Arizona Court of Appeals Division Two Holds That Res Judicata Does Not Apply to a Non-Protestable Request for Determination of Benefits.

An employee of Special Events Service filed for workers’ compensation benefits after a workplace injury.  Zurich, the employer’s insurance carrier, determined that the employee had an “unscheduled permanent partial disability” pursuant to A.R.S.  § 23-1044(C) and filed a notice of permanent disability and request for determination of benefits (“Form 107”) with the Industrial Commission of Arizona.  Two months later the Commission notified Zurich that it had filed an incorrect form and instead should file a notice of permanent disability (“Form 106”).  Zurich filed a Form 106 purporting to rescind the previously filed Form 107; the new form was filed 94 days after the original form.  The employee requested a hearing, contending that the Form 106 was void because the Form 107 had become final after 90 days and the principle of res judicata prohibited the Commission from changing the determination of partial permanent disability.  The administrative law judge agreed with the employee, and Zurich filed a special action.

The Court of Appeals set aside the decision.  Relying on both statutory language and prior cases, the court held that unlike Forms 104 and 106, a Form 107 cannot be protested because it merely initiates the determination process at the Commission.  It is the Commission’s determination which becomes final if not protested within 90 days, not the Form 107 request for a determination.  Because merely filing a Form 107 is not a final and protestable judgment on the merits, res judicata cannot apply.  The court also noted that other regulations permitting corrected filings and prohibiting unfair claim processing practices are sufficient to prevent employers and insurers from abusing the system by filing a Form 107 and later rescinding it.

Judge Brammer authored the opinion; Judges Eckerstrom and Howard concurred.