SAIF v. Coria

No. 10 April 20, 2023 1

IN THE SUPREME COURT OF THE

STATE OF OREGON

In the Matter of the Compensation of

Hipolito Coria, Claimant.

SAIF CORPORATION

and Trimark Salem Hospitality LLC,

Respondents on Review,

v.

Hipolito CORIA,

Petitioner on Review.

(WCB 1804334) (CA A171764) (SC S069155)

On review from the Court of Appeals.*

Argued and submitted September 23, 2022.

Julene M. Quinn, Beaverton, argued the cause and filed

the briefs for petitioner on review.

Beth Cupani, Appellate Counsel, SAIF Corporation, Salem,

argued the cause and filed the brief for respondents on

review.

James S. Coon, Thomas, Coon, Newton & Frost, Portland,

filed the brief for amicus curiae Oregon Trial Lawyers

Association.

Before Flynn, Chief Justice, and Duncan, Garrett, Bushong,

and James, Justices, and Landau and Balmer, Senior Judges,

Justices pro tempore.**

DUNCAN, J.

The decision of the Court of Appeals is reversed. The

order of the Workers’ Compensation Board is reversed, and

______________

* On judicial review from a final order of the Workers’ Compensation Board.

315 Or App 546, 500 P3d 42 (2021).

** Walters, J., retired December 31, 2022, and did not participate in the deci-

sion of this case. Nelson, J., resigned February 25, 2023, and did not participate

in the decision of this case. DeHoog, J., did not participate in the consideration or

decision of this case.

2 SAIF v. Coria

the case is remanded to the Workers’ Compensation Board

for further proceedings.

Bushong, J., concurred and filed an opinion.

Cite as 371 Or 1 (2023) 3

DUNCAN, J.

In this workers’ compensation case, claimant Coria

seeks review of the Court of Appeals’ decision reversing a

penalty that the Workers’ Compensation Board imposed on

respondent SAIF for unreasonable claims processing. The

board imposed the penalty pursuant to ORS 656.262(11)(a),

which provides, in part, that, if an “insurer * * * unreason-

ably refuses to pay compensation,” the insurer “shall be lia-

ble for an additional amount up to 25 percent of the amounts

then due,” plus penalty-related attorney fees.

On review, the parties disagree about the board’s

reason for imposing the penalty. They also disagree about

many of the procedural and substantive legal requirements

for imposing penalties pursuant to ORS 656.262(11)(a). As

we explain below, we conclude that the board’s imposition of

the penalty is not supported by substantial reason because

the board’s order fails to “articulate a rational connection

between the facts and the legal conclusions it draws from

them.” Jenkins v. Board of Parole, 356 Or 186, 195, 335 P3d

828 (2014) (internal quotation marks omitted). Consequently,

we reverse and remand the case to the board to explain its

reasoning, and we do not reach the parties’ arguments about

the legal requirements for imposing penalties pursuant to

ORS 656.262(11)(a).

I. HISTORICAL AND PROCEDURAL FACTS

A. Overview

Before describing the historical and procedural

facts in detail, we begin with an overview. This case arises

out of an injury that claimant suffered while working for

respondent Trimark Salem Hospitality LLC. Based on

his injury, claimant sought workers’ compensation ben-

efits. SAIF provides workers’ compensation insurance to

Trimark, and SAIF initially paid claimant total tempo-

rary disability (TTD) benefits. But SAIF later ceased paying

claimant TTD benefits because, as SAIF explained in a let-

ter to claimant, Trimark had notified SAIF that claimant’s

employment had been terminated for disciplinary reasons.

SAIF’s cessation of TTD benefits was based on ORS 656.325

(5)(b), which requires an insurer to cease TTD benefits

4 SAIF v. Coria

if a claimant’s employment was terminated for disciplinary

reasons.

Claimant requested administrative review, chal-

lenging SAIF’s cessation of TTD benefits and seeking a pen-

alty for unreasonable claims processing and penalty-related

attorney fees pursuant to ORS 656.262(11)(a). After a hear-

ing, an administrative law judge (ALJ) affirmed SAIF’s ces-

sation of TTD benefits.

Claimant appealed to the board, which reversed the

ALJ’s order. The board concluded that there was insufficient

evidence that claimant had been terminated for disciplinary

reasons and, therefore, SAIF was not authorized to termi-

nate TTD benefits. The board also imposed a penalty and

penalty-related attorney fees on SAIF. SAIF and Trimark

sought judicial review.

The Court of Appeals affirmed the board’s conclu-

sion that there was insufficient evidence that claimant had

been terminated for disciplinary reasons, but it reversed

the board’s imposition of the penalty and penalty-related

attorney fees. SAIF v. Coria, 315 Or App 546, 500 P3d 42

(2021). Claimant petitioned for review, which we allowed.

On review, only the penalty and the penalty-related fees are

at issue.

B. Historical Facts

We are bound by the board’s findings of historical

fact if they are supported by substantial evidence in the

record. Garcia v. Boise Cascade Corp., 309 Or 292, 295-96,

787 P2d 884 (1990). “[S]ubstantial evidence supports a find-

ing when the record, viewed as a whole, permits a reason-

able person to make the finding.” Id. at 295. Based on the

board’s findings and the undisputed evidence in the record,

the relevant facts are as follows.1

In 2015, claimant began working for Trimark’s

hotel as a maintenance worker. His duties included moni-

toring and adjusting the chemical levels in the hotel pool.

On June 10, 2018, claimant fell from a ladder at work and

1

We note that the board’s order states, “We adopt the ALJ’s ‘Findings of

Fact’ with the following summary and supplementation.”

Cite as 371 Or 1 (2023) 5

was injured. Claimant reported the injury to the hotel man-

ager, Holmes, and completed an accident report that day.

Three days later, on June 13, Trimark terminated claim-

ant’s employment.

On June 15, claimant sought medical treatment

from a physician, who restricted claimant to modified

duty work. Thereafter, SAIF began paying claimant TTD

benefits.

On July 30, Trimark prepared a memo stating that

it had light duty work that would have been available to

claimant “had he not been terminated for violation of work

place rules or other disciplinary reasons.” On August 31,

SAIF sent a letter to claimant that stated, in part:

“Your employer has notified us that your employment was

terminated for violation of work rules or other disciplinary

reasons as of June 13, 2018, and suitable light duty work,

approved by your attending physician, would have been

available to you as of July 30, 2018, had you remained

employed with the employer.”

Therefore, the letter further stated, SAIF would not pay

TTD benefits for time after July 30, 2018.

C. Proceedings Before the Administrative Law Judge

Claimant sought administrative review of SAIF’s

cessation of TTD benefits, asserting that the cessation was

not justified under ORS 656.325(5)(b) and that he was enti-

tled to a penalty and penalty-related attorney fees under

ORS 656.262(11)(a).

At a hearing before an ALJ, claimant testified

that, on June 13—three days after his injury—he discov-

ered his timecard was missing when he attempted to clock

in for work. He then went to Holmes’s office, where he met

with Holmes and the hotel’s assistant general manager,

Rodriguez. He was handed a paycheck and told that his ser-

vices were no longer needed. Claimant testified that he had

no disciplinary history at work and that he was not given

a reason for his termination or any papers regarding his

termination.

6 SAIF v. Coria

Trimark and SAIF were represented at the hearing

by the same lawyer. During his cross-examination of claim-

ant, the lawyer questioned claimant about a pool mainte-

nance form, which was subsequently admitted into the

record as Exhibit A. Claimant admitted that he had made

some entries on the form and that the form contained inac-

curate information.

Trimark and SAIF’s lawyer called two witnesses:

Rodriguez and one of claimant’s coworkers, Espino. Espino

testified that he had noticed discrepancies in the hotel’s pool

maintenance records and identified Exhibit A as a mainte-

nance form from April 2018. Espino also testified that the

supply of testing powder was lasting longer than it would if

the pool’s chemical levels were being tested as required. In

addition, Espino testified that, when a new company took

over management of the hotel in April 2018, he reported

the discrepancies in the pool records and was asked to

periodically check claimant’s pool readings and report any

inaccuracies.

Rodriguez testified that, when the new company

took over management of the hotel, claimant “took it a little

harsh” because the new company’s “expectations were a lot

different” and things were more “by the book.” Rodriguez

further testified that she had been present on June 13, when

claimant’s employment was terminated and had served as

an interpreter between Holmes and claimant, who speaks

Spanish. Rodriguez testified that claimant had signed a

document, which she translated for him, stating that he was

being terminated for recording false pool log information and

refusing to perform daily tasks that were assigned to him.

Rodriguez did not make the decision to terminate claimant

and did not know who did. Holmes did not testify; accord-

ing to Rodriguez, Holmes had voluntarily ceased working

for Trimark in July 2018, approximately four months before

the hearing.

Although Rodriguez testified that claimant had

signed a document stating the reasons for claimant’s termi-

nation, Trimark and SAIF’s lawyer informed the ALJ that

the document was “not available” to them.

Cite as 371 Or 1 (2023) 7

Trimark has a progressive discipline policy, the

steps of which are oral reminder, written warning, and ter-

mination. The policy provides that certain violations may be

grounds for immediate termination.

Throughout the hearing, the ALJ remarked on the

lack of clarity regarding the reasons for claimant’s termina-

tion. The ALJ stated that he was “not quite sure what the

facts are” and that there were “missing links in this case on

both sides” and “big holes on both sides.”

To determine whether claimant was entitled to TTD

benefits after July 30, 2018, the ALJ focused on whether SAIF

had presented sufficient evidence that claimant’s employ-

ment had been terminated for disciplinary reasons. In his

order, the ALJ found that claimant had admitted falsifying

pool maintenance records, and the ALJ noted that claimant

had not disputed either Espino’s testimony that there had

been pool maintenance problems or Rodriguez’s testimony

that claimant had been told that his employment was termi-

nated based on the pool maintenance records and his failure

to perform his assigned duties. But the ALJ also acknowl-

edged claimant’s arguments that Trimark had known about

the pool maintenance problems for months before terminat-

ing claimant’s employment, had not complied with its own

progressive discipline policy, and had failed to produce the

document Rodriguez had described. The ALJ stated that, as

he understood the board’s case law, “if there is credible evi-

dence in the record that the worker’s employment was termi-

nated for any disciplinary reasons, then the Board will not

consider whether other factors might have influenced the

employer’s decision.” Based on that understanding, the ALJ

determined that, “while other factors may have contributed

to its decision, the preponderance of the evidence supports a

conclusion that claimant’s employment was terminated for

disciplinary reasons.” Consequently, the ALJ denied claim-

ant’s requests for relief.

D. Proceedings Before the Board

Claimant appealed to the board, which reversed. In

its order, the board began by stating that “[t]he only evidence

in support of SAIF’s position that claimant was terminated

8 SAIF v. Coria

for disciplinary reasons is the testimony of * * * Rodriguez

that claimant was given a document stating that he was

being terminated for recording false pool logs and refusing

to follow daily tasks.” The board then noted that “[t]hat tes-

timony was contested by claimant, who testified that he was

not given any document reflecting the reasons for his ter-

mination” and that “[t]he alleged document was not offered

into evidence, nor was any other documentation presented,

which would reflect the grounds for claimant’s termination.”

The board went on to note that the record also lacked any

explanation regarding why, if Trimark’s actions were based

on the pool records, Trimark had not spoken to claimant,

after it learned about the pool records in April 2018, or why

it had departed from its progressive discipline policy. Based

on the record before it, the board concluded that there was

“insufficient evidence to conclude that claimant was dis-

charged for violation of a work rule or for other disciplinary

reasons.”

The board then turned to the question of whether

to order SAIF to pay a penalty and penalty-related attor-

ney fees pursuant to ORS 656.262(11)(a) for unreasonable

claims processing. Citing Court of Appeals cases, the board

stated that

“[t]he standard for determining an unreasonable resis-

tance to the payment of compensation is whether, from a

legal standpoint, the carrier had a legitimate doubt about

its liability, [International] Paper Co. v. Huntley, 106 Or

App 107, 110[, 806 P2d 188] (1991). ‘Unreasonableness’ and

‘legitimate doubt’ are to be considered in light of all the evi-

dence available to the carrier. Brown v. Argonaut [Insurance

Company], 93 Or App 588, 591[, 763 P2d 408] (1988).”

The board resolved the penalty issue in two sen-

tences, followed by citations to three of its own cases: Dustin

E. Hall, 68 Van Natta 1465, adh’d to on recons, 68 Van Natta

1615 (2016), aff’d, SAIF v. Hall, 289 Or App 842, 410 P3d

396, rev den, 363 Or 104 (2018); Ricky J. Morin, 68 Van Natta

1067 (2016); and Peggy J. Baker, 49 Van Natta 40 (1997).

Specifically, the board stated:

“We have found that the statutory prerequisite for ceas-

ing TTD benefits under ORS 656.325(5)(b) has not been

Cite as 371 Or 1 (2023) 9

established. Because the record does not identify any other

basis for authorizing the termination of claimant’s TTD

benefits, we conclude that SAIF unreasonably resisted the

payment of claimant’s TTD benefits. See Hall, 68 Van Natta

at 1474; Morin, 68 Van Natta at 1071 (a carrier’s conver-

sion of TTD to TPD benefits was unreasonable where the

statutory prerequisite was not established); Peggy J. Baker,

49 Van Natta 40 (1995) (penalty for a carrier’s unreason-

able failure to pay TTD benefits was assessed because the

carrier was legally imputed with the employer’s knowledge

and conduct regarding the unsupported reasons for the

claimant’s employment termination).”

Thus, the board’s stated reasoning was that, because “the

statutory prerequisite for ceasing TTD benefits under ORS

656.325(5)(b) has not been established” and “the record does

not identify any other basis” for ceasing the benefits, SAIF

acted unreasonably when it ceased the benefits. Based on

that reasoning, the board imposed a penalty in the amount

of 25 percent of the TTD benefits that it was awarding claim-

ant. It also imposed penalty-related attorney fees.

E. Proceedings in the Court of Appeals

SAIF and Trimark petitioned the Court of Appeals

for judicial review of the board’s order.2 In its first assign-

ment of error, SAIF asserted that the board had erred in

concluding that there was insufficient evidence to prove

that claimant had been terminated for disciplinary reasons.

The Court of Appeals rejected that assignment. It explained

that, given the competing evidence in the record, the board

could reasonably conclude that SAIF had failed to produce

sufficient evidence that claimant had been terminated for

disciplinary reasons. Coria, 315 Or App at 552-53.

In its second assignment of error, SAIF asserted

that the board had erred in ordering SAIF to pay a pen-

alty for unreasonable claims processing and penalty-related

attorney fees. When addressing that issue, the Court of

Appeals reiterated rules from its earlier cases:

2

In the appellate courts, SAIF and Trimark have been represented by the

same lawyer and filed joint briefs. For ease of reference, when describing the

appellate proceedings and arguments, we refer to SAIF and Trimark collectively

as SAIF, unless the context requires otherwise.

10 SAIF v. Coria

“The standard for determining whether SAIF acted

reasonably when it discontinued claimant’s TTD benefits

under ORS 656.325(5)(b) is ‘whether, from a legal stand-

point, [SAIF] ha[d] a legitimate doubt as to its liability.’

Travelers Ins. Co. v. Arevalo, 296 Or App 514, 523, 437 P3d

1153 (2019). Unreasonableness and legitimate doubt are to

be ‘considered in the light of all the evidence available to the

insurer.’ Hamilton v. Pacific Skyline, Inc., 266 Or App 676,

681, 338 P3d 791 (2014) (citing Brown[, 93 Or App at 591]).”

Coria, 315 Or App at 553-54 (first and second brackets in

Coria).

As the Court of Appeals understood the board’s

order, “the board awarded a penalty and penalty-related

attorney fees under ORS 656.262(11)(a), on the legal theory

that Trimark’s reason for terminating claimant’s employ-

ment is imputed to SAIF, as Trimark’s insurer. The pri-

mary issue raised by SAIF’s petition for [judicial] review is

whether the imputed knowledge theory was properly applied

by the board.” Coria, 315 Or App at 552.

In addressing that issue, the Court of Appeals

noted that Peggy J. Baker—one of the decisions cited by the

board—had relied, in turn, on Anfilofieff v. SAIF, 52 Or App

127, 627 P2d 1274 (1981), and Nix v. SAIF, 80 Or App 656,

723 P2d 366, rev den, 302 Or 158 (1986). In those two cases,

the court had construed a predecessor to ORS 656.262(11)(a)

and upheld penalties against an insurer where the employer

had provided false information or delayed in reporting a

compensable accident contrary to statute. Coria, 315 Or

App at 555. According to the court, it had essentially con-

cluded that penalties against an insurer are authorized “ ‘to

the extent unreasonable conduct of a contributing or non-

contributing employer causes or contributes to the delay or

refusal of compensation.’ ” Id. (quoting Anfilofieff, 52 Or App

at 135).

But the Court of Appeals held that this case differs

from Anfilofieff and Nix because the record does not contain

a finding of unreasonable conduct by Trimark that could be

imputed to SAIF:

“[T]he board did not find that [employer] terminated claim-

ant’s employment in retaliation for his filing a workers’

Cite as 371 Or 1 (2023) 11

compensation claim or that it otherwise acted unreason-

ably or engaged in any sort of misconduct. It found only

that ‘the statutory prerequisite for ceasing TTD benefits

under ORS 656.325(5)(b) has not been established’ and that

‘the record does not identify any other basis’ for discontinu-

ing TTD benefits. That is not the same as finding employer

misconduct in the claims process. The erroneous termina-

tion of benefits is not, ipso facto, evidence of misconduct.

Additionally, the absence of a finding about why claimant

was terminated is not itself evidence of employer miscon-

duct. The absence of a finding of employer misconduct dis-

tinguishes this case from Anfilofieff and Nix and leads us to

conclude that there is no misconduct to attribute to SAIF.”

Id. at 556. Therefore, the court affirmed the board’s award

of additional TTD but reversed its imposition of the penalty

and penalty-related attorney fees. Id. Claimant petitioned

for review, which we allowed.

II. ANALYSIS

On review, the parties disagree about what the

board actually did in its order. Claimant argues that the

board correctly imposed the penalty on SAIF because SAIF

itself acted unreasonably. Claimant acknowledges that

the board’s order cites Peggy J. Baker—which the board

described as a case in which a “penalty for a carrier’s unrea-

sonable failure to pay TTD benefits was assessed because

the carrier was legally imputed with the employer’s knowl-

edge and conduct regarding the unsupported reasons for the

claimant’s employment termination”—but claimant asserts

that the board did not need to, and did not in fact, impute

Trimark’s knowledge and conduct to SAIF. According to

claimant, the order

“does not read in any way that it imputed any knowledge.

Rather, the board penalized the insurer for the insuffi-

cient evidence it had to trigger ceasing [TTD] benefits. The

board did not penalize insurer for information had by the

employer but not the insurer.”

Based on that reading, claimant contends that

“the board applied a correct legal standard under ORS

656.262(11)(a), because it determined that an insurer’s

claim processing decision is not reasonable when it fails to

12 SAIF v. Coria

meet the terms of a statute and when the insurer fails to

provide any basis that its claims processing decision was

nevertheless reasonable at the time it was made.”

In response, SAIF argues that the board erred

because, when determining whether SAIF acted unrea-

sonably, the board did not focus on what SAIF knew at the

time it ceased paying claimant’s TTD benefits, but instead

focused on the evidence that the parties later presented at

the hearing before the ALJ. According to SAIF, an insurer

“can be found wrong about whether it should have ceased

payments but still reasonable in its decision at the time the

decision was made.” SAIF also argues that, contrary to the

Court of Appeals’ decision in Anfilofieff, the board cannot

impute an employer’s knowledge or conduct to an insurer.

As we will explain below, we decline to address the

merits of the parties’ arguments about whether the board

erred, and the extent to which “imputed knowledge” is a via-

ble basis for determining an insurer to have acted unrea-

sonably, because we conclude that the board’s order lacks

an explanation of its reasoning sufficient to allow appellate

review.

We review board orders for substantial evidence

and errors of law. ORS 183.482(8)(a), (c); see also ORS

656.298(7) (review of board orders “shall be as provided in

ORS 183.482(7) and (8)”). Implicit in the requirement that

orders be supported by substantial evidence is an additional

requirement that they be supported by “substantial reason.”

Jenkins, 356 Or at 195-96, 201. An order is supported by sub-

stantial reason when it “articulate[s] a rational connection

between the facts and the legal conclusions it draws from

them.” Id. at 195 (internal quotation marks omitted). Among

other purposes, the substantial-reason requirement ensures

“meaningful judicial review.” Id. (internal quotation marks

omitted); see id. at 195-96 (explaining that, “to the extent

that the substantial reason requirement inheres in an agen-

cy’s duty to make findings of fact and conclusions of law, the

substantial reason requirement concerns the reviewability

of the agency’s orders”).

Here, as the parties’ competing interpretations of

the board’s order indicate, the order is unclear. It is possible

Cite as 371 Or 1 (2023) 13

that, as claimant argues, the board imposed a penalty on

SAIF without relying on an imputed-knowledge or imputed-

conduct theory. But if it did, it failed to explain why SAIF’s

conduct was unreasonable given what SAIF knew at the

time it ceased paying TTD benefits. The record contains

undisputed evidence that SAIF ceased paying TTD bene-

fits because Trimark had informed SAIF that claimant

had been terminated for disciplinary reasons. The board’s

order purports to apply the Court of Appeals’ “legitimate

doubt” standard, which depends on an “insurer’s knowl-

edge at the time that it acts.” Liberty Northwest Ins. Corp. v.

Hughes, 197 Or App 553, 558, 106 P3d 687, rev den, 338 Or

488 (2005) (citing Brown, 93 Or App at 591). But the order

does not explain why the information that Trimark reported

to SAIF did not give SAIF a legitimate doubt about its lia-

bility at the time it ceased paying the benefits. The board

seems to have focused on the evidence presented at the

administrative hearing, but its order does not explain why it

did so.

It is also possible that, as SAIF argues, the board

relied on an imputed-knowledge or imputed-conduct theory.

But if it did, it failed to explain what it imputed to SAIF. As

discussed, when determining whether SAIF had the author-

ity to cease paying TTD benefits, the board concluded that

“there [was] insufficient evidence to conclude that claimant

was discharged for a violation of a work rule or for other dis-

ciplinary reasons.” (Emphasis added.) But that conclusion

is not the same as a factual finding that claimant’s employ-

ment was not actually terminated for violation of a work rule

or for other disciplinary reasons. Stated generally, if a party

fails to prove that X caused Y, that does not mean that X did

not actually cause Y; it only means that the evidence was

insufficient to prove that X caused Y. The failure of proof

is not proof of the opposite. Here, there was conflicting evi-

dence about the reasons for claimant’s termination. As the

ALJ observed, there were “missing links” and “big holes”

on “both sides.” The board did not make a finding about the

reasons claimant’s employment was terminated, and the

board’s order fails to explain how it could impute knowledge

of the reasons for the termination to SAIF without a finding

about what those reasons were.

14 SAIF v. Coria

In sum, the board’s order is not supported by sub-

stantial reason, because it fails to articulate a rational con-

nection between its findings of fact and its legal conclusions.

As just discussed, the board purported to apply the “legiti-

mate doubt” standard, which turns on what an insurer knew

when it acted, but the board’s order does not explain why,

given the undisputed evidence of what SAIF knew when it

acted, SAIF did not have a legitimate doubt about its liabil-

ity. And, if the board did not rely on what SAIF knew, but

instead relied on an imputed-knowledge theory, it did not

explain how it could conclude that SAIF knew that claimant

had not been terminated for disciplinary reasons when the

record does not contain a finding about the reason claimant

was terminated.

Therefore, we reverse the Court of Appeals’ decision

and the board’s order, and we remand the case to the board

to explain its reasoning. See Jenkins, 356 Or at 195 (explain-

ing that, if an order is not supported by substantial reason,

“the appellate court will reverse and remand the order for

the agency to correct the deficiency”).

Before closing, we pause to note that, in addition to

disagreeing about the board’s reasoning, the parties disagree

about many of the procedural and substantive legal require-

ments for imposing a penalty pursuant to ORS 656.262

(11)(a). Among other things, they disagree about (1) which

party bears the burden of proving that an insurer’s claims

processing was unreasonable, (2) what that party must show

to establish that the claims processing was unreasonable,

and (3) in what circumstances, if any, an employer’s knowl-

edge or conduct can be imputed to an insurer. We express

no opinion on those disagreements; we note them so that

the board is aware of them and can clearly set out its under-

standing of the legal requirements in its order on remand.3

The decision of the Court of Appeals is reversed.

The order of the Workers’ Compensation Board is reversed,

and the case is remanded to the Workers’ Compensation

Board for further proceedings.

3

We further note that, although the concurrence addresses some of the par-

ties’ disagreements, the court takes no position on how the concurrence would

resolve them.

Cite as 371 Or 1 (2023) 15

BUSHONG, J., concurring.

I agree with the majority opinion that the board

has not adequately explained its reasons for concluding that

SAIF is liable for a penalty and attorney fees for “unrea-

sonably refus[ing] to pay compensation” under ORS 656.262

(11)(a). I write separately to address (1) whether and how

the “imputed misconduct” principle adopted in Anfilofieff v.

SAIF, 52 Or App 127, 627 P2d 1274 (1981), might apply in

this situation; and (2) how the “legitimate doubt” standard

that the Court of Appeals cited in determining whether

SAIF acted unreasonably (SAIF v. Coria, 315 Or App 546,

553-54, 500 P3d 42 (2021)), might apply in this context.

In Anfilofieff, SAIF had denied a claim for workers’

compensation benefits “based on the reports from employer

and its own investigation.” 52 Or App at 135. Among other

things, the employer (1) “did not truthfully describe the

cause of the injury or his relationship with claimant in the

report to SAIF”; (2) “altered the scene [of the injury] to cover

up the true facts”; and (3) “gave false information to the doc-

tor as to how the injury occurred.” Id. The Court of Appeals

concluded that the employer’s conduct (1) “was clearly

unreasonable and was designed to avoid responsibility for

the injury”; and (2) “was a contributing cause of the denial

of compensation and the consequent delay.” Id.

Thus, the claimant was “entitled to penalties for

unreasonable denial of his claim.” Id. The court acknowl-

edged that the statute, “[r]ead literally,” does not address

penalties against SAIF for an employer’s misconduct, but it

“interpret[ed] the statute to authorize penalties to be paid

by SAIF to the extent unreasonable conduct of a contribut-

ing or noncomplying employer causes or contributes to the

delay or refusal of compensation.” Id.1

In this case, it is undisputed that SAIF termi-

nated claimant’s temporary total disability (TTD) benefits

1

The dissenting opinion stated that the literal reading of the statute acknowl-

edged by the majority “should settle it.” Anfilofieff, 52 Or App at 136 (Gillette, J.,

dissenting). In the dissent’s view, the legislature rationally could have intended

to make SAIF “responsible for its own unreasonable actions, without making

SAIF responsible for paying penalties for acts over which it—uniquely, in this

system—had no control.” Id. at 136-37 (emphasis in original).

16 SAIF v. Coria

pursuant to ORS 656.325(5)(b) after the employer (Trimark)

reported to SAIF that claimant had been discharged for a

violation of work rules or for other disciplinary reasons. In

restoring benefits, the board concluded that “there [was]

insufficient evidence to conclude that claimant was dis-

charged for violation of a work rule or for other disciplinary

reasons.”

In reaching that conclusion, the board cited sev-

eral suspicious facts. It noted that claimant had worked at

Trimark’s hotel for three years without any disciplinary

history. It also noted that the one instance of misconduct—

inaccurately completing a pool maintenance log—occurred

in April 2018, two months before Trimark discharged claim-

ant. It further noted that Trimark did not counsel or dis-

cipline claimant consistent with its progressive discipline

policy about his pool maintenance duties. Instead, as the

board noted, Trimark discharged claimant three days after

he sustained a compensable injury at work and completed

an accident report.

The board also noted that Trimark offered “no tes-

timony regarding the reasons for the discharge from the

individual who made the decision to terminate claimant’s

employment (indeed, the record does not even establish who

that individual was).” Those facts, taken together, could sup-

port an inference that the employer in fact discharged claim-

ant not for violating a work rule or for other disciplinary

reasons, but in retaliation for filing a workers’ compensation

claim.

But, as the Court of Appeals noted, “the board did

not find that Trimark terminated claimant’s employment

in retaliation for his filing a workers’ compensation claim

or that it otherwise acted unreasonably or engaged in any

sort of misconduct.” Coria, 315 Or App at 556. Although the

board is bound by decisions of the Court of Appeals, it is not

required to apply Anfilofieff here because, as the Court of

Appeals noted, “[t]he absence of a finding of employer mis-

conduct distinguishes this case from Anfilofieff[.]” 315 Or

App at 556. And I do not believe that the “imputed miscon-

duct” principle adopted in Anfilofieff necessarily means that

Cite as 371 Or 1 (2023) 17

all the employer’s conduct and knowledge should be imputed

to SAIF.2

That brings me to the “legitimate doubt” standard.3

SAIF argues that its reliance on Trimark’s statement that

it discharged claimant for violating work rules or for other

disciplinary reasons is sufficient to establish that SAIF had

a “legitimate doubt”—and thus did not act unreasonably—

when it decided to discontinue claimant’s TTD benefits.

Claimant argues, among other things, that the board’s find-

ing of insufficient evidence to support a determination that

Trimark discharged claimant for violating work rules or

for other disciplinary reasons is sufficient to establish that

SAIF acted unreasonably.

Although the board generally is bound by Court of

Appeals decisions, it is not required to apply the “legitimate

doubt” standard in the way advocated by either party. I

agree with SAIF that its reliance on Trimark’s statement is

enough to cause SAIF to “doubt” whether it should continue

paying TTD benefits. I agree with claimant that SAIF’s

reliance on Trimark’s statement, standing alone, is insuffi-

cient to establish that its doubt was legitimate. The question

under the statute is whether SAIF acted unreasonably. I do

not think that the board’s decision that there was insuffi-

cient evidence that the claimant was terminated for violat-

ing work rules or for other disciplinary reasons is enough,

standing alone, to establish that SAIF acted reasonably or

unreasonably.

2

The Court of Appeals in Anfilofieff read the statute “in the context of SAIF’s

function as an automatic insurer of noncomplying employers” to mean that “SAIF

stands in the shoes of the noncomplying employer for the purposes of accepting or

denying the claim.” 52 Or App at 134. That statement—made without the benefit

of any detailed analysis of the text, context, or legislative history of the statute—

may or may not be an accurate assessment of the legislature’s intent. I would

not read the statute to necessarily mean that the employer’s conduct and knowl-

edge are always imputed to the insurer in all contexts without a more in-depth

analysis of the text, context, and history of the statute.

3

The Court of Appeals has applied the “legitimate doubt” standard in sev-

eral cases, tracing back to Norgard v. Rawlinsons, 30 Or App 999, 569 P2d 49

(1977). There, the court stated the following: “As long as insurer * * * had a legiti-

mate doubt, from a legal standpoint, of its liability, its conduct was not unreason-

able.” Id. at 1003. The court explained in a footnote that (1) California’s workers’

compensation statute is “similar in wording” to the Oregon statute at issue; and

(2) “California courts have found that legal doubt as to liability for compensation

may establish the reasonableness of an insurer’s conduct.” Id. at 1003 n 1.

18 SAIF v. Coria

In my view, this issue should be resolved by clearly

identifying and applying the burden of proof. The general

rule in workers’ compensation cases is that “the burden of

proof is upon the proponent of a fact or position, the party

who would be unsuccessful if no evidence were introduced

on either side.” Harris v. SAIF, 292 Or 683, 690, 642 P2d

1147 (1982). Although the board’s order does not state the

burden expressly, the order appears to put the initial burden

on SAIF—the proponent of the position that it properly ter-

minated TTD benefits—to establish what the board treated

as a “prerequisite” to terminating benefits.4

Assuming—as the board and the Court of Appeals

assumed—that SAIF has that initial burden, then SAIF

may also have the burden of establishing that it acted

reasonably for purposes of the penalty provision in ORS

656.262(11)(a). If that is the case—and the board’s order is

unclear on this point—then the board should explain why

the evidence here was insufficient to meet that burden. In

my view, if SAIF has the burden to establish that its deci-

sion to terminate benefits—while incorrect—was reason-

able under the circumstances, simply accepting the employ-

er’s statement without putting on evidence of what made its

erroneous decision reasonable would be insufficient to meet

that burden.

On the other hand, if the board treats the claimant

as the proponent of a request for a penalty—thereby plac-

ing the burden on the claimant to prove that SAIF acted

unreasonably—it may be appropriate, in my view, to shift

the burden to SAIF to establish that its decision to termi-

nate benefits—while incorrect—was nonetheless reasonable

under the circumstances. That would require SAIF to come

forward with evidence of what, if anything, it did to deter-

mine whether the employer’s statement was supported by

4

The Court of Appeals stated that it understood the board’s conclusion that

the record contains insufficient evidence to conclude that claimant was dis-

charged for violating work rules or for other disciplinary reasons “to reflect its

view that SAIF failed to produce sufficient evidence that its decision to discon-

tinue claimant’s TTD benefits was based on a disciplinary termination.” Coria,

315 Or at 552. That assumes—without stating expressly—that the burden was

on SAIF to establish that the employer terminated claimant’s employment for

disciplinary reasons.

Cite as 371 Or 1 (2023) 19

evidence. If SAIF does not meet its burden, it may be liable

for a penalty and attorney fees.

We have previously applied a burden-shifting approach

under a different provision of the workers’ compensation

statute. ORS 656.802(4) creates a presumption that a fire-

fighter’s medical condition resulted from his or her employ-

ment once the firefighter establishes certain predicate facts.

The statute further provides that denial of a claim must

“be on the basis of clear and convincing medical evidence

that the cause of the condition or impairment is unrelated

to the firefighter’s employment.” ORS 686.802(4). In SAIF

v. Thompson, 360 Or 155, 379 P3d 494 (2016), we under-

stood those words to mean that, once a claimant established

the predicate facts, “then the presumption shifted both the

burden of production and the burden of persuasion to the

employer” to prove that the condition was unrelated to the

firefighter’s employment. Id. at 160.

The statute here—ORS 656.262(11)(a)—does not

provide for a “presumption” that would shift the burden to

the employer, as in Thompson. Instead, the statute simply

states:

“If the insurer or self-insured employer unreasonably delays

or unreasonably refuses to pay compensation * * * or unrea-

sonably delays acceptance * * * of a claim, the insurer or

self-insured employer shall be liable for an additional

amount up to 25 percent of the amounts then due plus any

attorney fees assessed under this section.”

Under ORS 656.262(11)(a), in my view, where SAIF

fails to establish that it properly denied compensation—or,

as in this case, correctly terminated TTD benefits—the

burden should be on SAIF to establish that its actions were

nonetheless reasonable. The board’s finding that the deci-

sion to terminate benefits was incorrect is stronger than the

presumption that a firefighter’s condition was work-related

that was sufficient to shift the burden in Thompson.

Moreover, placing the burden on the insurer makes

sense in this context because the insurer—not the claimant—

knows why it took the actions that it took. It has exclusive

control over the facts demonstrating whether its decision

was reasonable or unreasonable. Placing the burden on the

20 SAIF v. Coria

insurer also provides an incentive for the insurer to conduct

its own investigation into whether it can cease paying ben-

efits to a claimant, instead of just relying on the employer’s

statements.

In any event, clearly identifying and applying the

burden of proof in this context—and adopting a burden-

shifting approach, if necessary—makes more sense, in my

view, than applying an “imputed knowledge” principle. It

also makes more sense than either of the approaches advo-

cated by SAIF and by the claimant in this case.

Having made those points, I concur in the majority

opinion.