December 3, 2001, the employee filed a claim petition, alleging entitlement to workers= compensation benefits due to meniscus and multiple ligament damage in his right knee arising out of and in the course of his employment on August 28, 2001.  In an answer filed December 18, 2001, the employer denied liability and affirmatively alleged two defenses:  (1) the employee was not engaged in work activities at the direction of the employer at the time of his injury and (2) the employee=s intoxication was the proximate cause of his injury.

 

On September 25, 2002, counsel for the employer referred the employee=s medical records and laboratory results to Dr. Donald Starzinski for a record review and opinions.  On October 10, 2002, Dr. Starzinski, a neurologist with a doctoral degree in psychopharmacology, offered several opinions regarding marijuana intoxication and the test administered to the employee.  He concluded that 896 nanograms per milliliter [ng/ml] constituted a definite presence of marijuana in the sample.  He also stated, however, that it was not possible to draw any conclusions about the recency of marijuana intake based on this number.  He stated:

 

[T]he metabolite of marijuana, carboxy-THC does stay in the body for a long period of time and can indicate use of marijuana for several days to up to a few weeks prior to obtaining such a value.  Hence, this positive value for marijuana could indicate use of marijuana for hours to a few weeks prior to the obtaining of this specimen.

 

As to whether the employee was Aintoxicated@ at the time of the test, Dr. Starzinski stated that such a toxicology screen Adoes not help in determining whether intoxication is present or not.@  The doctor indicated that evidence of intoxication would be better determined by Aobservations of witnesses regarding any alteration in [the employee=s] mental status, including his cognitive abilities, behaviors and balance.@

 

A hearing on the employee=s claim was held before a compensation judge on October 16, 2002.  The primary dispute at hearing was the issue of primary liability.  The employer contended that intoxication was the proximate cause of the employee=s injury and that the employer had no liability for benefits under Minn. Stat. ' 176.021, subd. 1.  The employer further contended that the employee=s injury resulted from his performance of a prohibited act.  The employee contended that the employer=s defenses were frivolous, and he asserted a claim for penalties under Minn. Stat. ' 176.225, subd. 1(a).  Evidence offered at trial included the employee=s medical records, Dr. Starzinski=s report, and testimony from the employee, his co-worker Todd Pfeffer, and various officers of the employer, including its lift operations supervisor, its human resources director, its director of operations, its employee benefits administrator, and its executive director.

 

The employee testified that on August 28, 2001, he and Mr. Pfeffer were working on Hill #11, inspecting and repairing the electrical system required to operate the snow-making machines.  The system=s electrical outlets are attached to steel pedestals, standing approximately three to four feet high.  White plastic barrels typically cover the electrical pedestals so that they can be identified during the ski season.  The employee testified that he was working on an outlet that did not have a cover.  He testified that, following an afternoon coffee break, he asked another employee, Tom Gall, for a ride to the pole building area where barrels are stored.  He acknowledged that he did not tell anyone that he was going to look for a barrel.  He stated that, while he was in a wooded area near the pole building searching for a barrel, he saw operations director Mike Carlson near the building as well.  He stated that, as Mr. Carlson was leaving the location on his ATV, he, the employee, ran through the woods to call to Mr. Carlson to request a ride back to his work area and that, as he ran, his right knee buckled.  Mr. Carlson eventually testified that he was unaware of the employee=s presence near the pole building, and neither party offered any witness to the employee=s injury.  After the injury, the employee was evidently found sitting on the side of the maintenance road by lift supervisor Gretchen Ransom, who evidently called Mr. Carlson for assistance, who in turn enlisted Mr. Pfeffer to drive the employee to the Denfeld Medical Center.  Human resources director Denise Valure evidently met the employee at the doctor=s office and obtained his consent to the drug test.

 

The employee testified that he had not consumed marijuana on the date of his injury but had done so on the previous Saturday.  He testified that he was feeling no effects of the drug use at the time of his injury.  None of the witnesses who encountered the employee around the time of the injury, Ms. Ransom, Mr. Carlson, Mr. Pfeffer, or Ms. Valure, testified that they observed anything about the employee that caused them to believe that he was intoxicated or in a physically abnormal state due to drug use.  Both the employee and Mr. Pfeffer testified that they were unaware of any specific prohibition limiting the employee=s authority to be in the pole building area on the date of injury.  Both indicated that they believed that the outlets needed to be covered and that barrels for covering the outlets were to be found near the pole building.  Both Mr. Carlson and executive director Frederick Certano testified that covering the outlets in August was unnecessary, but neither testified to any specific prohibition of that activity.

 

In a Findings and Order issued January 24, 2003, the compensation judge determined that the employee=s right knee injury arose out of and in the course of the employee=s employment and that the employer had failed to produce evidence of intoxication or prohibited act.  Concluding that the employer=s defenses were Anot based on any reasonable grounds,@ the judge also awarded a 25% penalty under Minn. Stat. ' 176.225, subd. 1(a).  The employer appeals.

 

STANDARD OF REVIEW

 

In reviewing cases on appeal, the Workers= Compensation Court of Appeals must determine whether Athe findings of fact and order [are] clearly erroneous and unsupported by substantial evidence in view of the entire record as submitted.@  Minn. Stat. ' 176.421, subd. 1 (1992).  Substantial evidence supports the findings if, in the context of the entire record, Athey are supported by evidence that a reasonable mind might accept as adequate.@  Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984).  Where evidence conflicts or more than one inference may reasonably be drawn from the evidence, the findings are to be affirmed.  Id., at 60, 37 W.C.D. at 240.  Similarly, A[f]actfindings are clearly erroneous only if the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed.@  Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975).  Findings of fact should not be disturbed, even though the reviewing court might disagree with them, Aunless they are clearly erroneous in the sense that they are manifestly contrary to the weight of the evidence or not reasonably supported by the evidence as a whole.@  Id.

 

DECISION

 

As a general rule, the negligent or intentional misconduct of an employee is not a defense to a claim for workers= compensation benefits.  Cf. Boryca v. Marvin Lumber & Cedar, 487 N.W.2d 876, 47 W.C.D. 136 (Minn. 1992); Marsolek v. George Hormel & Co., 438 N.W.2d 922, 41 W.C.D. 964 (Minn. 1989).  The basic test of coverage is the relationship of the injury to the employment--that is, whether the injury is one Aarising out of and in the course of employment@  Minn. Stat. ' 176.011, subd. 16.  This question is generally decided without reference to fault or negligence of either party.  Cf. Minn. Stat. ' 176.021, subd. 1 (AEvery employer is liable for compensation according to the provisions of this chapter and is liable to pay compensation in every case of personal injury or death of an employee arising out of and in the course of employment without regard to the question of negligence.@).  There are, however, certain statutory and common law exceptions to the general rule.  Minn. Stat. ' 176.021, subd. 1, provides that, if Athe intoxication of the employee is a proximate cause of the injury, then the employer is not liable for compensation.@  A common law exception to the general rule is the so-called Aprohibited act@ doctrine.  In Bartley v. C-H Riding Stables, Inc., the supreme court stated:

 

[W]here an employer expressly prohibits the doing of a certain specific act, the disregard of which is not reasonably foreseeable to the employer, a violation thereof takes the employee outside the scope of his employment and injuries resulting therefrom are not compensable even though the act might be considered to be in furtherance of the employer=s business.

 

Bartley v. C-H Riding Stables, Inc., 296 Minn. 115, 120, 206 N.W.2d 660, 663, 26 W.C.D. 675, 679-80 (1973).  A denial of benefits under the prohibited act doctrine requires that there be a causal relationship between the prohibited conduct and the injury.  Yacoub v. American Nat=l Ins. Co, 59 W.C.D. 104, 108 (W.C.C.A. 1999).

 

1.  Intoxication

 

The employer denied liability for the employee=s injury based in part on the alleged intoxication of the employee.  The employer has the burden of proving both that the employee was intoxicated and that the intoxication was the proximate cause of the injury.  Thake v. Backhauls, Inc., 345 N.W.2d 745, 748, 36 W.C.D. 565, 568 (Minn. 1984).  This burden of proof may be met by any competent evidence, either direct or circumstantial.  Id.  Whether intoxication of an employee is the proximate cause of an employee=s injury is a question of fact for the compensation judge, and this court may reverse the judge=s findings on the issue only if those findings are clearly erroneous and unsupported by substantial evidence in the record as a whole.  See Manthey v. Charles E. Bernick, Inc., 306 N.W.2d 544, 545, 33 W.C.D. 415, 416 (Minn. 1981); Minn. Stat. ' 176.421, subd. 1(3).

 

On appeal, the employer does not argue that the compensation judge=s findings are clearly erroneous and unsupported by substantial evidence, but, rather, that the judge should have reached a different conclusion.  Relying heavily upon the opinions of its expert, Dr. Starzinski, the employer argues that the Apeak effect@ from inhalation of marijuana occurs ten to thirty minutes after inhalation, with the typical effects lasting up to three hours.  In the present case, Dr. Starzinski opined that an affective amount of marijuana was definitely present in the employee=s body at the time of the injury and that, because Amarijuana can have very substantial cognitive, behavioral and physical effects, [it] can contribute to a trip and fall-type injury as [the employee] sustained.@  The employer further argues that, based on the drug level revealed in the employee=s test result, which Dr. Starzinski referred to as Asignificant exposure,@ the employee could have been engaging in use of drugs immediately preceding the accident.  If so, it contends, the employee may have been experiencing what Dr. Starzinski described as the Apeak effect.@  Moreover, the employer argues, when this evidence is considered in conjunction with certain other evidence--the fact that no one, except co-worker Tom Gall (who admitted to the director of operations, Mr. Carlson, that he had been Ahiding in the woods@), saw the employee for two hours preceding the accident; Mr. Carlson=s testimony that neither the employee nor Mr. Gall offered a reasonable explanation for his being at the pole building and away from his assigned work area; and the fact that the employer had received anonymous reports of drug use by employees on duty--the record as a whole supports its position that the employee was intoxicated.  We are not persuaded.

 

The employee testified that he had not consumed marijuana within at least a few days prior to the work injury.  He claimed that he was feeling absolutely normal, with no effect from drug use, on the day of his injury.  Even the independent examiner, Dr. Starzinski, stated that no conclusions as to intoxication could be drawn from the drug test, which merely indicated the presence of a certain amount of marijuana was in the employee=s system.  As the judge noted in his AOverview of Decision,@Athe employer had every opportunity to closely observe the employee after the injury, yet no witness was able to testify that the employee appeared intoxicated.@  AThe employer failed to provide any observations of witnesses of an alteration of the employee=s mental state - despite the opportunity of multiple witnesses to observe the employee.@

 

The employer essentially argues that, given the employee=s positive test result, the employee could have been engaging in the use of drugs on the job and may have been experiencing its physical effects.  Such evidence falls woefully short of the Acompetent evidence@ referenced to in Thake.  While the employer may have had grounds to view the employee=s injury with suspicion, the record simply does not establish that the employee was intoxicated at the time of his injury, much less that intoxication was the proximate cause of the injury.  The judge=s conclusion that the employer failed to prove an intoxication defense is therefore affirmed.  See Hengemuhle, 358 N.W.2d at 59, 37 W.C.D. at 239.

 

2.  Prohibited Act

 

The employer has asserted a prohibited act defense on two separate grounds.  It first contends that, on the date of injury, the employee had been directed to assist Todd Pfeffer in the inspection and repair of the electrical system on Hill #11.  He was not directed to leave the hill to look for barrels at the pole barn.  The employer concedes that, while the activity of searching for barrels to cover electrical posts would have been in furtherance of the employer=s business at a later point in the season, the employee had no reason to engage in such activity in August.  The employer argues that, because the employee violated the direction which he had been given on that workday and was not engaged in activities in furtherance of the employer=s interests at the time of the accident, the employee was injured while performing a prohibited act, and the injury is not compensable.  We are not persuaded.

 

At Finding 13, the compensation judge evidently accepted the employee=s testimony and that of Mr. Pfeffer, that employees are allowed a certain amount of autonomy in determining how a job is to be completed and that neither was aware of any prohibition against being in the area where the barrels were located.  This conclusion was not unreasonable.  The employee testified that he had been in this area looking for barrels on multiple occasions in the past and had, in fact, sometimes been instructed to look for barrels to cover the electrical outlets.  More importantly, as did the judge at Finding 14, we can identify no witness testifying that there was ever a prohibition, either expressed or implied, against the employee=s either being in the area where he was injured or looking for barrels to cover electrical outlets.

 

The employer=s allegation that the employee was engaged in a prohibited act by going to the pole barn area appears to us to be more directed toward the credibility of the employee=s accounting for his time than based on any credible evidence of any specific prohibition, and assessment of a witness=s credibility is the unique function of the trier of fact.  Brennan v. Joseph G. Brennan, M.D., 425 N.W.2d 837, 839-40, 41 W.C.D. 79, 82 (Minn. 1988).  Absent evidence of some prohibited conduct or transgression by the employee, it was not unreasonable for the compensation judge to decline to find that the employee was engaged in a prohibited act when he went from Hill #11 to the pole barn area purportedly in search of a barrel to cover an electrical outlet post.

 

The employer contends also that the employee was engaged in a prohibited act under the employer=s drug and alcohol policy, by virtue of the fact that he was found to have a positive result on the post-injury drug test.  Again, we are not persuaded.

 

We would note initially that it is unclear from the record whether the second theory of the employer under the prohibited act doctrine was actually litigated before the judge.  It appears that this argument was made by the employer for the first time in its post-trial proposed findings.  At any rate, we find little merit to the argument.  In order for compensation to be denied on a determination that there is a causal relationship between a prohibited conduct and an injury, the court must have evidence that the prohibition existed.  The employer asserts that the employee violated its workplace drug and alcohol policy, but that policy is not part of the record before us.  As with the employer=s first argument under this heading, regarding the employee=s presence in the pole barn area, we conclude that it was not unreasonable for the judge to decline to find that the employee was engaged in a prohibited act merely by virtue of his testing positive on the drug test.  Because it was not unreasonable on either basis, we affirm the compensation judge=s refusal to find that the employee was engaged in a prohibited act at the time of his work injury.  See Hengemuhle, 358 N.W.2d at 59, 37 W.C.D. at 239.

 

3.  Penalties

 

The compensation judge awarded penalties against the employer on grounds that its denial of primary liability based on intoxication and the prohibited act doctrine was frivolous.

 

Minn. Stat. ' 176.225, subd. 1, provides that a compensation judge shall:

 

award compensation, in addition to the total amount of compensation award, of up to 30 percent of that total amount where the employer or insurer has:

 

(a) instituted a proceeding or interposed a defense which does not present a real controversy but which is frivolous or for the purpose of delay. . . .

 

The employer contends it had a good faith basis for denying primary liability in this case and that the judge=s award of penalties is not supported by substantial evidence.  We disagree.

 

In Hines v. Kobiela, 308 Minn. 320, 241 N.W.2d 814, 28 W.C.D. 400 (1976), the supreme court held that a penalty under Minn. Stat. ' 176.225 may be imposed where the reason for the neglect and refusal to pay compensation is patently ill-founded and unwarranted.  A defense is frivolous when it is unsupported by any positive evidence.  Jackson v. Eveleth Mines, 49 W.C.D. 591 (W.C.C.A. 1993).  In this case, the employee denied that he was under the influence of drugs at work.  No witnesses were called to contradict the employee=s testimony or to offer observations that would raise any inference of intoxication.  Dr. Starzinski reported that no conclusions about the employee=s intoxication could be drawn from the positive drug test.  Without evidence of intoxication, the employer could not meet its burden of proof under the statute.  Similarly, the employer presented no evidence of any specific prohibition relating to the employee=s conduct, much less any evidence of a causal relationship between some transgression of such a prohibition and the injury at issue.

 

In this case, the employer presented no credible evidence to support either of its defenses.  While there is no requirement that an employer ultimately prevail in its defense in order to avoid the imposition of penalties, an employer must still present some credible evidence supportive of its position in order to avoid a penalty.  The judge in this case concluded that the employer=s alleged defenses were not based on any reasonable grounds, and that conclusion was not unreasonable.  Therefore, we affirm the judge=s award of a penalty.  See Hengemuhle, 358 N.W.2d at 59, 37 W.C.D. at 239.