Schmidtlien Electric, Inc. v. Greathouse

• Decision Date: 21 January 2005
• Docket Number: No. 91,654.,91,654.
• Citation: 104 P.3d 378,278 Kan. 810
• Parties: SCHMIDTLIEN ELECTRIC, INC., and TRINITY UNIVERSAL INSURANCE CO., Plaintiffs/Appellants, v. PAULA GREATHOUSE, Director, Kansas Division of Workers Compensation, Defendant/Appellee. NORTHMINSTER PRESBYTERIAN CHURCH and BROTHERHOOD MUTUAL INSURANCE CO., Plaintiffs/Appellants, v. PAULA GREATHOUSE, Director, Kansas Division of Workers Compensation, Defendant/Appellee.
• Court: Kansas Supreme Court

278 Kan. 810

104 P.3d 378

SCHMIDTLIEN ELECTRIC, INC., and TRINITY UNIVERSAL INSURANCE CO., Plaintiffs/Appellants, v. PAULA GREATHOUSE, Director, Kansas Division of Workers Compensation, Defendant/Appellee.

NORTHMINSTER PRESBYTERIAN CHURCH and BROTHERHOOD MUTUAL INSURANCE CO., Plaintiffs/Appellants, v. PAULA GREATHOUSE, Director, Kansas Division of Workers Compensation, Defendant/Appellee.

No. 91,654.

Supreme Court of Kansas.

Opinion filed January 21, 2005.

Matthew S. Crowley, of Gehrt & Roberts, Chartered, of Topeka, argued the cause, and was on the briefs for appellants.

Glenn H. Griffeth, deputy chief counsel, of Kansas Department of Human Resources, of Topeka, argued the cause, and A.J. Kotich, chief counsel, was with him on the brief for appellee.

The opinion of the court was delivered by

NUSS, J.:

This appeal concerns two workers compensation cases which have been consolidated. Employer Schmidtlien Electric, Inc., together with its insurance carrier Trinity Universal Insurance Company (Trinity Universal), and employer Northminster Presbyterian Church, together with its insurance carrier Brotherhood Mutual Insurance Company (Brotherhood Mutual), appeal from the trial court's dismissal of their petitions for writs of mandamus. In both petitions, plaintiffs sued the Director of the Kansas Division of Workers Compensation (Director) under K.S.A. 44-534a seeking reimbursement of benefits they had paid to their injured employees (claimants). This court transferred the case from the Court of Appeals for review and determination, pursuant to K.S.A. 20-3018(c).

The issues on appeal, and this court's accompanying holdings, are as follows:

1. Did the trial court err in holding there was not a full hearing on employee Bryan Kent's claim? Yes. 2. Did the trial court err in holding there was no administrative determination that plaintiffs paid more in benefits than those to which claimants were entitled? Yes.

3. Did the trial court err in refusing to issue the writs of mandamus? Yes.

Accordingly, we reverse, remand, and order the trial court to issue writs of mandamus ordering the Director to carry out her statutory duties, i.e., to determine the amount of compensation paid by the insurance carriers to claimants and to certify to the Commissioner of Insurance the amount so determined for their reimbursement.

FACTS

Kristen Anderson was employed by Northminster Presbyterian Church, which was in turn insured by Brotherhood Mutual. Bryan Kent was employed by Schmidtlien Electric, Inc., which was in turn insured by Trinity Universal. Both Anderson and Kent became injured, and their employers' insurance carriers paid them temporary disability benefits and medical expenses. Their respective workers compensations claims are set forth separately below.

Claimant Anderson

According to an Agreed Award dated February 10, 2003, the parties stipulated to the following facts:

"1. [Anderson] claims personal injury by accident in Reno County, Kansas.

"2. [Anderson] claims said accidental injury occurred on or about July 19, 1998.

"3. Respondent/insurance carrier admit [that Anderson] met with personal injury by accident on or about the alleged date of accident.

"4. Respondent/insurance carrier admit the relationship of employer-employee existed on the date of the accidental injury.

"5. Respondent/insurance [carrier] admit that the parties are governed by the Kansas Workers Compensation Act.

"6. Respondent/insurance carrier admit that proper notice of the alleged accident was made.

"7. Brotherhood Mutual Insurance Company was the insurance carrier for the respondent on the date of accidental injury.

"8. The parties stipulate that the average weekly wage on July 19, 1998, was $403.85.

"9. Medical treatment has been furnished in the total amount of $24,388.16. There is no claim by Anderson for any past due or out-of-pocket medical reimbursement.

"10. Temporary disability compensation has been made in the amount of $3,794.23. . . ."

According to the Agreed Award, the parties acknowledged that the following four issues remained in dispute:

"(1) Whether [Anderson's] accidental injury arose out of and in the course of her employment with [the church]?

"(2) Whether timely written claim was served?

"(3) What is the nature and extent of [Anderson's] disability and the appropriate compensation, if any?

"(4) Whether timely Application for Hearing was filed with the Director pursuant to K.S.A. 44-534(b)?" (Emphasis added.)

Under "FINDINGS," the administrative law judge (ALJ) found regarding issues two and four that the parties acknowledged timely written claim was not served and that an application for hearing was not timely filed. He also found: "The parties have requested that the Court enter a final determination denying compensability based upon finding all disputed issues against claimant and in favor of respondent/insurance carrier." (Emphasis added.)

Accordingly, under the heading "AWARD," the ALJ stated in relevant part as follows:

"The Court accepts the findings of the parties and adopts them for purposes of the Court's final determination in this matter. Accordingly, claimant's claim is denied.

"This Agreed Award should be treated as any other award as if this matter was fully litigated. All other rights of the parties in this matter have been adjudicated except that the respondent/insurance carrier's right to proceed on securing the reimbursement from the Kansas Workers' Compensation Fund." (Emphasis added.)

The Agreed Award was signed by the ALJ, by attorneys for both sides, and by claimant Anderson. It was eventually filed with the Director, Philip Harness.

Brotherhood Mutual then sought reimbursement of its $28,182.39 from the Director. In a letter dated March 10, 2003, Harness essentially held that reimbursement would be denied because Anderson had originally been entitled to the benefits, and her later failure to file timely claims and applications did not eliminate her right to benefits earlier received.

"The February 10, 2003 Agreed Award correctly states that the claimant is entitled to no award of benefits due to late written claim or late application for hearing. However, the claimant's entitlement to benefits do [sic] not depend on the existence of an award.

"In this case, the defenses of late written claim or late application for hearing would not have existed until 200 days [K.S.A. 44-520a] or 2 years after the last payment of benefits [K.S.A. 44-534(b)]. The claimant was entitled to the benefits when paid, and the claimant's failure to timely pursue the case after receiving the benefits in no way dissolves the claimant's right to benefits already received.

"It does not appear that the employer or its insurance carrier paid any amounts that the claimant was not entitled to. Therefore, I cannot certify any amounts for reimbursement from the fund."

Brotherhood Mutual then sought reconsideration of Harness' denial, to which he replied in a letter dated March 25, 2003. Among other things, he essentially repeated the theme that reimbursement would be denied because Anderson had originally been entitled to the benefits and her later failure to file timely claims and applications did not eliminate her right to benefits earlier received. He also opined that the ALJ's determination denying compensability was not factually supportable:

"The February 10, 2003, Agreed Award did contain a finding that the claim was not compensable. There were two findings in the Agreed Award:

"1. Acknowledgment that written claim and application for hearing were not timely filed.

"2. Request for final determination denying compensability.

"[However,] [a] finding in the form of a request does not amount to a factual determination; but furthermore, the Agreed Award contains no stipulated facts on which to base a finding that the claim was not compensable.

. . . .

". . . Late written claim and application for hearing are the only apparent reasons for the denial of the claim.

"A claimant's entitlement to benefits does not depend on the existence of an award. K.S.A. 44-512b assesses a penalty in the form of interest where the employer or insurance carrier fails to pay benefits prior to an award without just cause. K.S.A. 44-5,120 states that such a failure to pay benefits is a fraudulent or abusive act, subject to civil penalty. Clearly, the Workers Compensation Act recognizes a claimant's entitlement to benefits prior to an award. Likewise, the denial of an award does not necessarily extinguish a claimant's preexisting entitlement to benefits."

Harness then expressed a possible basis for Brotherhood Mutual's reimbursement, i.e., that Anderson's injury did not arise out of and in the course of employment:

"If an award denied benefits because the injury did not arise out of and in the course of employment, then the claimant would not have been entitled to workers compensation benefits received for that injury. In the present case, you and the claimant's counsel may submit to the administrative law judge a modification to the agreed award that specifies that the injury did not arise out of and in the course of employment. If such a modification is approved, you may renew your request for fund reimbursement based on the new findings." (Emphasis added.)

Claimant Kent

According to an Award dated November 18, 2002, the parties stipulated to the following facts:

"1. [Kent] claims personal injury by accident in Shawnee County, Kansas.

"2. [Kent] claims said accidental injury occurred on or about January 22, 1991.

"3. Respondent/insurance carrier admit [that Kent] met with personal injury by accident on or about the alleged date of accident.

"4. Respondent/insurance carrier admit the relationship of employer-employee existed on the date of the accidental injury.

"5. Respondent/insurance carrier admit that the parties are governed by the Kansas Workers Compensation Act.

"6. Respondent/insurance [carrier] admit that proper notice of the

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