SANCHEZ V. MEMORIAL GEN. HOSP., 1990-NMCA-095,
110 N.M. 683, 798 P.2d 1069 (Ct. App. 1990)
RICHARD SANCHEZ, Claimant-Appellant,
vs.
MEMORIAL GENERAL HOSPITAL, a self-insured entity,
Respondent-Appellee
COURT OF APPEALS OF NEW MEXICO
1990-NMCA-095, 110 N.M. 683, 798 P.2d 1069
Appeal from the New Mexico Department
of Labor Workers' Compensation Division; John W. Pope, Workers' Compensation
Judge.
Petition for Writ of Certiorari Denied
September 26, 1990
ANTHONY F. AVALLONE, LAW SYSTEMS OF LAS
CRUCES, P.A., Las Cruces, New Mexico, Attorneys for Claimant-Appellant.
DOUGLAS R. VADNAIS, TIM L. FIELDS, STUART
R. BUTZIER, MODRALL, SPERLING, ROEHL, HARRIS & SISK, P.A., Albuquerque, New
Mexico, Attorneys for Respondent-Appellee.
Thomas A. Donnelly, Judge. Pamela B.
Minzner, Judge, Benjamin Anthony Chavez, Judge, Concur.
{1} Claimant appeals from an
order of a workers' compensation judge (WCJ) dismissing claimant's workers'
compensation claim with prejudice. Claimant has raised four issues on appeal,
which we have consolidated and discuss as follows: (1) whether claimant's
misrepresentations on his employment application concerning his prior medical condition
and employment history provides a bar to his workers' compensation claim; and
(2) whether substantial evidence supports the workers' compensation judge's
decision to deny claimant compensation benefits. We affirm.
{2} In April 1978 claimant
applied for employment as a custodian with respondent Memorial General Hospital
(Hospital). In response to questions contained in the employment application,
claimant denied ever having received any benefits from workers' compensation
insurance or having any physical limitations which might affect his
{*685} ability to perform custodial work. The
employment application also directed that claimant list the names of his
previous four employers. Claimant's written response listed three previous
employers, but omitted any reference to having been previously employed for two
years by New Mexico State University (NMSU).
{3} In 1968 while employed
with NMSU, claimant suffered an injury to his lower back. After filing a
workers' compensation claim in district court, claimant settled with NMSU and
its compensation carrier for temporary total disability, medical and related
benefits. Several different physicians treated claimant for his back injury
incurred during his employment with NMSU.
{4} In 1978, claimant was
hired as a janitor in the housekeeping department of the Hospital and worked
without incident until September 12, 1987. While employed with the Hospital
claimant suffered work-related injuries to his lower back on September 12, 1987
and October 14, 1987. Claimant testified that while he was lifting several
laundry bags he experienced an onset of low back pain. He stayed home for a
week and stated that his back pain improved with bed rest. Claimant returned to
work, and three weeks later, while stacking laundry bags, he again suffered a
reoccurrence of lower back pain. For these injuries, claimant received
temporary and partial disability benefits from the Hospital.
{5} On June 8, 1988 claimant
filed a workers' compensation action against the Hospital. After a formal
hearing, the WCJ entered orders on August 24, 1989 and September 26, 1989,
incorporating findings and conclusions determining, among other things, that
claimant had sustained an injury in 1968 while working for an employer other
than the Hospital; that claimant had filed a workers' compensation complaint
based on his 1968 injury, receiving compensation benefits and a lump-sum
settlement totalling $9,114.44; that claimant knowingly and willfully made
false representations on his application for employment regarding his past
employment with NMSU; that until March 1989 claimant failed to reveal his past
work with NMSU; that the Hospital relied on claimant's false representations
contained in his employment application relating to his physical condition, and
that this reliance was a substantial factor in hiring him.
{6} The findings of the WCJ
also determined that claimant never fully recovered from his 1968 injury, and
that injury was causally connected to his false representations concerning his
physical condition, contained in the Hospital application; that because of his
false application of employment, claimant was barred from receiving
compensation benefits due to the 1987 incidents; that claimant was not entitled
to future medical expenses; that claimant owed the Hospital $5,246.17 for
compensation benefits paid by it to claimant as a result of his 1987 injuries;
and that no award should be made for claimant's attorneys' fees.
I. CLAIMANT'S APPLICATION FOR EMPLOYMENT
{7} Claimant argues that the
representations contained in his employment application should not bar his
claim for workers' compensation in the instant case, and that the Hospital
failed to establish each of the factors which authorize denial of recovery of a
workers' compensation claim based upon an alleged false representation in an
employment application.
{8} The courts in New Mexico
recognize the defense of false representation in an action for workers'
compensation.
See Gray v. J.P. (Bum) Gibbins, Inc., 75 N.M. 584,
408
P.2d 506 (1965);
Jaynes v. Wal-Mart Store No. 824, 107 N.M. 648, 649,
763 P.2d 82, 83 (Ct. App. 1988);
Martinez v. Driver Mechenbier, Inc., 90
N.M. 282,
562 P.2d 843 (Ct. App. 1977);
see generally 1C A. Larson,
The
Law of Workmen's Compensation, § 47.53 (1990). As observed in
Jaynes,
a false representation defense to a workers' compensation claim requires that:
(1) the employee must have knowingly and wilfully made a
false representation as to his physical condition; (2) the employer must have
relied upon the false representation and this reliance must have been a
substantial factor in the hiring; {*686} and
(3) there must have been a causal connection between the false representation
and the injury.
Id. at 649, 763 P.2d at 83. See also Martinez v.
Driver Mechenbier, Inc.; Jewison v. Frerichs Constr., 434 N.W.2d 259 (Minn.
1989); 1C A. Larson, supra, at 8-394; cf. Gray v. J.P. (Bum) Gibbins,
Inc. (court found that worker did not knowingly, intentionally or
fraudulently misrepresent any material fact and that employer did not rely on
questionnaire as a condition of employment). The burden is on the employer to
prove each of the three elements. See Jaynes v. Wal-Mart Store No. 824.
When the three elements as cited in Jaynes have been proved, a false
representation as to physical condition or health made by an employee in
procuring employment will preclude the awarding of workers' compensation
benefits for an otherwise compensable injury. Jaynes v. Wal-Mart Store No.
824; see also Jewison v. Frerichs Constr.
{9} Claimant challenges the
WCJ's findings and conclusions that claimant made a knowing, willful false
representation as to his physical condition on his application with the
Hospital, asserting that the employment application failed to inquire as to
applicant's physical condition. Thus, the alleged misrepresentation was not
material. We disagree. Whether a person has acted knowingly or willfully is a
fact issue rarely susceptible of proof by direct evidence.
Tallman v. ABF
(Arkansas Best Freight), 108 N.M. 124,
767 P.2d 363 (Ct. App. 1988). Where
it is material to his employment, an employee's withholding of the truth as to
his physical condition or health may constitute a false representation.
McDaniel
v. Colonial Mechanical Corp., 3 Va. App. 408, 350 S.E.2d 225 (1986);
see
Jaynes v. Wal-Mart Store No. 824; cf. Gray v. J.P. (Bum) Gibbins, Inc.
(where worker was confused as to meaning of question, there was reason for
fact-finder to determine that worker had not knowingly, intentionally or
fraudulently made any misrepresentation of any material fact in answering
question);
Krauzer v. Farmland Indus., Inc., 6 Kan. App. 2d 107, 626
P.2d 1223 (1981) (actual misrepresentation not knowingly false where claimant's
educational background was an eighth grade education; health history forms were
complex and lengthy; and lack of severity of condition and employment physicals
tended to negate knowing misrepresentation). Failure to disclose prior receipt
of workers' compensation benefits, where such information is sought as part of
an employment application, constitutes a knowing and willful false
representation.
Jewison v. Frerichs Constr.
{10} The standard of
appellate review in an appeal from the decision of a workers' compensation
judge is that the reviewing court will apply the whole record review and will
take into account all evidence, favorable and unfavorable, in the light most
favorable to the agency's decision.
Tallman v. ABF (Arkansas Best Freight).
The reviewing court will not substitute its judgment for that of the Workers' Compensation
Division, and the agency's findings will not be disturbed so long as they are
supported by substantial evidence on the record as a whole.
Id.
{11} At the hearing before
the WCJ, evidence was presented that claimant had sustained a 1968 back injury
while employed by NMSU, that he had received workers' compensation benefits as
a result of such injury, and subsequently settled the claim. The Hospital also
presented evidence that claimant failed to reveal this prior injury and the
fact that he had received workers' compensation benefits for the injury. There
was testimony from four physicians, two of whom were claimant's experts, that
in treating claimant for his 1987 injuries, he did not disclose his prior back
injury, despite questioning concerning any prior history of back claims or
injury. The record also indicates that on his April 1978 application for
employment, claimant responded, "no" to the question, "Have you
ever received any benefits from workman's compensation insurance?"
Although claimant testified that he had not understood this question on the
application, claimant stated he had completed the ninth grade, and his own
vocational evaluator stated that claimant was proficient in reading. In
{*687} addition, claimant answered
"no" to the question, "If you are employed, do you have any
limitations which must be considered for the position in which you have
applied?"
{12} Evidence presented below
indicates that claimant, when asked to list his four previous employers,
omitted any reference to NMSU. Despite the questions contained on the
employment application and oral questions later posed to claimant by Hospital
personnel representatives, the record indicated that claimant did not disclose
the fact of his 1968 back injury to the Hospital and also failed to disclose
such fact in his response to the Hospital's initial interrogatories propounded
to him.
{13} At the close of the
hearing, the WCJ questioned claimant's counsel about the omission of NMSU as a
prior employer in light of claimant's two years employment with that
institution. Claimant's counsel acknowledged that claimant had no excuse for
this omission, and in addition, could not claim loss of memory for such an
omission. The WCJ entered findings and conclusions that claimant failed to
state on his employment application that he had previously worked for NMSU,
despite working there for two years; and that claimant's "failure to
complete the question on previous employment was for the purpose of avoiding
investigation of his physical background and discovery of earlier back
problems." Claimant does not specifically contest these determinations on
appeal. Findings not directly attacked are facts upon which the case rests.
Lerma
v. Romero, 87 N.M. 3,
528 P.2d 647 (1974);
see Plumbers Specialty Supply
Co. v. Enterprise Prods. Co., 96 N.M. 517,
632 P.2d 752 (Ct. App. 1981).
{14} In addition, the WCJ
entered findings that a 1968 medical report indicated that claimant injured his
back while lifting a barrel of books; that claimant had filed a workers'
compensation claim based on the 1968 disability; that claimant had not stated
on his employment application with the Hospital that he had received benefits
from workers' compensation insurance and that he had stated that he had no
limitations which should be considered for the position for which he applied,
despite the fact that he still suffered limitations from his 1968 injury; that
he has the ability to read and understand what he reads; that his vocational
evaluator established his proficiency in reading, math, addition, subtraction,
ability to make change, and use an adding machine for inventory tasks; and that
until March 1989, claimant failed to reveal his past work with NMSU.
{15} Did respondent rely on
claimant's false representation, and was this reliance a substantial factor in
hiring claimant for the housekeeping position? Whether an employer relied upon
the representations of an applicant is a question of fact.
Rowland v.
Carriers Ins. Co., 738 S.W.2d 183 (Tenn. 1987). The element of reliance is
established where the employee would not have been hired without the deception
or misrepresentation.
Id.
{16} The Hospital personnel
director testified that at the time of claimant's employment by the Hospital,
the Hospital had relied upon claimant's responses to questions in the
employment application concerning whether he had ever previously received
workers' compensation benefits, had any work limitations, and claimant's past
work history in determining whether to hire claimant for the position in
question. The personnel director further testified that an applicant with a
history of back injury would not be a candidate for a custodial position unless
the Hospital first received a physician's work release indicating the candidate
could safely perform such duties. The WCJ found that the Hospital relied on the
false representation made on claimant's application regarding his physical
condition, and that this reliance was a substantial factor in hiring claimant.
The WCJ also found that no doctor had given claimant a medical release to work
following his 1968 injury.
While an employer takes the employee as he finds him, an
employer is not required to assume the risk of aggravating a pre-existing
injury unless either some notice of the condition is given by the applicant to
enable the employer to make an {*688} informed
hiring decision, or the employer does not rely upon the employee's representations.
Beasley v. United States Fidelity & Guar. Co., 699
S.W.2d 143, 145 (Tenn. 1985).
{18} Claimant also disputes
the existence of substantial evidence concerning the third factor enumerated in
Jaynes v. Wal-Mart Store No. 824. Claimant argues that there was no
causal connection between claimant's false representation and his September and
October 1987 injuries. The employer bears the burden of proof to show that
there was a causal connection between claimant's false representation and his
work-related injury.
See id.; Givens v. Steel Structures, Inc., 279 S.C.
12, 301 S.E.2d 545 (1983) (record sustained finding of causal connection
between two injuries where claimant testified that same part of back had been
point of both injuries and expert medical testimony indicated claimant's
condition was one of disc degeneration reflecting cumulative effect of
successive injuries);
cf. Sanders v. Alan White Co. 10 Ark. App. 322,
663 S.W.2d 939 (1984) (substantial evidence did not support causal connection between
misrepresentation and injuries in absence of testimony, medical or otherwise,
that there was such causal connection).
{19} In order to satisfy the
three-pronged test of
Jaynes, the Hospital was not required to
demonstrate that claimant's physical condition was the natural and direct
result of his undisclosed 1968 injury. The Hospital was required to establish
that the prior undisclosed injury placed claimant at an "increased
risk" of suffering his claimed subsequent injury.
Chavez v.
Lectrosonics, Inc., 93 N.M. 495,
601 P.2d 728 (Ct. App. 1979) (Sutin, J.);
see
also United States Fidelity & Guar. Co. v. Edwards, 764 S.W.2d 533
(Tenn. 1989);
cf. Jewison v. Frerichs Constr. (court found substantial
evidence to support a finding that previous injuries were not cause of current
injury, reasoning that the preexisting condition did not contribute to the
occurrence of the accident in question).
{20} The WCJ's findings
determined that claimant had never fully recovered from his 1968 injury, and
that his current physical condition "is a natural and direct result of and
causally related" to that injury. The WCJ found that medical expert
testimony established the causal connection between claimant's 1968 injury and
his current physical condition.
{21} Claimant argues that the
defense of false application for employment asserted by the Hospital is
contrary to the Workers' Compensation Act and that such a defense amounts to
invalid judicial legislation. The Hospital maintains that claimant is precluded
from raising a constitutional issue for the first time on appeal. Since an
administrative agency does not have the authority to determine the
constitutionality of a statutory enactment, raising such an issue before the
WCJ is not required in order to preserve the issue for appeal because the WCJ
has no authority to decide constitutional claims.
Montez v. J & B
Radiator, Inc., 108 N.M. 752,
779 P.2d 129 (Ct. App. 1989).
{22} The affirmative defense
of a false representation in an employment application, however, was expressly
recognized by our supreme court in
Gray v. J.P. (Bum) Gibbins, Inc. and
found to be a valid defense consistent with the provisions of the Workers'
Compensation Act and public policy. Nothing in the subsequent amendments to the
Act has modified this holding. Any other result would be inconsistent with the
purposes and objectives of such legislation.
See, e.g., Gough v. Famariss
Oil & Ref. Co., 83 N.M. 710,
496 P.2d 1106 (Ct. App. 1972). We find
claimant's arguments without merit.
{23} Examination of the
history of the defense of fraudulent application for employment in New Mexico
indicates that the defense is based upon equitable principles and is consistent
with other applicable provisions of this state's Workers' Compensation Act. As
observed by our supreme court in
Anaya v. City of Santa Fe, 80 N.M. 54,
451 P.2d 303 (1969):
Even though our Workmen's Compensation Act does not
specifically provide for equitable defenses, nevertheless, [the Supreme Court]
has considered equitable {*689} claims
and defenses in workmen's compensation proceedings. Tocci v. Albuquerque
& Cerrillos Coal Co., 45 N.M. 133, 112 P.2d 515 (1941) -- fraud or
mutual mistake; Hudson v. Herschback Drilling Co., 46 N.M. 330, 128 P.2d
1044 (1942) -- incapacity to contract; Lance v. New Mexico Military
Institute, 70 N.M. 158, 371 P.2d 995 (1962) -- estoppel; Winter v.
Roberson Construction Co, 70 N.M. 187, 372 P.2d 381, 96 A.L.R.2d 933 (1962)
-- question of whether plaintiff was estopped; Herrera v. C & R Paving
Co., 73 N.M. 237, 387 P.2d 339 (1963) -- fraud and misconduct; Durham v.
Gulf Interstate Engineering Co., 74 N.M. 277, 393 P.2d 15 (1964) -- fraud
or other inequitable conduct; Thomas v. Barber's Super Markets, Inc., 74
N.M. 720, 398 P.2d 51 (1964) -- fraud, undue influence, misrepresentation or
coercion; Gray v. J. P. (Bum) Gibbins, Inc., 75 N.M. 584, 408 P.2d 506
(1965) -- fraud. These cases are cited to show that equitable considerations
apply to workmen's compensation claims and defenses and may be applied to the
instant case.
Id. at 56, 451 P.2d at 305.
{24} Claimant argues that
because the fraudulent employment application is not expressly included in the
Workers' Compensation Act, the legislature did not intend to permit such
defense. We disagree. The defense is equitable in nature, and nothing in the
Workers' Compensation Act evidences a legislative intent to bar the equitable
defense of fraud or estoppel.
II. SUFFICIENCY OF EVIDENCE
{25} Claimant raises a number
of challenges as to the sufficiency of the evidence to support the order of the
WCJ dismissing his workers' compensation claim based upon a finding of willful
misrepresentation.
{26} Claimant asserts that
the evidence was insufficient to support the finding that he made a knowing and
false representation to secure employment with the Hospital. Our review of the
record indicates the existence of substantial evidence to support the findings
of the WCJ on this issue. Findings Nos. 22, 24 and 25 adopted by the WCJ found
that claimant's omission of his prior employment with NMSU and the fact of his
1968 injury was made knowingly and willfully and constituted a false
representation. Claimant has not challenged these findings on appeal. Moreover,
the record indicates that after suffering his 1987 injuries he failed to inform
a Hospital claims officer concerning his prior employment with NMSU and his
1968 injury. Claimant also failed to disclose this information in his initial
answers to interrogatories and in his deposition.
{27} The WCJ also found that
on numerous occasions claimant "concealed his prior Workers' Compensation
Complaint and receipt of benefits," and that the Hospital relied "on
[such] false representations... and this reliance was a substantial factor in
hiring [claimant]." These findings are not specifically challenged on
appeal and thus are accepted as true.
See SCRA 1986, 12-213(A)(3);
State
ex rel. Thornton v. Hesselden Constr. Co., 80 N.M. 121,
452 P.2d 190 (1969)
(generalized attack on findings is insufficient);
see also Olguin v.
Manning, 104 N.M. 791,
727 P.2d 556 (Ct. App. 1986).
{28} The record also
indicates that claimant answered "no" to the question on the
application which inquired whether he had ever "received any benefits from
Workman's Compensation insurance." As shown by the exhibits introduced at
the formal workers' compensation hearing, claimant in fact had previously
received weekly compensation benefits for over 106 weeks following his 1968
injury. Additionally, he received a lump-sum settlement for that injury. On
appeal, we review the whole record to determine whether there is substantial
evidence to support the findings of the WCJ.
Tallman v. ABF (Arkansas Best
Freight). A review of the evidence amply supports the findings and
conclusions of the WCJ.
{29} Claimant has also
challenged the sufficiency of the evidence to support a finding indicating the
existence of a causal connection between his alleged false representations and
his 1986 injuries. In urging this point, claimant has not directly challenged
{*690} the WCJ's Findings Nos. 16 and 17.
These findings were:
16. Claimant... never fully recovered from his injury and his
current physical condition is a natural and direct result of and causally
related to his 1968 injury.
17. Dr. Diven's medical report of June 07, 1989 establishes
the causal connection between the 1968 injury and [claimant's] current physical
condition. Dr. Diven states "[claimant's] complaints, physical
examination, physical limitations, and diagnostic studies today demonstrate
back problems which would be the normal, and unfortunately, natural, expected
results of 20 years added to his previous back problems and injury.
{30} A letter from Dr. Diven
to the Hospital's attorney, dated June 7, 1989, was introduced into evidence.
Dr. Diven stated,
The matter of [claimant's] previous impairment is an
important one....
... I think certainly, the injury and the problems that were
demonstrated in 1968 would make him a higher risk candidate for future back
pain and recurrent injury, but most of his life is a series of small injuries
to a back like [claimant's] and is not surprising that he has pain at the
present time.
{31} Other evidence contained
in the record indicates that claimant's 1987 back injury was in the same
location as his 1968 injury. The record also indicates that following the 1968
injury, claimant was not given a release to return to work. Dr. Howard M. Lee,
a surgeon called by claimant, indicated that patients who have sustained a
prior severe back injury are statistically at an increased risk of suffering
further degenerative back changes.
{32} It would serve no useful
purpose to further detail the evidence presented at trial bearing upon this
contention. It is sufficient to state that the record, including the testimony
of Dr. Diven, amply supports the findings adopted below and the existence of a
causal connection between the 1968 and 1986 back injuries.
{33} In addition, claimant's
challenge concerning the WCJ's failure to adopt claimant's proposed findings is
without merit. The refusal of a requested finding has the legal effect of a
finding against the party who submitted the request.
Kincaid v. WEK Drilling
Co., 109 N.M. 480,
786 P.2d 1214 (Ct. App. 1989).
{34} Finally, claimant argues
that the extended passage of time between his 1968 injury and the 1986 back
injury should preclude the Hospital's use of the defense of false employment
application, and the employer should be presumed to rely upon his interim
satisfactory job performance. For this assertion, claimant relies on
Young
v. Morris, 475 S.W.2d 505 (Ky. 1971). We find
Young factually
distinguishable from the present case. In
Young, the court interpreted
the applicability of a specific statutory provision and sustained the Board's
determination that the worker was not barred from recovery. The compensation
board in
Young had dismissed the worker's prior claim, finding he did
not have the alleged disability. When worker applied for subsequent employment,
although failing to reveal the prior claim, worker did indicate he had received
a medical test with an inconclusive result. We do not find the analysis in
Young
applies to claimant's contention. In
Young, the court reasoned that the
answers to the questions became less relevant as time passed. However, the
statute in question did not require evidence of causal connection, and we do
not understand
Young to have held as a matter of law that the passage of
time requires a finding of no causal connection. Claimant's original fraudulent
application for employment was causally related to his subsequent injury.
Where, as here, the latter injury is shown to have been related to the original
disability, claimant's argument is not persuasive.
{35} We affirm the ruling of
the WCJ.