Cincinnati Ins., Struyf v. Second Inj. Fund

• Decision Date: 11 April 2007
• Docket Number: No. 93A02-0605-EX-429.,93A02-0605-EX-429.
• Citation: 863 N.E.2d 1242
• Parties: CINCINNATI INSURANCE COMPANY on Behalf of Jeffrey STRUYF, Appellant-Plaintiff, v. SECOND INJURY FUND c/o Worker's Compensation Board of Indiana, Appellee-Defendant.
• Court: Indiana Appellate Court

863 N.E.2d 1242

CINCINNATI INSURANCE COMPANY on Behalf of Jeffrey STRUYF, Appellant-Plaintiff, v. SECOND INJURY FUND c/o Worker's Compensation Board of Indiana, Appellee-Defendant.

No. 93A02-0605-EX-429.

Court of Appeals of Indiana.

April 11, 2007.

Philip E. Kalamaros, Hunt Suedhoff Kalamaros, LLP, St. Joseph, MI, Attorney for Appellant.

Steve Carter, Attorney General of Indiana, Elizabeth Rogers, Deputy Attorney General, Indianapolis, IN, Attorneys for Appellee.

OPINION

VAIDIK, Judge.

Case Summary

Cincinnati Insurance Company ("Cincinnati Insurance"), on behalf of Jeffrey Struyf ("Struyf"), appeals the Worker's Compensation Board of Indiana's denial of Struyf's application for payment of medical expenses from Indiana's Second Injury Fund. Cincinnati Insurance contends that its liability for Struyf's medical expenses ended after 500 weeks and that the obligation shifted to the Second Injury Fund at that point. While the legislature has never intended for the Second Injury Fund to be liable for all of an injured worker's medical expenses, it also has not limited an employer's liability for such expenses to 500 weeks. Therefore, Cincinnati Insurance remains liable for Struyf's medical expenses, and we affirm the Board's denial of Struyf's application for the payment of his medical expenses from the Second Injury Fund.

Facts and Procedural History¹

On April 9, 1987, Struyf fell from a tree in the course of his employment with Charles Hollerbach Tree Service ("Hollerbach"). The fall rendered Struyf, then twenty-one years old, a quadriplegic. Shortly thereafter, Cincinnati Insurance, Hollerbach's worker's compensation insurance carrier, filed an Employer's Report to Industrial Board of Injury to Employee with the Industrial Board Division of the State of Indiana Department of Commerce and Industry ("Industrial Board Division"). The same day, Struyf, Hollerbach, and Cincinnati Insurance filed an Agreement Between Employee and Employer As to Compensation with the Industrial Board Division ("Compensation Agreement"). Struyf's mother, Barbara Niendorf ("Niendorf"), signed the Compensation Agreement on Struyf's behalf. Pursuant to the Compensation Agreement, Cincinnati Insurance, on behalf of Hollerbach, agreed to pay Struyf $173.33 per week in compensation until said compensation was "terminated in accordance with the provisions of the Workmen's Compensation Law of the State of Indiana." Appellant's App. p. 3. The Industrial Board approved the Compensation Agreement.

As of early 1997, Cincinnati Insurance had paid 500 weeks of compensation to Struyf totaling $86,665.00 and medical expenses of $967,058.00. On February 20, 1997, Cincinnati Insurance, through Attorney Philip Kalamaros ("Attorney Kalamaros"), filed an Application for Adjustment of Claim ("First Application") with the Worker's Compensation Board of Indiana ("Board") on behalf of Struyf. Neither Struyf nor Niendorf signed the First Application, but Attorney Kalamaros did. The First Application alleged that Struyf has a permanent total disability and requested that the State's Second Injury Fund take over the payment of compensation and ongoing medical expenses for Struyf.

On May 27, 1997, Cincinnati Insurance, having received no ruling on the First Application, filed a Verified Petition for Compensation and Medical Benefits from the Second Injury Fund ("First Petition") with the Board. A single Board hearing member found that Struyf's injury resulted in permanent total disability and awarded Struyf compensation from the Second Injury Fund in the amount of $173.33 per week beginning on July 1, 1997, for a period not to exceed 150 weeks. The single Board hearing member made no finding as to Struyf's request for payment of medical expenses, and Cincinnati Insurance continued to pay for Struyf's medical services and supplies while Struyf's First Application remained pending.

On April 19, 2000, the parties submitted stipulations and exhibits to the Board and asked the Board to resolve the following issues:

a. Whether the Second Injury Fund is liable for statutory medical expenses after the maximum statutory period or maximum statutory amount of compensation has been paid by the employer/carrier, where the injured worker is permanently and totally disabled and is receiving compensation benefits from the Second Injury Fund, and the injured worker has shown the need for additional and ongoing medical treatment, and if so, what medical treatment should be authorized and paid for by the Second [I]njury [F]und[.] b. Whether Cincinnati Insurance should be reimbursed by the Second Injury Fund for statutory medical expenses advanced Struyf during the period after the maximum statutory period and amount [sic] that have been paid by Cincinnati [Insurance] while this [First] [A]pplication has been pending, and how much.

Id. at 21-22.

On August 10, 2000, Attorney Kalamaros, on behalf of Struyf and Cincinnati Insurance, filed a Verified Petition for Additional Compensation and Medical Benefits from the Second Injury Fund ("Second Petition"). The Second Petition noted that the 150 weeks of compensation awarded to Struyf pursuant to the First Petition had been paid and requested that the Second Injury Fund continue to compensate Struyf. The Second Petition also reiterated Struyf's request for payment of medical expenses. Accompanying the Second Petition was another Application for Adjustment of Claim ("Second Application") and an affidavit from Struyf. Struyf signed both the Second Application and the affidavit himself. A single Board hearing member found Struyf to be entitled to compensation from the Second Injury Fund in the amount of $173.33 per week beginning on August 10, 2000, for a period not to exceed 150 weeks. The single Board hearing member made no finding as to Struyf's request for payment of medical expenses.

On June 27, 2003, Struyf himself signed and filed another Application for Second Injury Fund Benefits ("Third Application") with the Board. A single Board hearing member again found Struyf to be entitled to compensation from the Second Injury Fund in the amount of $173.33 per week beginning on June 27, 2003, for a period not to exceed 150 weeks. And again, the single Board hearing member made no finding as to Struyf's previous request for payment of medical expenses.

As of December 5, 2005, the Indiana Attorney General's Office, as the representative of the Second Injury Fund, had never opposed Struyf' s request for payment of medical expenses in any manner. Nonetheless, on that date, a single Board hearing member dismissed Struyf's claim before the Board in its entirety, finding that it is a conflict of interest for Attorney Kalamaros to represent both Cincinnati Insurance and Struyf and that Cincinnati Insurance does not have standing to apply to the Second Injury Fund on behalf of Struyf.

Upon Cincinnati Insurance's request, the full Board agreed to review the single Board hearing member's dismissal order. At a hearing held on March 6, 2006, the Indiana Attorney General's Office, on behalf of the Second Injury Fund, argued for the first time that there is a conflict of interest between Cincinnati Insurance and Struyf. On May 8, 2006, the Board issued an order in which it stated that it was affirming the single Board hearing member's dismissal of Struyf's claim. The Board made the following relevant findings:

[Cincinnati Insurance] is the Defendant in the original worker's compensation claim that [Struyf's] injury arose out of.

Ind.Code § 22-3-3-13(g) specifically states that in applications to the Second Injury [Fund] that such employee may apply to the board. (emphasis added).

[N]either [Struyf] nor his legal representative signed the [First] Application submitted to the Board on February 20, 1997 requesting Second Injury Fund Compensation.

[T]he Attorney for [Cincinnati Insurance], [Attorney Kalamaros], has filed all pleadings and motions in this cause.

[I]t is a conflict of interest for Attorney Kalamaros to represent both [Cincinnati Insurance] and [Struyf].

[T]he interest of [Cincinnati Insurance] is not to pay for medical care for [Struyf] but simply to shift its statutory obligation to the Second Injury Fund. As such, the interests of [Struyf] and [Cincinnati Insurance] are in conflict.

[T]he conflicting interest of [Cincinnati Insurance] and [Struyf] is underscored by the procedure required to be followed in order to continue future medical care for [Struyf] or in order to terminate future medical care for [Struyf]. In the first instance, [Cincinnati Insurance's] obligation would be to continue future medical care ad infinitum until such time as the said company petitions the Board and receives an order that medical benefits are no longer due and owing to [Struyf] from [Cincinnati Insurance]. In the second instance, under the Second Injury Fund, the benefits and/or compensation due to [Struyf] [are] restricted to 150 weeks and after said period of time any such benefits and/or compensation is automatically terminated and the burden is on [Struyf] to petition the Second Injury Fund to prove that further benefits and/or compensation [are] required under the [Worker's Compensation Act]. Such a change in burden of proof does not permit [Struyf] and [Cincinnati Insurance] to have anything but conflicting interest.

Id. at 185-86. Notwithstanding its apparent dismissal of Struyf's applications, the Board also went on to address the merits of Struyf's request for the payment of all of his medical expenses from the Second Injury Fund:

IT IS HEREBY CONCLUDED as a matter of law that I.C. 22-3-3-13(f) in its pertinent part states as follows: "The funds shall be used only for the payment of awards of compensation and expense of medical examination[s][or] treatment made and ordered by the Board ..." It is hereby interpreted to mean that the Board, in its discretion, may order treatment for injured employees or recipients of Second...