Mikel v. Pott Industries/Saint Louis Ship

• Decision Date: 03 October 1995
• Docket Number: No. 64996,64996
• Parties: Henry MIKEL, Employee/Respondent, v. POTT INDUSTRIES/ST. LOUIS SHIP, Employer/Respondent, and Midland Insurance Company, Insurer (Insolvent), and Missouri Property and Casualty Insurance Guaranty Association, Appellant.
• Court: Missouri Court of Appeals

Page 323

910 S.W.2d 323

Henry MIKEL, Employee/Respondent, v. POTT INDUSTRIES/ST. LOUIS SHIP, Employer/Respondent and Midland Insurance Company, Insurer (Insolvent) and Missouri Property and Casualty Insurance Guaranty Association, Appellant.

No. 64996.

Missouri Court of Appeals,

Eastern District,

Division Four.

Oct. 3, 1995.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Nov. 8, 1995.

Application to Transfer Denied

Dec. 19, 1995.

James B. Kennedy, Gerre S. Langton, Adrian P. Sulser, St. Louis, for appellant.

W. Stanley Walch, Mark Sableman, Mike W. Bartolacci, St. Louis, for respondent.

GRIMM, Judge.

In this workers' compensation case, Midland Insurance Company, employer's insurer, became insolvent before employee filed his asbestosis claim. Pursuant to § 375.785, RSMo 1986, ¹ the Missouri Insurance Guaranty Association ² (MIGA) participated in the proceedings. The Labor and Industrial Relations Commission awarded employee compensation and ordered MIGA to pay the award.

MIGA appealed, raising four points. Following opinion by this court, the supreme court ordered transfer. In Mikel v. Pott Industries/St. Louis Ship, 896 S.W.2d 624 (Mo. banc 1995), the only point the court determined was that Commission has jurisdiction to determine whether employee's claim is a covered claim within the meaning of § 375.785.3(2). Id. at 627. The supreme court retransferred the appeal to this court for consideration of the remaining three points.

In those points, MIGA contends that (1) Commission has no personal jurisdiction over it; (2) its due process rights were violated; and (3) employee's claim is barred because no claim was presented prior to the claim bar date. We disagree and affirm.

I. Background

On April 3, 1986, the New York Supreme Court declared Midland Insurance Company insolvent. That court appointed the New York Superintendent of Insurance as liquidator. Further, the court set April 3, 1987 as the last day to present proofs of claims.

The liquidator sent proof of claim forms to employer. Instructions on the forms directed employer, as a former policyholder, to "check the appropriate box or boxes below. No amount need be stated."

The form contained two boxes a policyholder could check. One indicated, "Claim is made for policyholder protection up to the limits of the policy." The other said, "Claim is made for return of unearned premium." Employer checked both boxes.

In addition, the form stated that if "the amount of the claim is unknown, the amount may be omitted or insert the words 'Unstated Amount.' " Employer wrote in "Unstated Amount."

Employee worked for employer from 1966 until 1984, when employer went out of business. In June, 1987, employee first learned that he had asbestosis.

In January, 1989, employee filed his claim. The Division of Workers' Compensation sent a copy of the claim to "Midland Ins c/o MO Insurance Guaranty Fund." MIGA referred the file to the Kortenhof and Ely law firm.

On February 23, 1989, Robert T. Hart of that firm filed an answer. The answer indicated the name of the insurer was "Midland Ins. Co. (in insolvency) c/o GAB Business Services." GAB Business Services was MIGA's servicing agent.

At the direction of MIGA, Mr. Hart defended employee's claim for over a year. However, on April 11, 1990, MIGA's claim manager wrote employer that it was no longer going to defend the claim. The letter advised employer that because it did not file a specific proof claim for employee's claim with the liquidator before the April 3, 1987 bar date, MIGA was denying employer's request for coverage.

Further, the letter said that employer had until April 25, 1990, to retain counsel. At that time, MIGA was going to "instruct Mr. Hart to withdraw as counsel for the defendant Pott Industries."

Hearings on the claim were held on four days stretched over two years. The first hearing was on May 14, 1990. The record and transcript reflect that Mr. Hart appeared on behalf of the employer and insurer.

At the conclusion of that hearing, employee's attorney asked the ALJ to take notice that no withdrawal had "been filed by the firm of Kortenhof and Ely through the date of this hearing." Mr. Hart replied that they "always have and still do represent Pott Industries." Later, Mr. Hart said that he "was never in the case for Missouri Insurance Guaranty Association, so therefore I can't withdraw from them."

At that May hearing, employer's former president testified that employer had its workers' compensation insurance with Midland from January, 1977, until its insolvency in 1986. He identified the proof of claim forms filed with the liquidator and the liquidator's acknowledgement of them.

Further, he testified he filed the proof of claim forms as a general claim "to apply to claims which were not yet filed, but for which the statute [of limitations] had not yet run." MIGA does not dispute that the forms were timely filed with the liquidator.

The next hearing was on June 18, 1990. At that time, Mr. Hart appeared on employer's behalf. James Kennedy and Gerre Langton appeared for MIGA and MIGA's claims manager. Mr. Kennedy objected "to MIGA being a party in this particular claim." However, the ALJ overruled the objection.

MIGA's claims manager testified that Midland Insurance Company is a member insurer of MIGA. She stated that when a workers' compensation claim comes to MIGA, MIGA sends the file to GAB to handle. Also, MIGA assigns an attorney to defend the employer and the member insurer.

Further, she said, "MIGA is not normally named as a party," but MIGA pays for the attorney she selects, as well as any costs and benefits awarded. According to the statute, she said MIGA stands "in the shoes of the member insurer" and pays "what benefits they would have owed had they not become insolvent." Mr. Kennedy participated and made objections during the claims manager's testimony.

At the conclusion of the claims manager's testimony, the ALJ indicated he was going to draft a proposed order naming MIGA as a party. He said he would give each side fifteen days to support or oppose the proposed order, at which time he would enter his order.

On July 20, 1990, the ALJ found that MIGA was a proper party to the proceedings. He further ordered MIGA to defend the claim and to "pay whatever claims may be deemed warranted at later hearings."

The next hearing was on February 27, 1992. At that hearing, Mr. Kennedy made a special appearance on behalf of MIGA. At this hearing, the employee testified and was cross-examined by both Mr. Hart and Mr. Kennedy. As MIGA's appeal does not raise any issues specifically directed to the employee, there is no need to set out his testimony.

At the conclusion of employee's testimony, Mr. Kennedy asked for "an additional ten days in which to submit any additional evidence deemed necessary on the issues as they relate to MIGA." His request was granted.

The next and final hearing was held on March 2, 1992. At that time, employee, employer, and MIGA each introduced exhibits. In addition, Mr. Kennedy on behalf of MIGA, called MIGA's claims manager as a witness. Among other things, she said that prior to Union Gesellschaft Fur Metal Indus. Co. v. Illinois Ins. Guaranty Fund, 190 Ill.App.3d 696, 138 Ill.Dec. 21, 546 N.E.2d 1076 (1989), if a liquidator indicated that a general proof of claim was timely filed, MIGA accepted the claim as timely filed.

However, after the Union Gesellschaft case became final, MIGA reexamined its files. MIGA then decided to deny claims if a specific claim had not been filed before the bar date. The claims manager acknowledged that, subject to the merits of the claim, the only basis for denying this claim was that a general or omnibus proof of claim was filed rather than a specific claim.

At the conclusion of the claims manager's testimony, the ALJ asked Mr. Kennedy if he had "anything else." Mr. Kennedy responded, "No, I have nothing else."

II. Party Status

In its first point, MIGA asserts the "Commission had no personal jurisdiction over" it. MIGA contends that MIGA "was not named as a party in any claim" and it must be named "a party before any proceedings could take place that would affect its rights and obligations."

MIGA points out that employee's claim and amended claim shows the name of the employer. However, in section 4 of the claim form, "Name of all employers' insurers," employee's attorney inserted "Unknown." Thus, it argues, Commission's judgment against MIGA was "rendered without personal jurisdiction" and is void.

Section 287.300 provides that service on the employer shall be sufficient to give Commission jurisdiction "over the person of both the employer and his insurer." MIGA is not technically an "insurer." However, it is "deemed the insurer" on covered claims and has all the obligations of the insolvent insurer as if the insurer had not become insolvent. § 375.785.4(1)(b); Hirschbach Motor Lines Inc. v. Missouri Ins. Guaranty Ass'n, 782 S.W.2d 682, 684 (Mo.App.E.D.1989).

Although the employer was served with employee's claim, we need not rely on § 287.300 to find service on MIGA. On February 14, 1989, the Division of Workers' Compensation sent MIGA a copy of employee's claim for compensation. When MIGA received the claim, MIGA sent it to GAB, its servicing agent. In addition, MIGA assigned the defense of the claim to Mr. Hart.

Further, MIGA's attorneys participated in all proceedings. At the first hearing, the following occurred:

THE COURT: The insurer is Midland Insurance Company, which my understanding is ... insolvent. Do you represent the employer and insurer, Mr. Hart?

MR. HART: Yes.

At all subsequent hearings, both Mr. Hart and Mr. Kennedy participated. Although Mr. Hart may have represented only the employer in subsequent hearings, Mr. Kennedy represented MIGA and apparently fully participated. Mr. Kennedy called and cross examined witnesses, introduced exhibits, and made objections. Further, the ALJ...