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.

, 

 (2021).
    … Walters, J., retired December 31, 2022, and did not participate in the decision 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.
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        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 … unreasonably refuses to pay compensation,” the insurer “shall be liable 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, 

, 

 (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 benefits. SAIF provides workers’ compensation insurance to
Trimark, and SAIF initially paid claimant total temporary disability (TTD) benefits. But SAIF later ceased paying
claimant TTD benefits because, as SAIF explained in a letter 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, challenging SAIF’s cessation of TTD benefits and seeking a penalty for unreasonable claims processing and penalty-related
attorney fees pursuant to ORS 656.262(11)(a). After a hearing, an administrative law judge (ALJ) affirmed SAIF’s cessation 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 terminate 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 conclusion 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, 

, 

(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., 

,

 (1990). “[S]ubstantial evidence supports a finding when the record, viewed as a whole, permits a reasonable person to make the finding.” 

. 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 monitoring 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.”
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was injured. Claimant reported the injury to the hotel manager, Holmes, and completed an accident report that day.
Three days later, on June 13, Trimark terminated claimant’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 entitled 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 discovered 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 services 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 claimant, the lawyer questioned claimant about a pool maintenance 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 inaccurate 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 maintenance 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; according 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 termination, Trimark and SAIF’s lawyer informed the ALJ that
the document was “not available” to them.
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         Trimark has a progressive discipline policy, the
steps of which are oral reminder, written warning, and termination. 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 termination. 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 employment 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 terminated based on the pool maintenance records and his failure
to perform his assigned duties. But the ALJ also acknowledged claimant’s arguments that Trimark had known about
the pool maintenance problems for months before terminating 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 evidence in the record that the worker’s employment was terminated 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 claimant’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 testimony was contested by claimant, who testified that he was
not given any document reflecting the reasons for his termination” 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 discharged 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 attorney 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 resistance 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, 

[, 

] (1991). ‘Unreasonableness’ and
    ‘legitimate doubt’ are to be considered in light of all the evidence available to the carrier. Brown v. Argonaut [Insurance
    Company], 

[, 

] (1988).”
         The board resolved the penalty issue in two sentences, 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, 

, 

, rev den, 

 (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 ceasing TTD benefits under ORS 656.325(5)(b) has not been
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   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 conversion 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 unreasonable 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 claimant. 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 assignment 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, 

.
         In its second assignment of error, SAIF asserted
that the board had erred in ordering SAIF to pay a penalty 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 standpoint, [SAIF] ha[d] a legitimate doubt as to its liability.’
     Travelers Ins. Co. v. Arevalo, 

, 

 (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., 

, 

 (2014) (citing Brown[, 

]).”
Coria, 

 (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 employment is imputed to SAIF, as Trimark’s insurer. The primary issue raised by SAIF’s petition for [judicial] review is
whether the imputed knowledge theory was properly applied
by the board.” Coria, 

.
         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, 

, 

 (1981), and Nix v. SAIF, 

,

, rev den, 

 (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, 

. According to the court, it had essentially concluded that penalties against an insurer are authorized “ ‘to
the extent unreasonable conduct of a contributing or noncontributing employer causes or contributes to the delay or
refusal of compensation.’ ” 

 (quoting Anfilofieff, 

).
        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 claimant’s employment in retaliation for his filing a workers’
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   compensation claim or that it otherwise acted unreasonably 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 discontinuing TTD benefits. That is not the same as finding employer
   misconduct in the claims process. The erroneous termination 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 misconduct. The absence of a finding of employer misconduct distinguishes 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 unreasonable 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”—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 insufficient 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 unreasonably, 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 viable basis for determining an insurer to have acted unreasonably, 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, 

. An order is supported by substantial reason when it “articulate[s] a rational connection
between the facts and the legal conclusions it draws from
them.” 

 (internal quotation marks omitted). Among
other purposes, the substantial-reason requirement ensures
“meaningful judicial review.” 

 (internal quotation marks
omitted); see 

 (explaining that, “to the extent
that the substantial reason requirement inheres in an agency’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
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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 benefits 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 knowledge at the time that it acts.” Liberty Northwest Ins. Corp. v.
Hughes, 

, 

, rev den, 

 (2005) (citing Brown, 

). But the order
does not explain why the information that Trimark reported
to SAIF did not give SAIF a legitimate doubt about its liability 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 authority 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 disciplinary reasons.” (Emphasis added.) But that conclusion
is not the same as a factual finding that claimant’s employment 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 evidence 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 substantial reason, because it fails to articulate a rational connection between its findings of fact and its legal conclusions.
As just discussed, the board purported to apply the “legitimate 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 liability. 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, 

 (explaining 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 requirements 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 knowledge 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 understanding 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 parties’ disagreements, the court takes no position on how the concurrence would
resolve them.
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           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 “unreasonably 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, 

, 

 (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, 

, 

 (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.” 

. 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 doctor as to how the injury occurred.” 

 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.” 

         Thus, the claimant was “entitled to penalties for
unreasonable denial of his claim.” 

 The court acknowledged 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 contributing or noncomplying employer causes or contributes to the
delay or refusal of compensation.” Id.1
        In this case, it is undisputed that SAIF terminated claimant’s temporary total disability (TTD) benefits

    1
      The dissenting opinion stated that the literal reading of the statute acknowledged by the majority “should settle it.” Anfilofieff, 

 (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.” 

 (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 discharged for violation of a work rule or for other disciplinary
reasons.”

         In reaching that conclusion, the board cited several 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 claimant. It further noted that Trimark did not counsel or discipline 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 testimony 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 support an inference that the employer in fact discharged claimant 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, 

. 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 misconduct distinguishes this case from Anfilofieff[.]” 

. And I do not believe that the “imputed misconduct” principle adopted in Anfilofieff necessarily means that
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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 finding 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 insufficient 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 insufficient evidence that the claimant was terminated for violating 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.” 

. 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 knowledge 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 several cases, tracing back to Norgard v. Rawlinsons, 

, 

(1977). There, the court stated the following: “As long as insurer … had a legitimate doubt, from a legal standpoint, of its liability, its conduct was not unreasonable.” 

. 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.” 

 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, 

, 

 (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 terminated 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 decision to terminate benefits—while incorrect—was reasonable under the circumstances, simply accepting the employer’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 placing 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 terminate 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 determine 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 discharged for violating work rules or for other disciplinary reasons “to reflect its
view that SAIF failed to produce sufficient evidence that its decision to discontinue 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 

 (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 firefighter’s medical condition resulted from his or her employment 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, 

, 

 (2016), we understood 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. 

.
        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 unreasonably 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 decision 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 benefits 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 advocated by SAIF and by the claimant in this case.
           Having made those points, I concur in the majority
opinion.