BRENDA LOUISE MILES v. MARION COUNTY BOARD OF EDUCATION; HON. LAWRENCE F. SMITH, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD
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RENDERED:
SEPTEMBER 9, 2005; 2:00 p.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2005-CA-000480-WC
BRENDA LOUISE MILES
APPELLANT
PETITION FOR REVIEW OF A DECISION
OF THE WORKERS’ COMPENSATION BOARD
ACTION NO. WC-01-98035
v.
MARION COUNTY BOARD OF EDUCATION;
HON. LAWRENCE F. SMITH,
ADMINISTRATIVE LAW JUDGE; AND
WORKERS’ COMPENSATION BOARD
APPELLEES
OPINION
REVERSING
** ** ** ** **
BEFORE:
BARBER, KNOPF, AND SCHRODER, JUDGES.
BARBER, JUDGE:
Both the Administrative Law Judge (ALJ) and the
Workers’ Compensation Board (WCB) found that Brenda Louise
Miles’ (Miles) claim for workers’ compensation benefits was
time-barred despite undisputed evidence that the statutory
letter (also known as a WC-3) meant to advise potential
claimants of the applicable statute of limitations for making a
workers’ compensation claim from the Commissioner of the
Department of Workers’ Claims (DWC) never reached Miles.
The
reason it did not was because the employer did not provide the
Commissioner with Miles’ correct address.
We reverse and hold
in the circumstances of this case the two-year statute of
limitations in KRS 342.185(1) is tolled.
The facts of this case are largely undisputed.
Miles
is employed by the Marion County Board of Education (the Board)
as a school bus driver.
On February 22, 2001 Miles slipped on a
piece of ice on the bottom step of the school bus she was
operating, fell, and injured her back.
She was off work from
February 23, 2001 to May 15, 2001 during which time the Board
paid Miles temporary total disability benefits (TTD).
The Board
also paid Miles’ medical bills.
The Board admits that Miles was covered under the
Workers’ Compensation Act; that she received a work-related
injury, and that it received due and timely notice of the
injury.
After Miles’ injury the Board had her sign a form
entitled, “Kentucky School Boards Insurance Trust Workers’
Compensation Injury Notice.”
That form contained a variety of
information concerning Miles’ employment, the injury, and her
contact information.
It is undisputed that Miles did not fill
out the form, she only signed it.
When questioned regarding
whether she had signed the form when blank she stated she did
not believe so and acknowledged that she would most likely have
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reviewed the document for the purpose of determining whether it
was blank.
Also undisputed is that the address contained on the
form filled out by the Board and signed by Miles, 1665 L.
Mattingly Road, Lebanon, KY 40062, is not Miles’ correct
address.
When Miles’ TTD benefits were terminated the Board,
through its’ insurance carrier, Kentucky School Boards Insurance
Trust (KSBIT), electronically filed a form IA-2 with the
Department of Workers’ Claims as is required by KRS 342.040(1).
It is undisputed that the IA-2 filed contains an incorrect
address for Miles and also has information relating to the
injury not appearing on the form previously signed by Miles.
The IA-2 lists Miles’ address as “1665 Lewis Mattingly Rd.,
Lebanon, KY 40062.”
At all relevant times in this action Miles’ correct
address was “1330 Lewis Mattingly Road, St. Francis, Kentucky
40062.”
Finally, it is undisputed that on June 4, 2001 the
Commissioner sent a WC-3 letter to Miles at the incorrect
address provided on the IA-2; the letter was returned as
undeliverable on June 11, 2001.
Miles never received the notice
called for by KRS 342.040(1) of her need to file any claim for
workers’ compensation benefits within two years from the date of
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injury or the cessation of temporary income benefits, whichever
is later.
The ALJ found that the Board “provided the Department
of Workers’ Claims with the correct address for plaintiff and
complied with all requirements of KRS 342.040.”
The ALJ also
found Miles to be responsible for the incorrect address
information given on the form that the Board had Miles sign.
For these reasons he concluded Miles was not entitled to have
the two-year statute of limitations tolled.
The WCB affirmed on
the basis that tolling of the statute of limitations in KRS
342.185(1) is only appropriate where the claimant can show
reasons such as misconduct on the part of the employer for the
application of the doctrine of estoppel.
Our standard of review of an appeal of a workers’
compensation case is set forth in Western Baptist Hosp. v.
Kelly, 827 S.W.2d 685, 687-688 (Ky. 1992).
Because we believe
the WCB has misconstrued controlling precedent and committed an
error in assessing the evidence that is “so flagrant as to cause
gross injustice,” we reverse.
The WCB’s acceptance of the ALJ’s finding that the
Board provided the Department of Workers’ Claims with Miles’
correct address and that Miles herself was responsible for
supplying an incorrect address is simply not supportable by any
evidence in the record.
The undisputed evidence is that the
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employer, through KSBIT, filed an IA-2 with an incorrect
address.
There is no evidence in the record that KSBIT’s
information came from the form that Miles signed and the Board
filled out, thus, there is no evidence that Miles is in any way
responsible for the information given to the Department of
Workers’ Claims.
This finding by the ALJ and implicitly upheld
by the WCB is clearly erroneous and unreasonable under the
evidence in the case.
Lizdo v. Gentec Equip., 74 S.W.3d 703,
705 (Ky. 2002)(unreasonable finding is subject to reversal on
appeal).
Even if it were assumed KSBIT’s information on the IA2 came from the form signed by Miles, there is no evidence in
the record to support a finding that Miles was responsible for
the information contained therein.
The evidence is that an
employee of the Board filled out the form and Miles simply
signed it.
Her deposition testimony does not establish that she
reviewed the form for accuracy of the information – only that it
was not blank when she signed it.
Furthermore, the legal conclusion that Miles is not
entitled to have the statute of limitations tolled in this case
misconstrues controlling precedent.
The burden of proof for asserting an affirmative
defense such as the statute of limitations is on the employer.
Lizdo, supra 74 S.W.3d at 705.
It has long been recognized that
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the two-year statute of limitations provision for bringing a
claim contained in KRS 342.185(1) and the requirement for the
employer to advise the Commissioner of the DWC when income
benefits have been terminated or will not be paid contained in
KRS 342.040(1) work in tandem.
Patrick v. Christopher East
Health Care, 142 S.W.3d 149, 151 (Ky. 2004); J & V Coal Co. v.
Hall, 62 S.W.3d 392, 395 (Ky. 2001).
The purpose of KRS 342.040(1)’s requirement for the
employer to notify the Commissioner of this occurrence is so
that the potential claimant-employee will receive notice of his
or her right to prosecute a claim and the time limits within
which this must be pursued.
Lizdo, supra 74 S.W.3d at 705; J &
V Coal Co., supra 62 S.W.3d at 395; H.E. Neumann Co. v. Lee, 975
S.W.2d 917, 920 (Ky. 1998); Newberg v. Hudson, 838 S.W.2d 384,
388 (1992).
There is no doubt that KRS 342.040(1) places an
affirmative duty on the employer to properly notify the
Commissioner of the DWC of the termination or refusal to pay
income benefits.
Colt Management Co. v. Carter, 907 S.W.2d 169,
171 (Ky.App. 1995); Ingersoll-Rand Co. v. Whittaker, 883 S.W.2d
514, 515 (Ky.App. 1994).
Proper notification to the
Commissioner of the DWC includes, we think, proper information
regarding the location to send the statutory notice letter to a
potential claimant.
But the Board argues that there is no
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evidence of bad faith or misconduct on its part so that its
failure to comply with KRS 342.040(1) by not providing the
Commissioner of the DWC with Miles’ correct address should not
deprive it of the defense of the statute of limitations in this
case citing to Patrick, supra 142 S.W.3d at 152.
It is true Patrick notes that estoppel “is generally
reserved for situations where there is evidence of misconduct on
the employer’s part. . . .”
Patrick, supra 142 S.W.3d at 152.
However, as was also noted in Patrick, application of principles
of estoppel depend on the facts and circumstances of each case.
Id.
And, in certain circumstances estoppel is appropriate even
where there is no evidence of bad faith or misconduct.
See H.E.
Neumann Co., supra 975 S.W.2d at 921-922.
The essential question in this case is who should bear
the burden or consequences when the employer fails to properly
notify the Commissioner of the DWC of a potential claimant’s
correct address.
We answer this question as did the Court in
Ingersoll-Rand Co., supra.
KRS 342.040(1) places the burden on
the employer for proper notification.
If this is not given, the
Commissioner of the DWC is prevented from fulfilling his duty.
Id. at 516.
Where there is further evidence, such as here, that
the employee is not at fault for the information transmitted,
principles of equity mandate the consequences be borne by the
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employer.
Id. at 515 & 516.
See also, Colt Management Co.,
supra 907 S.W.2d at 171.
The ruling of the WCB (and the ALJ) effectively placed
the burden on Miles to show bad faith or misconduct before
principles of estoppel would be applied to toll the statute of
limitations in KRS 342.185(1).
As our review of the case law
above demonstrates, this misconstrues controlling precedent.
For the reasons stated above, the decision of the WCB
is reversed.
SCHRODER, JUDGE, CONCURS.
KNOPF, JUDGE, DISSENTS WITH SEPARATE OPINION.
KNOPF, JUDGE, DISSENTING:
Respectfully, I dissent from
the majority opinion because it overreaches the proper scope of
this Court’s review.
As the fact finder, the ALJ has the sole
discretion to determine the quality, character, and substance of
evidence. 1
The function of further review of the Board in the
Court of Appeals is to correct the Board only where this Court
perceives the Board has overlooked or misconstrued controlling
statutes or precedent, or committed an error in assessing the
evidence so flagrant as to cause gross injustice. 2
I am
unpersuaded by the majority that the view of the evidence taken
1
Burton v. Foster Wheeler Corp., 72 S.W.3d 925, 929 (Ky. 2002).
2
Western Baptist Hosp. v. Kelly, 827 S.W.2d 685, 687-88 (Ky.
1992).
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by the ALJ and the Board was patently unreasonable or flagrantly
implausible.
Hence, I would affirm the Board’s decision to
uphold the ALJ’s determination.
KRS 342.040(1) places certain obligations on the
employer and on the Department of Workers’ Claims (now the Office
of Workers’ Claims).
The employer has an affirmative duty to
notify the Department of its refusal to pay TTD benefits after a
worker misses more than seven days of work due to a work-related
injury.
The statute requires the Department to advise the worker
of the right to file a claim and the applicable period of
limitations.
Furthermore, KRS 342.185(1) tolls the period of
limitations until voluntary income benefits are suspended.
When
KRS 342.040(1) and 342.185(1) are read together, it is clear that
the two-year limitations period does not begin to run until: (1)
the employer ceases payment of voluntary income benefits: (2),
the employer provides notice of the cessation of benefits to the
Office of Workers’ Claims; and (3) the Office of Workers’ Claims
sends the employee the required notice.
KRS 342.990 provides both civil and criminal penalties
for a failure to comply with KRS 342.040, but neither it nor any
other statute provides a remedy for workers whose rights are
affected by the failure to comply.
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Thus, the courts have turned
to equitable principles in order to protect them. 3
Under the
doctrine of equitable estoppel, certain conduct by a party is
viewed as being so offensive that it precludes the party from
later asserting a claim or defense that would otherwise be
meritorious. 4
In other words, it serves to offset the benefit
that the offending party would otherwise derive from the
conduct. 5
An equitable estoppel is permitted when the estopped
party is aware of material facts that are unknown to the other
party and then engages in conduct, such as acts, language, or
silence, amounting to a representation or concealment of the
material facts.
The conduct is performed with the intention or
expectation that the other party will rely upon it, and the other
party does so to his detriment. 6
In Newberg v. Hudson, 7 the Kentucky Supreme Court held
that an employer's failure to strictly comply with KRS 342.040(1)
estops it from raising a limitations defense.
3
The rationale is
See Newberg v. Hudson, 838 S.W.2d 384, 389 (Ky. 1992).
4
See McDonald v. Burke, 288 S.W.2d 363 (Ky. 1956); P.V.& K. Coal
Co. v. Kelly, 191 S.W.2d 231 (Ky. 1945).
5
See Edmondson v. Pennsylvania National Mutual Casualty
Insurance Co., 781 S.W.2d 753, 755 (Ky. 1989).
6
See Howard v. Motorists Mutual Insurance Co., 955 S.W.2d 525
(Ky. 1997); Gray v. Jackson Purchase Production Credit
Association, 691 S .W.2d 904 (Ky.App. 1985).
7
Supra.
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that if the Department does not receive an employer's notice of
termination or refusal, it cannot perform its obligation to the
affected worker.
Furthermore, it is not necessary to establish
that the employer acted in bad faith for the employer to be
precluded from raising a statute of limitations defense.
Rather,
it must merely be shown that such failure could not be attributed
to the worker. 8
This is not a case where the employer failed to comply
with KRS 342.040(1) in an attempt to manufacture a limitations
defense or a case in which the Department failed to comply with
KRS 342.040(1).
Instead, the employer provided incorrect
information to the Department regarding Miles’s current address
and, as a result, the statutory notice sent by the Department
never reached her.
The majority states that there is no evidence
that the incorrect address came from the form that Miles signed.
But if the address did not come from that form, from where else
would it have come?
The ALJ made a reasonable inference from the
evidence that incorrect information provided to the Department
came from the injury form that Miles signed.
Moreover, the majority opinion entirely disregards
Miles’s conduct which contributed to the error.
8
The majority
See H. E. Neumann Co. v. Lee, 975 S .W .2d 917, 921 (Ky. 1998);
Colt Management Co. v. Carter, 907 S.W.2d 169 (Ky.App. 1995); and
Ingersoll-Rand Co. v. Whittaker, 883 S .W.2d 514 (Ky.App. 1994).
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focuses on the fact that the employer filled out the injury form
containing the incorrect address.
Thus, the majority concludes
that Miles could not be responsible for the incorrect information
on the form that she signed.
The problem with this approach is that none of the
possible interpretations of the evidence are particularly
favorable to Miles.
She either: (1) signed a blank form and left
it to the school board to fill out the necessary information; (2)
signed a form filled out by the school board without reviewing
the information contained therein; or (3) reviewed and signed the
form filled out by the school board but overlooked the outdated
address.
If Miles signed a blank form (something, Miles
testified, that she did not believe she would do), then the
school board might bear some responsibility for the error.
But
conversely, Miles also would have been negligent in signing a
blank form.
Likewise, Miles would have been negligent if she had
failed to thoroughly review a completed form prior to signing it.
In any case, Miles would bear at least some fault for
the incorrect information transmitted to the Board.
Consequently, the ALJ reasonably concluded that Miles was not
entitled to claim estoppel against the school board.
While this
result is certainly unfortunate for Miles, I cannot conclude that
the ALJ’s interpretation of the evidence is clearly erroneous.
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Therefore, the Board properly affirmed the ALJ’s order dismissing
Miles’s claim as untimely.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE, MARION
COUNTY BOARD OF EDUCATION:
Joseph H. Mattingly III
Lisa K. Nally-Martin
Lebanon, Kentucky
Douglas W. Gott
Bowling Green, Kentucky
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