Prudential Ins. Co. of America v. Jones, CA

• Court: Arkansas Court of Appeals
• Writing for the Court: CLONINGER
• Citation: Prudential Ins. Co. of America v. Jones, 613 S.W.2d 114, 1 Ark.App. 51 (Ark. App. 1981)
• Decision Date: 18 March 1981
• Docket Number: No. CA,CA
• Parties: PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant, v. James A. JONES, Appellee. 80-455.

Page 114

613 S.W.2d 114

1 Ark.App. 51

PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant, v. James A. JONES, Appellee.

No. CA 80-455.

Court of Appeals of Arkansas.

March 18, 1981.

Rose Law Firm, Little Rock, for appellant.

Sam Ed Gibson, Benton, for appellee.

CLONINGER, Judge.

Benton Hydraulics, Inc. purchased from appellant, Prudential Insurance Company of America, a group insurance policy which provided medical expense benefits for its employees. Appellee, James A. Jones, was president and general manager of Benton Hydraulics, Inc., and he and his wife owned all of the stock.

Appellee thereafter received an accidental injury within the course of his employment for Benton Hydraulics, Inc., and incurred medical expenses totaling $2,008.35. Appellant paid a hospital bill in the sum of $526.92, but refused to pay further benefits when it was determined that appellee had been injured within the scope of his employment. The policy issued by appellant contains the following provision:

The plan does not cover: Occupational Injury or Disease charges in connection with injury or disease recognized as a compensable loss by the provisions of any workmen's compensation, occupational disease or similar law under which you are covered or, if you are not a proprietor or partner of the employer, under which you could be covered on a mandatory or voluntary basis, whether or not you have such coverage.

The Arkansas Workers' Compensation Act, Ark.Stat.Ann. § 81-1320 (Repl. 1976) provides:

(a) No agreement by an employee to waive his right to compensation shall be valid, and no contract, regulation or device whatsoever, shall operate to relieve the employer or carrier, in whole or in part, from any liability created by this Act, except as specifically provided elsewhere in this Act. Provided however, that any officer of a corporation or self-employer who is not a subcontractor and who owns and operates his own business may by agreement or contract exclude himself from coverage or waive his right to coverage or compensation under this Act...

The trial court, sitting without a jury, gave judgment for appellee on his complaint for $1,481.43, statutory penalty of 12%, and an attorney's fee of $500.00. Appellant's counterclaim for $526.92 was denied.

The sole issue on appeal is whether appellee's injury was excluded from coverage under the policy issued by appellant.

We find that appellee's injury was a compensable loss under the terms of the Arkansas Workers' Compensation Act, and was excluded from coverage under appellant's policy.

Appellee, as an officer of a corporation, had a right to agree or contract to exclude himself from coverage under the Arkansas Workers' Compensation Act. Even if an exclusion agreement were in the record, which it is not, the appellee could not prevail. Appellant's policy excludes any injury recognized as a compensable loss by the provisions of any workers' compensation act, where the worker is covered or could be covered, whether he has the coverage or not, unless the worker is a proprietor or partner of the employer. We hold that appellee is not a proprietor, and that he is excluded from recovery under the policy issued by appellant.

Appellee has chosen to ignore the corporate character of his employer, and to claim the status of proprietor. Appellee defines proprietor as "A person...