Date: 02-25-2015

Case Style: JRP Construction Enterprises, Inc. v. Department of Consumer Business Services

Case Number: A155258

Judge: Lagesen

Court: Oregon Court of Appealsl on appeal from the Department of Consumer and Business Services

Plaintiff's Attorney: Jerry Keene argued the cause for petitioner. With him
on the briefs was Oregon Workers’ Compensation Institute,
LLC.

Defendant's Attorney: Ed Harri argued the cause for respondents. With
him on the brief was Philip H. Garrow.

Description: Petitioner JRP Construction Enterprises, Inc.
(“insurer”)1 petitions for review of a final order2 of the Director
of the Department of Consumer and Business Services (the
director) in this workers’ compensation medical services dispute.
In the final order, the director dismissed as “moot” petitioner’s
request for “director review” under ORS 656.704(2)(a)
and OAR 436-001-0246 of the order of an administrative
law judge (ALJ) that found that insurer incorrectly denied
medical services to claimant, and awarded attorney fees to
claimant based on that determination. For the reasons that
follow, we reverse the final order and remand to the director
for reconsideration.
This dispute arose after claimant requested preauthorization
from insurer to obtain certain treatments for his
compensable injury. Insurer declined to grant preauthorization
based on its view that it was not required to provide
preauthorization, but that it was permitted to wait to process
claimant’s claim for medical services if and when claimant
obtained those services and submitted a claim for reimbursement.
Claimant sought review of insurer’s decision
not to grant preauthorization before the Medical Resolution
Team of the Workers’ Compensation Division. On review, the
medical reviewer found that insurer’s decision not to grant
preauthorization was a denial of medical services to which
claimant was entitled. The medical reviewer found further
that claimant was the prevailing party and awarded attorney
fees to claimant on that basis.
Insurer then requested a hearing on the matter
before an ALJ under ORS 656.704(2). Following the hearing,
the ALJ affirmed the decision of the medical reviewer,
finding that insurer had incorrectly denied medical services
to claimant. In so finding, the ALJ rejected insurer’s
argument that nothing in the applicable statutes or rules
required it to preauthorize the particular medical services
1 Petitioner is a self-insured employer.
2 After the director issued the final order, petitioner sought reconsideration
of it, a process which resulted in the issuance of an order on reconsideration that
affirmed the final order. Petitioner timely petitioned for review of both orders.
Because this procedural fact does not bear on our disposition of this judicialreview
proceeding, we refer to both orders as the “final order” for convenience.
374 JRP Construction Enterprises, Inc. v. DCBS
requested by claimant or precluded it from waiting to process
any claim for those medical services until after claimant
obtained them and submitted a claim for them. The ALJ
further determined that claimant, having established that
insurer denied a claim for medical services, was entitled
to additional attorney fees in connection with the hearing
before the ALJ.
Thereafter, insurer sought director review of the
ALJ’s decision under ORS 656.704(2)(a). Before the director,
insurer reiterated the arguments that it presented to
the ALJ: that it was under no legal obligation to preauthorize
the particular medical services requested by claimant,
and that its decision not to preauthorize the requested
medical services was not the equivalent of the denial of a
claim for medical services. Insurer requested the director
to reverse the ALJ’s order, including the award of attorney
fees; insurer argued that there would be no basis for
attorney fees if the director agreed that the denial of preauthorization
was not the equivalent of the denial of a claim
for medical services. While review was pending before the
director, claimant obtained the medical services underlying
the dispute and insurer paid for the expenses related to
those services. At that point, the director, sua sponte, issued
a final order dismissing the review proceeding. The order
states, in full:
“This is a dispute in which the employer refused to
pre-authorize an examination by a specific medical provider
and refused to provide travel expenses to that exam
prior to the travel. The parties now agree that the travel
has already occurred, the examination has been performed,
and the employer has paid all related expenses. The dispute
is therefore moot.
“IT IS HEREBY ORDERED This matter is dismissed.”
(Capitalization and boldface in original.) Insurer sought
reconsideration, arguing that a ruling in insurer’s favor
would eliminate claimant’s entitlement to attorney fees, and
require a reversal of that award, establishing that insurer’s
request for director review was not moot. The director denied
reconsideration and affirmed the prior order of dismissal,
explaining:
Cite as 269 Or App 372 (2015) 375
“I previously issued a Final Order dismissing this matter
on the grounds [that] the substantive dispute was moot
because the employer had already paid for the disputed
medical services at the time [that] the dispute came before
me for a final order. The employer requested reconsideration,
arguing [that] there were substantive issues that
remained to be decided.
“On further review, I find the Final Order was correct
and that the substantive issues are moot. Reconsideration
is denied and the Final Order is affirmed.”
Insurer petitioned this court for review of the
director’s final order, as authorized by ORS 656.704(2). On
review, the parties dispute the correctness of the director’s
determination that the matter was moot. We reverse and
remand for reconsideration.
The order on review does not disclose what the
director meant by the term “moot.” If the director dismissed
insurer’s request for review under the jurisdictional doctrine
of mootness that governs the courts, the director erred.
“ ‘[M]ootness’ is a term of art concerning the authority of
the courts to exercise the judicial power conferred by Article
VII (Amended) of the Oregon Constitution and [ ], as an
aspect of justiciability, it applies only to the courts and not to
local governments or administrative agencies.” Thunderbird
Hotels, LLC v. City of Portland, 218 Or App 548, 556, 180
P3d 87 (2008) (emphasis added); see also Wallace v. State
ex rel PERS, 249 Or App 214, 220, 275 P3d 997, rev den, 352
Or 342 (2012) (noting agency’s concession “that the concept
of mootness does not apply to administrative agencies”).
However, alternatively, if the director dismissed
insurer’s request for review under some other concept of
mootness created by the agency in the course of carrying
out the authority delegated to it by statute, the director’s
decision is not supported by substantial reason—that is, it
does not “articulate a rational connection between the facts
and the legal conclusions it draws from them”—and we must
reverse and remand on that basis. Jenkins v. Board of Parole,
356 Or 186, 195, 335 P3d 828 (2014) (internal quotations
omitted); Hamilton v. Pacific Skyline, Inc., 266 Or App 676,
680, 338 P3d 791 (2014). Specifically, in omitting to address
376 JRP Construction Enterprises, Inc. v. DCBS
whether a ruling in insurer’s favor would require a reversal
of the attorney fee awards against insurer, the order fails
to articulate a rational connection between the fact that
insurer remains subject to those attorney fee awards, and
the legal conclusion that the dispute is no longer live. In the
absence of any such rational explanation, we are unable to
review whether the director’s decision to dismiss insurer’s
request for review comports with the director’s obligation
under ORS 656.704(2) to conduct review of ALJ orders, is
consistent with the requirements of any other applicable
statutes or rules, or otherwise falls “[o]utside the range of
discretion delegated to the agency by law.” ORS 183.482(8)
(articulating applicable standard of review).3

* * *

3 In their briefs on appeal, the parties focus on the correctness of the director’s
mootness ruling; neither party argues that we can or should review directly
the underlying orders left in place by the director’s order dismissing insurer’s
request for review. Accordingly, we do not address the issue of whether the applicable
statutes governing our review would permit us to review the merits of the
underlying orders, notwithstanding the director’s decision to dismiss insurer’s
request for director review of those orders.

Outcome: Reversed and remanded for reconsideration.

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Defendant's Experts:

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