Special Fund v. ICA/Bombara/JAR

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DIVISION ONE FILED: 03/08/2011 RUTH WILLINGHAM, ACTING CLERK BY: GH IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE SPECIAL FUND DIVISION, ) ) Petitioner, ) ) v. ) ) THE INDUSTRIAL COMMISSION OF ARIZONA, ) ) Respondent, ) ) RICHARD BOMBARA, ) ) Respondent Employee, ) ) J A R INC. dba JET ACTION RENTAL, ) ) Respondent Employer. ) ________________________________________) No. 1 CA-IC 09-0084 DEPARTMENT B O P I N I O N Special Action--Industrial Commission ICA Claim No. 20081-610202 Administrative Law Judge JoAnn C. Gaffaney AWARD AFFIRMED Special Fund Division By Rachel C. Morgan Attorney for Petitioner Phoenix Robert E. Wisniewski, P.C. By Robert E. Wisniewski Attorneys for Respondent Employee Phoenix The Industrial Commission of Arizona By Laura L. McGrory, Chief Counsel Attorney for Respondent Phoenix Udall, Shumway & Lyons, P.L.C. By Clark R. Richter Attorneys for Respondent Employer Mesa G E M M I L L, Judge ¶1 Is the election of remedies defense created by Arizona Revised Statutes ( A.R.S. ) section 23-1024(B) (1995) waived if not asserted before a determination of compensability has become final? We answer this question in the affirmative. ¶2 The injured worker, Richard Bombara, instituted action for damages in superior court against his employer. an The superior court action was dismissed without prejudice as to the employer, and Bombara initiated a workers compensation claim. The Special Fund Division/No Insurance Section of the Industrial Commission of Arizona ( Special Fund ) issued a Notice of Determination (the Notice ) accepting the claim for benefits, and the Notice became final. dismiss Bombara s Bombara had Thereafter, Special Fund sought to workers elected his compensation remedy by instituting superior court against his employer. Judge ( ALJ ) concluded become that because final, claim, arguing the that action in The Administrative Law the compensability had employer had waived defense. potential Fund of Because we agree with the ALJ, we affirm the award. their Special determination election and Bombara s of remedies BACKGROUND ¶3 In May 2008, Bombara was injured when he and a co2 worker were testing ( Employer ). compensation jet Because insurance, skis for Employer Bombara his employer, had had not the J A obtained option of R Inc. workers filing a damages action against Employer in superior court or filing a claim for workers compensation benefits. See A.R.S. § 23-907 (Supp. 2010). ¶4 Bombara filed a negligence action in superior court against Employer in 2008, seeking damages for the injuries he sustained in the accident. On January 8, 2009, he filed a workers compensation claim with the Industrial Commission of Arizona ( ICA ). His claim was processed by Special Fund because Employer did not carry workers compensation insurance. Later that month, Bombara and Employer agreed to dismiss the superior court action, and it was dismissed without prejudice. ¶5 Special Fund issued a Notice of Determination on March 17, 2009, accepting the claim for benefits. 1 for a hearing was filed. ¶6 Five months No timely request See infra ¶ 15. later, Special Fund moved to dismiss Bombara s workers compensation claim for lack of jurisdiction based on A.R.S. § 23-1024(B) and the doctrine of election of remedies. Special Fund argued 1 that because Bombara had Special Fund points out that it was unaware of Bombara s superior court action when it issued the Notice. 3 exercised his option to file suit against Employer, he had waived any right to seek workers compensation benefits. ¶7 2009. The ALJ issued her Findings and Award in September She finality denied of the the motion Notice of to dismiss and Determination. confirmed Citing Estate the of Wesolowski v. Indus. Comm n, 192 Ariz. 326, 965 P.2d 60 (App. 1998), she noted that the election of remedies defense is a nonjurisdictional affirmative defense that can be waived. She found that Special Fund and Employer had waived the election of remedies defense provided by A.R.S. § 23-1024(B) by not timely asserting the defense before the Notice of Determination became final. ¶8 Special review. After review, the ALJ issued a Decision upon Review Affirming and Fund filed Supplementing a request Findings and for administrative Award. The ALJ confirmed that the election of remedies defense was not timely raised by Special Fund in August 2009 because the Notice of Determination had become final on June 15, 2009, 90 days after its issuance on March 17, 2009. ¶9 Special Fund then filed this special action seeking judicial review. We have jurisdiction pursuant to A.R.S. § 12- 120.21(A) (2003), A.R.S. § 23-951(A) (1995), and Arizona Rule of Procedure for Special Actions 10. 4 ANALYSIS ¶10 We defer to the ALJ s factual findings, but we review questions of law de novo. Young v. Indus. Comm'n, 204 Ariz. 267, 270, ¶ 14, 63 P.3d 298, 301 (App. 2003). ¶11 that Special Fund argues that the ALJ erred by concluding it had waived its election of remedies defense and by failing to conclude that Bombara had irrevocably elected his remedy under A.R.S. § 23-1024(B) by instituting a proceeding in court against Employer. Bombara counters that the Notice of Determination was final and res judicata as to all parties, and the finality of the Notice bars an election of remedies defense. ¶12 Subsection 23-1024(B) provides that an employee who exercises any option to institute a proceeding in court against his employer waives any right to compensation. The election of remedies defense created by this provision, however, has been recognized as a non-jurisdictional affirmative defense that must be timely asserted. See Wesolowski, 192 Ariz. at 329, ¶¶ 7, 10, 965 P.2d at 63. ¶13 In Wesolowski, Special Fund contested the claim and the matter proceeded to a hearing. 6, 965 P.2d at 62. liability for Id. at 328, ¶ The election of remedies defense was not asserted until after the ALJ had issued her post-hearing award. Id. at 329, ¶ 9, 965 P.2d at 63. 5 When Special Fund requested administrative review, it asserted the defense for the first time. Id. The ALJ ruled that it was too late. Id. We agreed, explaining: This ruling [by the ALJ] was correct. Section 23-1024(B) provides an election of remedies defense. See Spear v. Industrial Comm'n, 114 Ariz. 601, 603-05, 562 P.2d 1099, 1101-03 (App. 1977). The defense is lost if not asserted before an award for a compensable claim is entered. Id. at 603, 562 P.2d at 1101. Election of remedies is similarly treated in other areas of law. See 28A C.J.S. Election of Remedies § 31, at 670 (1996) (characterizing election of remedies as an affirmative defense that is waived unless timely asserted). Id. at ¶ 10. We concluded that Special Fund had waived the defense. Id. at ¶ 11. ¶14 Arguing against waiver in this case, Special Fund contends it promptly asserted the defense in August 2009 after discovering Bombara had sued Employer in superior court and no hearing had been held in the workers compensation proceeding. We agree with the ALJ, however, that the Notice of Determination issued by Special Fund in March 2009 became final in June 2009 because it was not timely contested, challenged, or objected to by any party. ¶15 In accordance with A.R.S. § 23-947(A) (Supp. 2010), an employee challenging a Notice of Determination must file a request for a hearing within ninety days of the issuance of the 6 Notice and an employer must file within thirty days. Similarly, a carrier or Special Fund may amend or rescind a notice of claim status within ninety days after the notice has been issued. In Church of Jesus Christ of Latter Day Saints v. Indus. Comm n, 150 Ariz. 495, 498, 724 P.2d 581, 584 (App. 1986), we explained: As has been pointed out numerous times by this court, principles of res judicata are concerned with finality, not correctness. Res judicata principles take effect under A.R.S. § 23-947 after 90 days. It is clear from the testimony that the practices of the [ICA] are to allow a carrier to unilaterally rescind or amend a previously issued Notice of Claim Status within the 90 day statutory period. Thus, both the claimant and the carrier may void the binding effect of a Notice of Claim Status within this time frame-the claimant by filing a request for hearing and the carrier by simply issuing a new Notice. However, after that period has expired, the claimant cannot avoid the effect of the notice by simply claiming it is erroneous. Neither can the carrier. 150 Ariz. omitted). for at 498, 724 P.2d at 584 (citation and footnote The Notice of Determination accepting Bombara s claim benefits was issued by Special Bombara did not contest the Notice. contest the Notice. 2 Fund on March 17, 2009. Employer did not timely Special Fund did not seek to amend or rescind the Notice within ninety days. The Notice became final and res judicata in June 2009 but Special Fund did not raise the 2 Employer filed an untimely request on April 20, 2009, and later conceded that it did not have a statutory excuse for this untimely filing. 7 election of remedies defense until August 2009. ¶16 When the Notice accepting the claim for benefits became final, the affirmative defense of election of remedies could no longer be asserted. The Special Fund s argument -- that the election of remedies defense is not waived because it was promptly asserted upon discovery and prior to a hearing and award of a compensable claim -- fails to recognize the finality of the Notice. For waiver purposes, the unchallenged, final Notice is legally analogous to the post-hearing award of the ALJ in Wesolowski. Cf. Phoenix Cotton Pickery v. Indus. Comm n, 120 Ariz. 137, 138, 584 P.2d 601, 602 (App. 1978) ( A.R.S. § 23-947 gives the same final effect to unprotested Notices of Claim Status as is given to awards of the Industrial Commission which become final. ). Just as it was too late to assert the election of remedies defense in Wesolowski after the ALJ had issued the post-hearing award, it was too late here because the Notice of Determination had become final. ¶17 Additionally, election of remedies cannot be waived. we have defense is considered again jurisdictional whether and the therefore We agree with the Wesolowski conclusion that election of remedies in this context is a non-jurisdictional affirmative defense that can be waived if not timely asserted. ¶18 Finally, Special Fund argues that we should not place 8 on it the burden and expense of searching superior court records or otherwise investigating to determine if claimants have sued their employers. not a named claimants As Special Fund points out, it is generally in or know party such should actions know employers in superior court. and, whether they by contrast, have sued the their Accordingly, Special Fund contends the law should require employees seeking workers compensation benefits to disclose the filing of actions in superior court. We believe this policy argument is better addressed to the Arizona Legislature. CONCLUSION ¶19 The election of remedies defense created by A.R.S. § 23-1024(B) may be waived if not timely asserted. The Notice of Determination 2009 issued by Special timely challenged by any party. Fund in March was not The ALJ correctly concluded that the Notice became final and res judicata in June 2009 and that the defense of election of remedies had been waived. 3 3 Because we resolve this appeal on the basis of waiver of the election of remedies defense, we need not address whether, if timely asserted, the defense would have been effective under these facts. 9 ¶20 We therefore affirm. ____/s/_____________________ JOHN C. GEMMILL, Judge CONCURRING: ____/s/__________________________ DIANE M. JOHNSEN, Presiding Judge ____/s/__________________________ MICHAEL J. BROWN, Judge 10

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