Simpson v. Saunchegrow Const.

Decision Date30 March 1998
Docket NumberNos. 21802,21823 and 21836,s. 21802
Citation965 S.W.2d 899
PartiesDanny SIMPSON, Employee-Appellant, v. Dale E. SAUNCHEGROW CONSTRUCTION d/b/a DES Construction, Employer-Respondent-Cross Appellant, Columbia National Insurance Company, Insurer-Respondent, and Missouri State Treasurer, as Custodian of the Second Injury Fund, Additional Party-Cross Appellant.
CourtMissouri Court of Appeals

William C. Love, Harrison, Tucker & Hyde, Springfield, for Danny Simpson.

Jerry A. Harmison, Jr., Daniel R. Wichmer, Miller & Sanford, Springfield, for Dale E. Saunchegrow Construction, d/b/a DES Corp.

Raymond E. Whiteaker, Whiteaker & Wilson, Springfield, for Columbia National Insurance Company.

Jeremiah W. (Jay) Nixon, Atty. Gen., Jefferson City, Cara Lee Harris, Asst. Atty. Gen., Springfield, for Second Injury Fund, State of Missouri.

Before PARRISH, P.J., and SHRUM and BARNEY, JJ.

PER CURIAM.

In respective appeals 21802, 21823 and 21836, Appellants Danny Simpson (Claimant), Dale E. Saunchegrow, d/b/a DES Construction (Employer), and Treasurer of the State of Missouri, as custodian of the Second Injury Fund (Custodian), appeal the final award of the Labor and Industrial Relations Commission (Commission) entered in connection with a claim for compensation filed by Claimant. 1

Each respective Appellant maintains that the Commission erred when it found that Columbia National Insurance Company (Insurer) had effectively canceled a workers' compensation insurance policy (the policy), previously issued to Employer prior to Claimant's work-related injuries, when it sent Employer a certified letter canceling its policy. Appellants argue that Insurer failed to comply with the provisions of section 287.090.3 which they contend mandated that Insurer file a Form 75 with the Division of Workers' Compensation (the Division) as a prerequisite to the cancellation of its workers' compensation policy previously issued to Employer. 2 Also, in its separate appeal, Employer raises an additional point of Commission error by its determination that Employer was not entitled to an award of $3,000.00 against Insurer for his costs incurred in defending the claim.

I.

In July 1992, Employer purchased workers' compensation insurance from Respondent, Columbia National Insurance Company (Insurer), through Kenneth Bassett, an independent insurance agent. On September 22, 1992, Insurer issued a workers' compensation insurance policy (the policy) to Employer, effective as of July 23, 1992, which was to expire on July 23, 1993.

An endorsement attached to the policy provided, inter alia, that the insurer could cancel the policy by "mail or deliver to you by certified mail, not less than thirty days advance written notice stating when the cancellation is [to] take effect."

On September 28, 1992, Insurer filed with the Division a Form 75, dated September 23, 1992, wherein Insurer certified that "workers' compensation of [Employer] has been ... issued." 3

Mr. Bassett subsequently received from Insurer, by certified mail, a letter dated September 29, 1992, stating that Insurer was canceling Employer's policy effective November 28, 1992. According to the letter, Insurer determined that Employer had an undesirable credit rating per recent credit report. Mr. Bassett discussed the credit report problem with Employer but this problem was not resolved. On October 8, 1992, Insurer issued its check to Employer in the amount of $712.28 for the unused premiums on the policy in question. Employer admitted cashing and depositing the proceeds into his bank account. Insurer ultimately filed another WC-75 with the Division on April 19, 1995, showing that the policy in question had been canceled, effective November 28, 1992.

During the hearing before the Administrative Law Judge (ALJ) the parties stipulated that on January 20, 1993, Claimant sustained an injury arising from an accident while working for Employer, who was operating a construction business subject to the Missouri Workers' Compensation law. 4

In her findings of facts and conclusions of law, the ALJ determined that Insurer's policy of insurance was in force at the date of Claimant's work-related injuries. She determined that Insurer had failed to comply with the prerequisites of filing a Form 75 with the Division in order to perfect its right to cancel under section 287.090.3, noting that insurer had belatedly filed its notice of cancellation on April 19, 1995, more than two years after Claimant incurred his work-related injuries. Accordingly, the ALJ ordered the Insurer to pay Claimant's (a) medical expenses of $33,981.45; (b) mileage of $l,219.00; (c) temporary total disability for 59 4/7 weeks at the weekly rate of $266.67 for a total of $l5,866.87; (d) permanent partial disability of 60% of the left upper extremity in the amount of $32,796.91; (e) future medical treatment in an undetermined amount; and (f) disfigurement based on 20 weeks' compensation.

Additionally, the ALJ ordered that Insurer pay Employer $3,000.00 for costs he incurred in defending his claim, and determined that the Second Injury Fund had no liability in the case.

On appeal by Insurer to the Commission, the Commission reversed the ALJ's award which determined that the Insurer's policy was in effect at the time of Claimant's injuries. It decided that section 287.090.3 lacked a provision specifically making cancellation of a workers' compensation insurance policy contingent on the filing of a Form 75, and also found that the statute did not establish a specific time frame associated with the filing of that form. It, therefore, concluded that the filing of a Form 75 was of ministerial 5 importance to the Division, and that there was no basis for concluding that Insurer must have filed a Form 75 to have effectively canceled its workers' compensation insurance policy.

The Commission then found that the policy was effectively canceled on November 28, 1992, prior to Claimant's work-related accident. Accordingly, it held that the issue of Insurer's payment of future medical expenses was moot. The Commission reversed the award of $3,000.00 in favor of Employer and against Insurer to reimburse Employer for his costs in defending the claim. The Commission also determined that Employer remained liable for the payment of the award of benefits to Employee as set out by the ALJ's award, which was otherwise affirmed in its totality, and ordered the Second Injury Fund to be "liable for the payment of Claimant's past and future medical expenses not otherwise paid by Employer."

II.

In a workers' compensation case an appellate court reviews the entire record, including legitimate inferences to be drawn therefrom, in the light most favorable to the award of the Commission. Chambers v. SDX, Inc., 948 S.W.2d 448, 450 (Mo.App.1997). The appellate court may modify, reverse, remand for rehearing, or set aside an award or decision of the Commission only if the Commission's actions were unauthorized by law, in excess of its authority, fraudulent, unsupported by the facts as found by the Commission or unsupported by competent evidence of the whole record. Id. As to questions of law, our review of the Commission's decision is de novo. Davis v. Research Medical Center, 903 S.W.2d 557, 560 (Mo.App.1995).

"Workers' compensation law is entirely a creature of statute. Therefore, we are bound by the general rules of statutory construction in interpreting the workers' compensation law." Frazier v. Treasurer of Missouri as Custodian of Second Injury Fund, 869 S.W.2d 152, 156 (Mo.App.1993). "In interpreting it, we must ascertain the intent of the legislature by considering the plain and ordinary meaning of the terms." Id. We are also required to "give effect to that intent if possible...." Campbell v. Labor & Indus. Relations Comm'n, 907 S.W.2d 246, 249 (Mo.App.1995).

Section 287.090.3 provides as follows:

Any insurance company authorized to write insurance under the provisions of this chapter in this state shall file with the division a memorandum on a form prescribed by the division of any workers' compensation policy issued to any employer and of any renewal or cancellation thereof.

Claimant argues that sound policy reasons dictate that the foregoing statute be construed as requiring an insurance company to give notice to the Division as a prerequisite to the cancellation of a workers' compensation policy of insurance. He maintains that case law has established that such cancellation provisions be strictly construed against Insurer. He also argues that insurance companies providing workers' compensation insurance in Missouri are pervasively regulated with a view toward protection of the employee. Claimant maintains that the notice requirement of section 287.090.3 serves the purposes of first verifying that an employer has complied with the Missouri Workers' Compensation Law (Act) by obtaining insurance, see § 287.280; and, secondly, assists in the effectual administration of claims, serving as a safeguard to employees with respect to their employers' compliance with the Act.

Employer argues that in cancelling a policy the statute contains the words "shall file," in connection with the filing of a form prescribed by the Division. It maintains that the plain meaning of the statute requires an insurer to file a Form 75 with the Division prior to effectuating the cancellation of a policy. Employer argues that this Court "need look no further than the word 'shall' ..." in determining whether the section imposes a mandatory duty on Insurer to timely file a notice of cancellation prior to its being considered an effective cancellation. In like manner, the Custodian joins with the Claimant in arguing that the cancellation provisions of a workers' compensation policy are to be strictly construed. See ARTHUR LARSON, LARSON'S...

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