Jones v. Ind. Farmers Mut. Ins. Co.

926 N.E.2d 116

Scott JONES, Appellant-Plaintiff,v.INDIANA FARMERS MUTUAL INSURANCE COMPANY, and Crawford Custom Homes, Appellees-Defendants.

No. 93A02-0908-EX-812.

Court of Appeals of Indiana.

May 5, 2010.

COPYRIGHT MATERIAL OMITTED

Paul A. Brizendine, Brizendine Law Office, LLC, Floyds Knobs, IN, Attorney for Appellant.

Mark R. Smith, Smith Fisher Maas & Howard, P.C., Indianapolis, IN, Attorney for Appellees.

OPINION

BROWN, Judge.

Scott Jones appeals from an order of the Indiana Worker's Compensation Board (“Board”) concluding that Indiana Farmers Mutual Insurance Company (“Indiana Farmers”) did not provide coverage when Jones was injured because Indiana Farmers had cancelled its insurance policy. Jones raises two issues, which we consolidate and restate as whether the Board correctly interpreted Ind.Code § 22-3-5-5(c)(5) of the Worker's Compensation Act. We affirm.

The relevant facts follow. On or about June 3, 2005, Indiana Farmers issued its Workers Compensation and Employers Liability Policy No. 001-024-007545 (the “Policy”) to Crawford Custom Homes, Inc. (“CCHI”) as the named insured, with effective dates of coverage between June 3, 2005, and June 3, 2006. The Policy contained the following provision:

[Indiana Farmers] may cancel this policy. [Indiana Farmers] must mail or deliver to you not less than ten days advance written notice stating when the cancelation is to take effect. Mailing that notice to you at your mailing address shown in Item 1 of the Information Page will be sufficient to prove notice.

Appellee's Appendix at 34.

On or about August 5, 2005, Indiana Farmers mailed CCHI a premium invoice for $607.50 which indicated that the premium payment must be received by September 3, 2005. CCHI did not pay the premium by September 3, 2005. On September 6, 2005, Indiana Farmers mailed to CCHI a cancellation notice which indicated that unless the premium payment was received by September 13, 2005, the Policy “would cancel” on September 13, 2005. Id. at 45. CCHI did not pay the premium by September 13, 2005. On September 13, 2005, Indiana Farmers mailed to CCHI a final cancellation notice confirming that the Policy had been cancelled at 12:01 AM Standard Time on September 13, 2005, for non-payment of premium. On either September 19, 2005 or September 22, 2005, the Board received notice from Indiana Farmers that the Policy had been cancelled. ¹

On November 7, 2005, Jones was working at a residential home construction site for CCHI in Floyd County, Indiana, when he slipped and fell off of the roof, landing on a concrete slab, and allegedly injured his left knee and both upper extremities. On or about November 7, 2005, Jones filed an application for adjustment of claim. On December 9, 2005, Jones filed an application for adjustment of claim requesting a hearing.

Upon receipt of Jones's application, CCHI requested that Indiana Farmers defend/indemnify it under the Policy against the claim. Indiana Farmers defended CCHI against the claim pursuant to a written reservation of rights under the Policy.

On November 13, 2006, Indiana Farmers filed a complaint for declaratory judgment in the Floyd Circuit Court requesting in part that the court “declare that Indiana Farmers has no duty under the Policy to defend CCHI against the Work Comp Claim,” and that “Indiana Farmers has no duty under the Policy to indemnify CCHI against the Work Comp Claim.” Id. at 47.

On December 31, 2007, Jones filed a motion to join Indiana Farmers as a party defendant, which the Single Hearing Member later granted. On May 15, 2009, the parties filed their Joint Stipulations for Bifurcated Hearing, which presented the following issues to be decided: (1) “[w]hether the Indiana Worker's Compensation Board has exclusive jurisdiction to decide insurance coverage disputes in cases involving alleged work-related injuries;” and (2) “[w]hether [Indiana Farmers'] termination by cancellation if [sic] its Worker's Compensation insurance policy covering the employees of [CCHI] is effective as to employees of the insured covered thereby.” Appellant's Appendix at 60.

After a hearing, the Single Hearing Member concluded that Indiana Farmers did not insure Jones on the date of his accident. Specifically, the order of the Single Hearing Member stated:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. Ind.Code 22-3-5-5(c)(5) reads as follows:

Any termination of this policy by cancellation shall not be effective as to employees of the insured covered hereby unless at least ten (10) days prior to the taking effect of such cancellation, a written notice giving the date upon which such termination is to become effective has been received by the Worker's Compensation Board of Indiana at its office in Indianapolis, Indiana.

This statute is intended to protect workers and employers by requiring advanced notice to the employer that its policy is going to be cancelled. This allows the employer time to secure alternate coverage and gives the Worker's Compensation Board the opportunity to insure that the employer complies with the provisions of the Act.

2. [Indiana Farmers'] notice of cancellation issued on September 15, 2005 did not cancel the employer's policy as of September 13, 2005, as it purported to do.

3. However, the cancellation of the policy was effective ten (10) days after the Board received notice of the cancellation, on October 2, 2005.

4. Therefore, there was no coverage for [Jones's] accident on November 7, 2005 by Indiana Farmers.

5. The purpose of the statute is effectuated by running the cancellation ten (10) days from the date that the Board receives the notice because it allows the employer time to secure coverage and allows the Board an opportunity to insure that the employer purchases replacement coverage.

6. Furthermore, the hearing member finds the rationale in American Standard v. Rogers, 788 N.E.2d 873 (Ind.App.2003) and Krueger v. Hogan, 780 N.E.2d 1199 (Ind.App.2003) persuasive in that the court found that even though the insurance carrier did not comply with a similar notice requirement, that requiring strict compliance with the statute would not fulfill the intent of the legislature or the purpose of the statute since the insured had ample time to extend coverage or procure another policy (twenty-two days and forty-seven days respectively) before the date of accident for which coverage was disputed.

7. Similarly, in the instant case the employer had ample time to secure or extend coverage for its employees after the notice was sent and received by the Board.

8. Although Indiana Farmers is not liable for [Jones's] injuries, this does not necessarily mean that [Jones] is left without a remedy. [Jones's] employer is still responsible for [Jones's] damages if the accident is deemed compensable under the Indiana Worker's Compensation Act.

Appellant's Appendix at 6-7. On July 29, 2009, the Board, by a four to three decision, adopted the Single Hearing Member's decision.²

The issue is whether the Board correctly interpreted Ind.Code § 22-3-5-5(c)(5) of the Worker's Compensation Act (the “Act”). The Act provides compensation for personal injury or death by accident arising out of and in the course of employment. Ind.Code § 22-3-2-2. In evaluating the Board's decision, we employ a two-tiered standard of review. Triplett v. USX Corp., 893 N.E.2d 1107, 1116 (Ind.Ct.App.2008) trans. denied. First, we review the record to determine if there is any competent evidence of probative value to support the Board's findings. Id. We then assess whether the findings are sufficient to support the decision. Id.

“As to the Board's interpretation of the law, an appellate court employs a deferential standard of review to the interpretation of a statute by an administrative agency charged with its enforcement in light of its expertise in the given area.” Christopher R. Brown, D.D.S., Inc. v. Decatur County Memorial Hosp., 892 N.E.2d 642, 646 (Ind.2008). “An interpretation of a statute by an administrative agency charged with the duty of enforcing the statute is entitled to great weight, unless this interpretation would be inconsistent with the statute itself.” LTV Steel Co. v. Griffin, 730 N.E.2d 1251, 1257 (Ind.2000). “The Board will only be reversed if it incorrectly interpreted the [Act].” Brown, 892 N.E.2d at 646. However, the Act must be liberally construed to effectuate its humane purposes and doubts in the application of terms are to be resolved in favor of the employee. Christopher R. Brown, D.D.S., Inc., 892 N.E.2d at 649 (citing McQuade v. Draw Tite, Inc., 659 N.E.2d 1016, 1018 (Ind.1995)).

Jones argues that Indiana Farmers' notice of cancellation sent to the Board did not meet the requirements of Ind.Code § 22-3-5-5(c)(5) and that “the Board determined that strict compliance with I.C. § 22-3-5-5(c)(5) was not required and adopted a substantial compliance rationale by which it justified arbitrarily setting a new and different cancellation date for the [Policy].” Appellant's Brief at 9. Jones also argues that “[t]he Board cannot simply substitute its judgment for that of the legislature by dismissing the specific notice requirements and consequences inherent in the statute.” Id.

This case requires us to interpret Ind.Code § 22-3-5-5(c)(5). When interpreting a statute, we independently review a statute's meaning and apply it to the facts of the case under review. Bolin v. Wingert, 764 N.E.2d 201, 204 (Ind.2002). “The first step in interpreting any Indiana statute is to determine whether the legislature has spoken clearly and unambiguously on the point in question.” St. Vincent Hosp. & Health Care Ctr., Inc. v. Steele, 766 N.E.2d 699, 703-704 (Ind.2002). If a statute is unambiguous, we must give the statute its clear and plain meaning. Bolin, 764 N.E.2d at 204. A statute is unambiguous if it is not susceptible to more than one interpretation. Elmer Buchta Trucking, Inc. v. Stanley, 744 N.E.2d 939, 942 (Ind.2001).

If a statute is susceptible to multiple...