PATRICIA ANN STEWART V. PIKE COUNTY BOARD OF EDUCATION; HON. DONALD G. SMITH, ADMINISTRATIVE LAW JUSTICE, AND WORKERS' COMPENSATION BOARD
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IMPORTANT NO TICS
NOT TO BE PUBLISHED OPINION
THIS OPINION IS DESIGNATED "NOT TO BE
PUBLISHED. " PURSUANT TO THE RULES OF
CIVIL PR OCED URE PROMUL GA TED B Y THE
SUPREME COURT, CR 76.28 (4) (c), THIS OPINION
IS NOT TO BE PUBLISHED AND SHALL NOTBE
CITED OR USED AS A UTHORITY INANY OTHER
CASE INANY COURT OF THIS STATE.
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PATRICIA
APPEAL
V.
WORKERS'
PIKE
HON .
LAW
2002-CA-2016-WC
;
.
;
.
APPELLEES
MEMORANDUM
AFFIRMING
The
claim .
Compensation
proceedings .
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that no medical expenses were contested, and that the employer had paid more than 42
weeks of temporary total disability benefits . The agreement was signed on the
claimant's behalf by the same attorney who represents her presently . It listed the
employer as: "Pike County School Board, P. O. Box 3097, Pikeville, KY 41502 ." The
agreement indicated that the employer's insurance carrier was "Legion Ins. c/o
Cunningham Lindsey" and listed the address for Cunningham Lindsey Claims
Management, Legion's third-party administrator . Janet L. Quiggins, an adjuster for
Cunningham Lindsey, signed the agreement on the line designated for the employer's
attorney or representative . The order approving the agreement indicates that copies
were forwarded to the claimant, to her counsel, and to "INSURANCE CARRIER: The
Cunningham Lindsey Claims Management Group, Incorporated, 9502 Williamsburg
Plaza, Suite #201, Louisville, Kentucky 40201, Attn : Janet Quiggins ."
In 2000, Legion changed third-party administrators. It did not inform the
Department of Workers' Claims of the change and apparently had no legal obligation to
do so . The Board later took judicial notice of the Department's records, which reflected
that the First Report of Injury listed the employer's address as: "P .O . Box 3097,
Pikeville, KY 41502." It also took judicial notice that the Department's records listed the
address for Legion Insurance Co. as : "One Logan Square, Suite 1400, Philadelphia,
Pennsylvania 19103."
On September 6, 2001, the claimant filed a motion to reopen, acting through the
same attorney who represented her in the settlement . She served the motion on Ms.
Quiggins at Cunningham Lindsey, the former third-party administrator. Yet, she failed to
serve the motion on the employer or on Legion.
The Arbitrator who granted the motion and ordered further proof forwarded a
copy of the order to the claimant's attorney and to Cunningham Lindsey. Nothing in the
record indicates that the arbitrator forwarded a copy to the employer or to Legion . The
Commissioner of the Department of Workers' Claims then sent a copy of the scheduling
order to the claimant, her attorney, Cunningham Lindsey, and "Pike County Schools, S
Mayo Trail, Pikeville, KY 41501 ."
The claimant proceeded to file into evidence two groups of medical records,
serving notice on Ms. Quiggins and on the employer, using the S Mayo Trail address
that the Commissioner had used when sending the scheduling order to Pike County
Schools . She later filed notice that Dr. Warsy would be deposed on December 18,
2001, and served Ms . Quiggins but not the employer or Legion . No representative of
the employer attended Dr. Warsy's deposition. The transcript was filed with the
Department on January 4, 2002, and served on Ms . Quiggins, but nothing in the record
indicates that a copy was sent to the employer or to Legion . Acknowledging that her
proof time was scheduled to end on December 22, 2001, the claimant also moved for
leave to depose Dr. Ahmed on January 8, 2002, the earliest date available . Again, she
served Ms. Quiggins but not the employer or Legion . The ALJ forwarded to the
employer at the S Mayo Trail address a copy of the order extending the claimant's proof
time through January 8, 2002 . The order granted no corresponding extension of time to
the employer. On January 10, 2002, the claimant took Dr. Ahmed's deposition. Again,
neither the employer nor its representative attended and, again, the record does not
indicate that a copy was sent to the employer or to Legion . It also fails to indicate that a
copy was sent to Ms. Quiggins .
Although the claimant's request for additional proof time referred only to Dr.
Ahmed's deposition, she proceeded to submit records from Dr. Nadar on January 2,
2002, serving only Ms. Quiggins . Likewise, although the ALJ's order extended proof
time only until January 8, 2002, the claimant continued to submit evidence thereafter.
She submitted records from Phil Pack, a psychologist, on January 14, 2002, serving
only Ms. Quiggins . Although the record does not indicate that anyone was served with
notice, she deposed Mr. Pack on January 21, 2002, and filed the transcript into
evidence. As with Dr. Ahmed's deposition, the record does not indicate that a copy of
Mr. Pack's deposition was sent to the employer, Legion, or even Ms. Quiggins .
On January 28, 2002, the claimant filed her witness list, a list of proposed
stipulations, list of contested issues, and a designation of evidence that included
evidence submitted after January 8, 2002 . The filing was served on Ms. Quiggins but
not on the employer or Legion .
The memorandum of the February 6, 2002, benefit review conference
acknowledged that the employer had made no appearance in the reopening of this
settled claim. Nonetheless, it listed a number of stipulations . It also indicated that the
following items would be considered as evidence : the claimant's deposition, Dr.
Warsy's deposition and records, Dr. Ahmed's deposition and records, and Phil Pack's
deposition and report. Nothing in the record indicates that a copy of the memorandum
was sent to Ms. Quiggins, to the employer, or to Legion .
After serving only Ms. Quiggins with notice, the claimant's deposition was taken
on February 11, 2002 . Although the transcript was filed into evidence, it does not
indicate that a copy was sent to the employer, its carrier, or even Ms. Quiggins . On
February 15, 2002, the claimant submitted records from Dr. Warsy, serving only Ms .
Quiggins . They were filed into evidence on February 21, 2002 .
The ALJ conducted a formal hearing on February 19, 2002, with only the claimant
and her counsel present. At the hearing, the ALJ commented for the record concerning
the employer's failure to enter an appearance . Under the mistaken impression that
Cunningham Lindsey was the employer's carrier, the ALJ noted that both the employer
and its carrier were served with the scheduling order, including a copy of the reopened
claim. Although the ALJ stated that a copy of the benefit review conference
memorandum was sent by certified mail to the employer and carrier, the statement is
not supported by the record . After noting that the employer had still not entered an
appearance, the ALJ stated, "I understand that Plaintiff's counsel has also served the
defendant-employer with all the pleadings in this matter, is that correct?" Counsel
responded that although everything may not have gone to the employer, itself, it did go
to the carrier, Cunningham Lindsey. Concluding that the carrier had been served with
"all the pleadings, orders, and anything necessary for them to make an entry of
appearance," the ALJ decided to go ahead with the hearing . With respect to the merits
of the reopening, the ALJ noted that the settlement occurred before a claim was filed
and that the claimant's testimony in the reopening proceeding was the only evidence of
her condition at the settlement .
Attached to the hearing order were receipts for certified mail to: "Pike County
Schools, S Mayo Trail, Pikeville, KY 41501" and to Ms. Quiggins, at Cunningham
Lindsey Claims Management. The return receipt for the document sent to Ms . Quiggins
was signed "Jane Hadden ." The return receipt from the mailing to Pike County Schools
indicated that the delivery address, "P. O. Box 3097, Pikeville, KY 41502," was different
from the address to which the mail was sent .
On February 25, 2002, counsel for the employer filed a notice of representation ;
requested copies of all medical and vocational evidence in the claimant's possession ;
and filed motions to certify coverage, to file a late notice of claim denial, and to reopen
proof time or, in the alternative, to be given 45 days to present proof. As grounds for
the motions, the employer explained that Legion had changed third-party administrators
and that neither Legion nor the new third-party administrator was served with the motion
to reopen or the Commissioner's scheduling order. Noting that the claimant's initial
proof time had been extended, the employer asserted that neither extending its proof
time nor enabling the case to be decided on the merits would prejudice the claimant .
On April 11, 2002, the employer also filed a notice of stay, documenting the fact
that on March 28, 2002, in the Commonwealth Court of Pennsylvania, Docket No. 183MD-202, Koken, Insurance Commissioner v. Legion Insurance , an order was entered
placing Legion Insurance Company into fiscal rehabilitation .
Ignoring the notice of stay, the ALJ noted that the order extending the claimant's
proof time until January 8, 2002, automatically extended the employer's proof time
through February 7, 2002 . Yet, the employer failed to make an entry of appearance
during proof time and failed to appear at the benefit review conference or hearing . On
that basis, the ALJ determined that the motions to certify coverage and to reopen proof
time were untimely and denied them. Noting the employer's lack of a reasonable
explanation for why it failed to appear or defend the case despite the fact that it was
served, the ALJ determined that the notice of denial and request for medical evidence
also were untimely. The ALJ noted that the initial claim was settled, noted that certain
"stipulations were entered into by the [claimant], with no appearance by the DefendantEmployer," and listed them . After reviewing the evidence that the claimant submitted,
the ALJ awarded lifetime benefits for permanent total disability.
The employer's petition for reconsideration pointed out that the claimant failed to
serve her motion to reopen on either the employer or Legion. Furthermore, the
Commissioner failed to mail the scheduling order to Legion or its authorized agent. The
employer maintained that even if one were to assume that it or its carrier had been
neglectful, the penalty that the ALJ imposed was abusive under the circumstances .
Finally, noting that the burden was on the claimant to prove every element of her claim
for increased benefits and pointing out that a stipulation was an agreement of the
parties, the employer asserted that reliance on "stipulations" made solely by the
claimant amounted to a patent error in the opinion and award .
The claimant responded that an insurance carrier is not a party to a claim and
that the employer was served with a copy of the scheduling order. She asserted that
the employer's motions concerned matters within the sound discretion of the AU and
that the rulings were not unreasonable under the circumstances . Finally, she
maintained that each of the stipulations favored the employer, was supported by
evidence of record, or concerned a matter that was rendered res iudicata by the terms
of the settlement agreement .
Overruling the petition, the ALJ noted that an insurance carrier is not a party
under Chapter 342. Furthermore, although the employer's carrier was not served, its
agent, Ms . Quigley, was served . Rejecting the employer's assertion that the award
amounted to a default judgment, the ALJ pointed out that it was based on the evidence
that was timely filed by the parties. Although acknowledging that the employer was
correct in its assertion that stipulations are not unilateral, the ALJ stated that the facts
contained in the stipulations were supported by the unrebutted testimony of the
claimant . The claimant continues to maintain that the decision was correct and should
not have been vacated .
We begin our analysis with a brief review of procedures relevant to the reopening
of a claim . As authorized by KRS 342.125(1), a party may move to reopen an otherwise
final award . As with any other pleading, the motion must "be served on all other parties
by mailing a copy to the other parties or, if represented, to that representative, at the
parties' or representatives' last known address." 803 KAR 25 :010E, § 3(3) . The
Commissioner then issues notice that the claim has been assigned to an ALJ, a
document that is commonly referred to as the scheduling order. KRS 342.270(2).
Within 45 days of the scheduling order, the employer must file notice of claim denial or
acceptance, setting forth specifically those material matters that are admitted and those
that are denied . KRS 342.270(2); 803 KAR 25 :010E, § 5(2). KRS 342.470 prescribes
the manner for giving notice to a carrier whenever Chapter 342 requires such notice.
In addition to requiring notice of any pleadings, 803 KAR 25:010E, § 3(3) requires
parties to be served with notice of depositions . Also upon notice, a party may file
evidence, which will be admitted without further order unless a proper objection is filed
within 10 days . 803 KAR 25:010E, § 9(6). All parties take proof for 45 days from the
date of the scheduling order, with the defendant receiving an additional 30 days to
complete its proof, and the claimant receiving 15 days thereafter for rebuttal . 803 KAR
25 :010E,§5(3) . Proof time maybe extended upon a showing of circumstances that
prevent its timely introduction, but motions for extension of time must be filed no later
than 5 days before the deadline sought to be extended and require a supporting
affidavit . 803 KAR 25 :010E, § 13(1). Absent compelling circumstances, only one 30day extension is permitted . 803 KAR 25 :010E, §13 (2). Furthermore, granting an
extension of time automatically enlarges the opponent's time unless the extension is for
rebuttal proof. 803 KAR 25 :010E, § 13(3) .
An employer bears primary liability for a workers' compensation claim, regardless
of whether its liability is indemnified with insurance coverage. Therefore, it is the
employer, not its insurance carrier, who is the real party in interest. See, Browns, Bell &
Cow-gill v. Soper, 287 Ky. 17, 152 S.W.2d 278 (1941); Wilcox v. Board of Education of
Warren County , Ky.App., 779 S .W.2d 221 (1989) . As the real party in interest, an
employer is entitled to procedural due process, including notice and an opportunity to be
heard . American Beauty Homes v. Louisville & Jefferson County Planning & Zoninq
Comission , Ky., 379 S .W.2d 450 (1964). 803 KAR 25:010E, § 3(3) requires that every
party or its representative be served with every pleading . We find nothing in Chapter
342 to indicate that service of a claim or motion to reopen on an employer may be made
through service on its insurance carrier. Although KRS 342.470 prescribes the manner
for giving notice to an insurance carrier whenever Chapter 342 requires such notice,
nothing designates an insurance carrier as a party to a workers' compensation claim
unless it is specifically named as a party. Likewise, nothing requires an injured worker
to serve the employer's carrier with notice of a claim or motion to reopen unless the
carrier is named as a party.
As the real party in interest, the employer was entitled to notice of the claimant's
motion to reopen and was entitled to receive all pleadings and notices required under
Chapter 342 until it designated a representative for the service of process in the matter .
Notwithstanding Ms. Quigley's role with respect to the settlement agreement, nothing in
the record indicates that the employer designated Ms. Quigley or Cunningham Lindsey
as its representative for the service of process with respect to future matters .
Furthermore, we are not persuaded that serving a motion to reopen and related
pleadings on a claims adjuster who had worked for the employer's insurance carrier's
third-party administrator at the time of the initial claim could reasonably be viewed as
serving the employer as required by 803 KAR 25:010E, § 3(3). It was not until a notice
of representation was filed on February 25, 2002, that the employer designated a
representative for the service of process in the reopening.
Although the name and address of the claimant's employer were listed on the
First Report of Injury and appeared on the face of the settlement agreement, she failed
to serve the employer with a copy of her motion to reopen . Contrary to her assertion,
the Commissioner's scheduling order was not properly served on the employer. It was
neither addressed to the employer nor sent to the address that was listed on the First
Report of Injury and settlement agreement, the address to which the return receipt
indicates that the letter containing the hearing order was later delivered . Instead, the
Commissioner's office addressed the scheduling order to "Pike County Schools" at an
incomplete street address. Although the record indicates that the claimant attempted to
send some of the pleadings and evidence to the employer, using the correct name, it
also indicates that she failed to send even them to the employer's last known address .
Although the ALJ noted at the hearing that a copy of the benefit review
conference memorandum was sent to the employer by certified mail and that it had
failed to enter an appearance, no evidence supports the statement. The earliest
evidence in the record to establish the delivery of a pleading is the return receipt for the
certified mail in which the ALJ sent a copy of the hearing order. Even then, although the
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pleadings clearly indicated that the employer was the Pike County Board of Education,
the receipt indicates that the letter was addressed to "Pike County Schools" at the same
incomplete street address that the Commissioner and the claimant had used previously.
The receipt indicates that the letter was ultimately delivered to the address shown for
the employer on the First Report of Injury and the settlement agreement, and it was in
response to that letter that the employer moved to enter an appearance, designated a
representative for the service of process in the matter, and requested time for taking
proof.
Although the employer was entitled under the regulations to notice of depositions
and of evidence that was filed, the record does not indicate that the claimant attempted
to provide such notice except with respect to the initial medical reports . Nonetheless,
the evidence was admitted and considered . Although the regulations require a
supporting affidavit showing compelling circumstances in order to extend a party's proof
time by more than 30 days, nothing in the record explains why the claimant was
permitted to continue to introduce proof up until February 21, 2002, long after her proof
time expired . Although some of the evidence was submitted in what would appear to be
the claimant's rebuttal time, the employer's failure to enter an appearance and introduce
evidence obviated a rebuttal . Nonetheless, the claimant submitted proof out of time,
and the ALJ considered it.
As the claimant has pointed out in an attempt to defend her failure to give proper
notice and service of process, the employer did not assert to the AU that it was
unaware of the reopening until it received the certified letter on February 20, 2002 . Its
argument was premised on a lack of notice to its carrier, Legion . Nonetheless, because
the conduct of these proceedings was so arbitrary and capricious, we are persuaded
that the decision to vacate the award was warranted . Under the circumstances, the
employer must be given a reasonable period in which to present evidence, and the
claimant must then be given time for rebuttal.
The decision of the Court of Appeals is affirmed .
All concur.
COUNSEL FOR APPELLANT :
Michael Lucas
Miller Kent Carter & Michael Lucas, PLLC
P .O. Box 852
Pikeville, KY 41502
COUNSEL FOR APPELLEE:
Walter W . Turner
Jones, Walters, Turner & Shelton, PLLC
151 N. Eagle Creek Drive
One Fountain Plaza, Suite 101
Lexington, KY 40509
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