MO: Court Sanctions Employer For Seeking Injunctive Relief From Temporary Award

MO: Court Sanctions Employer For Seeking Injunctive Relief From Temporary Award

The western court of appeals recently sanctioned an employer $81,609 in attorney’s fees for making a constitutional challenge that it had a right to appeal a temporary award, contrary to a state rule and unfavorable precedent.   The case is Motor Control Specialties, Inc. And the Ohio Casualty Ins. Co. v.  Labor and Industrial Relations Commission, State of Mo., Stephen M. Petelik, WD 71586 (Mo. App. 11-9-10).

This Commission previously sanctioned the employer $228,000 for not complying with a temporary award.

Petelik reached the court of appeals 3 times since 2006.   The court originally dismissed the appeal in 2006 due to lack of jurisdiction because the award was not final and the employer was not denying all liability.  The employer sought a declaratory judgment that a state rule limiting appeals until a “final” award has been entered is unconstitutional.  The court of appeals in 2008 reversed a dismissal of a declaratory judgment. The employer appealed a third time in 2010 when the trial court found the state rule limiting appeals constitutional and awarded attorney’s fees.

The case involved a 2003 back injury, in which the 41-year old claimant was found in a final 2008 award to be permanently and totally disabled for low back syndrome following a fusion.  The employer did not dispute accident and had made nominal medical payments, but disputed causation based on late notice and belated symptoms until claimant went on a fishing trip several days later.  The employer waived defenses to any factual claims in the petition as a result of a late answer.  The administrative law judge in the final award opined the employer’s defenses were questionable, but not unreasonable, and did not awarded attorney’s fees.  The Division doubled an award for non-compliance of the original temporary award ordering benefits and medical treatment, resulting in a final award of permanent total at $388.78 per week for life, future medical, $457,845 of past accrued benefits, including about 238 weeks of TTD and $272,000 in medical and penalties.   Claimant went into bankruptcy following the accident, and obtained a two-level fusion through his wife’s insurance.

The court of appeals affirmed the denial of declaratory judgment; based on de novo review the trial court did not misapply the law.  The employer has no constitutional right for review of intermediate decision making, and the rule did not thwart judicial review of a final decision.

The employer argued that the statute to allow review of “any” awards conflicted with a rule limiting review only of final awards.  The court construed legislative intent through other provisions to distinguish between final and temporary awards.   The court noted that §287.490 only provided review of “final awards” to the court of appeals, and it was “absurd” to allow review of temporary awards to the Commission and not to the court of appeals.  The court noted the statute distinguished when an ALJ could modify a temporary or final award.

 The trial court did not exceed its mandate to award attorney’s fees, when the mandate was a “general” mandate.  The award of attorney’s fees fell within an exception to the general American rule based on the collateral litigation exception.  Judge Newton considered the “equities” between the parties supported the award of attorney’s fees, the employer/insurer was “well-funded” and the claimant was not; the employer breached a statutory duty and “reneged” to pay an injured worker who receives an award; and the employer pursued injunctive relief instead of complying with the temporary award.  Claimant was deemed a “prevailing party” as the employer originally named him as a party, but then dismissed him.

Source: Martin Klug, Huck, Howe & Tobin. Read Martin Klug’s Mo. Workers’ Comp Alerts