Travelers Indemnity Co. v. Wallis, 2003 VT 103 (Vt. 10/31/2003)

• Decision Date: 31 October 2003
• Docket Number: No. 2002-360.,2002-360.
• Citation: 2003 VT 103
• Parties: Travelers Indemnity Co. v. R. Tasha Wallis, Commissioner and Department of Labor and Industry.
• Court: Vermont Supreme Court

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2003 VT 103

Travelers Indemnity Co. v. R. Tasha Wallis, Commissioner and Department of Labor and Industry.

No. 2002-360.

Supreme Court of Vermont.

Filed October 31, 2003.

On Appeal from Washington Superior Court, Alan W. Cheever, J.

Andrew W. Goodger and Stephen D. Ellis of Kiel Ellis & Boxer, Springfield, for Plaintiff-Appellant.

William H. Sorrell, Attorney General, and William H. Rice, Assistant Attorney General, Montpelier, for Defendant-Appellee.

Craig A. Jarvis of Biggam, Fox & Skinner, Montpelier, for Amicus Curiae Vermont Labor Council, AFL-CIO.

PRESENT: Amestoy, C.J., Dooley, Johnson and Skoglund, JJ., and Allen, C.J. (Ret.), Specially Assigned.

DOOLEY, J.

¶ 1. Plaintiff Travelers Indemnity Co. appeals from a decision of the Washington Superior Court dismissing its suit against the Department of Labor and Industry and its Commissioner for lack of subject matter jurisdiction. In its suit, Travelers sought to challenge certain Department practices in issuing interim orders of benefits under 21 V.S.A. § 662(b), and asserted that the statute is constitutionally deficient on its face. Construing the complaint as an appeal rather than a declaratory judgment action, the superior court dismissed the suit because Travelers did not obtain certified questions from the Commissioner as required by 21 V.S.A. § 671. On appeal, Travelers claims the court misconstrued its complaint and should have allowed the suit to go forward under V.R.C.P. 75, 3 V.S.A. § 807, and 12 V.S.A. § 4711. We accept Travelers's argument that its complaint was not an appeal, but we affirm the dismissal of the company's challenge to the Commissioner's actions on primary jurisdiction grounds. As to the facial constitutional challenges to § 662(b) set forth in the complaint, we reverse and remand to the superior court for further proceedings.

¶ 2. Travelers issues workers' compensation policies to numerous employers and, thus, appears regularly before the Commissioner in connection with workers' compensation claims against it. It is dissatisfied with the Commissioner's administration of interim payments, that is, compensation payments ordered by the Commissioner pursuant to 21 V.S.A. § 662(b) after the insurance carrier has denied a claim, but before a hearing on the claim. Section 662(b) authorizes such payments, pending a hearing and final determination, where the Commissioner finds that the evidence put forth by the employer or carrier "does not reasonably support the denial."

¶ 3. On September 15, 2000, Travelers filed a complaint with the Washington Superior Court seeking review of the Department's actions related to issuing interim orders under V.R.C.P. 75 and 3 V.S.A. § 807, and requesting declaratory and injunctive relief under 12 V.S.A. § 4711. In its complaint, Travelers cited an interim order the Department issued on a claim that Travelers had twice denied as outside its workers' compensation coverage. Travelers alleged that the Department's order violated 21 V.S.A. § 662(b) and denied Travelers due process. Travelers requested that the court permanently enjoin the Department from enforcing the order cited in its complaint. Travelers also asked the court to issue an order "declaring the appropriate legal standard for the issuance of interim orders pursuant to the provisions of 21 V.S.A. § 662(b) and the Vermont Workers' Compensation and Occupational Disease Rules." The same day Travelers filed its suit in superior court, the Department rescinded the interim order cited in Travelers's complaint.

¶ 4. The Commissioner and Department moved to dismiss for lack of jurisdiction and because the case was moot. This led to skirmishing in which Travelers attempted to keep the case alive, eventually culminating in the filing of an amended complaint in which Travelers described additional workers' compensation cases in which, it alleged, the Commissioner had violated its rights under § 622(b) and the state and federal constitutions. As described in the complaint, the cases were in various stages of processing. For example, in four of the cases, the interim payment order was still outstanding. None had been appealed to the superior court. In others, the interim order had been rescinded. For three of these, Travelers had apparently taken no action to have the interim order reconsidered or stayed.¹ For the other, a motion for a stay was pending. Another case involved termination of compensation under 21 V.S.A. § 643a, a statute not otherwise involved in Travelers's complaint and for which Travelers sought no relief.

¶ 5. To address the mootness issue defendants raised, Travelers's amended complaint contended that "this action implicates administrative conduct which is capable of repetition, yet evasive of judicial review." Travelers also argued that the issues raised in the action would not become moot with the ultimate resolution of the specific cases, and requested that the court lay out "the appropriate legal standard" for the issuance of interim benefits orders. The complaint alleged three improper actions taken in one or more of the cases described in the complaint: (1) ordering interim payments in cases in which the employer or carrier has submitted evidence, which if believed, would support denial of the compensation claim; (2) relying on ex parte information submitted by the employee in deciding whether to order interim payments; and (3) ordering interim payments even though the claimant has not requested a hearing on the denial and served a request on the employer or carrier. Travelers has also alleged here that defendants' actions are unconstitutional because they grant interim benefits without articulated standards for determining whether the carrier/employer's evidence reasonably supports its denial, and because interim payments are ordered without any right of recoupment if the claimant is found not to be entitled to benefits. Travelers claimed that defendants' practices violated § 662(b), and its rights to due process and equal protection of the laws.

¶ 6. On July 31, 2002, the superior court dismissed the case for lack of subject matter jurisdiction.² The court ruled that Travelers had failed to properly exercise its statutory rights of appeal under 21 V.S.A. § 671 of the Workers' Compensation Act, which requires "questions of fact or questions of fact and law" certified by the Commissioner in order to establish jurisdiction in the superior court. Travelers subsequently brought this appeal.

¶ 7. We review a dismissal for lack of subject matter jurisdiction de novo, taking all uncontroverted factual allegations of the complaint as true and construing them in the light most favorable to the nonmoving party. Jordan v. State, 166 Vt. 509, 511, 702 A.2d 58, 60 (1997).

¶ 8. On appeal, Travelers contends that its suit was not an appeal as the trial court characterized it, but, rather, was a declaratory judgment action seeking to challenge the legality of the Department's general practices with respect to issuing interim orders, and therefore the court had original jurisdiction over Travelers's claims under V.R.C.P. 75, 12 V.S.A. § 4711 (the Declaratory Judgment Act), and 3 V.S.A. § 807 (the Administrative Procedure Act). We accept Travelers's characterization of the action, but conclude dismissal of most of the complaint is supported by our decision in C.V. Landfill, Inc. v. Envtl. Bd., 158 Vt. 386, 610 A.2d 145 (1992). We refer to that part of the complaint that challenges the Commissioner's implementation of § 662(b).

¶ 9. In C.V. Landfill, the plaintiff attempted to challenge a decision of a district environmental commission that its landfill required an Act 250 permit because of modifications made to resolve environmental problems raised by the Agency of Natural Resources. Rather than challenging the commission's finding by appealing to the environmental board, however, the plaintiff brought a declaratory judgment action in superior court. The superior court dismissed the action on the basis of the primary jurisdiction doctrine, and we affirmed.

¶ 10. Three factors were particularly critical to our decision, all of which are present here. We reasoned in C.V. Landfill:

First, the "legal question" raised was actually one mixed in law and fact. In retaining jurisdiction, the court would have had to decide if plaintiff's modifications to its landfill site constituted a "substantial change" under 10 V.S.A. § 6086 triggering Act 250 permit requirements. This task would have entailed an application of the facts to the relevant legal authority; hence, both factual and legal questions were implicated.

In addition, these are issues so intertwined with environmental law that, under the doctrine of primary jurisdiction previously discussed, the body charged with interpreting Act 250 is the most appropriate tribunal to interpret them. We give great weight to the Environmental Board's expertise in these areas. See, e.g., In re Agency of Transportation, 157 Vt. 203, 208, 596 A.2d 358, 360 (1991) (Act 250 gives "primacy over, without preemption of, ancillary permit and approval processes").

Finally, C.V. is not challenging the validity of the statute. If this were the posture of the case, a court might be the more appropriate tribunal. See Flanders Lumber & Building Supply Co. v. Town of Milton, 128 Vt. 38, 44, 258 A.2d 804, 808 (1969) (when issue is whether particular law is valid, "it is undoubtedly judicial economy and wisdom to decide the issue by declaratory judgment before the administrative channel has been invoked or exhausted").

158 Vt. at 392, 610 A.2d at 148; see also Williams v. State, 156 Vt. 42, 57-58, 589 A.2d 840, 850 (1990).³

¶ 11. We are particularly influenced by the first C.V. Landfill factor as applied to this case. The Legislature has adopted a broad general standard for issuance of interim orders - that the "evidence does not reasonably support the denial." 21 V.S.A. § 662(b). The Commissioner...