Miller v. Miller

• Court: Kansas Court of Appeals
• Writing for the Court: Before REES, P.J., DAVIS, J., and PORTER K. BROWN; REES
• Citation: Miller v. Miller, 768 P.2d 308, 13 Kan.App.2d 262 (Kan. App. 1989)
• Decision Date: 03 February 1989
• Docket Number: No. 62298,62298
• Parties: Robert E. MILLER, Claimant, v. Robert E. MILLER and St. Paul Fire and Marine Insurance Company, Appellants, and Workers' Compensation Fund, Appellee.

Page 308

768 P.2d 308

13 Kan.App.2d 262

Robert E. MILLER, Claimant, v. Robert E. MILLER and St. Paul Fire and Marine Insurance Company, Appellants and Workers' Compensation Fund, Appellee.

No. 62298.

Court of Appeals of Kansas.

Feb. 3, 1989.

Syllabus by the Court

In a case where an electing self-employed person is granted compensation and qualifies as a handicapped employee knowingly employed or retained, it is held that liability for payment of the award shifts to the Workers' Compensation Fund pursuant to K.S.A. 1988 Supp. 44-567(a).

Douglas C. Hobbs, of McDonald, Tinker, Skaer, Quinn & Herrington, P.A., Wichita, for appellants.

Charles R. Pike and Brock R. McPherson, of McPherson, Bauer, Pike & Pike, Chtd., Great Bend, for appellee.

Before REES, P.J., DAVIS, J., and PORTER K. BROWN, District Judge, Assigned.

REES, Judge:

This workers' compensation case raises the question whether liability for compensation payment to an electing self-employed person is to be shifted to the Workers' Compensation Fund (the Fund) pursuant to K.S.A.1988 Supp. 44-567(a). The district court denied shifting. We reverse.

Robert E. Miller is an over-the-road trucker. Since 1982 he had owned a tractor and flatbed semi-trailer that he operated as a leasing owner-operator. The parties agree that Miller was a "self-employed person" as that term appears in the Workers' Compensation Act (the Act).

Miller sustained personal injury by accident arising out of and in the course of his self-employment on August 5, 1984, when he fell off his trailer. Miller's resultant disability probably or most likely would not have occurred but for a preexisting handicap causing physical impairment with which he was afflicted and of which he had known throughout his self-employment. (A form 88 "Notice of Handicap, Disability or Physical Impairment" filed by Miller was evidence of his knowledge.)

Prior to the accident, Miller had elected to bring himself within the provisions of the Act by filing with the Director a written election and by insuring with and keeping insured the payment of compensation by St. Paul Fire and Marine Insurance Company (St. Paul), a Kansas authorized workers' compensation insurer. St. Paul, pursuant to Miller's election, filed with the Director its written agreement to provide coverage for Miller, that is, its acceptance to treat Miller as an employee for the purposes of the Act.

Following the accident, Miller filed an accident report and made claim against St. Paul. A compensation proceeding was begun. The Fund was impleaded and shifting of compensation liability was requested. Miller and St. Paul entered into a settlement agreement. The Administrative Law Judge (ALJ) approved and affirmed the agreement and entered an award of compensation in the agreed amount. The ALJ refused, however, to order shifting to the Fund of liability for payment of any of the award. In the absence of a request for review, the ALJ's decision was automatically approved by the Director. On appeal, the district court adopted the ALJ's award as its own and shifting was denied.

In simplest terms, the Act sets forth a mandatory, self-contained, and self-enacting no fault insurance plan. The Act provides that:

"If in any employment to which [the Act] applies, personal injury by accident arising out of and in the course of employment is caused to an employee, the employer shall be liable to pay compensation to the employee...." K.S.A.1988 Supp. 44-501(a).

and requires that:

"Every employer shall secure the payment of compensation to the employer's employees ... (1) By insuring and keeping insured the payment of such compensation with an insurance carrier authorized to transact the business of workers' compensation insurance in the state of Kansas...." K.S.A. 44-532(b).

Workers' compensation insurance satisfying K.S.A. 44-532(b)(1) is in the nature of liability insurance, not indemnity insurance. Cf. Employers' Liability Assurance Corp. v. Matlock, 151 Kan. 293, 305, 98 P.2d 456 (1940). This is so for the reason that the statute's language calls for insurance obligating the insurer to pay compensation rather than insurance obligating the insurer to pay the employer's loss suffered from liability imposed by law. See White v. Goodville Mut. Cas. Co., 226 Kan. 191, 193-95, 596 [13 Kan.App.2d 264] P.2d 1229 (1979) (an automobile insurance case); K.S.A. 44-559; K.S.A. 44-532(a). In our view, it follows that in the usual workers' compensation proceeding where the insurance carrier's coverage is acknowledged or otherwise established, as to the claimant the employer virtually is a nominal respondent; in civil procedure parlance, the claimant's "action" essentially is a direct action against the insurance carrier who has stepped into and stands in the employer's shoes. Cf. K.S.A. 44-532(a).

K.S.A. 44-542a provides that:

"[A] self-employed person may elect to bring himself or herself within the provisions of the workmen's compensation act, by securing and keeping insured such liability in accordance with [K.S.A. 44-532(b)(1) ]. Such insurance coverage shall clearly indicate the intention of the parties to provide coverage for such ... self-employed person. When such election is made, the insurance carrier or its agent shall cause to be filed with the director a written statement of election to accept thereunder so that such ... self-employed person is treated as an employee for the purposes of the workmen's compensation act pursuant to such election."

The facts plainly establish that Miller and St. Paul fully complied with K.S.A. 44-542a and K.S.A. 44-532(b)(1). A valid election was in effect.

K.S.A.1988 Supp. 44-508 states that:

"As used in the workers compensation act:

"(a) 'Employer' includes ... any person ... [and]

"(b) ... 'employee' ... means any person who has entered into the employment of ... an employer.... Unless there is a valid election in effect which has been filed as provided in K.S.A. 44-542a ..., ['employee'] shall not include ... self-employed persons." (Emphasis added.)

The presence of the introductory qualifying or conditional phrase in the last sentence of K.S.A.1988 Supp. 44-508(b) produces the corollary that, where there is a valid election in effect, the statutory term "employee" includes self-employed persons. An electing self-employed person is an "employee" for the purposes of the Act for the single reason that that is what the Act says.

Miller was an "employee" for the purposes of the Act. Under the terms of the Act, he was a person who had entered into the employment of an employer (K.S.A. 44-508[b].

Turning to K.S.A.1988 Supp. 44-567, we find it provides that:

"(a) An employer ... who knowingly employs or retains a handicapped employee as defined in K.S.A. 44-566 ... shall be relieved of liability for compensation awarded ... as follows:

"(1) Whenever a handicapped employee is ... disabled ... as a result of an injury and the director awards compensation therefor and finds the ... disability ... probably or most likely would not have occurred but for the preexisting physical ... impairment of the handicapped employee, all compensation and benefits payable because of the ... disability ... shall be paid from the workers' compensation fund.

....

"(b) In order to be relieved of liability under this section, the employer must prove either the employer had knowledge of the preexisting impairment at the time the employer employed the handicapped employee or the employer retained the handicapped employee in employment after acquiring such knowledge." (Emphasis added.)

A "handicapped employee as defined in K.S.A. 44-566" (K.S.A.1988 Supp. 44-567[a] is an employee who is at a disadvantage in obtaining employment or reemployment because of physical or mental impairment with which he or she is afflicted or to which he or she is subject. K.S.A. 44-566(b); Denton v. Sunflower Electric Co-op, 12 Kan.App.2d 262, 264, 740 P.2d 98 (1987), aff'd 242 Kan. 430, 748 P.2d 420 (1988). Miller met that definition. For the purposes of the Act, he not only was an employee, he was a handicapped employee who had entered into the employment of an employer.

The provisions of the Act imposing liability upon the Fund are to be liberally construed to carry out the legislative intent to encourage employment of handicapped persons. Morgan v. Inter-Collegiate Press, 4 Kan.App.2d 319, 323, 606 P.2d 479 (1980). As held in Leiker v. Manor House, Inc., 203 Kan. 906, 913-14, 457 P.2d 107 (1969):

"[T]he purpose of the Act is to encourage employers to hire the handicapped, and the Legislature intended this to be achieved by shifting the increased burden of compensation from the employer to [the Workers' Compensation Fund] which is funded by payments from insurance carriers and from legislative appropriations. The statute is remedial in character, and is not to be interpreted in any narrow, technical or illiberal manner. A liberal construction of its provisions should be indulged, if necessary, to give effect to the purpose intended by the Legislature." (Emphasis added.)

In the case before us, the Fund's position and the district court's decision evolve from this "threshold" language of K.S.A.1988 Supp. 44-567(a): "An employer ... who knowingly employs ... a handicapped employee ... shall be relieved of liability." The Fund argues that it cannot be subjected to shifting under K.S.A.1988 Supp. 44-567 for the reason that Miller cannot be found to have employed himself.

Relying on Kumberg v. Kumberg, 232 Kan. 692, 659 P.2d 823 (1983), and Allen v. Mills, 11 Kan.App.2d 415, 724 P.2d 143 (1986), as supporting authority, the Fund urges that the relationship of employer and employee is a contractual relationship and because no person can contract with himself or herself, a self-employed person, as a "handicapped employee," cannot be in the employment of himself or herself, as an "employer." Thus, the Fund contends that, by operation of the...