Travelers Indem. Co. v. Reker

• Citation: 100 S.W.3d 756
• Decision Date: 23 January 2003
• Docket Number: No. 2000-SC-0846-DG.,2000-SC-0846-DG.
• Parties: The TRAVELERS INDEMNITY COMPANY, Appellant, v. Deborah L. REKER, Appellee.
• Court: United States State Supreme Court (Kentucky)

100 S.W.3d 756

The TRAVELERS INDEMNITY COMPANY, Appellant, v. Deborah L. REKER, Appellee.

No. 2000-SC-0846-DG.

Supreme Court of Kentucky.

January 23, 2003.

Rehearing Denied April 24, 2003.

COPYRIGHT MATERIAL OMITTED

Robert David Clark, Licha H. Farah, Jr., Clark, Ward & Cave, Lexington, Counsel for Appellant.

Larry Hicks, Sutton, Hicks, Lucas, Grayson & Braden, Edgewood, Counsel for Appellee.

H. Edward O'Daniel, Jr., Springfield, Philip J. Shepherd, Frankfort, Counsel for Amici Curiae Kentucky Chamber of Commerce; American Insurance Association; Associated Builders & Contractors of Kentuckiana, Inc.; Western Kentucky Construction Association, Inc.; and Ky. Association of Plumbing, Heating and Cooling Contractors, Inc.

H. Douglas Jones, Kenneth Dietz, H. Douglas Jones & Assoc. PLLC, Florence, Counsel for Amicus Curiae Aik Comp.

Robert E. Stopher, Robert D. Bobrow, Boehl, Stopher & Graves, Louisville, Counsel for Amici Curiae General Motors Corporation; and Peabody Coal Company.

COOPER, Justice.

Appellant, The Travelers Indemnity Company ("Travelers"), is the workers' compensation insurance carrier for Appellee Deborah L. Reker's employer, Amick & Kreider Associates, Inc. Reker filed a workers' compensation claim for injuries that she sustained on May 18, 1987. On November 21, 1997, an administrative law judge (ALJ) found that the injuries were work-related and that she had sustained a 50% permanent partial disability as a result. She was awarded benefits accordingly. The employer and Travelers appealed and the award was affirmed by the Workers' Compensation Board on May 22, 1998. Meanwhile, in March 1998, Reker filed a motion to reopen her claim, KRS 342.125, seeking additional payments of $353.38 in unpaid medical and prescription bills and payment of a $468.78 motel bill. Reker's entire workers' compensation claim was ultimately settled in June 2000 for a lump sum payment of $125,000.00. The settlement agreement recites that the dispute as to medical expenses was submitted to an arbitrator and resolved in September 1999.

On June 8, 1998, Reker filed this civil action in the Boone Circuit Court seeking payment of the then-unpaid medical expenses and motel bill, totaling $822.16, that were the subject of the March 1998 motion to reopen her claim. She also sought compensatory damages for "worry and anguish" and "embarrassment" endured as a result of being dunned by medical providers for payment of the unpaid bills and as a result of Travelers' alleged "bad faith" refusal to settle her workers' compensation claim. Although Reker characterizes both Travelers' defense of her claim and its appeal to the Workers' Compensation Board as frivolous and in bad faith, the injuries that Reker sustained resulted from an off-premises assault at a highway rest area. Thus, the success of her claim depended upon whether the so-called "positional risk doctrine" applied, Corken v. Corken Steel Prods., Inc., Ky., 385 S.W.2d 949, 950 (1964), and upon whether the assailant's motivation for the assault arose from a nonwork-related personal animosity. Carnes v. Tremco Mfg. Co., Ky., 30 S.W.3d 172, 175 (2000). The settlement agreement executed by both Reker and her attorney recites:

This continues to be a case of contested and disputed liability on issues of work relationship and causation and existence of continuing medical treatment needs arising from the subject accident. These agreements represent a compromised settlement of all potential claims and defenses between the parties.

The Boone Circuit Court entered a summary judgment in favor of Travelers premised upon the "exclusive remedy" provision of the Workers' Compensation Act, KRS 342.690(1), and our decision in Zurich Insurance Co. v. Mitchell, Ky., 712 S.W.2d 340 (1986). The Court of Appeals reversed, concluding that KRS 342.267, when read together with KRS 304.12-230, the Unfair Claims Settlement Practices Act ("UCSPA"), and KRS 446.070, creates an exception to KRS 342.690(1). We disagree. Applying established principles of statutory construction and considering legislative intent, which is obvious from the legislative history, we conclude that KRS 342267 does not and was never intended to create an exception to KRS 342.690(1).

I. KRS 342.690(1).

The first sentence of KRS 342.690(1) provides:

If an employer secures payment of compensation as required by this chapter, the liability of such employer under this chapter shall be exclusive and in place of all other liability of such employer to the employee, his legal representative, husband or wife, parents, dependents, next of kin, and anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death.

The fourth sentence of the statute extends the same "exclusive remedy" shield to the employer's workers' compensation insurance carrier.

The exemption from liability given an employer by this section shall also extend to such employer's carrier, and to all employees, officers, or directors of such employer or carrier, provided the exemption from liability given an employee, officer or director of an employer or carrier shall not apply in any case where the injury or death is proximately caused by the willful and unprovoked physical aggression of such employee, officer or director. [Emphasis added.]

In Zurich Insurance Co. v. Mitchell, supra, we held that these provisions preclude a civil action against a workers' compensation insurer for an alleged "bad faith" refusal to settle a claim. Id. at 344. (Reker does not assert that her assailant was an employee, officer or director of Travelers.)

The "exclusive remedy" provision has been a part of the Workers' Compensation Act since its enactment in 1916. K.S. § 4882 (1916 Ky. Acts, ch. 33, § 3, repealed KRS 447.025, 1942 Ky. Acts, ch. 208, § 20); replaced by KRS 342.015(1) (1942 Ky. Acts, ch. 208, §§ 1, 2, repealed 1972 Ky. Acts, ch. 77, § 36, eff. January 1, 1973); replaced by KRS 342.690(1) (1972 Ky. Acts, ch. 78, § 9, eff. January 1, 1973). In addition, KRS 342.395(3) provides that until and unless an employee files a written notice of rejection of the Act, i.e., "opts out," "the measure of liability of the employer shall be determined according to the compensation provisions of this chapter."

It is elementary that "[w]orkers' compensation is a creature of statute, and the remedies and procedures described therein are exclusive." Williams v. Eastern Coal Corp., Ky., 952 S.W.2d 696, 698 (1997) (emphasis added); see also Morrison v. Carbide and Carbon Chemicals Corp., 278 Ky. 746, 129 S.W.2d 547, 549 (1939). We have consistently held that, except for the clause pertaining to a "willful or unprovoked physical aggression" at the hands of the employer or insurer or their agents, KRS 342.690(1) and its predecessor statutes shield a covered employer and its insurer from any other liability to a covered employee for damages arising out of a work-related injury. E.g., Shamrock Coal Co., Inc. v. Maricle, Ky., 5 S.W.3d 130, 133, 134-35 (1999) (workers' compensation board has exclusive jurisdiction to adjudicate work-related injuries not caused by intentional physical aggression); Zurich Ins. Co. v. Mitchell, supra, at 342 ("With the exception of failing to secure the payment of benefits as provided in KRS 342.690(2) or a willful and unprovoked physical aggression, the exclusive liability provisions of the act cannot be waived."). See also Duke v. Brown Hotel Co., Ky., 481 S.W.2d 289, 292 (1972); Mahan v. Litton, Ky., 321 S.W.2d 243, 245 (1959); Commonwealth, Dept. of Hwys. v. Meyers, Ky., 307 S.W.2d 179, 181 (1957); Davis v. Solomon, Ky., 276 S.W.2d 674, 676 (1955); Standard Oil Co. v. Cheek, 278 Ky. 508, 128 S.W.2d 950, 951 (1939); Partin's Adm'r v. Black Mountain Corp., 237 Ky. 556, 36 S.W.2d 1, 2 (1931); D.E. Hewitt Lumber Co. v. Brumfield, 196 Ky. 723, 245 S.W. 858, 859 (1922); cf. Roberts v. George W. Hill & Co., Ky., 23 S.W.3d 635, 636 (2000) (enactment of KRS 342.640 and repeal of KRS 342.170 reflect a legislative intent to eliminate any tort remedy for injuries sustained by an illegally employed minor).

In Brown Badgett, Inc. v. Calloway, Ky., 675 S.W.2d 389 (1984), we held that a circuit court has no jurisdiction to resolve a dispute over an unpaid medical bill; the Workers' Compensation Board has exclusive jurisdiction. Id. at 390-91. In Zurich Insurance Co. v. Mitchell, supra, we held that KRS 342.690(1) precludes a covered employee from maintaining a civil action for damages against his employer's insurance carrier for failure to pay medical expenses under either a common law "bad faith" theory, see Curry v. Fireman's Fund Ins. Co., Ky., 784 S.W.2d 176 (1989), or under the "tort of outrage" theory, see Craft v. Rice, Ky., 671 S.W.2d 247 (1984). 712 S.W.2d at 344. See also Coker v. Daniel Const. Co., 664 F.Supp. 1079 (W.D.Ky.1987), aff'd, 848 F.2d 189 (6th Cir.1988) (noting that the employer's delay in payment of medical bills did not give rise to a claim of bad faith or outrageous conduct under Kentucky law). Finally, in General Accident Insurance Co. v. Blank, Ky.App., 873 S.W.2d 580 (1993), the Court of Appeals, following Mitchell, held that neither the Consumer Protection Act, KRS 367.170 and 367.220, nor the UCSPA, KRS 304.12-230, were available as vehicles for bringing a civil action against a workers' compensation insurer. 873 S.W.2d at 582.

II. KRS 342.267.

Reker asserts and the Court of Appeals agreed that the 1996 enactment of KRS 342.267 authorized a civil cause of action against a workers' compensation insurer for an alleged unfair claims settlement practice and, thus, abrogated the holdings in Mitchell and Blank, supra. In fact, KRS 342.267 is completely silent on that issue, viz:

If an insurance carrier, self-insurance group, or self-insured employer providing workers' compensation coverage engages in claims settlement practices in violation of this chapter, or the provisions of KRS...