Douglas v. Montecito/Safety - Memorandum Decision - Arizona Court of Appeals - August 26, 2025

Christopher S. Norton, Esq.
Aug 28, 2025
2 min read

Facts: Sheila Douglas, a nurse employed by Montecito Post Acute Care and Rehabilitation, was injured on December 17, 2021, when a patient became violent. At the time of her injury, Douglas had recently been promoted from Licensed Practical Nurse (LPN) to Registered Nurse (RN), which increased her hourly pay from $32.96 to $36 and reclassified her as a full-time employee. Before her promotion, Douglas worked part-time while attending nursing school. Montecito and its insurance carrier calculated her average monthly wage for workers’ compensation benefits based on her earnings from January 1, 2021, to December 15, 2021, which included her part-time wages. This calculation resulted in an average monthly wage of $1,174.97. Douglas contested this calculation, arguing that it did not reflect her actual earning capacity as a full-time RN at the time of her injury.

Issue(s):

Did the administrative law judge (ALJ) err in calculating Douglas’ average monthly wage by including her part-time earnings as an LPN instead of focusing on her full-time RN status at the time of injury?
Does the wage calculation realistically reflect Douglas’ actual monthly earning capacity at the time of her injury?

Holding: The Arizona Court of Appeals set aside the ALJ’s award, concluding that the timeframe used to calculate Douglas’ average monthly wage did not accurately reflect her actual earning capacity at the time of her injury. The court found that including her part-time earnings as an LPN distorted her true earning capacity as a full-time RN.

Key Takeaways:

Earning Capacity Over Historical Earnings: Workers’ compensation calculations must reflect the injured worker’s actual earning capacity at the time of injury, not merely historical earnings.
Change in Employment Status: When an employee’s status changes (e.g., promotion, pay increase, or reclassification), the wage calculation should account for the new status if it better represents the worker’s earning capacity.
Deviation from Presumptive Period: While the presumptive 30-day period before the injury is typically used to calculate wages, courts may deviate from this period if it does not fairly represent the worker’s earning capacity.
Broad Discretion of ALJs: Administrative law judges have discretion in wage calculations, but their decisions must be supported by evidence that the chosen timeframe realistically reflects the worker’s earning capacity.