Hibbs v. Sedgwick CMS (A180280)

No. 421 May 14, 2025 421

IN THE COURT OF APPEALS OF THE

STATE OF OREGON

In the Matter of the Compensation of

James D. Hibbs, Claimant.

James D. HIBBS,

Petitioner,

v.

SEDGWICK CMS,

and Cascade Tissue Group Sales,

Respondents.

Workers’ Compensation Board

2104240; A180280

Argued and submitted April 15, 2025.

Julene M. Quinn argued the cause and filed the brief for

petitioner.

Katherine M. Caldwell argued the cause and filed the

brief for respondents.

Before Tookey, Presiding Judge, Kamins, Judge, and

Jacquot, Judge.

TOOKEY, P. J.

Affirmed.

422 Hibbs v. Sedgwick CMS (A180280)

TOOKEY, P. J.

This case is one of two cases decided today in which

we consider the division of jurisdiction between the Workers’

Compensation Board (the board), on the one hand, and the

Director of the Department of Consumer and Business

Services (the director), on the other.1

In this case, claimant seeks judicial review of a

final order of the board, which affirmed an order transfer-

ring to the director claimant’s request for the assessment of

a penalty under ORS 656.262(11)(a). Claimant’s request for

that assessment stemmed from a “medical services dispute”

that was under the jurisdiction of the director.

As framed by the parties, this case requires us to

consider the director’s authority under ORS 656.262(11)(a) to

impose penalties when the same parties before the director

have a separate matter pending before the board. Claimant’s

contention is that ORS 656.262(11)(a) “only allows the direc-

tor to have jurisdiction if there are no proceedings pending

at the board” and, in evaluating jurisdiction, it is of no conse-

quence whether the issue underlying the ORS 656.262(11)(a)

penalty “was a matter within the director’s jurisdiction.”

1

The other case is Hibbs v. Sedgwick CMS (A180289), 340 Or App 431, ___

P3d ___ (2025), in which we conclude that jurisdiction over a particular dispute

regarding independent medical examinations, see generally ORS 656.325(1)

(discussing independent medical examinations), that did not involve “matters

concerning a claim,” ORS 656.704(3)(a) (defining “matters concerning a claim”),

properly lay with the director, not with the board.

Additionally, at the outset, we note that the parties, as well as the board’s

order on review, frame this case as involving a matter of “jurisdiction,” although

some of the relevant statutes use the word “authority” rather than “jurisdiction.”

Compare, e.g., ORS 656.704(3)(a) (“For the purpose of determining the respec-

tive authority of the director and the board to conduct hearings, investiga-

tions and other proceedings under this chapter * * *.”), with ORS 656.262(11)(a)

(“Notwithstanding any other provision of this chapter, the director shall have

exclusive jurisdiction over proceedings regarding solely the assessment and pay-

ment of the additional amount and attorney fees described in this subsection.”).

In this opinion, we adopt the nomenclature used by the parties and the board,

because it does not affect our analysis, but we express no opinion on whether

that is the appropriate nomenclature, nor do we attempt to definitively define the

difference between jurisdiction and authority in this context. Cf. Weyerhaeuser

Co. v. Rich, 208 Or App 302, 304 n 1, 144 P3d 978, rev den, 342 Or 117 (2006)

(“choos[ing]” to use the term “authority,” although the board and the administra-

tive law judge used the term “jurisdiction,” but refraining from the “attempt to

definitively define either”).

Cite as 340 Or App 421 (2025) 423

For the reasons below, we agree with the board that

jurisdiction over the penalty request under ORS 656.262

(11)(a) in this case properly lay with the director, not the

board, because jurisdiction over the dispute underlying the

penalty request was within the director’s jurisdiction, not

the board’s jurisdiction; indeed, the director had issued an

order concerning the underlying dispute. We reject claim-

ant’s argument that “the only circumstance where the

director has jurisdiction over a penalty/fee issue is when the

penalty/fee issue is the only matter at issue” between the

parties. We therefore affirm.

HISTORICAL FACTS AND PROCEDURAL HISTORY

As they relate to the jurisdictional issue that we

consider on judicial review in this matter, the underlying

facts are undisputed.

Claimant has an accepted workers’ compensation

claim as a result of a 2016 injury. On June 5, 2021, claim-

ant’s attending physician, Paul Blaylock, MD, recommended

that claimant be seen by Robert Schneider, Ph.D., for a clos-

ing examination and evaluation of permanent impairment.

On June 16, 2021, respondent’s counsel informed

claimant’s counsel that respondent was entitled to select

who would perform the closing examination. The same day,

claimant requested administrative review by the director’s

Medical Resolution Team (MRT), seeking resolution of the

“medical service dispute” that had arisen. The following day,

June 17, 2021, respondent’s counsel advised claimant’s coun-

sel that respondent now approved of having Dr. Schneider

perform the closing examination.

On July 19, 2021, claimant requested a hearing

before the board’s Hearings Division. On judicial review in

this court, claimant describes that hearing as being “on a

different matter.”

On September 27, 2021, the MRT issued an admin-

istrative order providing that the MRT, under the direc-

tor’s authority, had reviewed the medical services dispute

under ORS 656.245 and OAR 436-010-0008. The MRT

determined that the issue of the medical services dispute

424 Hibbs v. Sedgwick CMS (A180280)

was resolved when respondent scheduled a closing exam-

ination with Dr. Schneider at Dr. Blaylock’s direction, and

that had occurred after claimant, through his attorney, had

requested administrative review by MRT.

In its order, the MRT assessed an attorney fee

under ORS 656.385(1). Additionally, at claimant’s request,

the MRT forwarded “the matter * * * for the possible assess-

ment of an ORS 656.262(11) penalty to the WCD’s Sanctions

Unit.”

On October 1, 2021, the Sanctions Unit issued an

order that referred the ORS 656.262(11)(a) penalty pro-

ceeding to the board’s Hearings Division. It reasoned that,

under the then-operative version of OAR 436-060-0155(4),

the director would not “issue an order assessing a penalty

or attorney fee under [OAR 436-060-0155] when the same

parties have initiated proceedings before the Hearings

Division.”2 The Sanctions Unit explained that, under that

rule, “if the director receives a request for penalties and

attorney fees * * *, and is aware of proceedings between the

parties before the Hearings Division, the director will refer

the request to the Hearings Division.” As the Sanctions Unit

saw it, because a request for a hearing was filed on July 19,

2021, with the board’s Hearings Division, “the director no

longer retains sole jurisdiction over the penalty issue under

OAR 436-060-0155(4)” and “the penalty proceeding now

rests with the Hearings Division.”

2

At the time of the Sanctions Unit’s order, OAR 436-060-0115(4) provided

that “if the director receives a request for penalties and attorney fees under this

rule, and is aware of proceedings between the parties before the board, the direc-

tor will refer the request to the board” and that the director would not “issue an

order assessing a penalty or attorney fee under [OAR 436-060-0115] when the

same parties have initiated proceedings before the board.” (Emphasis added.)

OAR 436-060-0115(4) was amended, effective July 1, 2024, after the

Sanctions Unit had issued its order, to provide the director with discretion in

determining whether to transfer a request for a penalty under ORS 656.262(11)

to the board when the director is aware that a hearing has been requested before

the board on other issues. As amended, OAR 436-060-0115(4) provides, “[i]f the

director receives a request for penalties and attorney fees under this rule, and

is aware that a hearing has been requested before the board on other issues, the

director may transfer the request to the board.” (Emphasis added.) Further, as of

July 1, 2024, OAR 436-060-0115(4) no longer prohibits the director from issuing

“an order assessing a penalty or attorney fee under [OAR 436-060-0115] when

the same parties have initiated proceedings before the board.”

Cite as 340 Or App 421 (2025) 425

On March 11, 2022, an administrative law judge

(ALJ) with the board’s Hearings Division issued an order

transferring the matter back to the director’s Sanctions

Unit for resolution, determining that the Sanctions Unit

“erroneously referred the present penalty/fee matter to the

Hearings Division.” The ALJ reasoned, among other points,

that “[a]ny dispute that requires a determination of whether

medical services are in violation of the rules regarding the

performance of medical services is not a ‘matter concern-

ing a claim,’ and is therefore under the director’s, rather

than the [b]oard’s, authority”; that the underlying matter

“concerned the provision of medical services, specifically,

whether claimant’s attending physician, rather than the

carrier, could select the physician who would perform the

closing examination” which was “not a ‘matter concerning

a claim’ under the board’s jurisdiction, because it pertained

to an alleged violation of the ‘rules regarding the perfor-

mance of medical services’ ”; and that “[t]he [b]oard and its

Hearings Division * * * do not have jurisdiction to award

ORS 656.262(11) penalties/fees where the dispute giving

rise to the penalty/fee request was under the director’s

authority.”

Claimant appealed the ALJ’s order to the board,

and the board adopted and affirmed the ALJ’s order with

“supplementation.” By way of supplementation, the board

additionally concluded that it did not have jurisdiction to

address claimant’s request “for solely the assessment of

penalties and attorney fees,” and cited ORS 656.262(11)(a),

which provides that “the director shall have exclusive juris-

diction over proceedings regarding solely the assessment

and payment of the additional amount and attorney fees

described in this subsection.”

ANALYSIS

As noted, claimant seeks judicial review of the

board’s order, which affirmed the ALJ’s order transferring

claimant’s request for the assessment of penalties under

ORS 656.262(11)(a) to the director.

In claimant’s first assignment of error, he asserts

that “the board erred in determining that it did not have

426 Hibbs v. Sedgwick CMS (A180280)

jurisdiction over the penalty/attorney fee matter in this

case under ORS 656.262(11)(a) on the basis that the direc-

tor (WCD/MRT) had jurisdiction over the underlying medi-

cal dispute.” In his second assignment of error, he contends

that “the board erred in determining that it did not have

jurisdiction over the penalty/attorney fee matter in this

case under ORS 656.262(11)(a) on the basis that, while

there were other matters pending before the board, this

case—or this matter, as it stated—only involved an issue of

penalty and attorney fee.” We conclude that the board did

not err in determining that jurisdiction over this matter

was with the director, not the board, because the director,

not the board, had jurisdiction over the underlying medical

services dispute.

As framed by the parties’ arguments, the issue

before us is solely one of law. We therefore review the board’s

decision for legal error. Mantle v. SAIF, 330 Or App 8, 13,

542 P3d 889 (2024).

Under Oregon’s scheme for workers’ compensation,

“[g]enerally speaking, under ORS 656.704, the board has

review authority over matters concerning a claim, and the

director has review authority over matters other than those

concerning a claim.” Mantle, 330 Or App at 14. “[M]atters

concerning a claim * * * are those matters in which a work-

er’s right to receive compensation, or the amount thereof,

are directly in issue.” ORS 656.704(3)(a).

We understand the director’s MRT, the ALJ, and

the board, to have concluded that, in this case, the medical

services dispute underlying the penalty request under ORS

656.262(11)(a) was a “matter not concerning a claim” and

therefore properly before the director, not the board: Claimant

does not dispute that conclusion. See ORS 656.704(3)(b)(B)

(“Any dispute that requires a determination of whether

medical services are excessive, inappropriate, ineffectual or

in violation of the rules regarding the performance of medi-

cal services, or a determination of whether medical services

for an accepted condition qualify as compensable medical

services among those listed in ORS 656.245(1)(c), is not a

matter concerning a claim.”).

Cite as 340 Or App 421 (2025) 427

As relevant to this appeal, ORS 656.262(11)(a) pro-

vides an exception to the general division of review author-

ity in one circumstance—when proceedings concern “solely

the assessment and payment of the additional amount and

attorney fees described in” ORS 656.262(11). That statute

provides, in relevant part:

“(a) If the insurer or self-insured employer unreasonably

delays or unreasonably refuses to pay compensation,

attorney fees or costs, or unreasonably delays acceptance

or denial 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. The fees assessed by the director,

an Administrative Law Judge, the board or the court

under this section shall be reasonable attorney fees. * * *

Notwithstanding any other provision of this chapter, the

director shall have exclusive jurisdiction over proceedings

regarding solely the assessment and payment of the addi-

tional amount and attorney fees described in this subsection.”

(Emphasis added.)

In Icenhower v. SAIF, 180 Or App 297, 43 P3d 431

(2002), we construed ORS 656.262(11)(a) and considered

whether the legislature intended “that proceedings that

were initially properly before the Hearings Division[, i.e., the

board,] must be dismissed if, at some point thereafter, the

imposition of penalties under ORS 656.262(11)(a) becomes

the only remaining issue.” Id. at 300. We concluded that that

was not the legislature’s intention. Id. at 305-06.

In reaching that conclusion, we noted that the “the

legislative history establishes that, once a dispute is prop-

erly before the Hearings Division, any subsequent narrow-

ing of the issues to just the penalty issue does not divest

the Hearings Division of jurisdiction over the dispute.” Id.

at 305. We also adopted a broad view of the word “proceed-

ings” in ORS 656.262(11)(a), i.e., that it “connotes the entire

course of the workers’ compensation litigation and review

process beginning with claimant’s request for a hearing.”

Id. We determined that that was the meaning the legis-

lature intended for the term in part because the “entire

focus of the legislative history is on the claims and issues

as framed at the outset of the process.” Id. at 305 (emphasis

428 Hibbs v. Sedgwick CMS (A180280)

in original). Additionally, in reviewing the legislative

history, we quoted a member of the Governor’s Workers’

Compensation Labor Management Advisory Committee,

who explained that the purpose of the “notwithstanding”

sentence in ORS 656.262(11)(a) was to avoid “the hearings

process [being] clogged up with ‘penalty only’ issues.” Id. at

303.

Icenhower is helpful in the consideration of this case,

and it demonstrates why the ALJ was correct in conclud-

ing that this case should be transferred back to the direc-

tor’s Sanctions Unit. Here, “at the outset of the process,” id.

at 305, jurisdiction properly lay with the director, not the

board, because the underlying dispute was a medical ser-

vices dispute, which was not a “matter concerning a claim.”

The issues before the director were subsequently narrowed

to just the ORS 656.262(11)(a) request for a penalty. But, as

Icenhower demonstrates, that “subsequent narrowing of the

issues to just the penalty issue,” did not divest the director

of jurisdiction once it was established; the determination

of who—between the director and the board—had author-

ity to decide the penalty issue requires consideration of the

“claims and issues as framed at the outset of the process.”

See Icenhower, 180 Or App at 305 (subsequent narrowing of

issues did not divest the board of jurisdiction); cf. id. at 308

(Wollheim, J., concurring) (“The majority holds that juris-

diction permanently vests at the time a request for hearing

is made, regardless of whether circumstances change prior

to the commencement of the hearing or the closing of the

record.”).

Put another way, at the outset, in this case, juris-

diction over the medical services dispute properly lay with

the director. And the director retained jurisdiction over the

penalty issue associated with the medical services dispute.

That is, the director was not divested of jurisdiction by vir-

tue of claimant’s July 19, 2021, hearing request before the

board’s Hearings Division “on a different matter.”

That result, we note, is consistent with the legisla-

tive history of ORS 656.262(11)(a), as reviewed in Icenhower,

which reflects a legislative intent to prevent the hearings

Cite as 340 Or App 421 (2025) 429

process from becoming “ ‘clogged up with “penalty only”

issues.’ ”3 180 Or App at 303.

In arguing for a different result, claimant points to

the “notwithstanding” clause at the end of ORS 656.262(11)(a).

As claimant sees it, given the word “notwithstanding,” that

clause contains the “only terms that decide jurisdiction” when

a claimant requests penalties under ORS 656.262(11)(a),

and by operation of that clause, the “only circumstance

where the director has jurisdiction over a penalty/fee issue

is when the penalty/fee issue is the only matter at issue.” In

claimant’s view, under ORS 656.262(11)(a), if there are “any

matters pending at the board”—such as the July 19, 2021,

hearing request—“then the director does not have jurisdic-

tion, and the matter must be heard by the board.”

The difficulty with claimant’s position is that it

loads the “notwithstanding” sentence in ORS 656.262(11)(a)

with more jurisdictional freight than it can carry. To be sure,

ORS 656.262(11)(a) provides that the director has “exclusive

jurisdiction” in a certain circumstance, i.e., when the “pro-

ceedings” regard “solely the assessment and payment of the

additional amount and attorney fees described in this sub-

section.” But it does not follow from that jurisdictional carve-

out that that is the only circumstance in which the director

has exclusive jurisdiction. That is, it does not follow from

the “notwithstanding” clause in ORS 656.262(11)(a) that

if there is a hearing request on a “different matter” before

the board—such as the July 19, 2021, hearing request—the

director loses jurisdiction over an ORS 656.262(11)(a) pen-

alty request that is related to a matter that was properly

before the director. Greenfield and Greenfield, 130 Or App

632, 636, 883 P2d 253 (1994) (“The function of a notwith-

standing clause in a statute is to except the remainder of

3

We note that, as a practical matter, it makes some sense that the body

responsible for deciding the merits of an underlying dispute—be it either the

board or the director—should be the body that decides whether a delay or refusal

was “unreasonable” within the meaning of ORS 656.262(11)(a)—i.e., whether an

insurer had a “legitimate doubt” about its liability. See International Paper Co.

v. Huntley, 106 Or App 107, 110, 806 P2d 188 (1991) (“An employer’s refusal to

pay is not unreasonable if it has a legitimate doubt about its liability.”); Liberty

Northwest Ins. Corp. v. Hughes, 197 Or App 553, 558, 106 P3d 687, rev den, 338 Or

488 (2005) (“Whether an insurer has a legitimate doubt concerning its processing

obligations under the Workers’ Compensation Law must be based on that insur-

er’s knowledge at the time that it acts.”).

430 Hibbs v. Sedgwick CMS (A180280)

the sentence containing the clause from other provisions of

the law that is referenced in that particular notwithstand-

ing clause.” (Internal quotation marks and brackets omit-

ted.)).4

Affirmed.

4

That remains true even given our interpretation of the word “proceedings”

in Icehower as connoting “the entire course of the workers’ compensation litiga-

tion and review process beginning with claimant’s request for a hearing.” 180 Or

App at 305. Although the broad understanding of the word “proceedings” in ORS

656.262(11)(a) as adopted in Icehower narrows the scope of the director’s exclu-

sive jurisdiction pursuant to the “notwithstanding” sentence at the end of ORS

656.262(11)(a), it does not divest the director of jurisdiction that it otherwise has.