Fund v. Stanford

• Decision Date: 20 June 2013
• Docket Number: Nos. 2011–SC–000651–WC, 2011–SC–000652–WC.,s. 2011–SC–000651–WC, 2011–SC–000652–WC.
• Parties: UNINSURED EMPLOYERS' FUND, Appellant v. Matthew STANFORD; U.S. Army Cadet Corps, Inc.; Bluegrass Area Development District; Honorable Chris Davis, Administrative Law Judge; and Workers' Compensation Board, Appellees and U.S. Army Cadet Corps, Inc., Cross–Appellant v. Matthew Stanford; Bluegrass Area Development District; Uninsured Employers' Fund Honorable Chris Davis, Administrative Law Judge; and Workers' Compensation Board, Cross–Appellees.
• Court: United States State Supreme Court — District of Kentucky

399 S.W.3d 26

UNINSURED EMPLOYERS' FUND, Appellant

v.Matthew STANFORD; U.S. Army Cadet Corps, Inc.; Bluegrass Area Development District; Honorable Chris Davis, Administrative Law Judge; and Workers' Compensation Board, AppelleesandU.S. Army Cadet Corps, Inc., Cross–Appellant

v.Matthew Stanford; Bluegrass Area Development District; Uninsured Employers' Fund Honorable Chris Davis, Administrative Law Judge; and Workers' Compensation Board, Cross–Appellees.

Nos. 2011–SC–000651–WC, 2011–SC–000652–WC.

Supreme Court of Kentucky.

March 21, 2013.

Rehearing Denied June 20, 2013.

James Robert Carpenter, Office of the Attorney General, Uninsured Employers' Fund, Frankfort, KY, for Appellant/Cross–Appellee, Uninsured Employers' Fund.

Wayne C. Daub, Louisville, KY, for Appellee/Cross–Appellant, U.S. Army Cadet Corps, Inc.

Christopher P. Evensen, Louisville, KY, for Appellee/Cross–Appellee, Matthew Stanford.

Scott Mitchell Burns Brown, Stephanie Dawn Ross, Fogle Keller Purdy PLLC, Lexington, KY, for Appellee/Cross–Appellee, Bluegrass Area Development District.

OPINION OF THE COURT

Appellant, Uninsured Employers' Fund, appeals from a decision of the Court of Appeals which held that it must reimburse Appellee, Bluegrass Area Development District (“Bluegrass”), for medical expenses and benefits paid on behalf of injured worker, Matthew Stanford. Additionally, U.S. Army Cadet Corp., Inc. (“USACC”), cross-appeals from the dismissal of their appeal as untimely filed, argues that they were not Stanford's sole employer, and argues that Stanford was not injured while in their employ. For the reasons set forth herein, we reverse the Court of Appeals and remand this matter back to the Administrative Law Judge for proceedings consistent with this opinion.

Stanford, a twenty-four-year old college graduate, participated in a summer job program administered by Bluegrass called “By Learning U Earn” (“BLUE”). The purpose of BLUE was to provide work experience for low-income and disadvantaged individuals ages sixteen through twenty-four. To further this mission, Bluegrass undertook community outreach efforts to encourage employers to sign up for the BLUE program. All employers who wished to participate had to fill out a “Worksite Application” which outlined some of the responsibilities shared between BLUE and the employer. It stated:

[t]he youth will have the opportunity to earn minimum wage as employees of Bluegrass Area Development District. Your agency will be expected to provide basic job training in assigned job duties, supervise workers, and be able to provide enough work to complete approximately 189 hours throughout the 7 weeks of employment (average of 30 hours/week). Bluegrass will select the workers for each worksite according to the specific skills you indicate.

In addition, those individuals employed through the BLUE program were covered under Bluegrass's health and workers' compensation insurance.

USACC ¹ applied to be a participating BLUE worksite. Bluegrass determined USACC qualified for the program and the parties entered into an agreement where individuals participating in BLUE could work at USACC's campus in Millersburg.

Stanford volunteered with USACC as a cadet counselor prior to entering the BLUE program. Stanford was also considered an USACC officer candidate. ² After entering the BLUE program in the summer of 2009, Stanford continued to work as a cadet counselor for USACC. Stanford filled out a biweekly timesheet for Bluegrass to indicate the times he completed his thirty hours of work. However, Stanford's duties as a cadet counselor required that he work far more than thirty hours a week—effectively he was on call “24/7.” Being a cadet counselor also required that Stanford live at the USACC campus. USACC provided Stanford with free room and board and reimbursed him for travel and other expenses incurred on behalf of the organization.

On July 21, 2009, Stanford accompanied the USACC cadets on a three-day trip to a Kentucky National Guard training facility in Armetus. On the final afternoon of the trip, the cadets were instructed to go through a “confidence” obstacle course. Stanford assisted the cadets through the course until the group reached a zip line. Unbeknownst to Stanford, the zip line at the training facility was not in proper working order and was not to be a part of the cadets' obstacle course.

Testimony regarding how or when Stanford's accident occurred differs. However, it is undisputed that Stanford fell from the zip line and suffered a permanent injury which rendered him a quadriplegic. All parties stipulate that due to his injury, Stanford is permanently and totally disabled. Stanford subsequently sought workers' compensation benefits.

The Administrative Law Judge (“ALJ”), in granting Stanford benefits, found that Stanford was primarily an employee of USACC, who served as a subcontractor for Bluegrass. Accordingly, the ALJ held that Bluegrass was an up-the-ladder contractor and would be liable for the workers' compensation payments should USACC be unable to pay. Since USACC did not carry workers' compensation insurance, Bluegrass would be responsible for the payments.

Several petitions for reconsideration were filed after the ruling. The Uninsured Employers' Fund, involved in the case because USACC was uninsured, filed a petition requesting clarification of which party is responsible for paying Stanford's benefits. Bluegrass filed a petition arguing that it was not an up-the-ladder contractor. Finally, Stanford filed a petition contending that the ALJ erred in finding there were no outstanding unpaid medical bills. USACC did not file a petition for reconsideration. The ALJ denied all of the petitions. Stanford then filed a second petition for reconsideration arguing again that the ALJ erred regarding the unpaid medical bills. The ALJ denied that petition finding that it was asking for the same relief as asked for in his first petition for reconsideration.

Bluegrass appealed to the Workers' Compensation Board. USACC also filed an appeal contesting the ruling that it was Stanford's employer. The Board held that up-the-ladder liability was not a contested issue preserved by the parties for adjudication because it was not listed on the Benefit Review Conference order. Indeed, on the Benefit Review Conference order “up-the-ladder liability” had been crossed out under the contested issue subheading. Alternatively, the Board determined that since Bluegrass was a governmental entity created under KRS 147A.050 it could not be considered a contractor for purposes of imposing up-the-ladder liability. KRS 342.610(2); Uninsured Employers' Fund v. City of Salyersville, 260 S.W.3d 773 (Ky.2008). The Board ultimately concluded that Bluegrass could not be held responsible for paying Stanford's benefits, and remanded the matter back to the ALJ for the entry of an order holding USACC liable. Further, the Board held that USACC must reimburse Bluegrass for all of the prior benefits it paid.

The Board also dismissed USACC's appeal as untimely because it was filed based on the timing of Stanford's second petition for reconsideration. The Board's reasoning is as follows:

Stanford admitted in the second petition for reconsideration [that] he was seeking the same relief he sought in his first petition for reconsideration. Successive petitions for reconsideration seeking the same relief are not permitted. Had the petition been filed with [sic] 14 days of the original opinion or had the second petition dealt with a patent error in the order ruling on the first petition for reconsideration, such a petition would be proper. Here, the second petition was filed more than 14 days after the date of the original decision and the second petition did not address a new error contained in the order ruling on the first petition for reconsideration. Thus, the second petition for reconsideration was not a timely petition addressing the original decision of the ALJ. Since the second petition was not a timely petition and did not address an error first occurring in the order ruling on the first petition for reconsideration, it did not destroy the finality of the order ruling on the first petition for reconsideration. Tube Turns Division of Chemetron v. Quiggins, 574 S.W.2d 901 (Ky.App.1978). Because the petition for reconsideration was improper, the ALJ's order on the second petition for reconsideration was a nullity. Stewart v. Kentucky Lottery Corp., 986 S.W.2d 918 (Ky.App.1998). Based upon the foregoing, USACC's appeal to the Board was not timely. USACC's appeal had to be filed by August 16, 2010 and was not filed until August 27, 2010. Thus the issues raised by USACC are not properly before the Board and its appeal must be dismissed.

The Board further stated that even if it reviewed the merits of USACC's appeal, there was “ample substantial evidence to conclude Stanford was an employee of USACC at the time of his accident and was acting within the course and scope of his employment at the time of his injury.”

The Court of Appeals affirmed the Board. The court found that even though the issue of reimbursing Bluegrass had not been raised at the Benefit Review Conference, “[b]oth logically, and equitably, the issue of reimbursement is a sub-issue of any liability issue presented to either the ALJ or the Board.” Since USACC was found liable for Stanford's benefits, the Court of Appeals believed reimbursing Bluegrass for past expenses “goes part and parcel with the determination.” Additionally, the Court of Appeals upheld the dismissal of USACC's appeal as untimely and held that there was sufficient evidence to find that USACC was Stanford's employer.

The Unemployed Employers' Fund appealed to this Court and USACC filed a cross-appeal. We will first determine whether USACC's appeal to the Board was timely filed, and then review the other arguments presented as necessary.

I. USACC'S APPEAL TO THE WORKERS' COMPENSATION BOARD WAS...