Hamilton v. Reeder Flying Service
| Decision Date | 26 January 2001 |
| Docket Number | No. 26079.,26079. |
| Citation | 135 Idaho 568,21 P.3d 890 |
| Parties | Karen HAMILTON on behalf of Darrell HAMILTON, deceased, Claimant-Appellant, v. REEDER FLYING SERVICE, Employer, and Idaho State Insurance Fund, Surety, Defendants-Respondents. |
| Court | Idaho Supreme Court |
L. Clyel Berry, Chtd., Twin Falls, for appellant. L. Clyel Berry argued.
Hon. Alan G. Lance, Attorney General; Elam & Burke, P.A., Boise, for respondents. Ryan P. Armbruster argued.
Karen Hamilton, on behalf of Darrell Hamilton, deceased, appeals the Industrial Commission's finding that Darrell Hamilton's employment as an agricultural crop spraying pilot was exempt from worker's compensation coverage pursuant to I.C. § 72-212(9).
The employer in this case, Reeder Flying Service, Inc. (Reeder), is an aviation company based out of the Twin Falls City Airport, in Twin Falls, Idaho. The main controversy in this case centers around the procedure followed by Reeder in procuring insurance for its pilots and whether this procedure conforms with the statutory exemption from worker's compensation available for agricultural spray pilots.
Reeder routinely followed the same procedure with the pilots that it employed for the spray season. It purchased a general liability policy on its agricultural pilots from John F. Throne and Company (Throne) through Stonebraker-McQuary Agency (Stonebraker) in Clarkston, Washington. The policy was procured under Master Policy No. AN6067Y by the Idaho Agricultural Aviation Association with Lloyd's of London as the policy's underwriters. The maximum death benefit available under the policy was $25,000.
Reeder hired Darrell Hamilton (Hamilton) as an agricultural spray pilot on July 19, 1993. Hamilton returned to work for Reeder for the 1994 spray season and again in the 1995 season until his death in July of 1995.
In the spring of 1995, the spray season in which Hamilton died, Reeder sent Hamilton's "Official Application for 1995 Pilot Accident Insurance" and a premium payment of $1040 to Stonebraker. Hamilton's insurance form application was dated April 20, 1995, and Karen Hamilton was listed as the beneficiary.
Stonebraker received the application from Reeder on May 15, 1995, and sent the application to Throne on the same day. Coverage was effective per the date stamp on the application, which, according to Stonebraker's company policy, would have been May 15, 1995, the day it was received.
Throne issued an Evidence of Insurance dated April 20, 1995, for coverage on Hamilton under the Lloyd's of London policy. According to the Evidence of Insurance, coverage on Hamilton remained in effect from May 15, 1995, through February 15, 1996. The Evidence of Insurance was returned to Stonebraker.
When Stonebraker received the Evidence of Insurance from Throne, it sent the original to Hamilton and copies of the document to Reeder, the Industrial Commission and the State Insurance Fund. The Industrial Commission date stamped the document on June 1, 1995, indicating that the document was received by the Commission on that date.
The Industrial Commission approved the coverage for Hamilton on or about June 16, 1995, as referenced in the Evidence of Insurance. The Commission sent its certificate of approval to Stonebraker and Reeder.
Hamilton's first agricultural spraying flight for the 1995 season was on June 3, 1995, thirteen days before Reeder received approval from the Commission. On July 29, 1995, Hamilton was spraying a bean field west of Hagerman in a 1976 Grumman Ag Cat owned by Reeder. Hamilton was killed during the course and scope of his employment with Reeder when the plane he was flying crashed on the south side of the field. On July 24, 1996, Karen Hamilton, claimant, filed a worker's compensation complaint identifying Hamilton as her husband and seeking medical expenses, death benefits and burial expenses.
A hearing was held on April 19, 1999, where the sole issue to be decided was whether the claimant's employment was exempt from coverage. At the hearing, Claimant argued that a strict interpretation of the Idaho Code should be applied because the language of the code is unambiguous. According to Claimant, the code specifically provides that an employer shall be exempt, "if: the employer files with, and has written approval by, the industrial commission prior to employing a pilot ...." Because the Commission did not issue its approval for the exemption prior to Hamilton's first flight of the season, Claimant maintained that the exemption should not apply. Claimant asserted that the Industrial Commission allowed the agricultural spray pilots to stray from the procedure set forth in the code, thus establishing a twenty-seven-year-old custom based on an incorrect procedure. Finally, Claimant argued that compliance on the part of the defendant was feasible, and consequently, the defendant should be forced to comply.
The defendants (Reeder and the Idaho State Insurance Fund) denied liability, asserting that they complied with the intent of I.C. § 72-212(9) and thus were exempt. The defendants argued that Stonebraker and its insureds developed a twenty-seven-year-old custom and practice in which pilots are provided with insurance before their first flight of the season. According to this custom and practice, the exemption arises when the surety receives the insurance application and premium payment. Further, the Commission condoned the practice through acquiescence, as it repeatedly granted approval long after the pilots had begun the season.
The defendants argued that aerial operators, such as Reeder, would suffer if pilots were not allowed to make their first flight of the season until they received the Industrial Commission's approval. According to the defendants, the date of death or injury should be the determinative date, and in this case, the Commission's approval preceded the pilot's death.
Following the hearing, the Commission found that an industry custom and practice had developed between the members of the Idaho Agricultural Aviation Association and Stonebraker. According to industry practice, coverage becomes effective the day the insurance company, in this case Stonebraker, receives the application and premium payment. Aviation business owners did not wait to receive the Commission's certificate of approval before sending pilots on the first flight of the season, but rather understood the language to mean that once the policy was effective, pilots could begin flying because the exemption requirement had been met.
The Commission determined that an employer has met the exemption as long as it has obtained the insurance required under I.C. § 72-212(9) before the pilot makes his first flight of the season. This is an "administratively recognized concept" in accordance with the intent of the statute. The Commission concluded that the determinative date for purposes of approval under I.C. § 72-212(9) is the date of injury or death.
Hamilton filed a timely notice of appeal of the Industrial Commission's decision.
The Industrial Commission's conclusions of law are freely reviewable by this Court. Taylor v. Soran Rest., Inc., 131 Idaho 525, 527, 960 P.2d 1254, 1256 (1998). Factual findings will be upheld if supported by substantial, competent evidence. Id. Constitutional issues and construction and application of legislative acts are questions of law subject to free review by this Court. Struhs v. Prot. Tech.'s, Inc., 133 Idaho 715, 722, 992 P.2d 164, 171 (1999).
A. THIS COURT GIVES DEFERENCE TO THE INDUSTRIAL COMMISSION'S INTERPRETATION THAT THE EXEMPTION APPLIES SO LONG AS AN EMPLOYER OBTAINS INSURANCE BEFORE THE PILOT MAKES THE FLIGHT THAT RESULTS IN INJURY AND AS LONG AS THE COMMISSION GRANTS APPROVAL PRIOR TO THE DATE OF DEATH OR INJURY.
This Court must apply a four-prong test when determining the appropriate level of deference to apply to an agency construction of a statute. J.R. Simplot Co., Inc. v. Tax Comm'n, 120 Idaho 849, 862, 820 P.2d 1206, 1219 (1991). The Court must first determine if the agency has been entrusted with the responsibility of administering the statute at issue. Id. Second, the agency's statutory construction must be reasonable. Id. Next, the Court must determine that the statutory language at issue does not expressly treat the precise question at issue. Id. The fourth prong of the test requires the Court to make a determination of whether any of the rationales underlying the rule of deference are present. Id.
An agency must be granted the authority to administer the statute before it is "impliedly clothed with the power to construe the law." J.R. Simplot Co., 120 Idaho at 862, 820 P.2d at 1219 (citing Kopp v. State, 100 Idaho 160, 163, 595 P.2d 309, 312 (1979)).
The Industrial Commission correctly concluded that it is entrusted with the responsibility of administering worker's compensation law in Idaho. This responsibility is clearly set forth in I.C. §§ 72-201, -506, -508. The first phase of the four prong test is satisfied.
The application of a statute is an aid to construction when the public relies on the application over a long period of time. State v. Hagerman Water Right Owners, Inc., 130 Idaho 727, 733, 947 P.2d 400, 406 (1997).
The Industrial Commission determined that its interpretation of the statute was reasonable based on legislative intent and industry custom and practice. Pilots are covered by the requisite insurance before they begin flying, thus satisfying the legislative intent of providing pilot's coverage under an insurance policy, while minimizing the expense incurred by the employer. Additionally, the Industrial Commission allowed this practice to continue for twenty-seven years, thus...
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