Thomas A. Paulsen Co. v. Industrial Com'n of Utah, 21049

• Decision Date: 09 February 1989
• Docket Number: No. 21049,21049
• Citation: 770 P.2d 125
• Parties: THOMAS A. PAULSEN COMPANY, Petitioner, v. The INDUSTRIAL COMMISSION OF UTAH, and Default Indemnity Fund of the Utah Industrial Commission, Respondents.
• Court: Utah Supreme Court

Page 125

770 P.2d 125

THOMAS A. PAULSEN COMPANY, Petitioner, v. The INDUSTRIAL COMMISSION OF UTAH, and Default Indemnity Fund of the Utah Industrial Commission, Respondents.

No. 21049.

Supreme Court of Utah.

Feb. 9, 1989.

Rehearing Denied March 10, 1989.

Brad L. Englund, Earl D. Tanner, Salt Lake City, for petitioner.

Steven M. Hadley, Susan Pixton, Salt Lake City, for respondents.

ZIMMERMAN, Justice:

Thomas A. Paulsen, dba Thomas A. Paulsen Company ("Paulsen"), petitions for review of an order of the Industrial Commission of Utah ("the Commission") finding Paulsen liable for workers' compensation benefits paid to an injured employee by the Commission's Default Indemnity Fund ("the Fund") and ordering Paulsen to satisfy that liability by making payment to the Fund. ¹ Paulsen challenges the order on a number of substantive and procedural grounds. We affirm that portion of the Commission's decision holding Paulsen liable for the employee's benefits but reverse that portion directing Paulsen to make payment directly to the Fund. The Fund will have to seek satisfaction of Paulsen's obligation through proceedings in the district court.

Paulsen's employee suffered an injury to his spine during the construction of a building in April of 1984. The employee sought workers' compensation benefits through the Commission. In October of 1984, a hearing was held on the employee's claim before an administrative law judge ("ALJ"). Both Paulsen and the employee appeared and testified. In January of 1985, the ALJ entered an order, accompanied by findings of fact and conclusions of law ("the original order"), which directed the payment of benefits to the employee.

Although the precise scope of the original order is in dispute, it is clear the ALJ found that the employee was injured in an industrial accident while employed by Paulsen, that Paulsen did not carry insurance coverage for workers' compensation benefits due its employees, that Paulsen was for all practical purposes insolvent and unable to pay the benefits to which the injured employee was entitled, and that the Fund was, by statute, required to step in and compensate the employee. ² Based on these findings, the ALJ ordered the Fund to pay the employee's medical expenses and his temporary total and permanent partial disability benefits, all totalling approximately $21,000. None of the parties sought review of the original order, and after fifteen days from the date of entry, the order became final and was not subject to review by the Commission or the courts. See Utah Code Ann. § 35-1-82.54, -82.55 (Supp.1983).

In the original order, the ALJ did not expressly order Paulsen to pay any of the amount awarded the employee. Approximately eight months after the original order became final, the Fund asked the ALJ to enter an amended order expressly stating that Paulsen was liable for all amounts the Fund had paid the employee and that Paulsen was to pay directly to the Fund all such amounts. The ALJ entered the requested The questions presented can be grouped as two broad legal challenges to the amended order. First, did the ALJ err when he amended the original order to include an express finding that Paulsen was liable to the Fund for the amounts paid the injured employee? Second, did the ALJ err when he ordered Paulsen to pay the amounts due directly to the Fund?

order ("the amended order") in October of 1985. Paulsen unsuccessfully sought review by the Commission and then filed a petition with this Court.

The first issue--the propriety of amending the order to expressly find Paulsen liable to the Fund--subsumes two subsidiary questions: First, as a matter of substantive law, could Paulsen be held liable for the compensation? Second, were the proper procedures followed in entering the amended order finding Paulsen liable?

There can be no doubt that Paulsen could be held liable for the compensation paid. If an employee is injured in an accident during the course of employment and the employer is properly insured, the employee's sole means of obtaining redress is through the workers' compensation system. See Utah Code Ann. § 35-1-60 (1988). However, when an employer is not insured as required by statute, see Utah Code Ann. § 35-1-46 (Supp.1983), the employee has the option of seeking damages from the employer in a civil action brought in the courts or of obtaining a workers' compensation award from the Commission. See Utah Code Ann. §§ 35-1-57, -58, -59 (1988). If the employee elects to proceed through the workers' compensation system and obtains an award, the employer is liable for the amount of that award. See American Fuel Co. v. Industrial Comm'n, 55 Utah 483, 484-89, 187 P. 633, 633-35 (1920); Utah Code Ann. § 35-1-58 (1988); id. §§ 35-1-45, -81 (Interim Supp.1984). ³

A number of Utah employers are unable to pay compensation awards entered against them because they are uninsured or underinsured and are lacking in other financial resources. As a result, a number of employees' awards have proven to be uncollectable. In 1984, the legislature acted to remedy this problem by passing the Workers' Compensation Default Indemnity Fund Act. See 1984 Utah Laws ch. 77, § 1. The purpose of the legislation was to assure that employees' awards would be paid by the Fund if the employer or the insurer was unable to do so. See Utah Code Ann. § 35-1-107(1) (Interim Supp.1984). The Fund was given by subrogation the right to proceed against the employer for all amounts paid to the employee. Utah Code Ann. § 35-1-107(3) (Interim Supp.1984); see generally 2A A. Larson, The Law of Workmen's Compensation § 67.40 (1988). Here, the ALJ found Paulsen was uninsured. ⁴ The employee had claimed workers' compensation benefits Having concluded that the ALJ could have stated in the original order that Paulsen was liable to the Fund for all amounts it paid the employee, the next question is whether proper procedures were followed in entering the amended order containing that pronouncement. The gist of Paulsen's argument is that even if an express statement of liability to the Fund could have been placed in the original order, it was not. And when no party sought review of that order, it became final and the issue was foreclosed from further consideration. He argues that when that issue was addressed in the amended order some eight months later, it was already beyond the ALJ's reach. The Fund counters that the original order did include an imperfectly expressed determination of Paulsen's liability; however, because of a clerical error, that determination was not made sufficiently clear so that the Fund could be sure that the original order would be enforceable against Paulsen. The Fund contends that it was entirely proper for the ALJ to correct the clerical error by way of an amended order.

and received an award. Under the relevant law, Paulsen became primarily responsible for the amount of that award either to the employee, as an initial matter, or to the Fund, to the extent it paid the employee in the employer's stead.

The original order could, in truth, have been written more clearly; ⁵ however, we think that it did effectively settle the issue of Paulsen's liability. Our conclusion is based on a reading of the specific language of the order in light of the legal principles that govern the workers' compensation program. The original order, after specifying the medical expenses the employee had incurred, states, "[T]hese expenses are the responsibility of the employer."

                Also, after describing the compensation awarded the employee and noting that Paulsen was insolvent and lacked insurance, the order states, "[T]he employer was in no position to pay the medical bills or the compensation benefits due in this matter."   Finally, the order directed the Fund to pay the employee the amount of the award, something the Fund is obliged to do only if the employer is first found responsible and unable to pay.  See Carlucci v. Utah State Indus. Comm'n, 725 P.2d 1335, 1337 (Utah 1986);  Utah Code Ann. § 35-1-107(1) (Interim Supp.1984).  These statements, read in light of the underlying law, are sufficient to show that the ALJ did determine that Paulsen was liable and did make that determination sufficiently clear to provide the parties with notice
                

Having concluded that the original order determined and adequately described Paulsen's liability, the question is whether the ALJ erred in entering the amended clarifying order. A brief explanation of why the clarification was sought should be helpful. Once the Commission enters an order finding an employer liable for benefits and the Fund pays those benefits to the employee, the Fund has a right by subrogation to proceed against the employer for reimbursement. Utah Code Ann. § 35-1-107(3) (Interim Supp.1984). The Fund's usual method of exercising this right is to follow the procedure set forth in section 35-1-59. Under that provision, the Fund may file with the district court an abstract of the Commission order finding the employer liable; once filed, that order is treated as a judgment. See Utah Code Ann. § 35-1-59 (1988). ⁶ In the present case, the Fund reasoned that absent a clarification, it might encounter some difficulty in docketing the original order as a judgment against Paulsen because the order did not make it entirely clear that Paulsen was liable. As a precaution, it sought the amended order.

In attacking the amended order, Paulsen argues that the Commission lacks the power to make modifications in outstanding final orders, especially substantive changes such as those made in the order at issue. The Fund responds that the Commission has the power to correct clerical errors and that the modification made was clerical, not substantive. We find the Fund's argument persuasive.

The initial question is whether the Commission has authority to correct clerical errors in orders. None of our prior cases have addressed this question, and the...