June 20, 2024
by Hannah Teig

Oregon Court of Appeals Upholds Nava Rule

In Nava v. SAIF, 333 Or App 196 (2024), claimant sought judicial review of the Board’s denial of penalty and attorney fees under ORS 656.262(11)(a) for unreasonable delay in payment of compensation.

By way of background, claimant was compensably injured in November 2017 and the claim was accepted for left knee sprain and chest wall contusion. Claimant then underwent a meniscectomy for complex, degenerative lateral meniscus tear which was paid for by SAIF. SAIF eventually issued a Notice of Closure for the accepted conditions only and awarded no permanent impairment. Following a subsequent aggravation denial, claimant retained counsel and requested acceptance of a meniscus tear which SAIF accepted without investigation.

Claimant then filed a request for hearing alleging SAIF unreasonably delayed compensation for a meniscus tear by failing to modify its notice of acceptance despite receiving an IME report confirming the meniscus tear was related to the work injury. The Board interpreted ORS 656.262(6)(b)(F) to impose an affirmative claim processing obligation on the insurer to revise a claim acceptance when medical information indicates that a previously issued notice of acceptance should be modified. However, it concluded that SAIF did not unreasonably delay compensation because it had a legitimate doubt about this obligation. Therefore, it denied the penalty and attorney fees and claimant appealed.

On judicial review, the claimant contested the Board’s legitimate doubt finding, arguing that penalties and attorney fees should have been awarded for SAIF’s unreasonable claim processing. SAIF argued the Board misinterpreted the statute but was correct in denying penalties and fees.

The Court of Appeals upheld the Board’s interpretation of ORS 656.262(6)(b)(F) and agreed with its finding that SAIF had a legitimate doubt about its requirement to amend the denial in the absence of a new or omitted condition request because, at the time, the statute had never been clearly evaluated by the Court of Appeals and administrative case law would have reasonably understood to support SAIF’s interpretation of ORS 656.262(6)(b)(F). As such, it affirmed the denial of penalties and attorney fees for unreasonable claim processing.

Since the Board’s decision Luis Nava, 74 Van Natta 372 (2022), claim examiners have been on edge about when to modify a notice of acceptance and expand the scope of a claim when there is no expansion request from the claimant. Based on the Court of Appeal’s decision, we have a bit more guidance. Per the Court’s holding, ORS 656.262(6)(b)(F), requires an insurer to modify the notice of acceptance when it receives unrebutted medical or other information that is incompatible  with the existing notice of acceptance.” At the very least, it is safe to assume that when you receive an IME report that finds a condition compensable which has not been previously accepted, you have an affirmative obligation to modify the notice of acceptance to include said condition. Whether “other information” will have the same triggering effect remains to be seen but we can expect case law in the future addressing this.

In the meantime, if you have any questions about the Nava rule or scope of acceptance issues, please feel free to reach out to me at 503-595-6115 or .

Posted by Hannah Teig.