Hormann v. New Hampshire Ins. Co.
| Decision Date | 26 October 1984 |
| Docket Number | 56211,Nos. 56184,s. 56184 |
| Citation | 689 P.2d 837,236 Kan. 190 |
| Parties | Earl D. HORMANN, Appellee, v. NEW HAMPSHIRE INSURANCE COMPANY, American International Adjustment Company, Inc., and Richard L. Hulse, Appellants. Michael C. SNYDER and Hazel M. Snyder, Appellants, v. HOME INDEMNITY COMPANY, and Mark A. Wolf, Appellees. |
| Court | Kansas Supreme Court |
Syllabus by the Court
1. As a general rule, exclusive of exceptions created in the Kansas Workmen's Compensation Act itself, the Kansas Act's operation is exclusive of all other remedy and liability.
2. In construing the Kansas Workmen's Compensation Act, we are guided by the general rules of statutory construction and interpretation. We are required to seek out and, as far as possible, give effect to the legislative intent.
3. There is no doubt that the legislature intended, by the use of the phrase "not just cause or excuse for the failure of the employer or insurance carrier to pay" compensation claimed prior to an award, to include the insurer's intentional act of refusing to pay compensation claimed by the worker. The worker's exclusive remedy to obtain relief where an insurer intentionally refuses to pay compensation prior to an award is contained in the Kansas Workmen's Compensation Act set forth in K.S.A. 44-512b.
Steven R. Smith, of Kahrs, Nelson, Fanning, Hite & Kellogg, Wichita, argued the cause, and Linda S. Parks, Wichita, of the same firm, was with him on brief for appellants in case No. 56184.
James P. Johnston, of Johnston & Johnston, P.A., Wichita, argued the cause and was on brief for appellee in case No. 56184, and argued the cause and was on brief for appellants in case No. 56211.
James T. McIntyre, of Turner & Boisseau, Chartered, Wichita, argued the cause and was on brief for appellees in case No. 56211.
The plaintiffs in two Sedgwick County cases, consolidated for appeal, attempted to sue their employers' workers' compensation insurers for tortious behavior in terminating the injured workers' benefits without just cause. Hormann is here on interlocutory appeal following the district court judge's denial of insurers' motion to dismiss for the worker's failure to state a cause of action. Snyder is here following summary judgment for the insurer in which a different district judge found that the worker's compensation remedies were exclusive.
There is no dispute as to the facts in either case. In Hormann, the worker was injured in an automobile accident while in the course of his employment. Hormann and his employer's insurers (insurers) entered into a voluntary agreement under which the insurers agreed to pay benefits to plaintiff pursuant to the Kansas Workmen's Compensation Act (Act). When Hormann failed to keep a scheduled doctor's appointment, the insurers suspended his benefits on June 29, 1981. Hormann claims he suffered severe emotional distress because of the lost income while he was disabled and unable to work.
Approximately 90 days after benefits were cut off, Hormann filed an application for a preliminary hearing against defendants pursuant to K.S.A.1983 Supp. 44-534a. On October 7, 1981, at the hearing, benefits were reinstated retroactive to September 21, 1981. Hormann also filed this action seeking damages for the harm caused by the insurers suspending payment of Hormann's benefits. Defendants filed a motion for judgment on the pleadings and, when the motion was overruled, sought this appeal.
In Snyder, the worker suffered a broken arm while in the scope of his employment. The insurer voluntarily began paying temporary total disability payments in July of 1981. As a result of his injury, Snyder required a bone graft from his left hip. On December 17, 1981, Snyder, while at home recuperating from his operation, fell and injured his left hip. Snyder was readmitted to the hospital. Upon learning of Snyder's hospitalization, the insurer suspended Snyder's benefits. Benefits were stopped during the holiday season. Snyder was forced to leave his home when utilities were shut off because he could not pay his bills. Snyder had a number of checks bounce because the insurer refused to make the agreed payments. Snyder was required to file for welfare and emergency assistance. Snyder's attorney met with the insurer's representative and attempted to get benefits reinstated, but was unsuccessful.
Snyder then sought a preliminary hearing before an administrative judge. Two days before the scheduled hearing, the insurer agreed to reinstate Snyder's benefits with complete back payment of all benefits due during the period of suspension. At the preliminary hearing the administrative judge found Snyder was entitled to total disability benefits throughout the period and ordered the insurer to pay all the hospital expenses resulting from the December 17 admission. Snyder then filed this action seeking damages for severe emotional distress resulting from the loss of all financial support while being disabled. The insurer requested summary judgment claiming that a cause of action did not lie because of the exclusive remedy provisions of the Kansas Workmen's Compensation Act. The motion was granted and Snyder appealed.
Workers' compensation acts are largely the outgrowth of modern industrial life. They give recognition to a broad social obligation, in furtherance of sound public policy. The public has come to realize that in many cases an injured employee engaged in a hazardous employment will be unable to establish actionable negligence on the part of the employer, but that it is unjust to deny relief to the employee on that account. For this and similar reasons, workers' compensation acts have shifted from the employee to the industry and indirectly to the general public certain burdens incidental to modern industrial operations. Compensation is thus provided for injuries by accident arising out of and in the course of the employment, regardless of any showing of negligence on the part of the employer. On the other hand, the amount of compensation so provided is in many cases substantially less than might be secured by the injured employee in a common-law action, where the employer's negligence is established. There is thus a sort of balancing of benefits in the common interest. Some employees may receive less compensation for injuries received than they would have been able to recover in a common-law action, while many other employees will receive benefits which they otherwise would not be able to receive because of the inability to establish the employer's negligence. Duncan v. Perry Packing Co., 162 Kan. 79, 174 P.2d 78 (1946).
The Act was considered in Yocum v. Phillips Petroleum Co., 228 Kan. 216, 612 P.2d 649 (1980). This court, in reviewing the Act, determined the Act is designed to provide a simple and efficient means of providing compensation to the injured worker while avoiding litigation. Souden v. Rine Drilling Co., 150 Kan. 239, 241, 92 P.2d 74 (1939); Walz v. Missouri Pac. Rld. Co., 130 Kan. 203, 285 P. 595 (1930). The Act is to be liberally construed to effectuate its purpose. Ours v. Lackey, 213 Kan. 72, 79, 515 P.2d 1071 (1973); Craig v. Electrolux Corporation, 212 Kan. 75, 76-77, 510 P.2d 138 (1973); and Green v. Burch, 164 Kan. 348, 189 P.2d 892 (1948).
The workers' compensation law has also been held to be contractual in nature, rather than establishing tort liability, with the terms and provisions of the statute being incorporated into the employment contract. Houk v. Arrow Drilling Co., 201 Kan. 81, 91, 439 P.2d 146 (1968); Moeser v. Shunk, 116 Kan. 247, 251, 226 P. 784 (1924). The employee, as well as the employer, is bound by the rules and procedures set forth in the Act. Wilburn v. Boeing Airplane Co., 188 Kan. 722, 729, 366 P.2d 246 (1961); Walz v. Missouri Pac. Rld. Co., 130 Kan. 203, 285 P. 595; and Chappell v. Morris & Co., 118 Kan. 210, 235 P. 117 (1925).
Once it is determined that the employment relationship is covered by the Act, the rights and liabilities of the parties are determined thereunder. Baker v. St. Louis Smelting & Refining Co., 145 Kan. 273, 65 P.2d 284, 109 A.L.R. 591 (1937). The Act is considered to be substitutional rather than cumulative and supplemental, and, therefore, provides the exclusive remedy for the injured worker. McRoberts v. Zinc Co., 93 Kan. 364, 367, 144 P. 247 (1914). In Duncan v. Perry Packing Co., 162 Kan. at 85, 174 P.2d 78, this court discussed the issue of exclusivity and noted:
It is well settled that the workers' compensation act provides the only remedy for injuries which are encompassed within its scope. Bitnoff v. Southwest Rendering, 223 Kan. 334, 336, 573 P.2d 1033 (1978); Shade v. Cement Co., 92 Kan. 146, 148, 139 P. 1193, aff'd 93 Kan. 257 (1914). The logical extension of this rule is that where a remedy exists under the statute, the injured worker no longer has the right to bring a common-law cause of action.
The central issue in the instant cases is whether a worker may sue his employer's workers' compensation insurer for the tort of either outrage or infliction of severe emotional distress. The insurers claim that the Kansas Workmen's Compensation Act is the worker's exclusive remedy because the worker is limited to the remedies offered by ...
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