Sunz Insurance Company v. Henry J. Decker
2017-SC-0257
| Ky. | Apr 26, 2018Background
- Henry Decker was injured on Jan 4, 2011 while working on a subcontract for A&C Communications; he filed a Form 101 naming Laney (his immediate employer) and listing the Uninsured Employers' Fund; A&C and its carrier KEMI were named as other defendants.
- Department of Workers' Claims certified that Laney had coverage through Employee Staff, LLC (ES) and that ES’s carrier was Sunz Insurance Company (Sunz); scheduling order required defendants to file a Form 111 (claim denial/acceptance) within 45 days.
- Sunz and ES did not file Form 111 within 45 days; the ALJ ordered joinder of ES and Sunz and again directed they file Form 111 within 45 days; both filed untimely Form 111s in late August 2011 without seeking leave or explaining good cause.
- ALJ ruled ES (and its insurer Sunz) had not shown good cause for the late filings, deemed ES the employer, and held ES/Sunz liable for Decker’s award; the Board affirmed on review and refused to allow additional evidence on remand.
- Sunz appealed to the Kentucky Supreme Court arguing insufficient joinder, that employer/coverage defenses are non-waivable, that good cause existed, and that a purported agreement with Decker barred default treatment; the Supreme Court affirmed the Court of Appeals and Board.
Issues
| Issue | Plaintiff's Argument (Decker/A&C) | Defendant's Argument (Sunz) | Held |
|---|---|---|---|
| Whether Sunz/ES were properly joined and served | DWC notices and ALJ joinder effectively put Sunz on notice; joinder was valid | Joinder process was defective under 803 KAR 25:010 §2(3)(b); insufficient joinder = good cause | ALJ/Board/Supreme Court found Sunz received notices and joinder was effective; insufficient joinder did not excuse delay |
| Whether failure to timely file Form 111 admits allegations (liability) | Failure to file admits allegations; permits award against employer/insurer | Employer/coverage defenses are non-waivable; Sunz was not Decker’s employer so cannot be held liable | Court reaffirmed that failing to timely file Form 111 deems allegations admitted (Gray v. Trimmaster); ES is deemed employer absent good cause |
| Whether Sunz showed good cause for untimely Form 111 | (N/A—plaintiffs contend no good cause) | Sunz argued counsel was newly retained and procedural defects justified delay | Court held Sunz did not show good cause; inattentiveness/new counsel not sufficient; ALJ’s factual finding not clearly erroneous |
| Whether ALJ/Board violated due process by refusing more evidence or honoring an alleged agreement with Decker | Plaintiffs relied on statutory process; agreement not in record and cannot override statutory requirements | Sunz claimed denial of opportunity to present additional proof and that an agreement with Decker excused default | Court held remand scope was limited by Board’s directive and law-of-the-case; ALJ properly refused additional evidence; private agreement cannot negate statutory filing rules |
Key Cases Cited
- W. Baptist Hosp. v. Kelly, 827 S.W.2d 685 (Ky. 1992) (standard for appellate review of Board fact-findings)
- Gray v. Trimmaster, 173 S.W.3d 236 (Ky. 2005) (failure to timely file Form 111 deems application allegations admitted)
- T.J. Maxx v. Blagg, 274 S.W.3d 436 (Ky. 2008) (prohibits new evidence or a "second bite" on remand)
- Nesco v. Haddix, 339 S.W.3d 465 (Ky. 2011) (limited remand; no reopening for new proof)
- UEF v. Pellant, 396 S.W.3d 292 (Ky. 2012) (remand scope and finality principles)
- Am. Woodmark Corp. v. Mullins, 484 S.W.3d 307 (Ky. App. 2016) (carrier’s inattentiveness not "good cause" for late Form 111)
- Terrafirma, Inc. v. Krogdahl, 380 S.W.2d 86 (Ky. 1964) (standard for establishing "good cause" from delay)