Accident Fund Ins. Co. v. Casey

• Decision Date: 22 May 2018
• Docket Number: No. SC 96899,SC 96899
• Citation: 550 S.W.3d 76
• Parties: ACCIDENT FUND INSURANCE COMPANY; E.J. Cody Company, Inc., Respondents-Appellants, v. Robert CASEY, Employee/Dolores Murphy, Appellant-Respondent.
• Court: Missouri Supreme Court

550 S.W.3d 76

ACCIDENT FUND INSURANCE COMPANY; E.J. Cody Company, Inc., Respondents-Appellants,

v.Robert CASEY, Employee/Dolores Murphy, Appellant-Respondent.

No. SC 96899

Supreme Court of Missouri, en banc.

Opinion issued May 22, 2018

The surviving family members were represented by Scott Mach and Cooper S. Mach of The Popham Law Firm PC in Kansas City, (816) 221-2288; and R. Carl Mueller Jr. of Edelman & Thompson in Kansas City, (816) 994-8316.

E.J. Cody and Accident Fund Insurance were represented by James B. Kennedy of Evans & Dixon LLC in St. Louis, (314) 552-4020; Jeffrey T. McPherson and Alexander C. Barrett of Armstrong Teasdale LLP in St. Louis, (314) 621-5070; John Robert Fox of Kansas City; and Daniel K. Luebbering of Kansas City.

Mary R. Russell, Judge

Robert Casey died from mesothelioma caused by repeated exposure to asbestos in the workplace. Before his death, Mr. Casey filed a claim for workers' compensation benefits, with which his widow, Dolores Murphy, proceeded following his death. The Labor and Industrial Relations Commission determined that because Mr. Casey’s exposure to asbestos occurred while he was employed by E.J. Cody Company, Inc. ("Employer"), its insurer, Accident Fund National Insurance Company ("Insurer"), was liable to Ms. Murphy for benefits under section 287.200.4, RSMo 2014.¹ All parties appealed.² Insurer and Employer argue, among other things, that section 287.200.4 violates article I, section 13 of the Missouri Constitution, which prohibits retrospective laws. Ms. Murphy contends the Commission erred by failing to include Mr. Casey’s eight adult children as beneficiaries of the award. For the following reasons, the Commission’s decision is affirmed as modified by this opinion to include Mr. Casey’s eight children in the final award. Rule 84.14.

Background

Mr. Casey spent his career working as a floor tile installer for several different companies. He last worked for Employer, a construction contractor in the business of installing acoustical ceilings and floor tiles. Mr. Casey began in 1984 in a part-time capacity but advanced to full-time employment in 1987. He continued working for Employer until his retirement in 1990.³

In his trade, Mr. Casey worked closely with asbestos-laden materials, primarily vinyl asbestos tile ("VAT"). Employer became aware of the dangers of asbestos in "the mid-1980s" and later discontinued its use of VAT in new projects. Asbestos exposure persisted for Mr. Casey, however, as he was frequently tasked with removing existing VAT when installing new, asbestos-free floor tiles. This practice required cutting, scraping, and sweeping asbestos tiles and cutback, which produced a dust containing asbestos fibers Mr. Casey regularly inhaled. He performed this work without the protection of an asbestos abatement suit or mask.

Due to his extensive asbestos exposure, Mr. Casey was diagnosed with mesothelioma in the fall of 2014. He filed a claim for workers' compensation benefits against Employer in February 2015. At the time he filed the claim, Employer was covered under an insurance policy purchased from Insurer. The policy included an endorsement titled "Missouri Notification of Additional Mesothelioma Benefits Endorsement," providing in pertinent part:

Section 287.200.4, subdivision (3), of the Missouri Revised Statutes provides additional benefits in the case of occupational diseases due to toxic exposure that are diagnosed to be mesothelioma and result in permanent total disability or death. Your policy provides insurance for these additional benefits.

By accepting this policy, Employer opted in to liability coverage for the additional mesothelioma benefits provided by section 287.200.4, which allows for enhanced compensation for "all [mesothelioma ] claims filed on or after January 1, 2014."

Mr. Casey passed away from his mesothelioma while his claim was still pending. An amended claim for compensation was filed thereafter, naming Ms. Murphy and Mr. Casey’s eight children as claimants. During a hearing held in front of an administrative law judge ("ALJ"), an oral motion to substitute Ms. Murphy as the claimant was sustained. The ALJ found Employer liable under Missouri’s last exposure rule,⁴ awarding section 287.200.4’s enhanced mesothelioma benefits to Ms. Murphy and Mr. Casey’s eight children.

Employer and Insurer both appealed to the Commission. The Commission largely affirmed the ALJ’s decision but did so on alternative grounds, finding the last exposure rule did not apply to claims made under section 287.200.4. It also limited recovery to Ms. Murphy. The Commission determined Ms. Murphy to be the sole proper claimant because the amended claim "did not identify employee’s children as dependents or claimants, nor is there any motion on the record before us to include these individuals as parties to any award in this matter." All parties appeal this decision.

Standard of Review

This Court reviews the Commission’s decision to determine whether it is supported by competent and substantial evidence. Mo. Const. art. V, sec. 18. A decision of the Commission will be disturbed only if (1) the Commission acted without authority or in excess of its authority; (2) the award was procured by fraud; (3) the facts do not support the award; or (4) there was not sufficient, competent evidence to justify the award. Section 287.495.1. Questions of law, including those involving statutory interpretation, are reviewed de novo. White v. ConAgra Packaged Foods, LLC , 535 S.W.3d 336, 338 (Mo. banc 2017).

Analysis

All three parties raise arguments on appeal. Insurer asserts it cannot be liable for Ms. Murphy’s claim of benefits because it did not insure Employer at the time of Mr. Casey’s last exposure. In the alternative, it argues section 287.200.4 violates the Missouri Constitution’s prohibition against retrospective laws and also contends the Commission erred by substituting Ms. Murphy for Mr. Casey as a claimant. Employer echoes Insurer’s constitutional argument and further asserts the Commission’s award was not supported by sufficient evidence. Ms. Murphy, meanwhile, posits the Commission erred in excluding Mr. Casey’s eight adult children from the final award of benefits. These arguments are addressed in turn.

I. Insurer is Liable for the Enhanced Mesothelioma Benefits

Missouri’s workers' compensation law was amended in 2014 to provide enhanced compensation for individuals diagnosed with occupational diseases such as mesothelioma. Section 287.200.4(3). Coverage is provided for "all claims filed on or after January 1, 2014, for occupational diseases due to toxic exposure which result in a permanent total disability or death." Section 287.200.4. Employers may either accept or reject liability for mesothelioma. If an employer elects to accept liability, it must insure its "entire liability" under the act, which includes accepting all of the act’s provisions. Section 287.280.1; Allen v. Raftery , 237 Mo.App. 542, 174 S.W.2d 345, 350 (1943). In other words, an insurer cannot avoid certain liabilities by constructing its policy to exclude certain provisions of the workers' compensation statute and cover only the provisions it prefers.

Employer elected to accept mesothelioma liability under section 287.200.4 and purchased a policy from Insurer to cover these "additional benefits" by selecting a policy that explicitly contemplated enhanced compensation for mesothelioma claims filed on or after January 1, 2014. The triggering occurrence—the event commencing liability coverage—is the filing of a claim. This Court gives the language in an insurance policy its plain meaning, "or the meaning that would be attached by an ordinary purchaser of insurance." Doe Run Res. Corp. v. Am. Guar. & Liab. Ins. , 531 S.W.3d 508, 511 (Mo. banc 2017). An ordinary purchaser of insurance would understand, per its own policy, Insurer covered Employer for all liabilities arising out of all mesothelioma claims filed on or after January 1, 2014—including Mr. Casey’s claim, which was filed in February 2015.

Insurer nevertheless argues that, irrespective of the plain policy language, it cannot be held liable for the award of compensation because it did not insure Employer in 1990—when Mr. Casey was last exposed to asbestos. Section 287.063.2, deemed the "last exposure rule," provides the "employer liable for [workers' compensation benefits] shall be the employer in whose employment the employee was last exposed to the hazard of the occupational disease." Insurer’s policy itself contains similar limitations, stating the "employee’s last day of last exposure to the conditions causing or aggravating [the occupational disease] must occur during the policy period."

Insurer’s policy also states its terms may not be changed "except by endorsement issued by us to be part of this policy." The mesothelioma endorsement adopts section 287.200.4 and, as a result, adopts that section’s provision of enhanced benefits for occupational disease claims filed on or after January 1, 2014—modifying the policy with respect to these additional mesothelioma benefits. In addition, the policy provides the "terms of this insurance that conflict with the workers['] compensation law are changed to conform to that law." Accordingly, any policy provision purporting to contravene section 287.200.4 or Insurer’s acceptance of it is of no effect.

Further, the last exposure rule is immaterial here. The policy Employer purchased explicitly covers the benefits proffered by section 287.200.4, which contains no qualifying language as to the date of last exposure or injury and limits coverage only by way of conditioning it on the filing of a claim after January 1, 2014. Through this policy, Employer accepted, and Insurer provided, liability insurance for the enhanced benefits—the only benefits Mr. Casey sought (and Ms. Murphy now seeks). The relevant inquiry in this matter is not under whose employment Mr. Casey was last exposed, but whether the terms of...