Zaloudek Grain Co. v. Compsource Oklahoma
2012 OK 75
| Okla. | 2012Background
- Zaloudek Grain Company held a workers’ compensation policy with CompSource Oklahoma for about ten years; annual payroll audit information was required to determine premiums.
- CompSource sent multiple audit requests in late 2010–early 2011; after failure to provide audit data, it began cancellation efforts and issued a Notice of Pending Cancellation on February 16, 2011.
- The policy was canceled effective March 3, 2011; Zaloudek was informed it could not reapply until an audit was completed for the canceled term; Zaloudek received a refund credit in July 2011.
- CompSource later emailed an application for coverage (August 2011) after cancellation; Zaloudek alleged the August 2011 application was incomplete and unsigned by an owner; two teenage workers were injured on August 4, 2011, and Zaloudek applied for coverage that day.
- Zaloudek filed suit (August 25, 2011) for breach of contract, bad faith, and declaratory relief; trial court granted summary judgment in Zaloudek’s favor on contract/declaratory issues but stayed other claims; appellate court reviewed the statutory questions de novo and ultimately reversed the trial court on the applicability of § 3639(C) to CompSource and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does 36 O.S. Supp.2007 § 3639(C) apply to CompSource? | Zaloudek argues § 3639(C) applies to licensed insurers. | CompSource argues it is not an insurer licensed under the Insurance Code and § 3639(C) is inapplicable. | § 3639(C) does not apply to CompSource. |
| Whether CompSource may cancel a policy for failure to participate in an audit? | Cancellation based solely on audit nonparticipation is improper. | Cancellation for failure to participate in the audit is permitted to determine premium adjustments. | CompSource is authorized to cancel for failure to participate in the audit; remaining issues remanded for trial court determination. |
| Is CompSource an insurer under the general Insurance Code definitions? | CompSource is included in the Insurance Code’s definition of insurer. | CompSource operates under the Workers’ Compensation Code, not the Insurance Code; not a general insurer. | CompSource is not a general insurer licensed by the Insurance Commissioner; authority derives from the Workers’ Compensation Code. |
Key Cases Cited
- TRW/Reda Pump v. Brewington, 829 P.2d 15 (Okla. 1992) (statutory construction standards and legislative intent emphasize plain meaning and avoidance of absurd results)
- Berry v. Public Employees Retirement System, 768 P.2d 898 (Okla. 1989) (construction to reconcile acts and legislative intent)
- Humphrey v. Denney, 757 P.2d 833 (Okla. 1988) (goal of statutory construction is following legislative intent)
- City of Duncan v. Bingham, 394 P.2d 456 (Okla. 1964) (legislative silence can imply intent; interpret to reconcile provisions)
- O.K. Constr. Co. v. Burwell, 93 P.2d 1092 (Okla. 1939) (rules for interpreting statutory language and legislative intent)