City of Boise v. Industrial Com'n

• Citation: 129 Idaho 906,935 P.2d 169
• Decision Date: 07 April 1997
• Docket Number: No. 22814,22814
• Parties: In the Matter of Self-Insurance by a Municipality. CITY OF BOISE, Appellant, v. INDUSTRIAL COMMISSION, State of Idaho; Stephen J. Lord, Chairman, James E. Kerns and Rachel S. Gilbert, Commissioners, Respondents, and Idaho State Insurance Fund, Petitioner, Respondent. Boise, January 1997 Term
• Court: Idaho Supreme Court

Page 169

935 P.2d 169

129 Idaho 906

In the Matter of Self-Insurance by a Municipality.

CITY OF BOISE, Appellant, v. INDUSTRIAL COMMISSION, State of Idaho; Stephen J. Lord, Chairman, James E. Kerns and Rachel S. Gilbert, Commissioners, Respondents, and Idaho State Insurance Fund, Petitioner, Respondent.

No. 22814.

Supreme Court of Idaho,

Boise, January 1997 Term.

April 7, 1997.

Bowen, Brassey, Gardner, Wetherell & Crawford, Boise, for appellant. Alan R. Gardner argued, Boise.

Moffatt, Thomas, Barrett, Rock & Fields, for respondent Idaho State Insurance Fund. John W. Barrett argued, Boise.

Alan G. Lance, Attorney General; A. Rene Martin, Deputy Attorney General, argued, Boise, for respondent Industrial Commission.

SILAK, Justice.

This is an Industrial Commission (Commission) case regarding the City of Boise's (City) application for worker's compensation self-insurance. After a hearing, the Commission On appeal, the City contends that as a matter of statutory construction, a public employer can become self-insured. It also argues that the Commission's ruling that the City had not met the requirements to become self-insured was premature, because the parties had agreed to limit the hearing to the issue whether a public employer could become self-insured. Finally, the City maintains that the Commission's decision that the City did not meet the requirements for self-insured status was not supported by substantial and competent evidence.

ruled that the City could not become self-insured under section 72-301 of the Idaho Code because it is a public employer. However, the Commission further ruled that even if the City could become self-insured, it had not met the requirements for doing so.

I. FACTS AND PROCEDURAL BACKGROUND

The City filed its application to become self-insured on March 7, 1995. On July 24, 1995, the Commission held a hearing (hearing), with the City and the State Insurance Fund (SIF) participating. The parties do not dispute that at least one of the purposes of the hearing was to determine whether, under I.C. § 72-301, public employers may self-insure (the legal issue). The Commission ruled that public employers may not self-insure.

The Commission also ruled that even if public employers are permitted to self-insure under I.C. § 72-301, the City's application for self-insurance did not satisfy the criteria. Therefore, the Commission denied the application. The City disputes whether the application for self-insurance was properly considered, because the City alleges that it should have had the opportunity to present oral argument on that issue.

II. ISSUES ON APPEAL

On appeal, the issues are:

1. Whether a public employer may seek self-insured status pursuant to I.C. § 72-301.

2. Whether the Commission's ruling on the City's application for self-insured status was premature.

3. Whether the Commission's denial of the City's application was supported by substantial and competent evidence.

III. STANDARD OF REVIEW

When this Court reviews an Industrial Commission decision, it exercises free review over questions of law. Ogden v. Thompson, 128 Idaho 87, 88, 910 P.2d 759, 760 (1996). Our review of questions of fact is limited to determining whether substantial and competent evidence supports the decision. Matter of Wilson, 128 Idaho 161, 164, 911 P.2d 754, 757 (1996). Substantial and competent evidence is "more than a scintilla of proof, but less than a preponderance. In short, it is relevant evidence which a reasonable mind might accept to support a conclusion." Id.

IV. ANALYSIS

A. The Commission Erred In Ruling That Under I.C. § 72-301, Public Employers May Not Self-Insure.

Section 72-301 of the Idaho Code provides, in relevant part:

Every employer shall secure the payment of compensation under this law in one of the following ways:

(1) By insuring and keeping insured with a policy of workmen's compensation insurance as defined by section 41-506(1)(d), Idaho Code, the payment of compensation with any surety authorized by the director of the department of insurance to transact such insurance, provided, that every public employer shall insure its liability for payment of compensation with the state insurance fund unless such fund shall refuse to accept the risk when the application for insurance is made; or (2) An employer may become self-insured by obtaining the approval of the industrial commission, and by depositing and maintaining with the commission security satisfactory to the commission securing the payment by said employer of compensation according to the terms of this law....

The Commission found, and SIF maintains on appeal, that I.C. § 72-301(1) requires public employers to insure for worker's compensation coverage with SIF, and prohibits public employers from self-insuring. Thus, only if SIF refuses to insure the risk can a public employer look elsewhere for worker's compensation insurance. On appeal, the City urges us to find that under I.C. § 72-301, public employers may self-insure.

Because interpretation of the worker's compensation statutes is a question of law, we exercise free review. It is well-settled that if a statute's language is clear and unambiguous, this Court will apply the statute without employing rules of statutory construction. Wolfe v. Farm Bureau Ins. Co., 128 Idaho 398, 404, 913 P.2d 1168, 1174 (1996). The starting point for any statutory interpretation is the literal wording of the statute, and we will give the statute's language its plain, obvious, and rational meaning. Id. See also State ex rel. Lisby v. Lisby, 126 Idaho 776, 779, 890 P.2d 727, 730 (1995).

We hold that I.C. § 72-301's language is clear and unambiguous, and that public employers are permitted to self-insure for worker's compensation liability. The lead-in clause to the statute states that "[e]very employer shall secure the payment of compensation under this law in one of the following ways." (Emphasis added). That clause is followed by two subsections, connected by the word "or." The first subsection states that every employer may provide security for worker's compensation liability by purchasing an insurance policy, while the second subsection provides that every employer may self-insure for worker's compensation risks. Giving those words their plain, obvious, and rational meanings, the legislature intended that every employer, whether public or private, may either purchase a worker's compensation insurance policy or self-insure. ¹

The phrase "provided, that every public employer shall insure its liability for payment of compensation with the state insurance fund unless such fund shall refuse to accept the risk when the application for insurance is made" is contained entirely within subsection (1), and applies only to that subsection. Thus, if a public employer chooses to obtain an insurance policy, the employer must first apply to SIF for the policy. If SIF refuses to accept the risk, then the public employer may seek out other sources for the policy. However, like private employers, a public employer may provide security for worker's compensation through self-insurance under the provisions of I.C. § 72-301(2), and it need not attempt to first obtain a policy from SIF.

If the legislature had intended to require public employers to always attempt to insure with SIF, and not self-insure, it could have easily and clearly done so, by placing the "provided, that" clause before or after both subsections, placing it in each subsection, or creating an entirely new subsection applicable only to public employers. However, the legislature did not do so. We hold that under the plain language of I.C. § 72-301, public employers may self-insure for worker's compensation. Therefore, we reverse the ruling of the Commission in this regard.

B. The Commission's Ruling On The City's Application For Self-Insured Status Was Not Premature, And The City Was Not Denied Procedural Due Process.

Although the Commission ruled that public employers may not self-insure under I.C. § 72-301, it also ruled on the merits of the City's application. The City argues on Procedural due process is an essential requirement of the administrative process, and notice is a critical aspect of that due process. See Rincover v. State, Dep't of Finance, 124 Idaho 920, 921, 866 P.2d 177, 178 (1993); Grindstone Butte Mut. Canal Co. v. Idaho Power Co., 98 Idaho 860, 865, 574 P.2d 902, 907 (1978). Due process does require that the parties "be provided with an opportunity to be heard at a meaningful time and in a meaningful manner." Matter of Wilson, 128 Idaho 161, 167, 911 P.2d 754, 760 (1996). However, due process is not a concept to be applied rigidly in every matter. Rather, it "is a flexible concept calling for such procedural protections as are warranted by the particular situation." Id. See also Mathews v. Eldridge, 424 U.S. 319, 334, 96 S.Ct. 893, 902, 47 L.Ed.2d 18 (1976) (stating that "[d]ue process, unlike some legal rules, is not a technical conception with a fixed content unrelated to time, place and circumstances." (citations omitted)).

appeal that this ruling was premature, arguing that the record establishes that the sole purpose of the July 1995 hearing was argument on the legal issue of whether a public employer may self-insure, not the substantive issue of whether the City's application met the statutory requirements. The City contends, therefore, that it did not have notice that the Commission was going to...