KENTUCKY EMPLOYERS' MUTUAL INSURANCE VS. TAYLOR CONTRACTING/TAYLOR READY MIX, LLC , ET AL.
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RENDERED: NOVEMBER 13, 2009; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-000647-WC1
AND
NO. 2008-CA-000959-WC
KENTUCKY EMPLOYERS' MUTUAL INSURANCE
v.
APPELLANT
PETITION FOR REVIEW OF A DECISION
OF THE WORKERS’ COMPENSATION BOARD
ACTION NO. WC-05-01707
TAYLOR CONTRACTING/TAYLOR READY MIX, LLC;
CHRISTOPHER WATTS; UNINSURED EMPLOYERS
FUND; ANDREW F. MANNO, ADMINISTRATIVE
LAW JUDGE; AND WORKERS' COMPENSATION
BOARD
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
1
This opinion addresses two appeals, 2008-CA-000647 and 2008-CA-000959, with identical
parties, facts, and issues. It is unclear why two appeals resulted, but the record establishes the
Board failed to serve KEMI with a copy of its February 22, 2008, opinion. As a result, the Board
withdrew that opinion and reentered the same opinion as of April 18, 2008.
BEFORE: CAPERTON, KELLER AND NICKELL, JUDGES.
NICKELL, JUDGE: Kentucky Employers’ Mutual Insurance (KEMI) appeals
from an order of the Workers’ Compensation Board (Board) reversing and
remanding the Administrative Law Judge’s (ALJ) opinion that Taylor
Contracting/Taylor Ready Mix, LLC (Taylor) did not have workers’ compensation
insurance through KEMI at the time its employee, Christopher Watts, was injured
on September 19, 2005. Upon a thorough review of the record, we affirm the
Board’s holding that reversal and remand to the ALJ is necessary because the ALJ
did not make the findings we directed him to make in a prior opinion.2
The sole issue in this appeal is whether KEMI properly canceled
workers’ compensation insurance for Taylor Contracting/Taylor Ready Mix, LLC
(Taylor) due to the late payment of premiums. While the insurance contract stated
premium payments were to be made by the second day of the month, monthly
invoices sent by KEMI to Taylor typically required payment within twenty-five
days of the invoice date. Taylor made the required payments, and KEMI, as a
course of practice, accepted them, even though they were often late. On August 5,
2005, KEMI sent a notice of intent to cancel to Taylor saying coverage would be
canceled unless payment was received by August 23, 2005. When payment was
2
Taylor Contracting/Taylor Ready Mix, LLC v. Watts, 2007 WL 1893722, No. 2007-CA000026-WC (rendered June 29, 2007, unpublished).
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not received, KEMI canceled the policy and notified the Office of Workers’
Claims. However, after canceling the policy, KEMI sent two more premium
payment notices to Taylor. The September notice acknowledged receipt of the
August premium payment and the October notice did not indicate any balance was
due and owing. Neither of these notices mentioned the policy had been canceled.
Taylor discovered its policy had been canceled only when it submitted a claim.
The first time we reviewed this matter we reversed and remanded the
claim to the Board and directed that the ALJ:
determine whether KEMI properly exercised its
contractual right to cancel the policy. This factual
determination includes the parties’ reasonable
understanding of when premium payments were due. . . .
If the ALJ determines that KEMI did not properly invoke
its right to cancel the policy then the ALJ must find that
Taylor’s coverage was still in effect as of September 19,
2005. But if the ALJ determines that Taylor Contracting
failed to make timely payments as required by the
parties’ mutual understanding of their contractual
obligations, then KEMI properly cancelled the policy and
the ALJ may reinstate his prior finding that coverage had
lapsed prior to the injury date.
On October 17, 2007, the ALJ issued his order upon remand. It was less than three
pages in length and acknowledged this Court had ordered him “to determine
whether KEMI properly exercised its contractual right to cancel the policy,
including the parties’ reasonable understanding of when premium payments were
due.” The order went on to state,
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this ALJ finds that KEMI properly exercised its
contractual right to cancel [Taylor’s] policy. Part V (B)
of the policy clearly allows KEMI to cancel for nonpayment of premiums. [Taylor] was consistently late
making payments to KEMI. While it is true [Taylor]
eventually made all payments within the policy periods,
payments were clearly consistently late. As of August 2,
2005, [Taylor] owed $1,998.21 in past due premium (sic)
plus a $1,998.21 installment. [Taylor] was sent a notice
of cancellation on August 5, 2005 which indicated the
policy would be cancelled for nonpayment on August 23,
2005 if $1,998.21 was not paid. [Taylor] failed to pay
the necessary amount prior to August 23, 2005. This
ALJ finds that at that point, there was no doubt that
[Taylor] was aware that there was (sic) past-due
premiums that had not been paid and that KEMI would
cancel the policy if payment was not remitted. This ALJ
finds that [Taylor] was aware of the necessity to make
payment to avoid cancellation. The payment stubs sent
by KEMI controlled the payment schedule and included a
due date. This ALJ finds that [Taylor] was aware of the
due dates yet frequently made payments after the posted
due dates. This ALJ finds that [Taylor] failed to make
timely payment or (sic) past-due premiums as required.
Ms. Taylor testified she knew payments were due when
she received the statements. Therefore, this ALJ finds
that both [Taylor] and KEMI understood that the
statements controlled the dates each payment was due.
[Taylor] failed to pay past due premium amounts prior to
the cancellation date. Therefore, this ALJ finds that
KEMI properly cancelled [Taylor’s] policy.
After the ALJ overruled a petition for reconsideration, Taylor appealed to the
Board. On February 22, 2008, the Board entered a twenty-four page opinion
reversing and remanding the matter to the ALJ to make the findings our original
opinion directed him to make.
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Because the ALJ failed to follow the directive of our 2007 opinion to
make findings regarding the parties’ understanding of when premium payments
were due under the contract at the time of execution, we affirm the Board’s
decision reversing and remanding the matter to the ALJ for additional findings
consistent with our original instructions. In doing so, we note that the Board, in its
opinion, implies that the ALJ must find KEMI could not have properly canceled
coverage. To the extent this is what the Board intends, we disagree. In our
original opinion, we held the ALJ could determine, after making proper findings of
fact, that KEMI had reason to, and did, properly cancel coverage. Therefore, in
remanding this matter, we again instruct the ALJ that he or she may determine
coverage was properly canceled; however, that determination must be based on
what the parties understood at the time the contract was entered. We agree with
the Board’s implication, if not explicit statement, that the ALJ may be unable to
make such a determination based upon the record. However, that determination is
the ALJ’s to make, Paramount Foods, Inc. v. Burkhardt, 695 S.W.2d 418, 419
(Ky.1985), and any mandate by the Board to the contrary is inconsistent with our
2007 opinion which neither party appealed.
Therefore, the Board’s opinion, entered on April 18, 2008, is affirmed
to the extent that this matter is again remanded to the ALJ for additional findings
of fact consistent with our 2007 opinion.
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ALL CONCUR.
BRIEFS FOR APPELLANT:
H. Douglas Jones
Kenneth J. Dietz
Lisa K. Clifton
Florence, Kentucky
BRIEF FOR APPELLEE, TAYLOR
CONTRACTING/TAYLOR READY
MIX, LLC:
Jeffrey D. Hensley
Flatwoods, Kentucky
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