IN THE SUPREME COURT OF THE STATE OF KANSAS
No. 91,654
SCHMIDTLIEN ELECTRIC, INC., and
TRINITY UNIVERSAL INSURANCE CO.,
Plaintiffs/Appellants,
v.
PAULA GREATHOUSE, Director,
Kansas Division of Workers Compensation,
Defendant/Appellee.
NORTHMINSTER PRESBYTERIAN CHURCH
and BROTHERHOOD MUTUAL INSURANCE CO.,
Plaintiffs/Appellants,
v.
PAULA GREATHOUSE, Director,
Kansas Division of Workers Compensation,
Defendant/Appellee.
SYLLABUS BY THE COURT
1. A full hearing, as used in K.S.A. 44-534a(b), means an exploration of the issues resulting in the ultimate decision, e.g., whether the claimant is entitled to workers compensation benefits. It includes a situation where there has been an evidentiary hearing before the administrative law judge, as well as where there has been procedural default, e.g., abandonment.
2. Under workers compensation law, the claimant bears the burden of proof to establish his or her right to an award of compensation and to prove the various conditions on which his or her right depends. Failure to prove that the injury arose out of and in the course of employment is fatal to a workers compensation claim.
3. The Workers Compensation Act is substantial, complete, and exclusive. Rules and methods provided by the Code of Civil Procedure not included in the act itself are not available in determining rights under the Act.
4. The Workers Compensation Act does not provide for the right to appeal the Director's determination on reimbursement.
5. In the absence of a statutory right of appeal, relief from illegal, arbitrary, and unreasonable acts of the Director can be obtained using an extraordinary remedy like mandamus, quo warranto, or injunction.
6. Mandamus is a proceeding to compel some inferior court, tribunal, board, or some corporation or person to perform a specified duty, which duty results from the office, trust, or official station of the party to whom the order is directed, or from operation of law. Unless the defendant's legal duty is clear, the writ should not issue.
7. The Director's certification of claims for reimbursement under K.S.A. 44-534a(b) is a ministerial duty; while the Director may have discretion to determine the specific amount of compensation paid by the employer or insurance carrier which is to be reimbursed, he or she has no discretion to totally deny reimbursement claims as a matter of law.
Appeal from Shawnee district court; TERRY L. BULLOCK, judge. Opinion filed January 21, 2005. Reversed and remanded with instructions.
Matthew S. Crowley, of Gehrt & Roberts, Chartered, of Topeka, argued the cause, and was on the briefs for appellants.
Glenn H. Griffeth, deputy chief counsel, of Kansas Department of Human Resources, of Topeka, argued the cause, and A.J. Kotich, chief counsel, was with him on the brief for appellee.
The opinion of the court was delivered by
NUSS, J.: This appeal concerns two workers compensation cases which have been consolidated. Employer Schmidtlien Electric, Inc., together with its insurance carrier Trinity Universal Insurance Company (Trinity Universal), and employer Northminster Presbyterian Church, together with its insurance carrier Brotherhood Mutual Insurance Company (Brotherhood Mutual), appeal from the trial court's dismissal of their petitions for writs of mandamus. In both petitions, plaintiffs sued the Director of the Kansas Division of Workers Compensation (Director) under K.S.A. 44-534a seeking reimbursement of benefits they had paid to their injured employees (claimants). This court transferred the case from the Court of Appeals for review and determination, pursuant to K.S.A. 20-3018(c).
The issues on appeal, and this court's accompanying holdings, are as follows:
1. Did the trial court err in holding there was not a full hearing on employee Bryan Kent's claim? Yes.
2. Did the trial court err in holding there was no administrative determination that plaintiffs paid more in benefits than those to which claimants were entitled? Yes.
3. Did the trial court err in refusing to issue the writs of mandamus? Yes.
Accordingly, we reverse, remand, and order the trial court to issue writs of mandamus ordering the Director to carry out her statutory duties, i.e., to determine the amount of compensation paid by the insurance carriers to claimants and to certify to the Commissioner of Insurance the amount so determined for their reimbursement.
FACTS
Kristen Anderson was employed by Northminster Presbyterian Church, which was in turn insured by Brotherhood Mutual. Bryan Kent was employed by Schmidtlien Electric, Inc., which was in turn insured by Trinity Universal. Both Anderson and Kent became injured, and their employers' insurance carriers paid them temporary disability benefits and medical expenses. Their respective workers compensations claims are set forth separately below.
Claimant Anderson
According to an Agreed Award dated February 10, 2003, the parties stipulated to the following facts:
"1. [Anderson] claims personal injury by accident in Reno County, Kansas.
"2. [Anderson] claims said accidental injury occurred on or about July 19, 1998.
"3. Respondent/insurance carrier admit [that Anderson] met with personal injury by accident on or about the alleged date of accident.
"4. Respondent/insurance carrier admit the relationship of employer-employee existed on the date of the accidental injury.
"5. Respondent/insurance [carrier] admit that the parties are governed by the Kansas Workers Compensation Act.
"6. Respondent/insurance carrier admit that proper notice of the alleged accident was made.
"7. Brotherhood Mutual Insurance Company was the insurance carrier for the respondent on the date of accidental injury.
"8. The parties stipulate that the average weekly wage on July 19, 1998, was $403.85.
"9. Medical treatment has been furnished in the total amount of $24,388.16. There is no claim by Anderson for any past due or out-of-pocket medical reimbursement.
"10. Temporary disability compensation has been made in the amount of $3,794.23. . . ."
According to the Agreed Award, the parties acknowledged that the following four issues remained in dispute:
"(1) Whether [Anderson's] accidental injury arose out of and in the course of her employment with the [church]?
"(2) Whether timely written claim was served?
"(3) What is the nature and extent of [Anderson's] disability and the appropriate compensation, if any?
"(4) Whether timely Application for Hearing was filed with the Director pursuant to K.S.A. 44-534(b)?" (Emphasis added.)
Under "FINDINGS," the administrative law judge (ALJ) found regarding issues two and four that the parties acknowledged timely written claim was not served and that an application for hearing was not timely filed. He also found: "The parties have requested that the Court enter a final determination denying compensability based upon finding all disputed issues against claimant and in favor of respondent/insurance carrier." (Emphasis added.)
Accordingly, under the heading "AWARD," the ALJ stated in relevant part as follows:
"The Court accepts the findings of the parties and adopts them for purposes of the Court's final determination in this matter. Accordingly, claimant's claim is denied.
"This Agreed Award should be treated as any other award as if this matter was fully litigated. All other rights of the parties in this matter have been adjudicated except that the respondent/insurance carrier's right to proceed on securing the reimbursement from the Kansas Workers' Compensation Fund." (Emphasis added.)
The Agreed Award was signed by the ALJ, by attorneys for both sides, and by claimant Anderson. It was eventually filed with the Director, Philip Harness.
Brotherhood Mutual then sought reimbursement of its $28,182.39 from the Director. In a letter dated March 10, 2003, Harness essentially held that reimbursement would be denied because Anderson had originally been entitled to the benefits, and her later failure to file timely claims and applications did not eliminate her right to benefits earlier received.
"The February 10, 2003 Agreed Award correctly states that the claimant is entitled to no award of benefits due to late written claim or late application for hearing. However, the claimant's entitlement to benefits do [sic] not depend on the existence of an award.
"In this case, the defenses of late written claim or late application for hearing would not have existed until 200 days [K.S.A. 44-520a] or 2 years after the last payment of benefits [K.S.A. 44-534(b)]. The claimant was entitled to the benefits when paid, and the claimant's failure to timely pursue the case after receiving the benefits in no way dissolves the claimant's right to benefits already received.
"It does not appear that the employer or its insurance carrier paid any amounts that the claimant was not entitled to. Therefore, I cannot certify any amounts for reimbursement from the fund."
Brotherhood Mutual then sought reconsideration of Harness' denial, to which he replied in a letter dated March 25, 2003. Among other things, he essentially repeated the theme that reimbursement would be denied because Anderson had originally been entitled to the benefits and her later failure to file timely claims and applications did not eliminate her right to benefits earlier received. He also opined that the ALJ's determination denying compensability was not factually supportable:
"The February 10, 2003, Agreed Award did contain a finding that the claim was not compensable. There were two findings in the Agreed Award:
"1. Acknowledgment that written claim and application for hearing were not timely filed.
"2. Request for final determination denying compensability.
"[However,] [a] finding in the form of a request does not amount to a factual determination; but furthermore, the Agreed Award contains no stipulated facts on which to base a finding that the claim was not compensable.
. . . .
". . . Late written claim and application for hearing are the only apparent reasons for the denial of the claim.
"A claimant's entitlement to benefits does not depend on the existence of an award. K.S.A. 44-512b assesses a penalty in the form of interest where the employer or insurance carrier fails to pay benefits prior to an award without just cause. K.S.A. 44-5,120 states that such a failure to pay benefits is a fraudulent or abusive act, subject to civil penalty. Clearly, the Workers Compensation Act recognizes a claimant's entitlement to benefits prior to an award. Likewise, the denial of an award does not necessarily extinguish a claimant's preexisting entitlement to benefits."
Harness then expressed a possible basis for Brotherhood Mutual's reimbursement, i.e., that Anderson's injury did not arise out of and in the course of employment:
"If an award denied benefits because the injury did not arise out of and in the course of employment, then the claimant would not have been entitled to workers compensation benefits received for that injury. In the present case, you and the claimant's counsel may submit to the administrative law judge a modification to the agreed award that specifies that the injury did not arise out of and in the course of employment. If such a modification is approved, you may renew your request for fund reimbursement based on the new findings." (Emphasis added.)
Claimant Kent
According to an Award dated November 18, 2002, the parties stipulated to the following facts:
"1. [Kent] claims personal injury by accident in Shawnee County, Kansas.
"2. [Kent] claims said accidental injury occurred on or about January 22, 1991.
"3. Respondent/insurance carrier admit [that Kent] met with personal injury by accident on or about the alleged date of accident.
"4. Respondent/insurance carrier admit the relationship of employer-employee existed on the date of the accidental injury.
"5. Respondent/insurance carrier admit that the parties are governed by the Kansas Workers' Compensation Act.
"6. Respondent/insurance [carrier] admit that proper notice of the alleged accident was made.
"7. Trinity Universal Insurance Company was the insurance carrier for the respondent on the date of the accidental injury.
"8. The parties stipulate that the average weekly wage on January 22, 1991, was $482.65.
"9. Medical treatment has been furnished in the total amount of $17,616.00. There is no claim by the claimant for any past due or out of pocket medical reimbursement.
"10. Temporary total disability compensation has been made in the amount of $87,848.00 representing 316 weeks at the rate of $278.00 per week."
According to the Award, the following four issues, the first three of which were identical to those in Anderson, remained in dispute:
"1. Whether claimant's accidental injury arose out of and in the course of his employment with respondent?
"2. Whether timely written claim was served?
"3. What is the nature and extent of claimant's disability and appropriate compensation, if any?
"4. What is the liability of the Kansas Workers Compensation Fund?" (Emphasis added.)
Under "FINDINGS," the ALJ found, among other things, that Kent's claim for compensation should be denied due to his abandonment of his claim, resulting in his failure to prove that his accidental injuries arose out of and in the course of his employment as follows:
"Claimant has acknowledged under letter dated July 31, 2001 from his attorney that he is abandoning his claim. This abandonment was confirmed as the result of a pre-hearing settlement conference held on August 1, 2001. As a result of the outcome of that pre-hearing settlement conference counsel for the respondent/insurance carrier had circulated on two separate occasions, an Agreed Award. Neither of these Agreed Awards was returned for filing as requested and respondent/insurance carrier has now sought issuance of [an] Award confirming the abandonment pursuant to Supreme Court Rule 170. It is therefore found that the claim for compensation should be denied due to claimant's abandonment of his claim resulting in failure to prove that his accidental injuries arose out of and in the course of his employment and that he served timely written claim." (Emphasis added.)
Under the heading "AWARD," the ALJ concluded: "The Court accepts the stipulation of the parties and makes findings consistent with those outlined above. Accordingly, claimant's claim is denied."
Like Anderson's ALJ, this one also held: "All rights of the parties in this matter have been determined except the respondent/insurance carrier's right to proceed on securing the reimbursement."
Trinity Universal then sought reimbursement of its $105,464 from the Director. In a letter dated April 17, 2003, Harness denied reimbursement on two bases: (1) no full hearing had occurred and (2) similar to his rationale regarding Anderson, claimant Kent would not lose his original entitlement merely through a subsequent untimely service of written claim or abandonment.
"First, it is questionable whether the November 18, 2002, award amounts to a full hearing. This is an award by default, initiated by the respondent, when the claimant was unavailable or unwilling to participate in a regular hearing. The award contains no substantive findings on the compensability issues of injury arising out of and in the course of employment or timely written claim. The award denied benefits simply because the claimant was not there to prove his case.
"Even if I assumed this was a full hearing, I cannot determine that the claimant was entitled to less than the benefits previously paid. A worker's entitlement to benefits does not depend on the existence of an award. Conversely, a default denial, such as in this case, that does not substantively address any compensability issues, fails to establish that the worker was never entitled to benefits." (Emphasis added.)
The employers and their insurance carriers in both matters then filed petitions for writs of mandamus, asking the trial court to compel reimbursement from the Director under K.S.A. 44-534a. Harness filed motions to dismiss, claiming that the trial court lacked subject matter jurisdiction and that mandamus was improper because plaintiffs were not entitled to the relief requested as a matter of law. As Harness had done in his letters denying the claims for reimbursement, he also alleged that there had not been a full hearing on the Kent claim and there had not been a determination of overpayment on either claim, both of which he asserted were required by K.S.A. 44-534a. Harness was succeeded by Paula Greathouse as Director.
After consolidating the two actions, the trial court made findings of fact primarily by adopting the stipulations of the parties before the ALJs. It also added findings of fact in the Anderson claim:
"6. The Administrative Law Judge found that Anderson had not timely filed a written claim, and that a timely application for hearing [had] not been made. Anderson's claim was denied.
"7. Petitioners requested that Respondent certify the amounts it had voluntarily paid to Anderson, to the Commissioner of Insurance for reimbursement pursuant to K.S.A. 44-534a(b).
"8. Respondent has declined to certify said amounts stating that denial of Anderson's claim was the result of an untimely application for hearing and a late written claim, and that there was no finding that Anderson was not entitled to the benefits when paid.
"9. The relief Petitioners seek is enforcement of a provision of the Kansas Workers' Compensation Act, specifically, K.S.A. 44-534a.
"10. That upon application for reconsideration of the director's denial of certification for reimbursement, the director indicated that if the parties wanted to stipulate that the injuries for which compensation was paid did not arise out of and in the course of employment, and obtain an amended order from the Administrative Law Judge to that effect, then the director would reconsider the application for certification." (Emphasis added.)
For the Kent claim the trial court added the following findings of fact:
"6. The Administrative Law Judge denied Kent's claim because he found that Kent had abandoned it, and as a result [1] failed to prove that his accidental injuries arose out of and in the course of his employment, and that [2] he failed to serve a timely written claim.
"7. Petitioners requested that Respondent certify the amounts they had paid to, or on behalf of, Kent, to the Commissioner of Insurance for reimbursement pursuant to K.S.A. 44-534a(b).
"8. Respondent has declined to certify said amounts stating that denial of the claim was the result of abandonment, and that there was no finding that Kent was not entitled to the benefits when paid.
"9. The relief Petitioners seek is enforcement of a provision of the Kansas Workers' Compensation [Act], specifically, K.S.A. 44-534a." (Emphasis added.)
The trial court found that it had jurisdiction over mandamus actions, though a writ of mandamus should not issue unless a defendant's legal duty is clear. The court agreed with the Director's argument that K.S.A. 44-534a(b) requires a full hearing, which occurs "when an administrative law judge enters an award after a preliminary hearing has been held. Sawyer v. Oldham's Farm Sausage Co., 247 Kan. 327, 333 (1990)." The court also held there was no determination that the claimants had been paid more in benefits than those to which they were entitled. It concluded:
"It is clear that an employer would be entitled to reimbursement if it was determined at a full hearing that the injured worker was not entitled to receive benefits. However, there is nothing present in case law or statutory interpretation/language that suggests reimbursement is appropriate when a full hearing has not been held. Additionally, there has been no determination that Petitioners paid more in benefits than the claimants were entitled to. Since Petitioners have failed to establish that the requirements of K.S.A. 44-534a(b) have been met, the Court cannot compel Respondent to certify a claim for reimbursement her legal duty to do so is not clear. Therefore, Petitioners are not entitled to mandamus relief as a matter of law."
ANALYSIS
The Director argues, as she did to the trial court, that the plaintiffs have failed to meet two conditions for reimbursement in K.S.A. 44-534a: (1) there had been no full hearing conducted in the Kent case; and (2) there had not been a determination of "no entitlement to benefits" on either claim. She also reiterates that the trial court has no jurisdiction over workers compensation matters and, even if so, mandamus is inappropriate because she has no legal duty to reimburse which she can be compelled to perform.
Plaintiffs respond that the functional equivalent of a full hearing was conducted under the facts of the Kent case and that a formal specific finding of "no entitlement to benefits" is unnecessary in both claims. According to plaintiffs, the trial court did have jurisdiction and mandamus is appropriate because it will compel the Director to fulfill her statutory duty of reimbursement of benefits paid to the two claimants.
Our analysis of the first two issues requires us to interpret the statute, K.S.A. 44-534a. The trial court agreed with the Director's interpretation. Interpretation of a statute is a question of law, however, and our review is unlimited. Accordingly, when determining a question of law, we are not bound by the decision of the trial court. Murphy v. Nelson, 260 Kan. 589, 594, 921 P.2d 1225 (1996). We do acknowledge our statement in the workers compensation case of Foos v. Terminix, 277 Kan. 687, 692-93, 89 P.3d 546 (2004), concerning an agency's interpretation:
"'"The interpretation of a statute by an administrative agency charged with the responsibility of enforcing that statute is entitled to judicial deference. This deference is sometimes called the doctrine of operative construction. . . . [I]f there is a rational basis for the agency's interpretation, it should be upheld on judicial review. . . . [However,] [t]he determination of an administrative body as to questions of law is not conclusive and, while persuasive, is not binding on the courts."'"
Before addressing the specifics of K.S.A. 44-534a, we need to review some of the general tenets of workers compensation law as contained in K.S.A. 44-501. If personal injury by accident arising out of and in the course of employment is caused to an employee, the employer shall be liable to pay compensation to the employee in accordance with the provisions of the Workers Compensation Act. See K.S.A. 44-501(a); Titterington v. Brooke Ins., 277 Kan. 888, 89 P.3d 643 (2004). However, the burden of proof shall be on the claimant to establish the claimant's right to an award of compensation and to prove the various conditions on which the claimant's right depends. K.S.A. 44-501(a). "'Burden of proof'" means the burden of a party to persuade the trier of facts by a preponderance of the credible evidence that such party's position on an issue is more probably true than not true on the basis of the whole record." K.S.A. 2003 Supp. 44-508(g).
The statute at issue, K.S.A. 44-534a, states:
"(a) (1) After an application for a hearing has been filed pursuant to K.S.A. 44-534 and amendments thereto, the employee or the employer may make application for a preliminary hearing, in such form as the director may require, on the issues of the furnishing of medical treatment and the payment of temporary total disability compensation. At least seven days prior to filing an application for a preliminary hearing, the applicant shall give written notice to the adverse party of the intent to file such an application. Such notice of intent shall contain a specific statement of the benefit change being sought that is to be the subject of the requested preliminary hearing. If the parties do not agree to the change of benefits within the seven-day period, the party seeking a change in benefits may file an application for preliminary hearing which shall be accompanied by a copy of the notice of intent and the applicant's certification that the notice of intent was served on the adverse party or that party's attorney and that the request for a benefit change has either been denied or was not answered within seven days after service. Copies of medical reports or other evidence which the party intends to produce as exhibits supporting the change of benefits shall be included with the application. The director shall assign the application to an administrative law judge who shall set the matter for a preliminary hearing and shall give at least seven days' written notice by mail to the parties of the date set for such hearing.
"(2) Such preliminary hearing shall be summary in nature and shall be held by an administrative law judge in any county designated by the administrative law judge, and the administrative law judge shall exercise such powers as are provided for the conduct of full hearings on claims under the workers compensation act. Upon a preliminary finding that the injury to the employee is compensable and in accordance with the facts presented at such preliminary hearing, the administrative law judge may make a preliminary award of medical compensation and temporary total disability compensation to be in effect pending the conclusion of a full hearing on the claim, except that if the employee's entitlement to medical compensation or temporary total disability compensation is disputed or there is a dispute as to the compensability of the claim, no preliminary award of benefits shall be entered without giving the employer the opportunity to present evidence, including testimony, on the disputed issues. A finding with regard to a disputed issue of whether the employee suffered an accidental injury, whether the injury arose out of and in the course of the employee's employment, whether notice is given or claim timely made, or whether certain defenses apply, shall be considered jurisdictional, and subject to review by the board. Such review by the board shall not be subject to judicial review. If an appeal from a preliminary order is perfected under this section, such appeal shall not stay the payment of medical compensation and temporary total disability compensation from the date of the preliminary award. If temporary total compensation is awarded, such compensation may be ordered paid from the date of filing the application, except that if the administrative law judge finds from the evidence presented that there were one or more periods of temporary total disability prior to such filing date, temporary total compensation may be ordered paid for all periods of temporary total disability prior to such date of filing. The decision in such preliminary hearing shall be rendered within five days of the conclusion of such hearing. Except as provided in this section, no such preliminary findings or preliminary awards shall be appealable by any party to the proceedings, and the same shall not be binding in a full hearing on the claim, but shall be subject to a full presentation of the facts.
"(b) If compensation in the form of medical benefits or temporary total disability benefits has been paid by the employer or the employer's insurance carrier either voluntarily or pursuant to an award entered under this section and, upon a full hearing on the claim, the amount of compensation to which the employee is entitled is found to be less than the amount of compensation paid or is totally disallowed, the employer and the employer's insurance carrier shall be reimbursed from the workers compensation fund established in K.S.A. 44-566a and amendments thereto, for all amounts of compensation so paid which are in excess of the amount of compensation the employee is entitled to less any amount deducted from additional disability benefits due the employee pursuant to subsection (c) of K.S.A. 44-525, and amendments thereto, as determined in the full hearing on the claim. The director shall determine the amount of compensation paid by the employer or insurance carrier which is to be reimbursed under this subsection, and the director shall certify to the commissioner of insurance the amount so determined. Upon receipt of such certification, the commissioner of insurance shall cause payment to be made to the employer or the employer's insurance carrier in accordance therewith. No reimbursement shall be certified unless the request is made by the employer or employer's insurance carrier within one year of the final award."
Issue 1: Did the trial court err in holding there was not a full hearing on employee Kent's claim?
Trinity Universal concedes that K.S.A. 44-534a(b) speaks of "full hearings" in a number of places:
"If compensation . . . has been paid by the employer or the employer's insurance carrier . . . and, upon a full hearing on the claim, the amount of compensation to which the employee is entitled is found to be less than the amount of compensation paid or is totally disallowed, the employer and the employer's insurance carrier shall be reimbursed from the workers' compensation fund . . . for all amounts of compensation so paid which are in excess of the amount of compensation the employee is entitled to . . . as determined in the full hearing on the claim." (Emphasis added.)
Trinity Universal also concedes that the trial court found there had not been a full hearing on the Kent claim. It argues, however, that the functional equivalent of one occurred. We therefore examine what is meant by "full hearing."
"'The fundamental rule of statutory construction is that the intent of the legislature governs. [Citation omitted.] When construing a statute, a court should give words in common usage their natural and ordinary meaning.'" Sawyer v. Oldham's Farm Sausage Co., 246 Kan. 327, 331, 787 P.2d 697 (1990) (quoting