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August 31, 2018 201592281

Commonwealth of Kentucky 

Workers’ Compensation Board

 

 

 

OPINION ENTERED:  August 30, 2018

 

 

CLAIM NO. 201592281

 

 

MARIA GRANT                                                                                        PETITIONER

 

 

 

VS.                           APPEAL FROM HON. TANYA PULLIN,

                                        ADMINISTRATIVE LAW JUDGE

 

 

 

NEWGISTICS, ET AL AND

HON. TANYA PULLIN,

ADMINISTRATIVE LAW JUDGE                                                  RESPONDENTS

 

 

OPINION

DISMISSING

AND ORDER

                                                                * * * * * *

 

 

BEFORE:  ALVEY, Chairman, STIVERS and RECHTER, Members. 

 

ALVEY, Chairman.   Maria Grant (“Grant”) appeals from the November 22, 2017 Opinion and Order on Bifurcated Issue, and the March 20, 2018 Opinion, Award and Order rendered by Hon. Tanya Pullin, Administrative Law Judge (“ALJ”).  In the November opinion, the ALJ found Grant was employed by Corporate Resource Services (“CRS”) at the time of her injury and that Newgistics, Inc. (“Newgistics”) did not bear any liability pursuant to KRS 342.610(2).  The ALJ further held the question of whether the Kentucky Insurance Guaranty Association (“KIGA”) is liable for payment is controlled by KRS 304.36 and is, therefore, outside her jurisdiction.  In the March 2018 opinion, the ALJ awarded Grant temporary total disability (“TTD”) benefits, permanent partial disability (“PPD”) benefits and medical benefits against her Employer, CRS, and/or their insurer.  No petition for reconsideration was filed by either party. 

                        On appeal, Grant argues the ALJ erred by misinterpreting KRS 342.610(2) and should have held Newgistics liable as the up-the-ladder employer.  Grant also argues the ALJ erred in finding she did not have jurisdiction to address the issue of KIGA’s liability under KRS 342.325.  Grant additionally argues the ALJ erred by failing to determine the Workers’ Compensation Act provided a mechanism to hold KIGA liable for her benefits.  Grant argues the bar on benefits due to residency limitations set forth in KRS 304.36 violates the Privileges and Immunities Clause of the U.S. Constitution.  In her supplemental brief addressing the Board’s June 21, 2018 opinion, Grant argues CRS is not an indispensable party to this appeal.  Because we determine CRS is an indispensable party which Grant failed to name in her appeal, this Board is without jurisdiction to rule on the merits and this appeal is dismissed.

                        Grant filed a Form 101 alleging she injured her hand on March 4, 2015.  Grant named CRS as the Defendant/Employer and Lumbermen’s Underwriting Alliance (“LUA”) as its workers’ compensation insurer.  Grant identified Newgistics and the KIGA as additional defendants since LUA is insolvent.  In the Form 104, Grant indicated she worked for CRS, a temporary help service, as a machine operator from May 1, 2014 to March 4, 2015. 

                        Both Newgistics, as insured by Chubb Group of Insurance Companies, and KIGA filed a Form 111 denying Grant’s claim.  Neither CRS nor LUA filed a Form 111, or participated in this claim.  On May 31, 2017, the Commissioner of the Department of Workers’ Claims (“the Commissioner”) issued two certifications of coverage.  The Commissioner certified an insurer, LUA, reported a policy of workers’ compensation insurance was in effect for CRS on the alleged injury date of March 4, 2015.  The Commissioner also certified an insurer, Chubb Indemnity Insurance Company, reported a policy was in effect for Newgistics on the alleged injury date of March 4, 2015.

                        KIGA submitted bankruptcy documents indicating CRS and its subsidiaries ceased operations on March 27, 2015 and filed for Chapter 11 Bankruptcy protection in New York in July 2015.  KIGA also submitted documents filed by CRS with the Kentucky Secretary of State, including the May 2011 Certificate of Authority and its Annual reports from 2011, 2012 and 2013.  Those documents reflect CRS was organized in Delaware on December 15, 2009.  CRS maintained its principal office in New York.  Likewise, the annual reports listed New York as the location for all CRS officers.  CRS listed with the Kentucky Secretary of State a registered agent company in Kentucky as its registered agent. 

                        The claim was bifurcated on the issues of whether Newgistics is an up- the-ladder contractor and whether the KIGA bears any potential liability.  

                        Grant testified by deposition on May 23, 2017, and at the hearing held September 28, 2017.  At the deposition, Grant testified she resides in Cincinnati, Ohio.  Grant began working for CRS, a temporary agency, in May 2014.  Grant was placed at Newgistics, and worked as a forklift operator at the time of the March 4, 2015 injury.  Grant indicated Newgistics is a fulfillment center for various companies such as Rite Aid, Fitgeek, Geek Squad, Cooking.com, and Simples.  Grant explained Newgistics contained eight departments and, at the time of her injury, she was working in the Rite Aid department.  Grant operated a sit down or standing forklift to pull orders.  Grant testified that on March 4, 2015, she injured the long and small fingers of her left hand when it was crushed between a metal rack and a part of the forklift.  Grant indicated she reported her injury to her shift lead at Newgistics, the safety coordinator, and the on-site coordinator for CRS.  Grant ultimately underwent three surgeries for her work injury.  Grant confirmed LUA paid TTD benefits and medical expenses until July 2016.  Grant also indicated she has received a check for a small amount from KIGA for medical and mileage reimbursement.   Grant stated she neither returned to Newgistics, nor has she been assigned to another work site by CRS since the work accident.

                        At the hearing, the ALJ noted Grant submitted a ledger indicating LUA paid her TTD benefits from March 2015 through July 20, 2016 and medical benefits for treatment up through July 8, 2016.  Grant testified she responded to a CRS advertisement for employment opportunities on Craigslist.  Grant went to the CRS office in Florence, Kentucky where she completed an application, watched safety and training videos, and attended an orientation.  Grant was assigned to Newgistics located in Hebron, Kentucky.  When she reported to work at Newgistics, Grant completed a time sheet at the door for CRS and also logged onto Newgistics computers to clock in.  Grant testified Newgistics’ employees trained her and controlled her day-to-day activities.  Grant reported to a Newgistics’ supervisor if she made a mistake.  However, she also reported to the CRS on-site supervisor for issues that could not be worked out with Newgistics.  Grant estimated there was a CRS on-site supervisor present at the Newgistics facility “at least half the time.” The CRS on-site supervisor hand-delivered paychecks.  Grant testified she reported her March 4, 2015 work injury to her team leader and her supervisor, both Newgistics’ employees.  Grant confirmed she resided in Cincinnati, Ohio throughout the period she worked at Newgistics. 

                        In the November 22, 2017 opinion, the ALJ determined Newgistics does not have up-the-ladder liability pursuant to KRS 342.610(2).  That statute reads, “A contractor who subcontracts all or any of the contract and his or her carrier shall be liable for the payment of compensation to the employee unless the subcontractor primarily liable for the payment of such compensation has secured the payment of compensation as provided for in this chapter.”  The ALJ noted the Commissioner certified an insurer reported CRS had a workers’ compensation insurance policy effective on the date of injury, March 4, 2015.  LUA paid TTD benefits and medical expenses after Grant’s work injury.  Therefore, the ALJ found that the subcontractor, CRS, “secured payment of compensation” as required by KRS 342.610(2) by having a valid workers’ compensation insurance policy on the date of injury.  Accordingly, the ALJ determined there was no basis for “up-the-ladder” liability to Newgistics under KRS 342.610. 

                        The ALJ then determined CRS was a temporary help service and Grant was a temporary worker pursuant to KRS 342.615.  The ALJ found Newgistics was the client of CRS.  Pursuant to KRS 342.615, the ALJ found CRS was Grant’s employer, rejecting the argument she was a leased employee.  Because the ALJ found Grant was employed by CRS on the date of injury, she dismissed Newgistics as a Defendant.

                        In addressing whether KIGA has any liability, the ALJ noted the ALJ’s jurisdiction is limited pursuant to KRS 342.325 to “all questions arising under this chapter, if not settled by agreement of the parties interested therein, with the approval of the [ALJ], shall be determined by the [ALJ] except as otherwise provided in this chapter.”  The ALJ stated whether KIGA is liable for payment is controlled by KRS 304.36 and is, therefore, outside the jurisdiction of the ALJ.  Therefore, the ALJ dismissed the KIGA as a Defendant.  The ALJ noted any dispute between Defendant Employer and KIGA or Plaintiff and KIGA is properly reserved in Circuit Court. 

                        The ALJ dismissed Newgistics and KIGA as parties.  The ALJ granted Grant and CRS fifteen days to file a motion to request or waive an additional formal hearing. 

                        On December 7, 2017, Grant filed a Notice of Appeal from the November 22, 2017 Opinion and a motion to waive her right to a second formal hearing.  This Board, in an opinion rendered December 21, 2017, dismissed Grant’s appeal since the November 2017 opinion did not represent a final and appealable order.   

                        Subsequently, the ALJ issued an Opinion, Award and Order on March 20, 2018.  The ALJ began by noting she previously dismissed KIGA and Newgistics as parties, and CRS, who has not participated in any manner in the claim, remained as the sole defendant.  Since CRS failed to file a Form 111, the ALJ found it had admitted the allegations contained in Grant’s Form 101, including whether she sustained a work-related hand injury on March 4, 2015.  The ALJ determined Grant’s average weekly wage.  The ALJ found Grant is entitled to PPD benefits based upon a 20% impairment rating and found she does not retain the physical capacity to return to the type of work performed at the time of injury.  The ALJ awarded TTD benefits, PPD benefits and medical benefits against CRS, and/or its insurer.  No petition for reconsideration was filed.

            Grant filed a notice of appeal on March 23, 2018 and an amended notice of appeal on April 3, 2018.  In both notices, Grant listed the style of the case as, “Maria Grant v. Newgistics, et al. and Administrative Law Judge Tonya Pullin.”  The body of the amended notice states, “Plaintiff, Maria Grant, by and through counsel, hereby gives notice that she appeals the Opinion, Award and Order dated March 20, 2018 and the Opinion on Bifurcated Issues dated November 22, 2017.”  Counsel for Grant certified a copy of the notice was sent to counsel for KIGA and Newgistics, CRS, the Department of Workers’ Claims, and the ALJ.            KIGA filed a motion to be dismissed since the ALJ had previously dismissed it as a party in the November 2017 opinion and awarded benefits against Grant’s employer, CRS, in the March 2018 opinion.  KIGA also states, “[m]ore importantly KIGA must be dismissed as a party as it was never named as a party in the Notice of Appeal.”  KIGA asserts listing respondents as, “Newgistics, et al. and Administrative Law Judge Tonya Pullin” does not comply with 803 KAR 25:010§21(1)(c)2.  Newgistics also filed a motion to dismiss since the ALJ previously dismissed it as a party to the claim in the November 2017 opinion.    

            This Board issued an Order on June 21, 2018, addressing KIGA’s and Newgistics’ motions to dismiss.  Pursuant to 803 KAR 25:010 §(2), this Board dismissed KIGA as a party because it was not named in the appeal.  The Board noted the regulations require KIGA to be specifically named as a party, and the fact that its counsel may have been served with a Notice of Appeal is not sufficient to join it as a party to the appeal.  The order also referenced CR 73.03(1), which states, “The notice of appeal shall specify by name all appellants and all appellees (“et al.” and “etc.” are not proper designation of parties) . . . .  Based upon the above, the Board held the designation of “Newgistics, et al.” is insufficient to name KIGA as a party to the appeal and sustained its motion to be dismissed as a party to the appeal.  The Board, however, overruled Newgistics’ motion since it was specifically named as a party to the appeal. 

            The Board further stated, “We are compelled to note that in her Notice of Appeal, Grant did not name CRS as a party to the appeal.  The ALJ’s March 20, 2018, Opinion, Award, and Order awarded benefits to be paid by CRS.”  Therefore, the Board ordered the parties to “address whether CRS was a necessary and indispensable party to this appeal and whether Grant’s failure to name CRS as a party to the appeal necessitates dismissal of her appeal.”  

                        On appeal, Grant argues the ALJ misinterpreted KRS 342.610(2) and should have held Newgistics liable as the up-the-ladder employer.  Grant stresses she stopped receiving compensation once LUA became insolvent and will in all likelihood receive no further payments without a favorable ruling by the Board.  Grant argues the ALJ misinterpreted the language of KRS 342.610(2) by concluding insurance coverage at the time of her injury satisfies the statutory requirement of payment of compensation.  Grant argues this fact does not absolve Newgistics of the ongoing responsibility for compensation to be paid, noting PPD benefits are reasonably expected to last at least 425 weeks.  Grant states, “Assuming arguendo that all KRS 342.610(2) requires is that a contractor has their subcontractors obtain insurance coverage, then the intent must be that there is ongoing coverage, otherwise the payment of compensation ceases without recourse to the contractor.  The better reading of the statute would be that the contractor is liable if the coverage lapses and payment of compensation is required.”  Grant states this reading is more consistent with the Act’s purpose of protecting injured workers. 

                        Grant argues the ALJ erred by “not determining that Chapter 342 provided a mechanism for her to find that KIGA should pay on this claim.”  Grant asserts the ALJ had jurisdiction to address the issue of KIGA’s liability under KRS 342.325 since the question had to be determined in conjunction with the claim against other parties and could only be brought before an ALJ pursuant to KRS 342.690.  Grant asserts by not addressing this issue, she was denied the opportunity to obtain relief under the Act.  Grant also argues KIGA’s stated reason for finding it was not obligated to pay her claim, i.e., that she is not a Kentucky resident, is inconsistent with the Workers’ Compensation Act.  She notes the Act itself contains no residency requirements for benefits. She also notes the principal that Kentucky statutes shall be liberally construed with a view to carry out their objective.  Grant asserts the residency exclusion contained in KRS 304.36-050(6)(a) conflicts with the legislative intent and practical application of Chapter 342.  When statutes are in apparent conflict, the one containing positive language relating to the particular subject should take precedence over a provision dealing with a matter in general terms. 

                        Grant argues the bar on benefits due to residency of KRS 304.36 violates the Privileges and Immunities Clause of the U.S. Constitution.    

                        In her supplemental brief addressing the Board’s June 21, 2018 opinion, Grant argues CRS is not an indispensable party to the appeal.

                        We first address whether CRS is an indispensable party to this appeal.  As noted above, this Board rendered an Order on June 21, 2018.  In that order, the Board held Grant failed to name CRS as a party to the appeal.  The Board directed the parties to address whether CRS was a necessary and indispensable party to this appeal and whether Grant’s failure to name CRS as a party to the appeal necessitates dismissal of her appeal. 

            We note 803 KAR 25:010§2(3)(a) requires all persons shall be joined as defendants against whom the ultimate right to relief pursuant to the Act may exist, whether jointly, severally, or in the alternative in adjustments of claims.  Within thirty days of a final award, order or decision rendered by an ALJ, any aggrieved party may file a notice of appeal to the Board.  803 KAR 25:010 §22(2)(c) mandates the notice of appeal denote the following information:  

(c)        The notice of appeal shall:

 

1.         Denote the appealing party as the petitioner;


2.         Denote all parties against whom the appeal is taken as respondents;

 

3.         Name the administrative law judge who rendered the award, order, or decision appealed from as a respondent;

 

4.         If appropriate pursuant to KRS 342.120 or KRS 342.1242, name the director of the Division of Workers’ Compensation Funds as a respondent; and

 

5.         Include the claim number.

(Emphasis added.)

 

            An indispensable party to an appeal is one whose absence prevents the tribunal from granting complete relief among those already listed as parties.  See CR 19.01; CR 19.02; Braden v. Republic-Vanguard Life Ins. Co., 657 S.W.2d 241 (Ky. 1983); Milligan v. Schenley Distillers, Inc., 584 S.W.2d 751 (Ky. App. 1979).  “In determining whether a party is truly necessary on appeal, the court must ask ‘who is necessary to pursue the claim … If a party’s participation in the appeal is unnecessary to grant relief, and requiring its participation would force unnecessary expense on the party, then … such a party is not indispensable.’”  Browning v. Preece, 392 S.W.3d 388, 392 (Ky. 2013) quoting Nelson County Bd. of Educ. v. Forte, 337 S.W.3d 617, 625 (Ky. 2011).  The issue is whether the party has “an interest that would be affected by the decision of the Court of Appeals, regardless of whether that interest is affected adversely or favorably.” Id.  Even if a party is indispensable at a trial, pursuant to CR 19.02, the party is not necessarily indispensable to the appeal.  Nelson County Bd. of Educ. v. Forte, 337 S.W.3d at 624.  The failure to name an indispensable party in the notice of appeal is ‘a jurisdictional defect that cannot be remedied.’ ”  Id. at 626 (quoting City of Devondale v. Stallings, 795 S.W.2d 954, 957 (Ky. 1990).

            We find CRS is an indispensable party to Grant’s appeal and her failure to name it as a party to the appeal necessitates dismissal of her appeal.  The ALJ found CRS was Grant’s employer on the date of injury, and as such, it and its insurer are liable for the TTD benefits, PPD benefits and medical benefits awarded.  These findings are not disputed on appeal.  Although neither CRS nor LUA participated in the underlying claim, presumably due to its financial status, CRS maintains an interest affected by the ALJ’s determination and any decision by this Board.  Regardless of CRS’ financial status, it is the primary party responsible for Grant’s award of indemnity and medical benefits.  Additionally, assuming arguendo that Newgistics is found an up-the-ladder contractor liable for the payment of compensation as argued by Grant, neither it nor its insurer may recover the amount of such compensation paid and necessary expenses from the “subcontractor,” in this instance CRS, who is primarily liable.  Therefore, CRS has an interest that would be affected by the Board’s decision and is an indispensable party to the appeal.  The failure to name an indispensable party is a jurisdictional defect fatal to an appeal. Commonwealth of Kentucky, Department of Finance, Division of Printing v. Drury, 846 S.W.2d 702 (Ky. 1993).  Consequently, we are without jurisdiction to rule on the merits of the argument raised by Grant on appeal.

            Accordingly, for the reasons stated herein, IT IS HEREBY ORDERED AND ADJUDGED the appeal filed by Grant is DISMISSED.

                        ALL CONCUR.

 

 

                                                                     _____________________________________

                                                                     MICHAEL W. ALVEY, CHAIRMAN

                                                                     WORKERS’ COMPENSATION BOARD

 

 

COUNSEL FOR PETITIONER:

 

HON PETER A TRIPP

2500 CHAMBER CENTER DR, STE 300

FORT MITCHELL, KY 41017

 

COUNSEL FOR NEWGISTICS:

 

HON BRIAN D WIMSATT

303 NORTH HURSTBOURNE PKWY, STE 110

LOUISVILLE, KY 40222

 

COUNSEL FOR KIGA:

 

HON CHARLES JOBSON

6006 BROWNSBORO PK BLVD, STE C

LOUISVILLE, KY 40207

 

RESPONDENT:

 

CORPORATE RESOURCE SERVICES

160 BROADWAY, STE 1300

NEW YORK, NY 10038

 

ADMINISTRATIVE LAW JUDGE:

 

HON TANYA PULLIN

657 CHAMBERLIN AVE

FRANKFORT, KY 40601