Steven Meadows v. Havens Erectors, Inc.; The Austin Company

The above-entitled workers' compensation case is submitted to the Labor and Industrial Relations Commission (Commission) for review as provided by section 287.480 RSMo. We heard the oral arguments of the parties. We have reviewed the evidence and considered the whole record and we find that the award of the administrative law judge is supported by competent and substantial evidence and was made in accordance with the Missouri Workers' Compensation Act, except as modified herein. Pursuant to section 286.090 RSMo, we issue this final award and decision modifying the April 21, 2006, award and decision of the administrative law judge. We adopt the findings, conclusions, decision, and award of the administrative law judge to the extent that they are not inconsistent with the findings, conclusions, decision, and modifications set forth below.

We take administrative notice of the pleadings as they appear in the Division of Workers' Compensation (Division) file. On October 12, 2004, employee filed his original claim for compensation. On October 21, 2004, the Division acknowledged the claim. On November 19, 2004, Haven's Erectors, Inc., (Erectors), filed a timely Answer to Claim for Compensation. On November 22, 2004, Erectors filed an Amended Answer to Claim for Compensation to correct the alleged accident date.

The administrative law judge erroneously found that Erectors filed an untimely Answer on November 22, 2004. Based upon that erroneous finding, the administrative law judge erroneously concluded that certain statements of fact were deemed admitted by Erectors pursuant to 8 CSR 50-2.010(8)(B). Our findings and conclusions regarding Erectors' liability are based upon the record developed at the hearing.

Relying on § 287.560 RSMo, the administrative law judge awarded costs from Erectors to employee in the amount of $\ 1,083.73. The administrative law judge wrote:

As noted, after filing its Answer, Havens did not defend the case or appear at the hearing. Havens not only failed to defend this case without reasonable grounds, Havens failed to defend it without any grounds. Therefore, I find it liable for costs under $\S 287.560$ RSMo.

The administrative law judge misapplied § 287.560 RSMo, which reads, in relevant part:

[I]f the division or the commission determines that any proceedings have been brought, prosecuted or defended without reasonable ground, it may assess the whole cost of the proceedings upon the party who so brought, prosecuted or defended them.

The administrative law judge concluded that Erectors did not defend the claim. Under the statute, costs may only be assessed if a claim is defended without reasonable ground. That is, costs may be assessed against a party who advances and persists with an unreasonable defense. The plain language of the statute does not authorize an award of cost where a party fails to defend a claim. We reverse the award of costs.

The Commission further approves and affirms the administrative law judge's allowance of attorney's fee herein as being fair and reasonable.

Any past due compensation shall bear interest as provided by law.

The award and decision of Administrative Law Judge R. Carl Mueller, Jr., issued April 21, 2006, is attached and incorporated by this reference except to the extent modified herein.

Given at Jefferson City, State of Missouri, this $17^{\text {th }}$ day of January 2007.

LABOR AND INDUSTRIAL RELATIONS COMMISSION

NOT SITTING

William F. Ringer, Chairman

Alice A. Bartlett, Member

John J. Hickey, Member

Attest:

Secretary

Issued by THE LABOR AND INDUSTRIAL RELATIONS COMMISSION

ORDER

CORRECTING AWARD

Injury No.: 04-044941

Employee: Steven Meadows

Employers: 1) Havens Erectors, Inc.

2) The Austin Company

Insurers: 1) Self-Insured/Missouri Private Sector Guaranty Corp.

2) St. Paul Travelers

Additional Party: Treasurer of Missouri as Custodian

of Second Injury Fund

Date of Accident: May 3, 2004

On January 17, 2007, the Labor and Industrial Relations Commission (Commission) issued a Final Award Allowing Compensation (Modifying Award and Decision of Administrative Law Judge).

The second sentence of the first paragraph of the Final Award incorrectly stated the Commission heard oral argument of the parties. That sentence is corrected to read:

The Commission reviewed the briefs filed by the parties.

Otherwise, the Final Award issued January 17, 2007, remains in full force and effect as originally written.

Given at Jefferson City, State of Missouri, this $\qquad 25^{\text {th }} \qquad$ day of January 2007.

LABOR AND INDUSTRIAL RELATIONS COMMISSION

NOT SITTING

William F. Ringer, Chairman

Alice A. Bartlett, Member

John J. Hickey, Member

Attest:

Secretary

Employee: | Steven Meadows | Injury No: 04-044941 |

Dependents: $\quad \mathrm{N} / \mathrm{A}$

Employer: Havens Erectors, Inc.

Insurer: Self-Insured

Additional Parties: The Austin Company (Alleged Statutory Employer)

Insurer: St. Paul Travelers

State Treasurer as Custodian of the Second Injury Fund

The Missouri Private Sector Individual Self-Insurers Guaranty Corporation

Hearing Dates: March 3, 2006 and January 10, 2006

1. Are any benefits awarded herein? Yes.

1. Was the injury or occupational disease compensable under Chapter 287? Yes.
2. Was there an accident or incident of occupational disease under the Law? Yes.
3. Date of accident or onset of occupational disease: May 3, 2004.
4. State location where accident occurred or occupational disease was contracted: Kansas City, Jackson County, Missouri.
5. Was above employee in employ of above employer at time of alleged accident or occupational disease? Yes.
6. Did employer receive proper notice? Yes.
7. Did accident or occupational disease arise out of and in the course of the employment? Yes.
8. Was claim for compensation filed within time required by Law? Yes.
9. Was employer insured by above insurer? Yes.
10. Describe work employee was doing and how accident occurred or occupational disease contracted: The employee slipped while walking on a steel beam and injured his right shoulder.
11. Did accident or occupational disease cause death? No. Date of death? N/A
12. Part(s) of body injured by accident or occupational disease: Right upper extremity at the 232-week level.
13. Nature and extent of any permanent disability: Twenty-five percent (25\%) disability of the right upper extremity at the 232-week level.
14. Compensation paid to-date for temporary disability: None
15. Value necessary medical aid paid to date by employer/insurer? None
16. Value necessary medical aid not furnished by employer/insurer? \13,656.00
17. Employee's average weekly wages: \ 980.00
18. Weekly compensation rate: $\ 653.33 for temporary total and $\ 347.05 for permanent partial disability.
19. Method wages computation: $\S 287.250 .1$ (4).

1. Amount of compensation payable:

Medical Expenses

Medical Already Incurred. $\ 13,656.00

Temporary Disability

20 weeks (6/30/2004-11/17/2004) $\ 13,066.60

Permanent Partial Disability

25\% disability at 232-week level ( $25 \times 232 weeks) x \$ 347.05 \ 20,128.90

Costs Pursuant to $\S 287.560 \ 1,083.73

Total Award: $\ 47,935.23

... by a court of competent jurisdiction . . . " (Motion at ¶ 7).

However, I note that:

1. No court of competent jurisdiction has declared Havens Erectors insolvent. Havens Erectors is a subsidiary of Havens Steel, and only the latter has filed bankruptcy.
2. $\S 287.877 .1$ states only that the Guaranty Corporation may determine "by majority vote that any member employer may be insolvent . . ." not determine that a member is insolvent. The Legislature recently amended Missouri's Workers' Compensation Law ("MWCL") adding the mandate that "Administrative law judges . . . the labor and industrial relations commission . . . and any reviewing courts shall construe the provisions of this chapter strictly." §287.280.1, RSMo. (2005). Strictly speaking, $\S 287.877 .1$ does not empower the Guaranty Corporation to declare a member insolvent. The Guaranty Corporation's function, instead, is to "take the necessary actions to protect against the insolvency of a member of the corporation." §287.870.2.
3. Even if the Guaranty Corporation did have the authority to declare a member employer insolvent, it notes that it found Havens to be insolvent on November 15, 2005 "well less than 90 days prior to the date of Hearing." (Motion at $\mathbb{\pi}$ 8). However, the March 3, 2005 hearing on the Motion was well more than 90 days after the November 15, 2005 insolvency. A 90-day automatic stay would have expired on February 13, 2006. The Guaranty Corporation had notice of the January 10, 2006 hearing and appeared before the Division on March 3, 2006. It cannot now argue that it did not have the opportunity to defend this claim or inform the Claimant of a claims procedure - either before or after the expiration of 90 days following Havens' insolvency.
4. The Western District Court of Appeals ruled on March 21, 2006 in a case involving jurisdictional issues and the Guaranty Corporation in Tague v. Missouri Private Sector Individual Self-Insurers Guar. Corp. --- S.W.3d ----, 2006 WL 694378 (Mo.App. W.D.). The underlying premise in Tague is that a court of competent jurisdiction (the U.S. Bankruptcy Court) is adjudicating a self-insured's insolvency. Again, in Mr. Meadows' case, Havens has not filed bankruptcy and, therefore, there is no court of competent jurisdiction in which Meadows could file a proof of claim. Notwithstanding that fact, Mr. Meadows did file a proof of claim in the Havens Steel bankruptcy case on October 22, 2004. See, "Suggestions in Opposition to Havens Erectors' Motion for Stay of Proceedings" at Exhibit A.. I note this to highlight the great effort Mr. Meadows has expended in trying to secure benefits for his workers' compensation injury.
5. The Division already had transferred Havens' security proceeds (Ex. 1) to the Guaranty Corporation before the January 10, 2006 hearing. (Ex. A). The Guaranty Corporation had notice of the January 10, 2006 hearing and appeared with counsel on March 3, 2006. Yet, the record is devoid of any direction on its part to Mr. Meadows on how to secure benefits for his injury.

I overrule the Motion and find that until Havens' insolvency is adjudicated in a court of competent jurisdiction the Division retains jurisdiction to hear this case.

The primary issue the Employee and Austin requested the Division to determine was whether Austin was liable to provide Mr. Meadows with benefits as a statutory employer. I find that because Havens was insured,