Opinion
NO. 2015-CA-000993-WC
04-22-2016
UNINSURED EMPLOYERS' FUND APPELLANT v. JOSE ACAHUA; LUIS LOPEZ; ISAIAS SILVA-LAMAS; HON. THOMAS G. POLITES, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD APPELLEES
BRIEF FOR APPELLANT: Jack Conway Attorney General James R. Carpenter Assistant Attorney General Frankfort, Kentucky BRIEF FOR APPELLEE: Joy L. Buchenberger Louisville, Kentucky
NOT TO BE PUBLISHED PETITION FOR REVIEW OF A DECISION OF THE WORKERS' COMPENSATION BOARD
ACTION NO. WC-13-00273 OPINION
AFFIRMING
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BEFORE: CLAYTON, THOMPSON AND VANMETER, JUDGES. THOMPSON, JUDGE: The Uninsured Employers Fund (UEF) appeals from an opinion of the Workers' Compensation Board affirming a decision of the Administrative Law Judge (ALJ) awarding permanent total disability benefits and medical benefits to Isaias Silva-Lamas. The UEF argues the ALJ did not have jurisdiction over the uninsured defendant-employer, Luis Lopez.
We confine our statement of the facts to those necessary to resolve this appeal. Silva-Lamas filed a Form 101 on February 25, 2013, alleging he fell from scaffolding in Pikeville, Kentucky, while working for a brick mason. As a result, he has no use of his legs, very little use of his arms and cannot use his hands and fingers. He alleged his employer at the time of the accident was Jose Acahua. Because Acahua did not have workers' compensation insurance in Kentucky on the alleged injury date, the ALJ ordered the UEF to be joined as a defendant.
During discovery, it became apparent that Silva-Lamas was actually employed by Lopez. On September 17, 2013, Silva-Lamas filed a motion for leave to amend the claim to name Lopez as his employer, who was also uninsured. His motion was granted on October 7, 2013. On April 30, 2014, Silva-Lamas filed an additional Form 101 alleging the same injury on the same day naming Lopez as his employer and filed a motion to consolidate his claims. The filing of the Form 101 against Lopez was acknowledged by order of the Kentucky Department of Workers' Claims (Department) commissioner on May 13, 2014, and the additional application forwarded to the assigned ALJ. The Department's personnel attached a note to the file copy of the May 13, 2013 order stating that the copies of the Form 101 and the acknowledgment of filing order were mailed to Lopez but returned as undeliverable.
A benefit review conference was held on December 9, 2014. The issues preserved were benefits per Kentucky Revised Statutes (KRS) 342.730; notice; average weekly wage; unpaid medical expenses; and temporary total disability benefits. The parties agreed to waive the hearing, and the claim was submitted on the record. Subsequent to the conference, the UEF filed a motion to amend the order to include the issue of whether Department had jurisdiction over Lopez. The motion was granted.
The ALJ ruled there was jurisdiction over Lopez and Lopez was responsible for the benefits awarded. The ALJ also ruled that in the event Lopez does not discharge his liability, the benefits shall be paid by the UEF upon the filing of an appropriate motion. The Board affirmed.
The sole issue presented by the UEF is whether service on Lopez at his last known address by first class mail by the Department is sufficient to confer jurisdiction over Lopez. UEF contends that pursuant to KRS 342.135, Silva-Lamas was required to serve Lopez with the claim by registered mail.
KRS 342.135 provides, in part, as follows:
Any notice required to be given under this chapter shall be considered properly given and served when deposited in the mail in a registered letter or package properly stamped and addressed to the person to whom notice is to be given at his last known address and in time to reach him in due time to act thereon. Notice may also be given and served like notices in civil actions.
While KRS 342.135 addresses "notice" generally, KRS 342.270 addresses the filing of a claim and the procedures after a claim is filed. Subsection 2 provides:
Except with respect to claims for benefits by reason of coal workers' pneumoconiosis, the commissioner shall issue notice of the filing to all parties and shall promptly assign the claim to an administrative law judge. The administrative law judge shall facilitate the exchange of information pertinent to the claim pursuant to administrative regulations promulgated by the commissioner. 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. [Emphasis added].
Consistent with KRS 342.270's requirement that the Department's commissioner issue a notice of the filing of a claim, 803 Kentucky Administrative Regulations (KAR) 25:010§3(2) provides directives to the commissioner in how that notice is to be given. It directs: "An application for resolution of claim shall be filed with sufficient copies for service on all parties. The executive director shall make service by first class mail." (Emphasis added).
"Executive director" and "commissioner" are used interchangeably. --------
The UEF argues that even if the obligation to give notice is upon the Department, Lopez's due process rights were violated when he did not receive notice of the claim and, therefore, Silva-Lamas's claim must be dismissed. Without addressing whether the UEF has standing to assert the rights of Lopez, we discuss the merits of its argument. The UEF cites several cases in support of its claim that there was no jurisdiction over Lopez. However, all involved dissimilar facts.
In Realty Improvement Co., Inc. v. Raley, 194 S.W.3d 818 (Ky. 2006), the question was whether an insured employer assessed with a safety penalty was denied due process when the employer's address was improperly listed in the Form 101 and the notice was returned undeliverable. In contrast, Silva-Lamas properly listed Lopez's last known address and did all that was required to file his claim and the Department sent the notice of the claim to that address. Additionally, unlike the insured employer in Realty Improvement, this is not a case where a safety violation penalty is sought to be imposed but is one where the claimant seeks benefits for an injury suffered while working for an uninsured employer.
The UEF also cites Natural Res. & Envtl. Prot. Cabinet v. Pinnacle Coal Corp., 729 S.W.2d 438 (Ky. 1987), and Akers v. Pike County Bd. of Ed., 171 S.W.3d 740 (Ky. 2005). The Natural Resources case stands for the proposition that an administrative agency cannot adopt regulations, including those providing for service of process, that conflict with a statute directly providing the means of service. Natural Resources, 729 S.W.2d at 439. That case is of little importance because 800 KAR 25:010§3(2) does not conflict with KRS 342.135, which applies to pre-claim notice.
In Akers, the claimant argued the employer did not give adequate notice after the Department did not properly notify him of the statute of limitations provided for in KRS 342.040(1). Akers, 171 S.W.3d at 741-42. The Akers decision cannot be read to support the UEF's argument. In fact, the Court merely held that KRS 342.135 is inapplicable to the Department's obligation under KRS 342.040(1). Id. at 742.
The sole case dealing with the UEF and service upon the uninsured employer is Uninsured Employers' Fund v. Brewster, 818 S.W.2d 602 (Ky. 1991). However, in that case, service was eventually perfected on the employer through the long-arm statute and, therefore, the Supreme Court did not address the service issue.
The cases cited are markedly distinguishable from the present. There is no dispute that Silva-Lamas sustained a severe work-related injury and cannot return to his employment. Moreover, as the ALJ noted, "no involved party has any illusion in regard to the insured status or solvency of [Lopez]." Under the circumstances, the reality is that Lopez will not be responsible for payments to Silva-Lamas. That responsibility will be the UEF's. Any amount paid by UEF to Silva-Lamas may be recovered by the UEF through a civil action for damages with service of process on Lopez by either actual or constructive service as provided for in Kentucky Rules of Civil Procedure 4.05. KRS 342.790 (3).
The opinion of the Workers' Compensation Board affirming the ALJ is affirmed.
ALL CONCUR. BRIEF FOR APPELLANT: Jack Conway
Attorney General James R. Carpenter
Assistant Attorney General
Frankfort, Kentucky BRIEF FOR APPELLEE: Joy L. Buchenberger
Louisville, Kentucky