McKaskle v. Industrial Com'n of Arizona

• Decision Date: 30 November 1982
• Docket Number: CA-IC,No. 1,1
• Citation: McKaskle v. Industrial Com'n of Arizona, 659 P.2d 1313, 135 Ariz. 168 (Ariz. App. 1982)
• Parties: James L. McKASKLE, Petitioner, v. The INDUSTRIAL COMMISSION OF ARIZONA, Respondent, New York Life Insurance Company, Respondent Employer, Travelers Insurance Company, Respondent Carrier. 2590.
• Court: Arizona Court of Appeals

Page 1313

659 P.2d 1313

135 Ariz. 168

James L. McKASKLE, Petitioner, v. The INDUSTRIAL COMMISSION OF ARIZONA, Respondent New York Life Insurance Company, Respondent Employer Travelers Insurance Company, Respondent Carrier.

No. 1 CA-IC 2590.

Court of Appeals of Arizona Division 1, Department C.

Nov. 30, 1982.

Rehearing Denied Jan. 28, 1983.

Review Denied Feb. 23, 1983.

Charles Anthony Shaw, Prescott, for petitioner.

James A. Overholt, Acting Chief Counsel, Industrial Commission of Arizona, Phoenix, for respondent.

Burch & Cracchiolo, P.A. by John F. Day, Linda A. Finnegan, Phoenix, for respondents Employer & Carrier.

OPINION

CONTRERAS, Judge.

At issue in this special action review of an Industrial Commission award is whether the administrative law judge abused his discretion in dismissing petitioner's claim as being untimely filed without a meritorious excuse. We conclude that this was not the proper test to be employed in this case. We further conclude that respondents would be estopped to assert the statute of limitations if it is determined that the petitioner exercised due diligence in filing his claim within a reasonable period of time after the circumstances giving rise to estoppel ceased to be operational. The award is set aside.

BACKGROUND

The essential dates and events are these:

September 22, 1978 Petitioner was injured, allegedly in the course of employment as an insurance agent.

October, 1978 Petitioner talked to his employment supervisors, Ken Holmes and Dave Best, who told him that they thought he was not covered by workmen's compensation because he was an independent contractor and not an employee.

November, 1978 Holmes and Best again told petitioner that he was not covered by workmen's compensation, again for the same reason given in October.

March, 1979 Petitioner retained an attorney, to whom he indicated that he would not file a workmen's compensation claim.

September 25, 1979 While attending a seminar in California for insurance agents, petitioner learned that during the first three years on the job, an agent was a probationary employee rather than an independent contractor.

October 10, 1979 Petitioner again raised the matter with Best who, several weeks later, confirmed that petitioner was covered by workmen's compensation.

November 20, 1979 Best mailed to petitioner an "Employers Report" which petitioner filled out.

December 10, 1979 The Employer's Report was filed with the Industrial Commission.

February, 1980 Respondent Carrier mailed to petitioner a "Workman's Report".

February 13, 1980 Petitioner filed the workman's report with the Industrial Commission, one year and 4 1/2 months after the injury.

Subsequently, the carrier denied the claim. Pursuant to petitioner's request a hearing was held limited to the question arising from the late filing of petitioner's claim. The administrative law judge issued a decision dismissing the claim. The decision was affirmed on administrative review and this special action review followed.

EQUITABLE ESTOPPEL

1. Applicability

Since petitioner's claim was filed in 1980, prior to the effective date of the current A.R.S. § 23-1061(A), the late filing is not a jurisdictional bar, but an affirmative defense. Van Horn v. Industrial Commission, 111 Ariz. 237, 527 P.2d 282 (1974); St. Paul Fire & Marine Ins. Co. v. Industrial Commission, 25 Ariz.App. 595, 545 P.2d 443 (1976).

Petitioner asserts that, by virtue of the misinformation supplied by the respondent employer, the respondent carrier is estopped to assert that affirmative defense. In Van Horn, supra, the Arizona Supreme Court adopted the view that

[T]he doctrine of equitable estoppel may be applied to prevent an employer from raising the bar of the one-year limitation where he had, by his own conduct, caused the employee to forebear filing a claim....

111 Ariz. at 239, 527 P.2d at 284.

Respondents contend that estoppel cannot be applied where the claimant cannot satisfy the three-part test of Kleinsmith v. Industrial Commission, 26 Ariz.App. 77, 546 P.2d 346, approved and adopted, 113 Ariz. 189, 549 P.2d 161 (1976), and its progeny dealing with the power of the Commission to waive an untimely filing. Respondents essentially claim that the estoppel doctrine of Van Horn has been supplanted or superseded by the three-part test of Kleinsmith and its progeny, or that acts which formerly would have estopped the employer or carrier are to be considered only as indicating a "meritorious reason" underlying the late filing. We disagree. While the acts of the employer or carrier may constitute a meritorious excuse for a late filing so as to justify a waiver of the one-year limitation, see Cohen v. Industrial Commission, 133 Ariz. 24, 648 P.2d 139 (App.1982), such acts may also estop the employer and carrier to raise the limitation in the first place. This court has previously distinguished between estoppel to assert the statute of limitations and a waiver of the statute of limitations; a waiver may be justified even when no grounds for estoppel are shown. Keeler v. Industrial Commission, 122 Ariz. 16, 592 P.2d 1282 (App.1979). Keeler did not purport to abolish the Van Horn estoppel principle.

We also note that the current version of A.R.S. § 23-1061(A) (while not directly applicable to this case) does away with the three-part Kleinsmith test for waiver of late filing, and again makes compliance with the one-year limitation a jurisdictional prerequisite, but still maintains an exception

[i]f the employee or other party entitled to file the claim has delayed in doing so because of justifiable reliance on a material representation by the commission, employer or insurance carrier....

We therefore conclude that the doctrine of equitable estoppel endures and is theoretically available in Arizona workmen's compensation cases, independent of the Kleinsmith test for waiver. It remains to be determined whether the facts of this case make an application of estoppel proper.

Respondents contend that estoppel is not applicable here because neither the employer nor the carrier perpetrated any fraud or deliberate deception, nor has the petitioner so claimed. Neither Van Horn nor Holmes Tuttle Broadway Ford v. Industrial Commission, 27 Ariz.App. 128, 551 P.2d 577 (1976), limited the estoppel doctrine to such situations. See also 3 A. Larson, Workmen's Compensation Law, § 78.45; Pino v. Maplewood Packing Co., 375 A.2d 534 (Me.1977).

Questions of estoppel can arise in a wide variety of situations. Most common are those in which the employer or carrier says to the injured employee, in effect, "Don't worry, we'll take care of you," thereby "lulling" the employee into inaction until the filing period has passed. In these situations, the employer and/or carrier are commonly estopped to raise the limitation. Thus, the employer/carrier may be estopped by its actions of paying disability compensation, A.R.S. § 23-1061(B), by paying the employee's medical expenses, Van Horn, supra, by promising to "take care of" the employee who need not file an industrial claim, or by promising to file the employee's industrial claim, Holmes Tuttle, supra.

Less frequently it is contended that the employer/carrier is estopped to assert the statute of limitations by its denial of compensability. Under such circumstances, there is disagreement whether or not estoppel is available. On the one hand, it is held that an employer's statement that the employee has no claim is a denial, not concession, of liability, and cannot reasonably lead the employee to believe that he would receive any benefits. Since the effect is not to "lull" the employee into inaction, estoppel is not applicable. See Barfield v. General Steel Tank Co., 370 So.2d 1005 (Ala.Civ.App.1979); Drane v. City of New Orleans, 328 So.2d 752 (La.App.1976).

On the other hand, it has been held that estoppel is equally applicable when the employer or carrier denies liability, either because the injury was not work-related or because the injured workman was not covered by workmen's compensation. See Levo v. General-Shea-Morrison, 128 Mont. 570, 280 P.2d 1086 (1955); Robertson v. Brissey's Garage, Inc., 270 S.C. 58, 240 S.E.2d 810 (1978).

In Levo, the claimant was informed by the employer that his heart attack was the result of non-industrial disease and not any industrial injury, and that there was no use in filing a claim, "nothing that could be done". The court held that

[T]he advice here given by the assistant project manager and personnel director and the advice given by a lawyer who the claimant thought to be a company lawyer did not permit the claimant in good conscience to file a claim. Ignorance based on completely erroneous advice from persons who are directly connected with the affairs of the employer can even be more profound and dangerous in its consequence than ignorance based on no advice at all. Such advice effectively prevents a conscientious employee from filing a claim for an award or at least until different advice of equal or higher standing is received. According to the record the conclusion is inescapable that claimant was actually dissuaded from filing a claim by the agents of defendant.

We find that the doctrine of equitable estoppel should be applied under the facts in this cause.

280 P.2d at 1089-90.

In the present case, respondents contend that petitioner's mistake of law was no defense. While we might agree that a claimant's unilateral mistake as to his entitlement to compensation would not excuse a late filing, that is not the issue presented. Larson recognizes the distinction between a claimant's mistake and an employer-induced mistake. Larson, supra, § 78.47. The administrative law judge apparently felt that petitioner had no right to rely on respondent employer's determination of a question of law. In finding number 4 he stated:

The legal determination by the employer that applicant was not covered was not the employer's decision to make;...