     Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
     Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
     303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
     corrections@akcourts.us.



              THE SUPREME COURT OF THE STATE OF ALASKA

ALASKA AIRLINES, INC.; EBERLE    )
                                 )
VIVIAN, INC.; AIGA, as successor in
interest to LUMBERMEN’S          )                     Supreme Court Nos. S-16127/16143
INSURANCE COMPANIES; and         )
NORTHERN ADJUSTERS, INC.,        )
                                 )                     Alaska Workers’ Compensation
                Appellants and   )                     Appeals Commission No. 14-024
                Cross-Appellees, )
                                 )
        v.                       )
                                 )                     OPINION
PAMELA DARROW,                   )
f/k/a/ PAMELA CREEKMORE,         )
                                 )                     No. 7192 - August 25, 2017
                Appellee and     )
                Cross-Appellant, )
                                 )
and                              )
                                 )
STATE OF ALASKA, DEPARTMENT )
OF LABOR & WORKFORCE             )
DEVELOPMENT, DIVISION OF         )
WORKERS’ COMPENSATION,           )
                                 )
                Intervenor and   )
                Cross-Appellee.  )
                                 )

             Appeal from the Alaska Workers’ Compensation Appeals
             Commission.

             Appearances: Richard L. Wagg, Russell Wagg Meshke &
             Budzinski, Anchorage, for Appellants/Cross-Appellees.
              J. John Franich, Franich Law Office, LLC, Fairbanks, for
              Appellee/Cross-Appellant. Kimberly D. Rodgers, Assistant
              Attorney General, Anchorage, and James E. Cantor, Acting
              Attorney General, Juneau, for Intervenor/Cross-Appellee
              State of Alaska.

              Before: Stowers, Chief Justice, Winfree, Maassen, Bolger,
              and Carney, Justices.

              CARNEY, Justice.

I.     INTRODUCTION
              An employee continued to work for over ten years after a job-related knee
injury but had multiple surgeries on her injured knee. Over time, her employer made
several permanent partial impairment payments, and she was eventually determined to
be permanently and totally disabled because of the work injury. She began to receive
Social Security disability at about the same time she was classified as permanently and
totally disabled for workers’ compensation.
              Her employer asked the Alaska Workers’ Compensation Board to allow
two offsets to its payment of permanent total disability (PTD) compensation: one related
to Social Security disability benefits and one related to the earlier permanent partial
impairment (PPI) payments. The Board established a Social Security offset and
permitted the employer to deduct the amount of previously paid PPI (adjusted for
inflation).
              The employee appealed to the Alaska Workers’ Compensation Appeals
Commission, arguing that the Board had improperly applied one of its regulations in
allowing the PPI offset and had incorrectly calculated the amount of the Social Security
offset. She also brought a civil suit against the State challenging the validity of the
regulation. The State intervened in the Commission appeal; the lawsuit was dismissed.


                                          -2-                                     7192

The Commission reversed the Board’s calculation of the Social Security offset and
affirmed the Board’s order permitting the PPI offset. The employer appealed the
Commission’s Social Security offset decision to this court, and the employee cross-
appealed the PPI offset. We affirm in part and reverse in part.
II.   FACTS AND PROCEEDINGS
             Pamela Darrow worked for Alaska Airlines at the Fairbanks airport in 1996.
While working, she suffered a knee injury that required multiple surgeries and ultimately
led to her becoming permanently and totally disabled. Darrow held other jobs in the
years following the 1996 injury, and Alaska Airlines paid her temporary total disability
(TTD) during times she was unable to work because of her injury. Alaska Airlines also
made four payments for PPI for a total of $40,500.1 The last payment was made in 2005.
             In 2012 the Social Security Administration decided Darrow met its
standards for disability related to her knee, found her disabled as of December 2010, and
determined that her first month of eligibility for benefits was June 2011. In January 2013
Darrow filed a written workers’ compensation claim for PTD benefits and an adjustment
of her disability compensation rate.2 She was receiving TTD at the time and was in the
reemployment process.3


      1
              PPI is calculated by multiplying the percentage of an injured worker’s
permanent impairment by a fixed amount. AS 23.30.190(a). At the time of Darrow’s
injury, the fixed amount was $135,000. Former AS 23.30.190(a) (1996). Using the
medical reference named in the statute, Darrow’s doctor ultimately rated Darrow as
having a 30% whole person impairment.
      2
              When a worker is permanently and totally disabled, AS 23.30.220(a)(10)
permits the Board to base compensation on a wage rate the employee could earn during
the period of disability rather than what she earned before the injury.
      3
             The reemployment process, which helps to prepare an employee to return
                                                                     (continued...)

                                           -3-                                      7192

              Alaska Airlines initially objected to her reclassification, but later agreed she
was permanently and totally disabled. It objected to the compensation rate adjustment
and noted it might be entitled to an offset for Darrow’s Social Security disability (SSDI)
under AS 23.30.225(b).4 Alaska Airlines later petitioned the Board to allow it two
offsets: one for SSDI and another one, pursuant to AS 23.30.180, for the PPI it had paid
earlier.5
              During Darrow’s 2014 deposition Alaska Airlines learned that she had also
been working for the State of Alaska at the time of her injury, which affected her
compensation rate.6 The parties later entered into a partial settlement in which they
agreed that: (1) Darrow’s “average weekly wage” when the injury occurred was
$668.98, rather than $270 as the adjuster had initially calculated;7 (2) she became

       3
              (...continued)
to work in a different job when she can no longer return to her former one, is set out in
AS 23.30.041.
       4
           Alaska Statute 23.30.225(b) authorizes an offset to an employer’s disability
payments when an employee gets both workers’ compensation and SSDI for the same
injury.
       5
              Alaska Statute 23.30.180 provides in part, “If a permanent partial disability
award has been made before a permanent total disability determination, permanent total
disability benefits must be reduced by the amount of the permanent partial disability
award, adjusted for inflation, in a manner determined by the board.”
       6
             Pursuant to AS 23.30.220(a)(7), “when the employee is working under
concurrent contracts with two or more employers, the employee’s earnings from all
employers is considered as if earned from the employer liable for compensation.”
       7
              The partial settlement indicated that the average weekly wage was
“computed under the 1996 version of AS 23.30.220(a)(4)(A)” and that the initial
calculation “did not take into account” Darrow’s concurrent employment with the State.
No records were available to show how the adjuster at the onset of the case determined
                                                                          (continued...)

                                             -4-                                        7192

disabled for purposes of the Alaska Workers’ Compensation Act (Act) on October 8,
2012; (3) Alaska Airlines would pay Darrow an additional $15,000 related to penalties
and interest “in satisfaction of all claims prior to March 8, 2012”; and (4) Darrow’s
attorney would receive “minimum statutory fees on all previously disputed benefits.”
They listed four unresolved issues in the partial settlement: one related to the Board’s
exercise of discretion under AS 23.30.220(a)(10) to determine a wage rate for calculating
Darrow’s PTD amount,8 one regarding the percentage of PTD that could be withheld for
any overpayment, and the two raised in this appeal.
             The Board held a hearing in August 2014; because the contested issues
were primarily legal, no witnesses testified. Darrow argued that, contrary to Alaska
Airlines’ assertion, AS 23.30.180 did not permit Alaska Airlines to offset the amount of
PPI it had previously paid her because the statute authorized an offset for permanent
partial disability rather than permanent partial impairment.9 Although a Board regulation


      7
               (...continued)
the average weekly wage. The applicable subsections of the 1996 version of
AS 23.30.220(a) used the phrases gross weekly earnings and spendable weekly wage, see
former AS 23.30.220(a) (1996), but the parties referred to the average weekly wage in
the partial settlement.
      8
              Alaska Statute 23.30.220(a)(10) permits the Board to “determine gross
weekly earnings by considering the nature of the employee’s work, work history, and
resulting disability” when an employee is PTD and the Board decides that the amount
of gross weekly earnings under other statutory subsections “does not fairly reflect the
employee’s earnings during the period of disability.” The amount of compensation is
tied to an employee’s gross weekly earnings. AS 23.30.175, .180, .185, .200, .220(a).
Alaska Airlines later agreed with Darrow’s calculation of $1,390 as her adjusted average
weekly wage under subsection .220(a)(10). Counsel told the Board the figure was based
on a vocational expert’s report.
      9
             Compare AS 23.30.190(a) (providing for compensation “[i]n case of
                                                                 (continued...)

                                           -5-                                     7192

provided that “[f]or purposes of (b) of this section and AS 23.30.180, permanent partial
disability benefits include permanent partial impairment benefits paid under
AS 23.30.190,”10 Darrow contended the regulation was against legislative intent. She
asked the Board to adopt the reasoning of Miller v. Municipality of Anchorage, in which
the Board based an offset on the worker’s adjusted weekly wage,11 when calculating the
SSDI offset. Under Darrow’s analysis, Alaska Airlines would not be entitled to an SSDI
offset because the offset calculation resulted in a negative number.
              Alaska Airlines argued first that it was entitled to an SSDI offset based on
Darrow’s actual wages in 1996 rather than the amount it had agreed to as an adjusted
wage under AS 23.30.220(a)(10). It contended that the statement in Underwater
Construction, Inc. v. Shirley that the phrase average weekly wages in AS 23.30.225(b)
was “the same as ‘gross weekly earnings’ in AS 23.30.220(a)(1)”12 meant that only
AS 23.30.220(a)(1) could be used to establish gross weekly earnings. Alaska Airlines
maintained that the purpose of AS 23.30.225 was to save the employer money and that
the way to effectuate this purpose was to calculate the offset using Darrow’s actual 1996



         9
               (...continued)
impairment partial in character but permanent in quality, and not resulting in permanent
total disability”), with AS 23.30.180(a) (requiring reduction of PTD by “the amount of
the permanent partial disability award, adjusted for inflation”).
         10
               8 Alaska Administrative Code (AAC) 45.134(c) (2011). 8 AAC 45.134(b)
provides, “In accordance with AS 23.30.155(j), the employer may reduce permanent
total disability benefits to recover permanent partial disability benefits previously paid
by the employer for the same injury.”
         11
              AWCB Dec. No. 13-0099 at 27, 2013 WL 4508816, at *20 (Aug. 20,
2103).
         12
              884 P.2d 150, 154 (Alaska 1994).

                                           -6-                                      7192

wage, even though Darrow would get less money in combined SSDI and PTD than she
would get in PTD alone under this proposal.13
             Alaska Airlines acknowledged that AS 23.30.180 provided for an offset for
permanent partial disability (PPD) rather than PPI. But it argued that in enacting
AS 23.30.180, the legislature intended “to avoid double payment for injuries” that cause
first a permanent impairment and later a permanent total disability. Alaska Airlines
pointed out that AS 23.30.190(a), the statute authorizing PPI, directs payment of PPI
only when the partial impairment does not “result[] in permanent and total disability.”
It argued that if an employee was paid PPI and later became permanently and totally
disabled, the employer should get a credit for the previously paid PPI as an advance
payment of PTD. Alaska Airlines cited several Board decisions that allowed an offset
for PPI when a claimant received PTD, and maintained that the Board’s regulation
“equat[ing] permanent and partial disability with permanent and partial impairment”
required the Board to consider the terms synonymous.
             In its decision the Board adopted the approach used in Miller, but its
application of Miller did not give Darrow the outcome she wanted.14 Instead, the
Board’s result when it calculated the SSDI offset was the same as Alaska Airlines’
proposal. When it turned to the PPI offset, the Board referred to the legislative history
of the 1988 amendments to the Act that replaced permanent partial disability with
permanent partial impairment. It also quoted from Larson’s Workers’ Compensation



      13
             Under Alaska Airlines’ calculation of the SSDI offset, Darrow would
receive $535.18 a week in combined SSDI and PTD instead of $668.98 in PTD alone.

      14
            In applying Miller, the Board limited Darrow’s adjusted wages under
AS 23.30.220(a)(10) to $668.90. As the Commission pointed out, this was erroneous.

                                           -7-                                     7192

Law to explain the differences between impairment and disability in compensation.15
The Board concluded that the legislature intended to change the partial impairment
benefit under the Act to “a physical impairment benefit” rather than a disability benefit;
it therefore concluded that payment of both PPI and PTD would not result in Darrow
receiving duplicate compensation for the same loss. The Board did not think Alaska
Airlines should be entitled to an offset for PPI according to statute, but it allowed the
offset because it considered itself bound by its own regulation stating that “[f]or purposes
of . . . AS 23.30.180, permanent partial disability benefits includes permanent partial
impairment benefits paid under AS 23.30.190.”16 The Board adjusted the PPI amounts
for inflation, denied Alaska Airlines’ request to withhold more than 20% of benefits to
recoup the overpayment, and denied both interest and further attorney’s fees to Darrow.
              Darrow appealed to the Commission, challenging the Board’s decision
regarding both offsets. She also filed suit in the superior court challenging the Board’s
regulation, evidently contending that it was not consistent with the statute.17 The director
of the Division of Workers’ Compensation intervened in the Commission appeal for
purposes of addressing the regulatory issue. The lawsuit was stayed and, according to
the State, later dismissed.
              The Commission reversed the Board’s calculation of the SSDI offset and,
using a different legal analysis, decided the PPI payments could be recouped under a
different part of the Act. The Commission calculated the same amount as Darrow for the




       15
          The Board looked to 6 ARTHUR LARSON ET AL., LARSON’S WORKERS’
COMPENSATION LAW § 80.05 (Matthew Bender, Rev. Ed. 2015).
       16
              8 AAC 45.134(c).
       17
              The record contains no pleadings from the court case.

                                            -8-                                       7192

SSDI offset, even though its analysis was somewhat different from hers.18 Under the
Commission’s analysis, the average weekly wage the parties agreed to under
AS 23.30.220(a)(10) was the average weekly wage to be used in calculating the offset.
It noted Alaska Airlines’ argument that the statutory language of AS 23.30.225(b) said
“average weekly wages at the time of injury.” But it interpreted the legislature’s 1995
amendment of AS 23.30.220(a)19 to include wages calculated under any subsection of
AS 23.30.220(a), including subsection .220(a)(10), within the definition of average
weekly wages under AS 23.30.225(a). The Commission thought that to interpret the
statute otherwise would lead to an unfair result: Darrow would receive less in combined
SSDI and PTD than she would in PTD alone. The Commission observed that the
statutory language permitted an offset, but that Alaska Airlines’ argument would result
in a reduction of total benefits.
              Next the Commission decided that Darrow’s PPI did not now meet the
terms of AS 23.30.190(a) — “impairment partial in character but permanent in quality,
and not resulting in permanent total disability” — and thus the earlier PPI payments were
effectively an advance payment of PTD. It allowed Alaska Airlines to offset the PPI
amount under AS 23.30.155(j),20 and ordered that “Alaska Airlines is entitled to withhold
20% of [Darrow’s] permanent total disability payments, without regard to AS 23.30.180



       18
              The parties also disputed how the Board should apply the maximum benefit
cap, but neither party has raised that issue before us. We therefore do not address it.
       19
              This amendment added subsection .220(a)(10) and allowed the Board
discretion to vary gross weekly earnings when an employee was eligible for PTD.
Ch. 75, § 9, SLA 1995.
       20
            Alaska Statute 23.30.155(j) permits an employer to offset overpayments or
advance payments “by withholding up to 20 percent . . . of unpaid installments of
compensation.”

                                           -9-                                     7192

and without regard to 8 AAC [45].134.” It did not address whether the amount of PPI
to be withheld should be adjusted for inflation,21 and it decided it lacked jurisdiction to
determine whether 8 AAC 45.134 (c) was valid.
              Alaska Airlines appeals, and Darrow cross-appeals.
III.   STANDARD OF REVIEW
              In an appeal from the Alaska Workers’ Compensation Appeals Commission
we review the Commission’s decision rather than the Board’s.22 We apply our
independent judgment to questions of “statutory interpretation requiring the application
and analysis of various canons of statutory construction.”23          “We exercise our
independent judgment in determining the validity of an administrative regulation . . . .”24
“Regulations are presumptively valid and will be upheld as long as they are ‘consistent
with and reasonably necessary to implement the statutes authorizing [their] adoption.’ ”25




       21
              Alaska Statute 23.30.155(j) does not mention adjusting earlier payments for
inflation as AS 23.30.180 does.
       22
            Humphrey v. Lowe’s Home Improvement Warehouse, Inc., 337 P.3d 1174,
1178 (Alaska 2014) (citing Shehata v. Salvation Army, 225 P.3d 1106, 1113 (Alaska
2010)).
       23
            ARCTEC Servs. v. Cummings, 295 P.3d 916, 920 (Alaska 2013) (quoting
Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903-04 (Alaska
1987)).
       24
              Lauth v. State, 12 P.3d 181, 184 (Alaska 2000) (citing Bd. of Trade, Inc.
v. State, Dep’t of Labor, Wage & Hour Admin., 968 P.2d 86, 89 (Alaska 1998)).
       25
               State, Bd. of Marine Pilots v. Renwick, 936 P.2d 526, 531 (Alaska 1997)
(alteration in original) (citation omitted) (quoting Chevron U.S.A. v. LeResche, 663 P.2d
923, 927 (Alaska 1983)).

                                           -10-                                      7192

IV.	   DISCUSSION
       A.	   The Commission Correctly Calculated The Social Security Disability
             Offset.
             The main question presented by the lead appeal is the proper method of
calculating an offset for Social Security disability (SSDI) payments when the amount of
permanent total disability (PTD) paid is based on income calculated under
AS 23.30.220(a)(10). This question requires consideration of two statutes, AS 23.30.220
and AS 23.30.225. We construe statutes according to reason, practicality, and common
sense, considering the meaning of the statute’s language, its legislative history, and its
purpose.26 We do not strictly apply the plain meaning rule but construe statutes using a
sliding scale approach, under which “the plainer the language of the statute, the more
convincing contrary legislative history must be.”27
             Alaska Airlines sought an offset under AS 23.30.225(b), which provides
that when an employee gets SSDI
             for an injury for which a claim has been filed under this
             chapter, weekly disability benefits payable under this chapter
             shall be offset by an amount by which the sum of (1) weekly
             benefits to which the employee is entitled under 42 U.S.C.
             401 – 433, and (2) weekly disability benefits to which the
             employee would otherwise be entitled under this chapter,
             exceeds 80 percent of the employee’s average weekly wages
             at the time of injury.
Calculation of an offset thus depends on the following amounts: weekly SSDI, weekly
workers’ compensation benefits, and “the employee’s average weekly wages at the time

       26
           Louie v. BP Expl. (Alaska), Inc., 327 P.3d 204, 206 (Alaska 2014) (citing
Grimm v. Wagoner, 77 P.3d 423, 427 (Alaska 2003)).
       27
            Bartley v. State, Dep’t of Admin., Teachers’ Ret. Bd., 110 P.3d 1254, 1258
(Alaska 2005) (quoting Alaskans for Efficient Gov’t Inc. v. Knowles, 91 P.3d 273, 275
(Alaska 2004)).

                                          -11-	                                     7192

of injury.” The parties’ main dispute centered on the meaning of the phrase average
weekly wages at the time of injury. Alaska Airlines argued that this phrase required
using $668.98 as Darrow’s average weekly wage because that represented her wages in
1996, the time of her injury. Darrow, in contrast, contended that $1,390, the adjusted
weekly wage to which the parties had agreed under AS 23.30.220(a)(10), was the correct
amount. Darrow based her argument in part on our interpretation of AS 23.30.225 and
.220 in Underwater Construction, Inc. v. Shirley.28
             The Commission considered Shirley and the 1995 amendments to
AS 23.30.220. It concluded that the average weekly wage at the time of injury could be
calculated under any subsection of AS 23.30.220, including subsection .220(a)(10). We
agree with the Commission.
             In Shirley the employee asked us to interpret the phrase average weekly
wages in AS 23.30.225(b) in pari materia29 with the phrase average current earnings in
the Social Security Act.30 We declined to do so.31 After deciding that average weekly
wages in AS 23.30.225(b) was ambiguous, we considered the language of the Act in
1977, when AS 23.30.255(b) was added.32 We observed that at that time average weekly
wages was also the term used in AS 23.30.220, making the phrase “the basis for


      28
             884 P.2d 150 (Alaska 1994).
      29
              In pari materia is a canon of statutory construction, meaning that statutes
relating to the same subject may be construed together, so that inconsistencies in one
may be resolved by looking to another statute on the same subject. In pari materia,
BLACK’S LAW DICTIONARY (10th ed. 2014).
      30
             Shirley, 884 P.2d at 155.
      31
             Id.
      32
             Id. at 153-54.

                                          -12-                                     7192

computing compensation.”33 We noted that even though the legislature had changed the
language of AS 23.30.220 in 1983, the method used to calculate a weekly wage rate in
the 1977 and 1983 versions of the statute remained “very similar.”34 From this we
concluded that average weekly wages in AS 23.30.225(b) was “the same as ‘gross
weekly earnings’ in AS 23.30.220(a)(1),” the subsection used to calculate the
employee’s compensation in that case.35
             Alaska Airlines asserts that AS 23.30.225(b)’s use of the phrase at the time
of injury only permits the use of Darrow’s income from 1996, the year of her injury.
This argument ignores the use of the same phrase in AS 23.30.220, which currently
provides that compensation is calculated “on the basis of an employee’s spendable
weekly wage at the time of injury.”36 (Emphasis added.) In spite of this language,
AS 23.30.220(a)(10) allows the Board to set a different wage rate for certain workers
who are permanently and totally disabled.
             Historically AS 23.30.220 has permitted the Board some discretion in
setting the wage used as a base for compensation calculation. When AS 23.30.225(b)
was added to the Act in 1977, for example, former AS 23.30.220 permitted the Board to
set a worker’s average weekly wages at the time of injury by considering wages for

      33
             Id. at 153 (quoting former AS 23.30.220 (1977)).
      34
            Id. at 153-54 (quoting former AS 23.30.220(2) (1977) and former
AS 23.30.220(a)(1) (1983)).
      35
            Id. at 154. We also observed that the version of AS 23.30.220 in effect
when Shirley was injured was unconstitutional. See id. at 151 n.2 (citing Gilmore v.
Alaska Workers’ Comp. Bd., 882 P.2d 922 (Alaska 1994)).
      36
            Spendable weekly wages are based on gross weekly earnings and serve as
the basis for calculating compensation under the Act. See AS 23.30.220(a).
AS 23.30.220(a)(10) allows the Board to vary an employee’s gross weekly earnings
when an employee is PTD, which changes the amount of compensation.

                                          -13-                                     7192

similar jobs if the Board did not think wages could be “fairly calculated” under other
subsections.37 And the same legislation that adopted the SSDI offset included a
provision that “the average weekly wage is that most favorable to the employee,”
considering the wages an employee had earned in the previous three years.38 These
variations in permissible calculations of a worker’s “average weekly wage . . . at the time
of the injury”39 suggest that the legislature understood and intended that at times the
wage used to calculate compensation would not be precisely the same wage that a worker
was in fact earning at the time of the injury.
              The    legislature   amended        AS   23.30.220    in    1995,    adding
subsection .220(a)(10), the provision the parties used to calculate Darrow’s weekly
earnings for purposes of computing her PTD amount.40 The legislature is presumed to
know that Shirley construed the term average weekly wages in .225(b) as meaning the



       37
             Former AS 23.30.220(3) (1977). See also former AS 23.30.220(a)(2)
(1984) (permitting Board to determine gross weekly earnings “by considering the nature
of the employee’s work and work history” if wages could not be “fairly calculated”
under other statutory subsection).
       38
              Ch. 75, § 10, SLA 1977, codified at former AS 23.30.220(2) (1978).
       39
              Former AS 23.30.220 (1977).
       40
              Ch. 75, § 9, SLA 1995. This amendment was intended to address the
constitutional issues discussed in Gilmore, 882 P.2d at 929. See Minutes, House Labor
& Commerce Comm., Hearing on House Bill (H.B.) 237, 19th Leg., 1st Sess., No. 397­
469 (Mar. 15, 1995) (statement of Rep. Eldon Mulder, Prime Sponsor of H.B. 237).
Discussions in hearing minutes specifically related to AS 23.30.220(a)(10) were mainly
about expanding its use to other benefits in addition to PTD. Minutes, House Judiciary
Comm., Hearing on H.B. 237, 19th Leg., 1st Sess., Tape 95-40, Side B No. 250-375
(Mar. 31, 1995) (statement of Rep. David Finkelstein); Minutes, Senate Judiciary
Comm., Hearing on H.B. 237, 19th Leg., 1st Sess., No. 555-Tape 95-28, Side B (May 3,
1995).

                                           -14-                                      7192

same thing as gross weekly earnings in .220(a).41 This presumption supports the
Commission’s conclusion that when the legislature amended the statute in 1995, “it in
effect wrote . . . the phrase ‘as determined under AS 23.30.220(a)(1)-(10)’ into
[AS 23.30.225(b)].”
             Alaska Airlines argues that our statement in Shirley that “[t]he general
purpose of the bill under which AS 23.30.225(b) was enacted was to make benefits more
affordable to employers in Alaska”42 supports its construction of the statute. It further
contends that Darrow’s case is analogous to Louie v. BP Exploration (Alaska), Inc.,
where we recognized that the legislature chose in 1988 to lower compensation for some
workers, even if it caused those workers hardship.43 But the legislative history of
AS 23.30.225(b) shows that it supports the Commission’s construction of the statute, not
Alaska Airlines’.
             Alaska Statute 23.30.225(b) was enacted in 1977 as part of Senate Bill
(S.B.) 131, but subsection .225(b) was first introduced as a separate bill in the House.44
Initially S.B. 131 only dealt with offsets for Social Security retirement and survivors




      41
              Joseph v. State, 293 P.3d 488, 492 (Alaska App. 2012) (“[T]he legislature
is presumed to be aware of pertinent court decisions when it amends a statute.” (citing
Shea v. State, Dep’t of Admin., Div. of Ret. & Benefits, 267 P.3d 624, 633 n.33 (Alaska
2011))).
      42
            Underwater Constr., Inc. v. Shirley, 884 P.2d 150, 154 (Alaska 1994)
(emphasis omitted).
      43
             327 P.3d 204, 208-09 (Alaska 2014).
      44
             1977 House Journal 775; House Bill (H.B.) 437, 10th Leg., 1st Sess.
(Apr. 5, 1977), Alaska Leg. Bill File No. 33.

                                          -15-                                      7192

benefits;45 but the House Labor and Management Committee amended it to include the
House bill46 because both bills related to Social Security offsets.47
             When S.B. 131 was initially introduced, the governor identified one of its
general purposes as “making benefits more affordable” to employers,48 a purpose we
noted in Shirley.49 While the House Labor and Management Committee anticipated that
its bill would decrease workers’ compensation insurance premiums and thereby save
employers money, those savings were to come from shifting costs to the federal
government. The House measure was meant to take advantage of a then-existing
“loophole” in federal law that permitted states to offset workers’ compensation payments
with SSDI when an injured worker recieved both forms of compensation, thereby
shifting part of the cost of supporting a disabled worker to the federal government.50 One


      45
            S.B. 131, 10th Leg., 1st Sess. (Feb. 4, 1977). The reduction of workers’
compensation related to retirement and survivors benefits is now codified at
AS 23.30.225(a).
      46
              Minutes, House Labor & Mgmt. Comm. Hearing on S.B. 131, 10th Leg.,
1st Sess., Alaska Leg. Microfiche Collection No. 89 (Apr. 26, 1977).
      47
             Statement of Rep. Larry Carpenter, Tape 21 at 55:50-57:08, Hearing on
S.B. 131 Before the House Labor & Mgmt. Comm., 10th Leg., 1st Sess. (Apr. 26, 1977).
      48
             1977 Senate Journal 203.
      49
             Underwater Constr., Inc. v. Shirley, 884 P.2d 150, 154 (Alaska 1994).
      50
            Statements of Rep. Larry Carpenter and Mr. Theodore Berns, Tape 21 at
56:25-57:18, 58:14-59:40, Hearing on S.B. 131 Before the House Labor & Mgmt.
Comm., 10th Leg., 1st Sess. (Apr. 26, 1977). According to Larson’s the federal and state
governments have used offsets to shift costs between the Social Security and workers’
compensation systems. See 14 ARTHUR LARSON ET AL., LARSON’S WORKERS’
COMPENSATION LAW § 157.03[5] (Matthew Bender, Rev. Ed. 2015). The federal
government ultimately “enacted legislation effectively ruling out any future adoptions
                                                                          (continued...)

                                           -16-                                     7192

witness told the committee that in “no case” would the proposed offset result in any
decrease in payments to workers.51 This witness presented a report that had been
prepared for the Municipality of Anchorage showing hypothetical examples in which an
employer would generally pay less in workers’ compensation under the proposal.52 This
legislative history is a stark contrast to the history we discussed in Louie, which showed
the legislature expressly chose to lower benefits for some workers at the same time it
increased benefits for others.53 Nothing in the legislative history of either the Senate or
House proposals shows any intent to reduce benefits paid to injured workers; to the
contrary, one argument in favor of the legislation was that it would give workers the
benefit of the Social Security taxes they had paid.54
              We have recognized that workers’ compensation must balance two
competing concerns. Wages must be calculated “to arrive at a fair approximation of [a]


       50
               (...continued)
of offsets at the state compensation end,” id., and state offsets can only be used if they
were in effect as of February 18, 1981. 42 U.S.C. § 424a(d) (2012). Under the federal
offset provision, combined benefits from SSDI and workers’ compensation are capped
at 80% of the worker’s average current earnings; this provision is inapplicable to states
with their own offset provisions. 42 U.S.C. § 424a.
       51
            Statement of Theodore Berns, Tape 21 at 59:40-59:48, Hearing on S.B. 131
Before the House Labor & Mgmt. Comm., 10th Leg., 1st Sess. (Apr. 26, 1977).
       52
              Id. at 60:28-61:42.
       53
              Louie v. BP Expl. (Alaska), Inc., 327 P.3d 204, 208-09 (Alaska 2014).
       54
             Statement of Theodore Berns, Tape 21 at 58:50-59:37, Hearing on S.B. 131
Before the House Labor & Mgmt. Comm., 10th Leg., 1st Sess. (Apr. 26, 1977).
Relatedly, the proposal to offset retirement benefits was capped at half of the Social
Security benefits because the employer only contributed half the Social Security tax.
Statement of Dick Block, Dir. of Ins., Tape CB21C5 at 13:25-14:03, Hearing on S.B.
131 Before the Senate Labor & Mgmt. Comm., 10th Leg., 1st Sess. (Mar. 3, 1977).

                                           -17-                                      7192

claimant’s probable future earning capacity”55 while at the same time, benefits must not
be too generous for fear that an injured worker will not have an incentive to return to
work.56 The 1977 hearing testimony suggests that the offset legislation was meant to
balance these goals: replacing enough income with enough money that an injured
worker’s standard of living would not be dramatically reduced but keeping benefits low
enough to provide an incentive to return to work.57 The federal Social Security offset
provision had a similar purpose — ensuring that workers have an incentive to return to
work and preventing the “erosion of state workers’ compensation programs.”58 But if
an injured worker returns to work for a long time before becoming completely disabled,
using an earlier wage to set benefits can result in hardship.59 Permitting an alternative
method to calculate gross weekly earnings under AS 23.30.220(a)(10) ameliorates this


       55
            Peck v. Alaska Aeronautical, Inc., 756 P.2d 282, 286 (Alaska 1988)
(quoting Johnson v. RCA-OMS, Inc., 681 P.2d 905, 907 (Alaska 1984)).
       56
              See Alaska Pac. Assurance Co. v. Brown, 687 P.2d 264, 273 (Alaska 1984)
(agreeing “that the State has important interests in avoiding disincentives to rehabilitation
and in creating incentives for injured workers to go back to work”).
       57
             Statement of Dick Block, Dir. of Ins., Tape CB21C5 at 12:30-13:03,
Hearing on S.B. 131 Before the Senate Labor & Mgmt. Comm., 10th Leg., 1st Sess.
(Mar. 3, 1977).
       58
              Freeman v. Harris, 625 F.2d 1303, 1306 (5th Cir. 1980) (citing Hearings
on H.R. 6675 Before the Senate Comm. on Fin., 89th Cong., 1st Sess. 252, 259, 366, 540,
738-40, 892-97, 949-54, 990 (1965)). Evidently when the federal Social Security offset
was repealed for several years, “data . . . showed that in the majority of the states, the
typical worker who was receiving workers’ compensation and federal disability benefits
actually received more in benefits than his pre-disability take-home pay.” Id. (citing
Hearings on H.R. 6675 Before the Senate Comm. on Fin., 89th Cong., 1st Sess. 151
(1965)).
       59
              See Peck, 756 P.2d at 287-88 (construing statute to avoid an unfair result).

                                            -18-                                       7192

hardship. Construing the Act as Alaska Airlines requests would effectively block
AS 23.30.220(a)(10)’s calculation of an alternative wage.
             Alaska Airlines also argues that we should consider AS 23.30.225(b) a
more specific provision than AS 23.30.220 and urges us to apply the principle that the
more specific statutory provision should control over the general one when the
provisions cannot be harmonized.60 It does not explain why the provisions cannot be
harmonized or why AS 23.30.225(b) is more specific. The Commission thought the two
provisions could be harmonized by interpreting average weekly wages at the time of
injury in AS 23.30.225(b) as including gross weekly earnings calculated under any
subsection of AS 23.30.220(a).
             We agree with the Commission that the statutes can be harmonized;
therefore the rule that specific provisions govern more general ones does not apply.61
When the offset provision was adopted, the average weekly wage under AS 23.30.220
did not have to correspond to the exact wage the worker was earning at the time of
injury, yet the legislature used the same phrase in AS 23.30.225(b) that it used in
AS 23.30.220.62 This supports the Commission’s conclusion that the two provisions can
be harmonized. Additionally, in Shirley, we interpreted the phrase average weekly wages
in AS 23.30.225(b) as “refer[ring] to the measure of historical earning capacity used to


      60
               See In re Hutchinson’s Estate, 577 P.2d 1074, 1075 (Alaska 1978)
(“[W]here one section deals with a subject in general terms and another deals with a part
of the same subject in a more detailed way, the two should be harmonized, if possible;
but if there is a conflict, the specific section will control over the general.”).
      61
             Monzulla v. Voorhees Concrete Cutting, 254 P.3d 341, 345 n.20 (Alaska
2011) (citing Nat’l Bank of Alaska v. State, Dep’t of Revenue, 642 P.2d 811, 817-18
(Alaska 1982)).
      62
             Former AS 23.30.220(3) (1977).

                                          -19-                                     7192

calculate compensation” — that is, gross weekly earnings as determined by
AS 23.30.220.63
              Here Alaska Airlines’ construction of the statute results in Darrow getting
less per week in combined workers’ compensation benefits and SSDI — $535.18 — than
she would get in workers’ compensation alone — $668.98 — based upon the stipulated
amount of $1,390 as her weekly wage. While the Commission’s interpretation does not
give Alaska Airlines an offset as long as Darrow gets SSDI, the amount Darrow receives
under the Commission’s analysis is still substantially less than the adjusted weekly wage
the parties stipulated to. The Commission’s construction of the Act is consistent with
both the purpose of keeping an employee’s benefits below wages and providing adequate
compensation.     We hold that the Commission correctly construed and applied
AS 23.30.220(a) and AS 23.30.225(b).
       B.     The Commission Erred In Allowing An Offset For PPI.
              Darrow’s cross-appeal also presents an issue of statutory construction and
requires us to examine the legislature’s use of the terms disability and impairment in the
context of workers’ compensation. Alaska Statute 23.30.180(a) provides in part, “If a
permanent partial disability award has been made before a permanent total disability
determination, permanent total disability benefits must be reduced by the amount of the
permanent partial disability award, adjusted for inflation, in a manner determined by the
board.” The statutory definition of disability is found in AS 23.30.395(16): “ ‘disability’
means incapacity because of injury to earn the wages which the employee was receiving
at the time of injury in the same or any other employment.”
              Alaska Statute 23.30.190(a) sets out a formula for paying compensation
“[i]n case of impairment partial in character but permanent in quality, and not resulting


       63
              Underwater Constr., Inc. v. Shirley, 884 P.2d 150, 154 (Alaska 1994).

                                           -20-                                      7192
in permanent total disability.” To determine “the existence and degree of permanent
impairment,” AS 23.30.190(b) requires the use of a specific medical reference, the AMA
Guides. Nothing in AS 23.30.190 links compensation for a permanent impairment to an
inability to earn wages.
             Before 1988, AS 23.30.190 authorized payment of permanent partial
disability compensation, with payments based on the type of permanent injury and the
worker’s wage-earning capacity.64 In 1988 the legislature repealed and reenacted
AS 23.30.190, replacing permanent partial disability with permanent partial impairment
benefits.65 At the same time, the legislature amended AS 23.30.180(a) to include the
provision mandating reduction of PTD by the amount of previously paid permanent
partial disability.66 The legislature also made both of these provisions applicable only
to injuries that happened on or after July 1, 1988.67
             Relying principally on AS 23.30.180(a) and the regulation it had
promulgated to implement it, 8 AAC 45.134,68 the Board permitted Alaska Airlines to
recover the $40,500 it had previously paid Darrow in PPI, plus an additional $11,338 to
adjust the prior awards for inflation.      The Commission, in contrast, interpreted


      64
             Former AS 23.30.190 (1984).
      65
             Ch. 79, § 34, SLA 1988.
      66
             Id. § 31.
      67
             Id. § 48.
      68
               8 AAC 45.134(c) provides, “For purposes of (b) of this section and
AS 23.30.180, permanent partial disability benefits includes permanent partial
impairment benefits paid under AS 23.30.190.” 8 AAC 45.134(b) provides, “In
accordance with AS 23.30.155(j), the employer may reduce permanent total disability
benefits to recover permanent partial disability benefits previously paid by the employer
for the same injury.”

                                          -21-                                     7192

AS 23.30.190(a) and AS 23.30.155(j) and decided that Alaska Airlines could recover the
PPI as an overpayment of PTD “without regard to AS 23.30.180 and without regard to
8 AAC [45].134.” It did not mention the additional $11,338.
             Darrow argues that the Commission misinterpreted the Act by allowing
Alaska Airlines to offset the PPI it had previously paid her against her PTD award. Her
argument is based on statutory language: AS 23.30.180(a) requires an offset when “a
permanent partial disability award has been made before a permanent total disability
determination” (emphasis added) — not a permanent partial impairment award — yet
permanent partial disability as a benefit was removed from the Act in 1988.69 Darrow
contends that disability and impairment are distinct concepts. She points out that a
person may be disabled from working without having a permanent impairment,70 and
conversely, a person who has a permanent impairment may not be disabled from
working, as illustrated by Darrow herself. Darrow maintains that the Board correctly
recognized that PPI was intended to compensate for a separate loss related to a physical
harm, rather than wage loss from an injury, which would be a disability benefit.
             Darrow points to a different statutory subsection, AS 23.30.041(k), which
concerns an employee’s eligibility for reemployment benefits, to show that the legislature
understood that PPD and PPI are in fact different. In that subsection the legislature
explicitly differentiated between PPD and PPI.71 She concludes that AS 23.30.180 does


      69
             Ch. 79, § 34, SLA 1988.
      70
             For example, in Rydwell v. Anchorage School District, 864 P.2d 526, 529­
30 (Alaska 1993), the parties agreed the injured worker could not return to her former
job even though she had a 0% impairment rating.
      71
               Alaska Statute 23.30.041(k) provides in part, “If permanent partial
disability or permanent partial impairment benefits have been paid in a lump sum before
                                                                           (continued...)

                                          -22-                                      7192

not authorize an offset against her PTD for PPI. Darrow argues that the Commission’s
construction of AS 23.30.190 could permit an employer a double recovery of PPI when
AS 23.30.041(k) had been used to suspend benefits. Both Darrow and Alaska Airlines
currently take the position that permanent partial disability in AS 23.30.180(a) refers to
the permanent partial benefit that existed before the 1988 statutory amendments.
              Alaska Airlines asks us to affirmthe Commission’s interpretation of the Act
allowing it to recoup PPI under AS 23.30.190(a) and .155(j). Alaska Airlines argues that
the 1988 addition of the offset provision to subsection .180(a) “only . . . related to
injuries occurring prior to the statutory changes . . . which changed permanent partial
disability benefits to permanent partial impairment benefits.” Therefore, it continues,
after the 1988 amendments to the Act, “neither the credit provision of § .180 nor the
board’s regulation in 8 AAC 45.134(c) is required to address recovery of PPI paid when
an employee is rendered permanently and totally disabled.” It does not mention the
Board’s adjustment of the PPI amount for inflation or the Commission’s failure to
address it.
              The State supports the Commission’s interpretation of the statute, arguing
that Darrow “is not entitled to PPI benefits for her knee injury because her impairment
resulted in permanent total disability.” The State relies on the plain meaning of
AS 23.30.190(a) — which refers to PPI as not resulting in permanent total disability —
and the common meaning of overpayment, but also maintains that the Board’s regulation
is consistent with both AS 23.30.180 and .190 and “harmonizes the two statutes.” It
contends that the concepts of disability and impairment are distinct but related, as shown


       71
            (...continued)
the employee requested or was found eligible for reemployment benefits, payment of
benefits under this subsection is suspended until permanent partial disability or
permanent partial impairment benefits would have ceased . . . . ”

                                          -23-                                      7192

by language in AS 23.30.180(a) that classifies a worker who suffers certain impairments
as presumptively permanently and totally disabled. It argues that not requiring an offset
would overcompensate Darrow. At oral argument before us the State postulated that,
because both statutes took effect on the same date, the statutory language in
AS 23.30.180(a) was a drafting error and that the legislature meant to use impairment
rather than disability in the statutory language.
             As noted, the Commission’s decision relied solely on AS 23.30.190(a) and
AS 23.30.155(j) to permit Alaska Airlines’ recovery of previously paid PPI and failed
to explore the meaning of AS 23.30.180(a) and its interaction with AS 23.30.190(a). The
Commission effectively wrote out of the statute AS 23.30.180(a)’s provision for
recovery of previously paid PPD by saying that “Alaska Airlines is entitled to withhold
20% of [Darrow’s] permanent total disability payments, without regard to AS 23.30.180
and without regard to 8 AAC [45].134.”
             Alaska Airlines asks us to ignore AS 23.30.180(a), the Board’s regulation,
and the Board’s decision applying that statute and regulation, narrowing its focus to the
statutory subsections relied on by the Commission.           Although we review the
Commission’s decision, not the Board’s,72 when construing a statute, “we must,
whenever possible, interpret each part or section of a statute with every other part or
section, so as to create a harmonious whole.”73 “When a statute or regulation is part of
a larger framework or regulatory scheme, even a seemingly unambiguous statute must


      72
            Humphrey v. Lowe’s Home Improvement Warehouse, Inc., 337 P.3d 1174,
1178 (Alaska 2014) (citing Shehata v. Salvation Army, 225 P.3d 1106, 1113 (Alaska
2010)).
      73
             State, Dep’t of Commerce, Cmty. & Econ. Dev., Div. of Ins. v. Progressive
Cas. Ins. Co., 165 P.3d 624, 629 (Alaska 2007) (quoting Kodiak Island Borough v.
Exxon Corp., 991 P.2d 757, 761 (Alaska 1999)).

                                           -24-                                    7192

be interpreted in light of the other portions of the regulatory whole.”74 We decline to
ignore the relevant statutory context and consider AS 23.30.190(a) and .155(j) in
isolation to decide whether Alaska Airlines was entitled to an offset for PPI it had
previously paid Darrow, because that analysis ignores other parts of the statute as well
as the Board’s regulation.
             1.     Statutory language and prior interpretation of disability
             As set out above, AS 23.30.180(a) permits an offset for permanent partial
disability when an employee later becomes permanently and totally disabled, and
AS 23.30.190(a) allows an award of PPI “[i]n case of impairment partial in character but
permanent in quality, and not resulting in permanent total disability.” (Emphasis added.)
Whether the Act authorizes an employer to reduce PTD by the amount it earlier paid as
PPI is not clear from the statutory language.
             In Rydwell v. Anchorage School District we considered the difference
between disability and impairment in the context of reemployment benefits under
AS 23.30.041.75 We distinguished between these two concepts, observing that “Alaska’s
statutory scheme does not use the AMA Guides to determine disability, which requires
a discretionary analysis considering incapacity in relation to employment potential.”76
Instead the Act uses the AMA Guides “to provide a predictable standard for impairment,
which measures the employee’s absolute physical capacity.”77 Because the legislature
conditioned receipt of reemployment benefits on having an impairment, not a disability,


      74
             Millman v. State, 841 P.2d 190, 194 (Alaska App. 1992), quoted in Fed.
Deposit Ins. Corp. v. Laidlaw Transit, Inc., 21 P.3d 344, 351 (Alaska 2001).
      75
             864 P.2d at 530-31.
      76
             Id. at 531 (emphasis in original).
      77
             Id. (emphasis in original).

                                           -25-                                    7192

we rejected the argument that an employee’s inability to return to a previous employment
was a basis to find eligibility for reemployment benefits.78 And in response to a
dissenting opinion, we pointed out that the employee might be eligible for PTD even if
not eligible for reemployment benefits under our analysis. We noted that the AMA
Guides “cautions against a ‘ “one-to-one” translation of impairment to disability.’ ”79
              The language of AS 23.30.180(a) and our prior construction of impairment
do not permit the two terms, impairment and disability, to be used interchangeably. But
that is the effect of the regulation on which the Board relied to decide this case. The
legislature requires that “[t]echnical words and phrases and those that have acquired a
peculiar and appropriate meaning, whether by legislative definition or otherwise, shall
be construed according to the peculiar and appropriate meaning.”80                   Alaska
Statute 23.30.180(a) uses a specifically defined term, disability, which ties eligibility for
that benefit to the inability to earn wages and which we have interpreted to be distinct
from impairment.
              Alaska Statute 23.30.190(a) authorizes payment of PPI “[i]n case of
impairment partial in character but permanent in quality, and not resulting in permanent
total disability.” We apply common rules of grammar to construe statutory language.81
The statutory language and sentence structure suggest that the phrase and not resulting
in permanent total disability was intended to limit PPI to workers whose disability did

       78
              Id. at 528-31.
       79
              Id. at 531 (quoting id. at 532 (Compton, J., dissenting)).
       80
              AS 01.10.040(a).
       81
             State v. Fyfe, 370 P.3d 1092, 1099 (Alaska 2016) (citing AS 01.10.040(a);
Emp’t Sec. Comm’n v. Wilson, 461 P.2d 425, 428 (Alaska 1969)) (construing statutory
language in accordance with the common rules of grammar); see also Wilson, 461 P.2d
at 428 & n.5 (citing punctuation rule from dictionary in statutory construction).

                                            -26-                                       7192

not fall under AS 23.30.180, which presumes that certain losses render a worker
permanently and totally disabled.82 The phrase and not resulting in permanent total
disability is set off with commas, indicating it is a separate, coordinate requirement for
an injured worker to qualify for PPI.83 When Darrow was evaluated for impairment
benefits, her impairment had to meet two distinct requirements — it had to be “partial
in character but permanent in quality” and it could not “result[] in permanent total
disability.” It is uncontested that Darrow met both conditions when she was found
eligible for PPI. The statutory language does not indicate that a worker who is eligible
for PPI when rated should be retroactively classified as ineligible for PPI if years later
the worker becomes permanently and totally disabled. And if AS 23.30.190(a) has the
meaning the Commission said it has, there was no need for the Board to promulgate the
regulation it used to allow the offset in this case.84
              The provision in subsection .180(a) authorizing recovery of the amount of
a PPD award from a PTD award was added to the Act in 1988 as part of the same
legislation that replaced permanent partial disability compensation with permanent
partial impairment compensation.85         Alaska Airlines’ and Darrow’s theory that
AS 23.30.180(a) was intended to allow recovery of PPD awards made under the prior
version of the Act has some logic because when the 1988 amendments were enacted, we
had not considered or decided whether an employee who received PPD benefits could

       82
              AS 23.30.180(a) sets out specific losses that “in the absence of conclusive
proof to the contrary, constitute[] permanent total disability.”
       83
              See BRYAN A. GARNER, THE REDBOOK: AMANUAL ON LEGAL STYLE § 1.7
(2d ed. 2006) (discussing use of comma for separate, coordinate adjectives and adverbs).
       84
              See 8 AAC 45.134 (c) (allowing an employer to reduce permanent total
disability benefits to recover previously paid PPI).
       85
              Ch. 79, §§ 31, 34, SLA 1988.

                                            -27-                                    7192

also receive PTD benefits.86 But as we noted in Wagner v. Stuckagain Heights, and as
the State acknowledges here, the legislature made the 1988 amendments to the Act
applicable “only to injuries sustained on or after July 1, 1988.”87 This restriction means
that the provision requiring an offset for previously paid PPD cannot apply to cases in
which the employee was already eligible for PPD benefits because that employee’s
injury had to have occurred before the amended statutes took effect. As the State
candidly admitted at oral argument before us, reading AS 23.30.180(a) together with the
effective date of the amendments leads to the conclusion that the offset authorized under
subsection .180(a) “effectively applies to no cases whatsoever” and raises the possibility
that a drafting error of some type was made.
              Two distinct drafting errors are possible.              The provision in
subsection .180(a) could apply to PPD awards made under the previous version of the
Act, as Alaska Airlines and Darrow contend. If that was the legislature’s intent, then it
made a drafting error by not exempting that part of the legislation from the effective date
in the bill.88 At oral argument before us, the State offered the alternative theory that use
of permanent partial disability in subsection .180(a) was “a drafting mistake” — that the
legislature “meant to say permanent partial impairment instead of permanent partial
disability” because when the statute is “read in that light it makes perfect sense” and “it
has meaning.” Because the statutory language is unclear, we consider the legislative
history of the relevant parts of AS 23.30.180(a) and AS 23.30.190.




       86
              Wagner v. Stuckagain Heights, 926 P.2d 456, 457-58 (Alaska 1996).
       87
              Ch. 79, § 48, SLA 1988, cited in Wagner, 926 P.2d at 458 n.2.
       88
             The legislature provided that some sections of the 1988 amendments to the
Act applied to injuries that happened before July 1, 1988. See ch. 79, § 48, SLA 1988.

                                           -28-                                       7192

             2.     Legislative history
             The legislative history related to these statutory provisions yields few clues
as to the legislature’s intent. The legislature received testimony and reports about the
difference in the concepts of impairment and disability when it considered the change
from permanent partial disability to permanent partial impairment.89 That legislative
history shows some inconsistent use of the terms disability and impairment when
referring to permanent partial compensation.90 The main reasons discussed for changing


      89
              See, e.g., Governor’s Oversight Group Report on SB 322/HB 352 10-11
(Mar. 12, 1988) (discussing difference between permanent partial benefits under old and
new statutes), Alaska Leg. Microfiche Collection No. 5389. See also Minutes, Joint
House & Senate Labor & Commerce Comm., Hearing on H.B. 352/S.B. 322, 15th Leg.,
2d Sess., No. 350-461 (Jan. 19, 1988) (statement of John H. Lewis), in Pat Wilson,
Alaska Legislative History: Workers’ Comp. SB 322 (1988) (compiled 1993) (explaining
that primary concern for people with PPD is income loss); Letter from Philip M.
Pallenberg to Senator Tim Kelly (Jan. 11, 1988), Alaska Leg. Microfiche Collection No.
5385 (expressing concern that impairment payment would not address effect of injury
on ability to work).
             Our decisions before 1988 distinguished between the “whole person”
theory of compensation and the “earning capacity” theory. See, e.g., Foster v. Wright-
Schuchart-Harbor, 644 P.2d 221, 222 n.2 (Alaska 1982). See also Hewing v. Alaska
Workmen’s Comp. Bd., 512 P.2d 896, 900 (Alaska 1973) (stating that basic concept of
Alaska workers’ compensation law is “that unscheduled partial disability awards should
be made for economic loss, not for physical injury as such”); 6 ARTHUR LARSON ET AL.,
LARSON’S WORKERS’ COMPENSATION LAW §§ 80.02-.07 (Matthew Bender, Rev. Ed.
2015) (discussing history and different theories of permanent partial benefits).
      90
              See, e.g., H. Judiciary Comm., House CS for CS for Senate Bill No. 322
(L&C), Sectional Analysis, § 33, 15th Leg., 2d Session (Apr. 6, 1988) (labeling section
about permanent partial benefits “Permanent Partial Disability” but noting difference in
concepts), in Wilson, supra note 89; see also Memorandum from Shari Kochman to Rep.
John Sund Re: All Proposed Amendments to SB 322 in All Testimony, Amendment #12
(Apr. 16, 1988), Alaska Leg. Microfiche Collection No. 5383 (stating that maximum
“PPD” would be lowered).

                                          -29-                                       7192

the permanent partial benefit from permanent partial disability to permanent partial
impairment were concerns about fairness in benefit levels and litigation costs related to
unscheduled benefits.91 Neither concern is particularly relevant to the issue before us.
             The sentence in AS 23.30.180(a) at the heart of this case was added in the
Senate Labor and Commerce Committee in February 1988,92 apparently at the request
of the Labor-Management Task Force on Workers’ Compensation.93 A memo to the
committee chair from the Task Force proposed inserting the exact language now in
AS 23.30.180(a) because “[c]urrent language” made it possible for “individuals [to]
receive both a permanent partial disability award and permanent total disability
payments” for the same injury, which was not the intent of the Task Force.94 The memo
does not clarify whether “[c]urrent language” referred to the pre-1988 statutory language
or to the proposed legislation then under consideration.95 But the same committee that
inserted the relevant language in AS 23.30.180(a) had just two days earlier also inserted

      91
               Minutes, Joint House & Senate Labor & Commerce Comm., Hearing on
H.B. 352/S.B. 322, 15th Leg., 2d Sess., Tape 1, Nos. 350-461, 666 (Jan. 19, 1988)
(statements of John H. Lewis and Jacquelyn McClintock), in Wilson, supra note 89. See
also Sectional Analysis of Workers’ Compensation Task Force SB 322 and HB 352, at
9, in Sen. Labor & Commerce Comm. Files, 15th Leg., 2d Sess. (1988), Alaska Leg.
Microfiche Collection No. 5378 (stating intent “to redistribute benefits so that those
employees who have a greater percentage of injury receive awards commensurate with
their injuries”).
      92
             Working Draft, Committee Substitute for S.B. 332 (L&C), § 26, 15th Leg.,
2d Sess. (Feb. 19, 1988), Alaska Leg. Microfiche Collection No. 5375.
      93
             Memorandum from the Labor-Mgmt. Task Force on Workers’ Comp. to
Sen. Tim Kelly, Chair, Sen. Labor & Commerce Comm. ¶ 15 (Feb. 17, 1988), Alaska
Leg. Microfiche Collection No. 5383.
      94
             Id.
      95
             Id.

                                          -30-                                     7192

the statutory language we construed in Rydwell, conditioning receipt of reemployment
benefits on the existence of a permanent impairment.96
             Throughout the time the legislature considered the 1988 amendments to the
Act, the language in AS 23.30.190(a) that the Commission construed remained
unchanged.97 We are aware of no legislative history supporting the Commission’s
construction of this subsection to authorize a retroactive determination that an employee
was never entitled to PPI. The Board recognized that the legislative history could
support the construction of the statute Darrow advances — that the legislature intended
to compensate injured workers for a distinct loss when it disconnected PPI from wage
loss. The mere fact that the legislature limited receipt of PPI to those workers who were
not permanently and totally disabled when rated does not mean the legislature intended
to authorize the employer to recoup previously paid PPI if an employee was determined,
years later, to be permanently and totally disabled. The compensation for impairment
is awarded independent of earning capacity and for a different type of loss than the later
permanent disability compensation, which depends on a worker’s inability to earn wages.
             The State asks us to apply the rule that an agency’s longstanding
interpretation of a statute should be given deference. But in this case the Commission’s
construction of the statute does not rely on or support the Board’s regulation, which
appears to be the longstanding construction to which the State refers. This difference in
construing the statutes suggests that the Board did not interpret the Act as the




      96
             Working Draft, Committee Substitute for S.B. 332 (L&C), §7, 15th Leg.,
2d Sess. (Feb. 17, 1988), Alaska Leg. Microfiche Collection No. 5375.
      97
             All of the versions of S.B. 322, 15th Leg., 2d Sess., are compiled in Wilson,
supra note 89.

                                          -31-                                      7192

Commission did.98 Had the Board interpreted AS 23.30.190 as the Commission did, the
regulation would have been completely unnecessary.99 Moreover, the Board did not cite
AS 23.30.190 as authority for the regulation.100 In addition, the Commission interpreted
the statute using its independent judgment and ignored the regulation and its effect on
Darrow’s case.101 Thus we see no reason why we should defer to the Board’s
interpretation of the Act as set out in the regulation when the Commission did not and
we review the Commission’s decision. In any event, a regulation cannot “justify a
statutory interpretation not warranted by the statute’s own language and legislative
history.”102
               We agree with the State that the legislature likely made a drafting error in
1988. We faced a similar issue in State, Department of Commerce, Community &
Economic Development, Division of Insurance v. Alyeska Pipeline Service Co., where
the State asked us to construe a statute with specific definitions in a manner that was

       98
               Alaska Administrative Code, Register 113 (April 1990).
       99
              The Notice of Proposed Changes related to the regulation said, “8 AAC
45.134 is proposed to be amended to specify how the employer may recover payment of
permanent partial disability benefits when permanent total disability [benefits] are paid
for the same injury, and to clarify the meaning of the term ‘permanent partial disability
benefits.’ ” Jim Sampson, Commissioner of Labor, Notice of Proposed Changes in the
Regulations of the Alaska Workers’ Compensation Board at 4 (Mar. 24, 1989).
       100
               Alaska Administrative Code, Register 113 (April 1990).
       101
            AS 23.30.180(a) together with the regulation allowed the Board to adjust
the amount of PPI for inflation, increasing the amount Alaska Airlines could recoup by
$11,338.
       102
             Muller v. BP Expl. (Alaska) Inc., 923 P.2d 783, 792 (Alaska 1996). In
Wagner v. Stuckagain Heights, 926 P.2d 456, 457 & n.1 (Alaska 1996), we applied
independent judgment and de novo review to interpret former AS 23.30.180 and former
AS 23.30.190.

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inconsistent with those definitions.103 The separation of powers doctrine “prohibits this
court from enacting legislation or redrafting defective statutes.”104 When the legislature
makes a drafting error, we do not rewrite the statute.105 The statutory language in
AS 23.30.180(a) does not authorize an employer to reduce a PTD award when an
employee has previously received PPI. Alaska Statute 23.30.180(a) authorizes recovery
of previously paid permanent partial disability, not impairment, benefits.           The
Commission’s construction of AS 23.30.190(a) fails to interpret that subsection in the
context of the entire Act, including AS 23.30.180(a), and essentially eliminates the
Board’s regulation. We therefore reverse the Commission’s decision.
      C.     8 AAC 45.134(c) Is Invalid Because It Is Inconsistent With The Act.
             Darrow’s cross-appeal asks us to consider the validity of 8 AAC 45.134(c),
which the Board applied to authorize Alaska Airlines’ recovery of previously paid PPI
and to increase the amount Alaska Airlines was entitled to recover for the PPI by
adjusting for inflation. Alaska Airlines does not directly address the validity of the
regulation, arguing instead that its recovery of the overpayment does not rely on the
regulation. The State agreed with Alaska Airlines that under the Commission’s
construction of the statute, the regulation is not needed to recover previously paid PPI.
But neither Alaska Airlines nor the State addressed whether PPI should be adjusted for
inflation, as permitted by AS 23.30.180(a) and 8 AAC 45.134(c) and ordered by the
Board. And the State did not discuss why the Board would have adopted this regulation



      103
             262 P.3d 593, 597-98 (Alaska 2011).
      104
                 State v. Campbell, 536 P.2d 105, 111 (Alaska 1975) (citing Alaska Const.
art. II, § 1, art. IV, § 1), overruled on other grounds by Kimoktoak v. State, 584 P.2d 25
(Alaska 1978).
      105
             Alyeska Pipeline Serv. Co., 262 P.3d at 597-98.

                                          -33-                                      7192

if the Commission’s construction of the statute were correct. The State argues that the
regulation’s validity is not properly before us because the superior court case was
dismissed and the Commission determined it did not have jurisdiction to decide this
issue. It concludes that “no ruling on the regulation’s validity exists to support this
Court’s appellate jurisdiction.”
              Alaska Statute 23.30.129(a) gives a party the right to appeal a decision by
the Commission to this court rather than the superior court. This is precisely the posture
of the case before us; we therefore have jurisdiction. The question of the regulation’s
validity may not technically be ripe for review because the Commission correctly
decided it lacked jurisdiction to determine a regulation’s validity and, according to the
State, the superior court case was dismissed.106 But the parties briefed the merits of this
issue before the Commission and this court, and our construction of the relevant statutes
leaves no question as to the validity of 8 AAC 45.134 (c).
              Because Darrow does not challenge whether the regulation was properly
promulgated, we consider only “whether the regulation is consistent with and reasonably
necessary to carry out the purposes of the statutory provisions” and “whether the
regulation is reasonable and not arbitrary.”107 “We exercise our independent judgment
in determining the validity of an administrative regulation . . . .”108 A regulation that




       106
              Cf. Nelson v. Municipality of Anchorage, 267 P.3d 636, 644 (Alaska 2011)
(deciding that as-applied constitutional challenge was not ripe because claim had not
been litigated before Board or superior court).
       107
             Kelly v. Zamarello, 486 P.2d 906, 911 (Alaska 1971); see also Lauth v.
State, 12 P.3d 181, 184 (Alaska 2000).
       108
              Lauth, 12 P.3d at 184.

                                           -34-                                      7192

“differs substantively from the clear language of the statute” is invalid.109 Here
AS 23.30.180(a) specifies that an employer can reduce permanent total disability benefits
by the amount of previously paid permanent partial disability benefits, adjusted for
inflation. While the State advances some policy arguments in support of the regulation,
such a policy decision is for the legislature rather than for the Board or this court.110
Because the regulation effectively rewrites AS 23.30.180(a), substituting impairment for
disability, 8 AAC 45.134 (c) is not valid.
V.    CONCLUSION
             We AFFIRM that part of the Commission’s decision reversing the Board’s
calculation of the Social Security disability offset and REVERSE that part of the
Commission’s decision permitting an offset for permanent partial impairment benefits.
We therefore REMAND this matter to the Commission for further proceedings consistent
with this opinion.




      109
             Muller v. BP Expl. (Alaska) Inc., 923 P.2d 783, 792 n.9 (Alaska 1996); see
also Madison v. Alaska Dep’t of Fish & Game, 696 P.2d 168, 178 (Alaska 1985)
(holding that agency regulation was invalid because it unduly restricted subsistence
hunting, contrary to legislative intent).
      110
            Fairbanks N. Star Borough Sch. Dist. v. NEA-Alaska, Inc., 817 P.2d 923,
926 (Alaska 1991).

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