John Soligo v. GST Steel Company

For the reasons set forth below, the Commission reverses the conclusion of the administrative law judge that employee is entitled to an award of costs and attorney fees in this matter. All other aspects of the award of the administrative law judge are affirmed.

The issue is whether the administrative law judge properly assessed costs and attorney fees against the employer/insurer in this case. Section 287.560 RSMo, provides, in pertinent part:

All costs under this section shall be approved by the division and paid out of the state treasury from the fund for the support of the Missouri division of workers' compensation; provided, however, that if 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.

Under the foregoing section, the general rule is that costs of a proceeding before the Division or the Commission shall be paid out of the state treasury from the fund for the support of the Division. DeLong v. Hampton Envelope Co., 149 S.W.3d 549, 555 (Mo. App. 2004) (citations omitted). However, as an exception to the general rule, the Division or the Commission may assess the whole cost of the proceedings upon a party who, without reasonable ground, brought, prosecuted, or defended a proceeding before the Division or Commission. Id. (citations omitted). The "whole cost of the proceedings" includes all amounts the innocent party expended throughout the proceeding brought, prosecuted, or defended without reasonable grounds, including attorney's fees. Id. (citations omitted).

Thus, the question is whether Guaranty Corporation defended this case without reasonable grounds for purposes of $\S 287.560$ RSMo. We conclude that Guaranty Corporation did not defend this case without reasonable grounds.

First, this case involved a factual dispute as to whether employee received notice of the requirement that he file a timely proof of claim with the bankruptcy court. While we agree with the findings of the administrative law judge, we are not convinced that Guaranty Corporation had no reasonable grounds for disputing these factual issues. Second, this case involved valid questions of law including a dispute as to whether the Division of Workers' Compensation has jurisdiction over this matter, and the applicability of the recent case of Jones v. GST Steel Co., 272 S.W.3d 511 (Mo. App. 2009). Again, while we are convinced that the administrative law judge correctly analyzed and decided the jurisdictional issue, we do not agree with the administrative law judge that the Guaranty Corporation's defense is rendered unreasonable or egregious by operation of the holding in Jones, supra.

Here, employee seeks compensation for injuries to his right wrist, elbow, and shoulder sustained at work on January 6, 1996. Guaranty Corporation seeks to defend the case

on a jurisdictional basis. While the Jones court made clear its view of the type of defense raised here by Guaranty Corporation, the holding in the Jones case was that the employee in that case could not be held to have defaulted in his claim for hearing loss, where he was precluded from filing a claim for compensation before the expiration of the deadline for filing a proof of claim with the bankruptcy court, due to the thencurrent language of $\S 287.197 .7$ RSMo. Jones, 272 S.W.3d at 520. That rationale is clearly inapplicable to the injuries at issue in this case. As a result, while there is certainly no mistaking the public policy preference of the Jones court with regard to the type of defense raised here by Guaranty Corporation, we do not believe the holding in the Jones case has the effect of rendering Guaranty Corporation's defense in this matter unreasonable or egregious.

We exercise our discretion under $\S 287.650$ RSMo, with great caution and only where the case for costs is clear and the offense egregious. In sum, we are not convinced that the liability of Guaranty Corporation was "clear and beyond serious dispute" in this matter. Wilson v. C.C. Southern, Inc., 140 S.W.3d 115, 120 (Mo. App. 2004). Where such is the case, we believe the award of costs and attorney fees is improper.

For the foregoing reasons, we find that the administrative law judge incorrectly concluded that employee is entitled to his costs and attorney fees associated with prosecuting his claim.

The Commission reverses that portion of the award holding that employer/insurer is liable for costs and attorney fees. Accordingly, each party shall bear their own costs and shall be responsible for their own attorney fees associated with this matter.

The award and decision of Administrative Law Judge Mark S. Siedlik, as modified, is attached hereto, and its findings and conclusions are incorporated to the extent they are not inconsistent with our findings and conclusions herein.

Given at Jefferson City, State of Missouri, this $24^{\text {th }}$ day of March 2010.

LABOR AND INDUSTRIAL RELATIONS COMMISSION

William F. Ringer, Chairman

Alice A. Bartlett, Member

SEPARATE OPINION FILED

John J. Hickey, Member

Attest:

Secretary

I have reviewed and considered all of the competent and substantial evidence on the whole record. Based on my review of the evidence as well as my consideration of the relevant provisions of the Missouri Workers' Compensation Law, I believe the decision of the administrative law judge should be affirmed without modification. I dissent from the majority's decision to deny the award of costs and fees in this matter.

I agree with the finding of the administrative law judge that the jurisdictional issue in this case is identical to that before the court in Jones v. GST Steel Co., 272 S.W.3d 511 (Mo. App. 2009). Further, I find that the court's unequivocal holding in Jones makes clear that there exist no reasonable grounds for the jurisdictional defense raised by Guaranty Corporation in this case. As a result, I believe it is unjust to require employee to bear the burden of costs and attorney fees incurred as a direct result of Guaranty Corporation's pursuing a patently unreasonable defense.

I would affirm the award of the administrative law judge allowing the award of fees and costs against the employer/insurer.

For the foregoing reasons, I respectfully dissent from the portion of the award denying the award of fees and costs.

John J. Hickey, Member

Employee: John Soligo

Injury No. 96-002827

Dependents: N/A

Employer: GST Steel Company

Insurer: GS Technologies Operating Co.

Additional Party: N/A

Hearing Date: April 21, 2009

Checked by: MSS/lh

1. Are any benefits awarded herein? Yes.
2. Was the injury or occupational disease compensable under Chapter 287? Yes.
3. Was there an accident or incident of occupational disease under the Law? Yes.
4. Date of accident or onset of occupational disease: January 6, 1996.
5. State location where accident occurred or occupational disease was contracted: Employer's premises, Kansas City, Jackson County, Missouri.
6. Was above employee in employ of above employer at time of alleged accident or occupational disease? Yes.
7. Did employer receive proper notice? Yes.
8. Did accident or occupational disease arise out of and in the course of the employment? Yes.
9. Was claim for compensation filed within time required by Law? Yes.
10. Was employer insured by above insurer? Yes.
11. Describe work employee was doing and how accident occurred or occupational disease contracted: Right upper extremity - Employee fell from a ladder 8 to 10 feet and landed on his right side.
12. Did accident or occupational disease cause death? No. Date of death? N/A
13. Part(s) of body injured by accident or occupational disease: Right upper extremity.
14. Nature and extent of any permanent disability: 35 percent permanent partial disability to the right upper extremity at the level of the shoulder -232 week level.
15. Compensation paid to-date for temporary disability: $\ 8,139.00.

Issued by DIVISION OF WORKERS' COMPENSATION

Employee: John Soligo

Injury No. 96-002827

1. Value necessary medical aid paid to date by employer/insurer? $\ 3,737.00.
2. Value necessary medical aid not furnished by employer/insurer? N/A
3. Employee's average weekly wages: $\ 491.19.
4. Weekly compensation rate: $\ 257.29.
5. Method wages computation: By agreement of the parties.

1. Amount of compensation payable:

81.2 weeks for permanent partial disability from employer: $\ 20,891.95.

1. Amounts payable for costs and attorney fee awarded pursuant to statute and caselaw - attorney's fees and costs as set forth above.
2. Second Injury Fund liability: N/A
3. Future requirements awarded: N/A

Said payments to begin upon receipt of Award and to be payable and be subject to modification and review as provided by law.

The compensation awarded to the claimant shall be subject to a lien in the amount of 25 percent of