Olds–carter v. Lakeshore Farms Inc.

• Decision Date: 18 February 2011
• Docket Number: No. 104,047.,104,047.
• Citation: 250 P.3d 825,45 Kan.App.2d 390
• Parties: Margaret LeAnn OLDS–CARTER, Appellee,v.LAKESHORE FARMS, INC.,andThe Kansas Workers Compensation Fund, Appellants.
• Court: Kansas Court of Appeals

45 Kan.App.2d 390

250 P.3d 825

Margaret LeAnn OLDS–CARTER, Appellee,

v.LAKESHORE FARMS, INC.,andThe Kansas Workers Compensation Fund, Appellants.

No. 104,047.

Court of Appeals of Kansas.

Feb. 18, 2011.

[250 P.3d 827 , 45 Kan.App.2d 390]

Syllabus by the Court

1. Determining whether a workers compensation claimant is involved in an agricultural pursuit is a question of fact which must be decided on a case-by-case basis.

2. To determine whether a workers compensation claimant was engaged in an agricultural pursuit when injured requires a two-step analysis. The first step is to determine whether the employer was engaged in an agricultural pursuit. If the answer to this question is no, then the court may find that there is coverage. If the answer is yes, then the court proceeds to the second step, which is to determine if the injury occurred while the employee was engaged in an employment incident to an agricultural pursuit. If the answer to that question is also yes, then the employee is not covered by the Workers Compensation Act. If the answer to that question is no, then there is coverage.

3. There are three considerations for determining whether a specific pursuit or business is an agricultural pursuit within the meaning of K.S.A. 44–505(a)(1): (1) the general nature of the employer's business; (2) the traditional meaning of agriculture as the term is commonly understood; and (3) each business will be judged on its own unique characteristics.

4. Under the facts in this case involving an injured worker's claim for workers compensation benefits, after applying the proper analysis under K.S.A. 44–505(a)(1), it is held that when the claimant was injured, the respondent's business did not constitute an agricultural pursuit as the term is commonly understood. As a result, respondent's business was not exempt from the Worker's Compensation Act.

5. Kansas courts have consistently defined an independent contractor as one who, in exercising an independent employment, contracts to do certain work according to his or her own methods, without being subject to the control of the party he or she contracts with, except as to the results or product of his or her own work.

6. There is no absolute rule for determining whether one is an independent contractor or an employee. Generally, each case must be determined on its own facts.

7. The principal test of whether one is an independent contractor or an employee is based upon the control exercised: Who has the right to direct what work will be done and when and how the work will be performed?

8. The primary test in determining whether the relationship of employer and employee exists is whether the alleged employer has the right of control and supervision over the work of the alleged employee and the right to direct the manner in which the work is to be performed, as well as the result which is to be accomplished. It is not the actual interference or exercise of control by the employer but the existence of the right or authority to interfere or control which renders one an employee rather than an independent contractor.

9. Under the facts of this case, evidence supported findings that the respondent exercised or had the right to exercise as much control over the claimant-driver as the respondent desired, so that the claimant-driver was an employee and not an independent contractor and was covered by the Workers Compensation Act.

10. K.S.A. 44–532a(a) clearly states that if an employer of an injured employee is insolvent and uninsured, the State pays compensation benefits to the employee out of the Kansas Workers Compensation Fund (Fund). Moreover, the Kansas Insurance Commissioner can then sue the employer under K.S.A. 44–532a(b). It follows that by satisfying the claim of the employee, the Insurance Commissioner steps into the shoes of the employee and is subrogated to the rights of the employee. This is a proper interpretation of K.S.A. 44–532a(a) because the policy and purpose behind the Workers Compensation Act is to furnish a remedy which is both expeditious and free from proof of fault. As a result, the burden is properly placed on the Fund to pursue a subrogation action against an insolvent and uninsured employer under K.S.A. 44–532a(b).

Matthew R. Bergmann, of Frieden, Unrein, Forbes & Biggs, L.L.P., of Topeka, for appellant Kansas Workers Compensation Fund.John D. Jurcyk and Brent M. Johnston, of Roeland Park, for appellant Lakeshore Farms, Inc.Timothy J. Pringle, of Eschmann & Pringle, P.A., of Topeka, for appellee Margaret LeAnn Olds–Carter.Before GREENE, P.J., GREEN and STANDRIDGE, JJ.GREEN, J.

Margaret LeAnn Olds–Carter was injured in an accident while driving a semi truck that she leased from Lakeshore Farms, Inc. (Lakeshore). Olds–Carter was granted workers compensation benefits from the administrative law judge (ALJ). The ALJ's decision was affirmed by the Appeals Board for the Kansas Division of Workers Compensation (Board). Lakeshore and the Kansas Workers Compensation Fund (the Fund) appeal the Board's decision, contending that the present claim is not subject to the Kansas Workers Compensation Act because Olds–Carter was engaged in an agricultural pursuit when she was injured, because Lakeshore's payroll is insufficient to trigger coverage under the Act, and because Olds–Carter was an independent contractor, not an employee of Lakeshore. The Fund also appeals the Board's decision that it is obligated to pay the award because Lakeshore is insolvent. Finding no reversible error, we affirm.

Lakeshore is a company owned by Jonathan Russell, who is the company's sole officer, director, and shareholder. Lakeshore owns certain equipment, including vehicles, semi-trucks, combines, tractors, planters, and sprayers. Russell owns farmland and pays Lakeshore for the use of its equipment. Lakeshore also leases its semi-trucks to individuals who haul loads of grain and other items for Russell and for various brokers. Lakeshore pays for the trucks' insurance, licensing, permits, fuel, repairs, and maintenance, and keeps 75 percent of the compensation the drivers earn from hauling. After the brokers make payments directly to Lakeshore, the drivers earn the remaining 25 percent of each haul. The drivers are required to gross $2,400 per month in order to cover their obligations under the lease.

On March 5, 2007, Olds–Carter began driving a semi-truck for Lakeshore under an oral lease agreement. Her duties included loading and hauling grain or sand in a grain wagon. On July 18, 2007, Olds–Carter was driving her truck to pick up a load of corn at an elevator for a broker. En route, Olds–Carter was injured after she lost control of her truck. She was ultimately diagnosed with a 20 percent compression fracture to her L2 vertebra.

Olds–Carter filed a workers compensation claim, alleging that the accident occurred during the course of her employment with Lakeshore. In attempting to avoid liability, Lakeshore argued that Olds–Carter was an independent contractor, not an employee. Following a hearing, the ALJ found that although the evidence presented contained elements both of an independent contractor relationship and an employer and employee relationship, the totality of the evidence indicated that Olds–Carter was an employee of Lakeshore. The ALJ also found that there was coverage under the Act because Olds–Carter was not engaged in an agricultural pursuit when she was injured and because Lakeshore had a payroll of over $20,000. The ALJ determined that Olds–Carter sustained a 38.5 percent work disability based upon a 38 percent task loss and a 39 percent wage loss, entitling her to 159.78 weeks of permanent partial disability compensation and a total award of $50,230.04, assessed against both Lakeshore and the Fund.

Lakeshore and the Fund petitioned the Board for review. After reviewing the evidence, the Board entered an order affirming in part and modifying in part the ALJ's award. The Board concluded that Lakeshore's trucking operation did not constitute an agricultural pursuit, that Lakeshore had a sufficient payroll to bring it under the jurisdiction of the Act, and that the evidence more heavily weighed towards a finding that Olds–Carter was an employee of Lakeshore, rather than an independent contractor. The Board also held that there was sufficient evidence in the record to establish that Lakeshore was unable to pay Olds–Carter's workers compensation benefits; thus, the Fund was responsible for paying the benefits. Finally, the Board modified the ALJ's award to reflect that Olds–Carter suffered a 60 percent permanent partial disability, for a total award of $84,125.41.

Standard of Review

Under the Workers Compensation Act (Act), K.S.A. 44–501 et seq. , an appellate court's standard of review is statutorily controlled by the Kansas Judicial Review Act (KJRA), K.S.A.2009 Supp. 77–601 et seq. See 2009 Supp. K.S.A. 44–556; L.2009, ch. 109, secs. 23–30. A recent decision of our Supreme Court held that the 2009 changes to the standard of review are to be given prospective application only because the KJRA contains a savings clause; thus, the 2009 changes are to be applied to agency decisions issued on or after July 1, 2009. Redd v. Kansas Truck Center, 291 Kan. 176, Syl. ¶ 1, 239 P.3d 66 (2010). The Board's decision here was issued on February 26, 2010. Therefore, the 2009 KJRA changes apply to the present case.

The KJRA provides that appellate courts review the Board's factual determinations to verify that they are supported by substantial competent evidence “in light of the record as a whole.” K.S.A.2009 Supp. 77–621(c)(7); Herrera–Gallegos v. H & H Delivery Service, Inc., 42 Kan.App.2d 360, 362, 212 P.3d 239 (2009). The language “in light of the record as a whole” is statutorily defined to mean

“that the adequacy of the evidence in the record before the court to support a particular finding of fact shall be judged in light of all the relevant...