SAIF v. Krusenstjerna

No. 7 January 7, 2026 429

IN THE COURT OF APPEALS OF THE

STATE OF OREGON

In the Matter of the Compensation of Eric R. Krusenstjerna,

Claimant.

SAIF CORPORATION

and Holte Manufacturing Co.,

Petitioners,

v.

Eric R. KRUSENSTJERNA,

Respondent.

Workers’ Compensation Board

2305180;

A185508

Argued and submitted November 17, 2025.

Michelle L. Shaffer argued the cause and filed the briefs

for petitioners.

Aaron Clingerman argued the cause for respondent. Also

on the brief was Dunn and Roy.

Before Ortega, Presiding Judge, Joyce, Judge, and

Hellman, Judge.

JOYCE, J.

Reversed and remanded.

430 SAIF v. Krusenstjerna

JOYCE, J.

SAIF Corporation (SAIF) and Holte Manufacturing

Company seek judicial review of a Workers’ Compensation

Board (board) order that approved an ALJ’s order awarding

a penalty and attorney fees for a claim closure that the board

deemed “unreasonable.” See ORS 656.268(5)(f) (requiring a

penalty to be assessed if “a finding is made * * * that the

notice of closure or refusal to close was not reasonable”).

SAIF contends that its decision to close the claim based on

the attending physician’s assessment that claimant was

medically stationary was reasonable and that the board’s

conclusions otherwise are not supported by substantial evi-

dence and reasoning. We agree and reverse and remand.

The relevant facts are few. Claimant suffered a

right-hand injury at work. Dr. Campion was his treating

physician. She performed a surgery on his hand and fol-

lowing that, SAIF accepted a claim for injury to claimant’s

hand, specifically, an injury to two fingers on his right hand.

In May 2023, Campion met with claimant. Claimant

had started using his hand normally and, while he was still

“somewhat bothered by numbness,” he felt like his symp-

toms were improving over time. Campion released him to

work without restrictions. She explained to claimant that

the sensation in his fingers “may continue to improve over

the course of a year, but he will notice small increments in

improving sensation over time.” She told claimant to follow

up in one month and planned a closing exam.

Campion conducted a closing exam in August 2023.

She noted that claimant felt like he had “made a plateau

in progress” and that he was still somewhat bothered by

numbness. Claimant relayed that he felt his symptoms were

improving over time. Campion declared that claimant had

reached maximum medical improvement and was medically

stationary. She did not anticipate the need for “any future

treatment” and although claimant suffered some impair-

ment, Campion was “hopeful that his motion and strength

will continue [to] improve over time as he returns to normal

functioning.”

Cite as 346 Or App 429 (2026) 431

Campion, in a work status note filled out the same

day as the closing examination, noted that claimant was

medically stationary and could continue to work without

restrictions.

Also on the same day as the closing examination,

Campion filled out SAIF’s closing examination question-

naire. She provided impairment findings and stated that

“all of the accepted conditions [are] medically stationary.”

Campion also indicated that she did not anticipate the need

for additional medical treatment in the future.

Shortly thereafter, SAIF issued a notice of closure.

See OAR 436-030-0020(1) (requiring claim closure within 14

days where the medical information establishes that “there

is sufficient information to determine the extent of perma-

nent disability and indicates that the worker is medically

stationary”); ORS 656.005(17) (defining “medically station-

ary” to mean that no further “material improvement” would

“reasonably be expected” from medical treatment or the

passage of time). SAIF concluded that claimant was entitled

to a two percent whole person impairment, which resulted

in a permanent partial disability award.

Claimant sought reconsideration of the closure,

arguing that the closure was premature. The Appellate

Review Unit (ARU) agreed. The ARU reasoned as follows:

• In her notes during the August 2023 closing exam,

Campion noted that claimant’s functioning “could

continue to improve over time * * *.”

• In her May 2023 chart notes, Campion indi-

cated that claimant’s sensation “may continue to

improve” over time and that claimant “would notice

small increments in improving sensation over time”

(emphasis added);

• Because “medically stationary” means that no

further material improvement would reasonably

be expected, Campion’s observations that claim-

ant’s impairment may improve over time made it

“unclear” that claimant was medically stationary

at the time of closure.

432 SAIF v. Krusenstjerna

The ARU accordingly concluded that SAIF had closed the

claim prematurely and rescinded the closure. No party chal-

lenged that order.

Claimant then sought a penalty under ORS

656.268(5)(f), asserting an unreasonable closure, and

related attorney fees under ORS 656.382(1). The ALJ agreed

that SAIF’s closure was unreasonable because, “as the ARU

concluded,” Campion’s opinion “supported that his sensation

and motion would improve over time. Therefore, the record

was unclear as to whether claimant was in fact medically

stationary at the time of closure.” (Emphasis added.) Given

that “uncertainty,” the ALJ concluded that “it was not rea-

sonable for SAIF to conclude that there was sufficient infor-

mation on which to close the claim.”

SAIF sought review by the board, which adopted

and affirmed the ALJ’s order. SAIF has, as noted above,

petitioned for judicial review. It contends that the board’s

conclusion that SAIF’s closure was not reasonable is unsup-

ported by substantial evidence and substantial reason.

We start with the constellation of administra-

tive rules and statutes that govern the question presented

on appeal. An insurer is required to close a claim when a

worker is “medically stationary.” OAR 436-030-0020(1)

(a). “Medically stationary,” in turn, means that no further

“material improvement” would “reasonably be expected”

from medical treatment or the passage of time. ORS

656.005(17). A claimant can challenge the closure, as claim-

ant here did, on the ground that the closure is premature

because the accepted condition was not yet medically sta-

tionary. ORS 656.268(1)(a), (6)(a)(C); OAR 436-030-0135(3).

And, if a claimant’s challenge is successful and the ARU

rescinds the closure, a claimant may seek a penalty under

ORS 656.268(5)(f) and attorney fees under ORS 656.382(1).

ORS 656.268(5)(f) requires assessment of a penalty where a

notice of closure was “not reasonable”:

“If an insurer or self-insured employer has closed a

claim or refused to close a claim pursuant to this section, if

the correctness of that notice of closure or refusal to close is

at issue in a hearing on the claim and if a finding is made

at the hearing that the notice of closure or refusal to close

Cite as 346 Or App 429 (2026) 433

was not reasonable, a penalty shall be assessed against the

insurer or self-insured employer and paid to the worker in

an amount equal to 25 percent of all compensation deter-

mined to be then due the claimant.”

As we have explained in the context of a denial of

a claim, the question of reasonableness turns on whether

the insurer had a legitimate doubt as to the propriety of the

denial. Brooks v. Tube Specialties - TCSO International, 300

Or App 361, 366, 455 P3d 938 (2019), rev den, 366 Or 257

(2020). In assessing reasonableness here, the board must

consider the information that was available to the insurer

at the time that it issued the notice of closure and whether it

reasonably believed that conditions appropriate for closure

existed at that time. Id.

With the relevant law so framed, we turn to SAIF’s

contentions on appeal. SAIF first argues that the board’s

finding that Campion’s opinion that claimant was expected

to improve over time is unsupported by substantial evidence.

In particular, SAIF observes that the board’s conclusion that

“as the ARU concluded,” Campion’s opinion supported that

claimant’s “sensation and motion would improve over time”

is unsupported by the record. (Emphasis in original.)

We agree. The ARU did not conclude that claimant’s

condition “would” improve over time. Rather, the ARU noted

that Campion had said that his condition “may” improve

over time. (Emphasis added.)

Properly framed, then, the question is whether the

board correctly concluded that the notice of closure was not

reasonable because Campion believed that claimant’s condi-

tion could or may improve over time. Whether SAIF’s con-

duct was “unreasonable such that attorney fees or penalties

are warranted involves both legal and factual questions.”

Providence Health System v. Walker, 252 Or App 489, 505,

289 P3d 256 (2012), rev den, 353 Or 867 (2013); see also ORS

183.482(8)(a), (c) (reviewing legal issues for errors of law and

factual issues for substantial evidence); SAIF v. Harrison,

299 Or App 104, 105, 448 P3d 662 (2019) (reviewing for sub-

stantial evidence necessarily includes review for substantial

reason).

434 SAIF v. Krusenstjerna

The extent of the board’s reasoning (by virtue

of adopting the ALJ’s reasoning) was simply that it was

“unclear” whether claimant was in fact medically station-

ary at the time of closure. But the board did not endeavor

to explain why that lack of clarity renders SAIF’s closure

“unreasonable.” As set forth above, a claimant is medically

stationary if no further “material improvement” would “rea-

sonably be expected” from medical treatment or the passage

of time. ORS 656.005(17). Although Campion believed that

claimant may improve over time, she also repeatedly stated

that claimant was medically stationary. While the ARU con-

cluded that that conclusion was incorrect—a conclusion that

SAIF accepts—an incorrect conclusion of medically station-

ary is not the same as unreasonable claim closure. Stated

slightly differently, a reasonable factfinder could conclude

that SAIF did have a legitimate doubt about its liability

because it believed that Campion’s statements that claim-

ant might or could experience improvement did not factually

negate her repeated statements that he was medically sta-

tionary. Indeed, claimant himself acknowledges that “[a]t

best, SAIF has proved that the information that it had avail-

able to it at the time of the closure was unclear and capable

of more than one interpretation.”

On this record then, the board opinion lacks sub-

stantial evidence and substantial reason. Liberty Northwest

Ins. Corp. v. Verner, 139 Or App 165, 169, 911 P2d 948 (1996)

(explaining that the board must articulate a rational con-

nection between the facts that it finds and the legal conclu-

sion that it draws from those facts). The board’s findings of

fact contain an incorrect view of the record and do not suffi-

ciently explain why SAIF’s view of Campion’s statements was

not reasonable. If the information available to SAIF about

claimant’s medically stationary status at the time of closure

was capable of more than one reasonable interpretation, and

SAIF picked one of those reasonable interpretations, SAIF’s

interpretation should not be deemed unreasonable.

Reversed and remanded.