Bill Huntsman Sr D/B/A Huntsman & Sons Painting v. Joe Manning ( 2015 )

IMPORTANT NOTICE
NOT TO BE PUBLISHED OPINION
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PURSUANT TO THE RULES OF CIVIL PROCEDURE
PROMULGATED BY THE SUPREME COURT, CR 76.28(4)(C),
THIS OPINION IS NOT TO BE PUBLISHED AND SHALL NOT BE
CITED OR USED AS BINDING PRECEDENT IN ANY OTHER
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UNPUBLISHED KENTUCKY APPELLATE DECISIONS,
RENDERED AFTER JANUARY 1, 2003, MAY BE CITED FOR
CONSIDERATION BY THE COURT IF THERE IS NO PUBLISHED
OPINION THAT WOULD ADEQUATELY ADDRESS THE ISSUE
BEFORE THE COURT. OPINIONS CITED FOR CONSIDERATION
BY THE COURT SHALL BE SET OUT AS AN UNPUBLISHED
DECISION IN THE FILED DOCUMENT AND A COPY OF THE
ENTIRE DECISION SHALL BE TENDERED ALONG WITH THE
DOCUMENT TO THE COURT AND ALL PARTIES TO THE
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RENDERED: JUNE 11, 2015
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2014-SC-000569-WC
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—
BILL HUNTSMAN SR. D/B/A HUNTSMAN & APPELLANT
SONS PAINTING
ON APPEAL FROM COURT OF APPEALS
V. CASE NO. 2012-CA-001879-WC
WORKERS' COMPENSATION BOARD NO. 09-WC-01334
JOE MANNING; UNINSURED EMPLOYERS' APPELLEES
FUND; HONORABLE CHRIS DAVIS,
ADMINISTRATIVE LAW JUDGE; AND
WORKERS' COMPENSATION BOARD
MEMORANDUM OPINION OF THE COURT
AFFIRMING
I. INTRODUCTION
Appellee, Joe Manning ("Manning"), worked for Appellant, Bill Huntsman
d/b/a Huntsman & Sons Painting ("Huntsman") as a painter. On June 9,
2009, Manning was injured while working at Huntsman's residence, removing
brush/storm debris. Huntsman did not have workers' compensation
insurance on the subject injury date. Manning subsequently filed an
Application for Resolution of Claim ("Form 101") with the Department of
Workers' Claims ("DWC") alleging that he was injured in the course of his
employment with Huntsman. Huntsman failed to timely file a Notice of Claim
Denial or Acceptance ("Form 111"); consequently, the allegations of Manning's
Form 101 were deemed admitted. 1 After Appellee, Uninsured Employer's Fund
("UEF"), settled with Manning and the ALA approved the settlement, Huntsman
moved to reopen on grounds of fraud. The ALJ reopened and abated the
settlement, passing final resolution to the merits. After the taking of proof and
a formal hearing, the ALJ concluded that there was no fraud, and that the
settlement between Manning and UEF was valid and enforceable. Huntsman
appealed. The Board dismissed the appeal as interlocutory, because the ALJ
had not yet resolved Manning's claim against Huntsman. On remand, the AI,J
entered an award in Manning's favor. Huntsman appealed. UEF did not. The
Board and the Court of Appeals affirmed. On appeal to this Court, Huntsman
argues that the DWC lacked subject matter jurisdiction and that the settlement
should be set aside on the basis of fraud. Finding no error, we affirm.
A. Proceedings before the ALJ and Appeals to the Board
On November 23, 2009, Manning filed a Form 101 alleging that he was
injured on June 10, 2009, in the course and scope of his employment.
Manning named Huntsman & Sons Painting 2 and UEF as Defendants. On
1 803 KAR 25:010 §5(2) provides in relevant part:
(a) The defendant shall file a Notice of Claim Denial or Acceptance on a Form 111
within forty-five (45) days after the notice of the scheduling order ....
(b) If a Form 111 is not filed, all allegations of the application shall be deemed
admitted.
2 On February 8, 2010, UEF filed a "Motion to Amend Name of Defendant-Employer/
Motion to Certify Coverage," after their (UEF's) investigation determined the business
was a sole proprietorship. By Order of March 3, 2010, the ALJ amended the name of
the Defendant-Employer to Bill Huntsman d/b/a Huntsman 86 Sons Painting. On
March 23, 2010, the DWC certified that Bill Huntsman did not have workers'
compensation coverage on the alleged injury date.
2
November 25, 2009, the DWC certified that Huntsman 86 Sons Painting did not
have workers' compensation insurance on the alleged injury date.
The DWC investigated. The investigative report reflects that Huntsman's
business address was a residence. In a December 10, 2009, telephone
conversation, 3 Mr. Huntsman told the enforcement officer he had no
employees, and that Manning was an independent contractor (for the painting
business). Mr. Huntsman explained he was on vacation at the time of the
subject injury. Mr. Huntsman related that he had told Manning if he wanted to
earn some money, he could remove tree debris at his property. Manning fell
from a ladder while clearing up the property. On December 11, 2009, Mr. '
Huntsman met with the enforcement officer in her office. 4
On December 15, 2009, the DWC issued a scheduling order assigning
the claim to MO Davis and setting a Benefit Review Conference ("BRC") for
April 13, 2010. The order states that defendants have 45 days to file "a notice
of claim denial or acceptance (Form 111). If none is filed all allegations of the
application shall be deemed admitted." Huntsman did not timely file a Form
111. 5
3 Before that, Mr. Huntsman had spoken with Roger Swift at the UEF.
4 At hearing, Mr. Huntsman testified that he met with the enforcement officer, Billie
Buckley, who told him• his business was officially closed down. "That I could work but
nobody else could work, but - that if she caught me working anyone or whatever that
there would be a large fine put on me." According to Mr. Huntsman, he subsequently
"got insurance and then brought the thing back to her and she said you're free to
work."
5 Mr. Huntsman testified that he received the scheduling order. The 45 days expired
on January 29, 2010.
3
UEF settled with Manning. On April 28, 2010, ALJ Davis approved the
settlement ("Form 110").
On May 5, 2010, attorney Jack Richardson, IV, filed an entry of
appearance on behalf of Mr. Bill Huntsman d/b/a Huntsman & Sons Painting.
On May 11, 2010, Huntsman filed a "Petition for Reconsideration of and/or
Setting Aside of Settlement and Order" which the ALJ denied by Order of May
28, 2010.
On June 14, 2010, Huntsman filed a Motion to reopen pursuant to KRS
342.125 on grounds of fraud, because Manning was "claiming a work injury
against a party for whom he was not working ... [and that he was not] in the
course of employment at the time of the alleged injury...." Huntsman asserted
Manning was engaged in domestic work exempt under KRS 342.650 6 and that
the "Board [sic], is without jurisdiction to approve a settlement for injury of a
domestic worker." Huntsman also alleged that the average weekly wage was
false. By Order of July 6, 2010, the ALJ reopened the matter, abated the
settlement and allotted proof time, passing final resolution of'Huntsman's
motion to the merits.
Mr. Huntsman testified by deposition and at the hearing. He testified
that he had received the December 15, 2009 scheduling order. He explained
6 KRS 342.650 provides in relevant part:
The following employees are exempt from the coverage of this chapter:
(1) Any person employed as a domestic servant in a private home by an
employer who has less than two (2) employees each regularly employed forty
(40) or more hours a week in domestic servant employment.
the address for his residence and business are the same. Mr. Huntsman also
testified that he had asked Manning to pull tree, limbs down to the drive so they
could be collected by Metro Louisville's deadline for picking up storm damage
debris. Mr. Huntsman explained that it helped him out, otherwie he would
have had to do it himself which would have taken up his vacation.
In an Opinion, Award & Order rendered August 12, 2011, the ALJ
provided a detailed summary of the evidence and determined that:
Bill Huntsman, as the employer, was fully aware of the
pending nature of this claim, and had received
numerous communications from the Plaintiff's
attorney and the UEF prior to the settlement
agreement and that he was never, at any time, refused
his right to be heard nor was he discouraged or
effectively silenced in his pursuit of his right to be
heard. Rather, Bill Huntsman, willfully or through his
own neglect did not seek to become an effective party
to this claim and have the settlement agreement set
aside until he became aware that he might not be able
to avoid some liability for this claim.
The ALJ noted that the defenses of independent contractor and
employment relationship are commonplace, and that Huntsman had waived
those defenses by failing to timely file a Form 111 within 45 days of the
scheduling order, KRS 342.270(2). 7 Citing Gray v. Trimmaster, 173 S.W.3d 236
(Ky. 2005), the AI.,J explained that the only exception to the 45-day rule is good
cause which Huntsman had failed to demonstrate. The AI,J determined that no
7 KRS 342.270(2) provides in relevant part: "Within forty-five (45) days of the date of
issuance of the notice required by this section, the employer or carrier shall file notice
of claim denial or acceptance, setting forth specifically those material matters which
are admitted, those which are denied, and the basis of any denial of the claim."
5
fraud was committed. The ALJ noted that one of the few things upon which the
parties could agree was that at the time of the injury, Manning was working for
Huntsman. The ALJ did not believe Manning was aware of the distinction in his
status as a painter versus a brush remover, noting Manning's testimony that
he simply knew he was working for Huntsman, which in the lay sense was
correct. The ALJ dismissed Huntsman's motion to reopen for fraud and held
that the April 28, 2010 settlement agreement was valid and enforceable.
Huntsman appealed to the Workers' Compensation Board ("Board"). By
Opinion and Order rendered December 28, 2011, the Board dismissed
Huntsman's appeal. The Board concluded that the ALJ's decision was
interlocutory, because it only "found the settlement agreement to be valid and
enforceable. The ALJ has yet to resolve Manning's claim against Huntsman."
The Board explained that "[i]n resolving Manning's claim against
Huntsman, the ALJ is not bound by the settlement ... between the UEF and
Manning." The Board noted KRS 342.125(7) which provides "no statement
contained in the agreement, whether as to jurisdiction, liability of the employer,
nature and extent of disability, or as to any other matter, shall be considered
by the [ALJ] as an admission against the interests of any party." The Board
instructed the ALJ to enter a "separate opinion ruling on the merits of
Manning's claim against Huntsman. If the ALJ enters an award in favor of
Manning, ... [he] must grant the UEF a right of recovery to the extent of its
payment of income benefits and medical benefits awarded by the ALJ."
6
On May 9, 2012, the ALJ rendered an Opinion, Award and Order on
remand. The ALJ explained that in the original Opinion he found that no fraud
had occurred, that the Form 111 was not timely filed, and that the settlement
between Manning and UEF was valid and enforceable; therefore, the only
remaining issue was extent and duration of disability. The ALJ noted Dr.
Bilkey's uncontroverted opinion; further, that Huntsman had sent Manning to
Dr. Gleis for an IME, but had not filed his report. The ALJ did not believe Mr.
Huntsman's (or his son's) testimony:
[They] would have the undersigned and potential
appellate bodies believe that they, and only they, have
ever told anything resembling the truth and that they
were not provided notice of the claim nor given a
chance to defend against it until it was too late. This
position can only be maintained if the UEF
investigator, the UEF attorneys, and the ALJ are all
liars. I believe they have done all of this not only with a
premeditated eye toward ... defeating this claim but,
more importantly, ... to extending this claim so as to
position themselves to avoid any direct liability for it.
The ALJ awarded Manning permanent total disability ("PTD") benefits at
the rate of $426.67 per week based upon an average weekly wage ("AWW") of
$640.00 and medicals. The award reflects that the UEF's liability "shall be fully
discharged when the sums agreed upon in the Form 110 ... are paid[,]" even if
Huntsman fails to pay any additional sums as awarded in the ALJ's Opinion.
"[T]he UEF retains any and all rights to recovery, from Bill Huntsman, for sums
paid to [Manning] now or in the future."
Manning filed a petition for reconsideration to clarify the award of
medicals. Huntsman also filed a petition, asserting, inter alia, that the ALJ
7
erred in calculating the AWW. By Order of May 29, 2012, the ALJ granted
Manning's Petition; by Order of June 4, 2012, the ALJ denied Huntsman's
petition. Huntsman appealed to the Board which affirmed by Opinion rendered
September, 28, 2012:
Huntsman's assertions that the ALJ somehow
misconstrued both the law and the facts presented are
simply untrue. The ALJ found Manning committed no
fraud, as was his prerogative, and believed Manning's
version of the facts ... was more accurate than the
version presented by the Huntsmans. [S]ubstantial
evidence exists to support the ALJ's determination
Manning did not engage in fraudulent activity.
The Board explained that:
Huntsman made no attempt to file a Form 111
until ... long after the time provided by statute,
regulation, and scheduling order. .... On appeal,
Huntsman argues it was deprived of due process.
Since it failed to avail itself to the procedures set forth
above, we find Huntsman was deprived of neither
substantive nor procedural due process.
Huntsman argues the ALJ impermissibly
exercised jurisdiction over this claim, and it can raise
such issue at any time. Manning filed a Form 101
alleging a work-related injury, and this filing brings
the claim under the purview of the Department of
Workers' Clams and confers jurisdiction upon the ALJ
to decide all matters. Huntsman could have timely
raised issues of work-relatedness, jurisdiction, and
KRS 342.650 before the ALJ, but failed to do so. Even
then, a mere allegation or assertion of a defense does
not equate to a finding. ...
Huntsman's arguments pertaining to the UEF's
settlement of the claim are groundless and without
merit.
8
B. Appeal to the Court of Appeals
On October 29, 2012, Huntsman filed a Petition for Review in the Court
of Appeals which affirmed by Opinion rendered August 22, 2014:
As Huntsman correctly notes, defects in subject
matter jurisdiction may be raised by the parties or the
court at any time and cannot be waived.
Commonwealth Health Corp. v. Croslin, 920 S.W.2d 46,
47 (Ky.1996). However, while Huntsman may raise
subject matter jurisdiction, there are no facts to
substantiate his argument. By failing to timely submit
a Form 111, Huntsman admitted the facts in
Manning's Application .... [that he] sustained a work-
related injury to his right foot during the course of his
employment. ...
Relying on Partin's Adm'r v. Black Mountain
Corp., 36 S.W.2d 1 (Ky.1930), and Eastern Coal Corp.
v. Mon -is, 287 S.W.2d 603 (Ky.1956), Huntsman
argues parties cannot stipulate jurisdiction. These
cases, however, can be distinguished from the instant
matter. [ 8] The parties in Partin's Adm'r and Eastern
Coal stipulated they were operating under the
provisions of the Act. In both cases, the facts
revealed the Department did not have subject matter
jurisdiction. Therefore, the Court held the stipulation
... was not binding.
Lastly, Huntsman argues Manning procured the
settlement agreement by fraud by misrepresenting his
average weekly wage (AWW). As a result, Huntsman
alleges the UEF has no right to recover from him. We
disagree.
8Those cases were decided under a different statutory scheme. The prior statute
required the employer and the employee to have affirmatively accepted the provisions
of the (then) workmen's compensation law. In those cases, the parties' stipulations
could not confer jurisdiction, because it never existed in the first place due to an
absence of acceptance of the Act. By contrast, under the current statutory scheme, "[a]
worker who does not affirmatively reject coverage under Chapter 342 is deemed to
have accepted it. KRS 342.395." Adkins v. R & S Body Co., 58 S.W.3d 428, 430 (Ky.
2001).
9
Manning accurately identified his pay rate as
$16.00 per hour on his Application. The UEF
conducted a thorough investigation, including
interviewing witnesses, prior to entering into the
settlement agreement. The agreed settlement amount
was not based on a particular AWW, but rather, was
the product of negotiation between Manning and the
UEF. Huntsman's claim that the settlement agreement
was fraudulently obtained based on a
misrepresentation of Manning's wages is without
merit.
For the foregoing reasons, the opinion of the
Board is affirmed.
On September 18, 2014, Huntsman filed a Notice of Appeal to this Court.
II. ANALYSIS
Huntsman argues that the DWC lacked subject matter jurisdiction
because Manning was either a domestic worker, exempt under KRS 342.650(1),
or an independent contractor. "The question of jurisdiction is ordinarily one of
law, meaning that the standard of review to be applied is de novo." Appalachian
Regional Healthcare, Inc. v. Coleman, 239 S.W.3d 49, 53 54 (Ky. 2007)
-
Huntsman maintains that the Court of Appeals misconstrued the law by
equating the failure to file a Form 111 with "a judicial admission that granted
the Department of Workers' Claims subject matter jurisdiction." Huntsman
misperceives the issue.
Gordon v. NKC Hospitals, Inc., 887 S.W.2d 360 (Ky. 1994), discusses the
proper analysis. Gordon worked for Norris, a painting contractor. While
working for Norris at NKC's premises, Gordon was injured in a fire. He received
workers' compensation benefits from his employer, and filed an action for
damages in circuit court against NKC. NKC failed to raise the exclusive remedy
10
provisions of the Workers' Compensation Act as a defense in the trial court. On
appeal, NKC argued that the exclusive remedy provision of the Act deprived the
trial court of subject matter jurisdiction, despite its failure to timely raise the
defense. This Court disagreed:
This Court's decision in Duncan v. O'Nan, Ky.,
451 S.W.2d 626 (1970), and cases cited therein,
provides a proper analysis of subject matter
jurisdiction under Kentucky law. Among the stated
principles are that subject matter jurisdiction cannot
be created by waiver or conferred by agreement; and
that in general, "subject matter" does not mean "this
case," but "this kind of case.". Duncan v. O'Nan makes
it clear that a court is deprived of subject matter
jurisdiction only in cases "where the court has not
been given any power to do anything at all." Id. at 631.
To determine subject matter jurisdiction, the pleadings
should be taken at face value and so long as the "kind
of case" identified in the pleadings is within the court's
jurisdiction, one claiming a legal bar must plead it
affirmatively....
Appellee contends, however, that the jurisdiction
otherwise possessed by the circuit court was defeated
or rendered contingent by the possibility of a defense
under the Workers' Compensation Act. ... In our view,
this construction of the statute is erroneous for it
confuses a defensive plea with want of jurisdiction.
The statutory provisions upon which appellee
relies are not self-executing. To have protection of the
Act, KRS 342.690 requires an employer to secure
payment of compensation as a condition of benefiting
from the exclusive liability provision. As the employer
has this duty and the statute contemplates the
possibility that it may not be fulfilled in which case
there is a right to sue (KRS 342.690(2)), ... the
employer must inform the court of its status as such
and prove its compliance with the statute....
[W]e have no doubt that the matters claimed to
protect appellee are affirmative defenses which were
11
required to have been pleaded and proven, the failure
of which amounts to a waiver. CR 8.03 and CR 12.02.
Id., 361-63.
Huntsman confuses a possible defense under KRS Chapter 342 with lack
of jurisdiction. Manning filed a Form 101 alleging that he was injured in the
course of his employment. 9 The ALJ had jurisdiction by virtue of KRS
342.325. 10 Huntsman waived any defenses it could have raised by failing to
timely file a Form 111. Consequently, the allegations of Manning's Form 101
were deemed admitted pursuant to 803 KAR 25:010 §5(2)(b). "Workers'
compensation is a creature of statute, and the remedies and procedures
described therein are exclusive." Williams v. Eastern Coal Corp., 952 S.W.2d
696, 698 (Ky. 1997). As the Board noted, Huntsman failed to avail itself of
those procedures.
9 Manning notes that he appropriately filed a Form 101 given the precedent in Coln.,
Office of Jefferson Cnty. Clerk u. Gordon, 892 S.W.2d 565 (Ky. 1994). We do not
disagree. There the claimant was injured while distributing campaign literature after
hours at her supervisor's direction. The injury was found to be compensable, having
occurred within the scope of employment:
Larson, The Law of Workmen's Compensation, § 27.40, et.
seq., ... indicates that ... the apparent authority of a
supervisor to direct work activities and to fire subordinate
employees puts the supervisor in a position of being able to
compel the performance of activities by the subordinate for
the supervisor's private benefit. Under such circumstances,
benefit to the supervisor is the equivalent of benefit to the
employer. Where a worker is injured in the performance of
such an activity, the worker is entitled to compensation
benefits, regardless of whether the supervisor lacked actual
authority to compel the performance. Id.., at 657.
10 KRS 342.325 provides: "All questions arising under this chapter, if not settled by
agreement of the parties interested therein, with the approval of the administrative law
judge, shall be determined by the administrative law judge except as otherwise
provided in this chapter."
12
Huntsman argues that Manning fraudulently procured the settlement
by misrepresenting his AWW as $640.00. The Board correctly concluded that
substantial evidence exists to support the ALJ's determination Manning did not
engage in fraudulent activity. The Court of Appeals found no merit to
Huntsman's assertion of fraud based on a misrepresentation of wages with
respect to the settlement. Nor do we. We also note that Huntsman has not
appealed the ALJ's award of PTD benefits which is based upon an AWW of
$640.00. The decision of the Court of Appeals is affirmed.
All sitting. All concur.
13
COUNSEL FOR APPELLANT:
Jack Logan Richardson IV
Richardson & Richardson, PSC
10345 Linn Station Rd.
Louisville, KY 40223
Justin Drew Clark
Christopher E. Schaefer
Stoll Keenon Ogden, PLLC
2000 PNC Plaza
500 W. Jefferson St.
Louisville, KY 40202
COUNSEL FOR APPELLEE:
Christopher P. Evensen
6011 Brownsboro Park Blvd., Suite A
Louisville, KY 40207
James Robert Carpenter
Assistant Attorney General
Uninsured Employers' Fund
1024 Capital Center Dr., Ste. 200
Frankfort, KY 40601
14