Southwest Desert Images, LLC v. Industrial Commission of Arizona (10/28/2014)

November 11, 2014

Arizona Court of Appeals Division Two Holds That an Organic Change in Condition Is Not Required to Shift Disability Compensation Liability for a Successive Injury.

This case addresses which of two insurance carriers is responsible for a disability claim when one carrier was responsible for an initial injury and then another company is responsible for a successive injury.  

In this case, an employee suffered a back injury while his employer used SCF Arizona as its insurance carrier.  Several years later the employee injured his back again, but by then his employer had switched carriers to Colorado Casualty Insurance.  The employee filed a petition to reopen his first claim with SCF Arizona, and he also filed a new a claim with Colorado Casualty for the new injury. 

Under the successive-injury doctrine, if an employee has had multiple injuries, the party responsible for the last injury may be responsible for the liability.  The doctrine typically involves two different employers, but it also applies in situations like this one, when one employer switches insurance carriers.

Colorado Casualty tried to escape liability by arguing that the employee merely aggravated the first injury rather than cause a new injury.  The Court of Appeals rejected that argument, but in doing so, it clarified what was arguably a conflict between two earlier opinions from Division One, Kaibab Industries v. Industrial Commission of Arizona, 196 Ariz. 602, 2 P.3d 691 (App. 2000), and Industrial Indemnity Co. v. Industrial Commission of Arizona, 147 Ariz. 574, 711 P.2d 1247 (App. 1985). 

Kaibab arguably stated that mere aggravation of a previous injury does not trigger the successive-injury doctrine and that instead the doctrine requires organic change:  the second carrier is responsible “if the new work activity causes organic change in the underlying condition. . . .  Alternatively when a change in condition is but an aggravation of the first injury, there is no injury.”  Kaibab (emphases added).  In this case, Division Two clarified Kaibab by stating what looks at first glance like the opposite holding:  “The presence of organic change . . . is not a condition precedent” for shifting liability to the new carrier; “aggravation of an old injury resulting in additional disability is compensable by the new employer without organic change.” 

In sum, the insurance carrier responsible at the time of the most recent injury may be responsible in a case of successive injuries even if there was no organic change in the employee’s condition.

Judge Miller authored the opinion; Judges Espinosa and Vásquez joined.