Summary
The Supreme Court of Kentucky held that an employer was estopped from asserting a workers’ compensation statute-of-limitations defense because its insurance carrier violated Kentucky claims-settlement regulations and reasonably induced the claimant’s late filing. The court affirmed the Court of Appeals and remanded the claim for consideration of its merits. The decision explains the interaction among KRS 342.040, KRS 342.185, KRS 342.267, and 803 KAR 25:240.
Topics
Practice areas
Questions Presented
- Whether the employer and its insurance carrier should be estopped from asserting the workers' compensation statute of limitations because the carrier engaged in unfair claims settlement practices that reasonably induced Craig's tardy filing.
- Whether 803 KAR 25:240 applies to a carrier's handling of claims for permanent income and medical benefits after temporary total disability benefits have ended.
- Whether the Supreme Court should remand for additional factual findings by the administrative law judge.
Holdings
- A workers' compensation carrier's violations of KRS 342.267 and 803 KAR 25:240 may provide grounds to estop the employer from asserting a limitations defense when the misconduct reasonably induces the worker to file late.
- The duties imposed by 803 KAR 25:240 apply not only to the initial claims for temporary total disability and medical treatment but also to claims for permanent income and medical benefits until the claim is finally resolved.
- A remand for additional findings under 803 KAR 25:240 was unnecessary because the evidence compelled findings that the carrier violated the regulation and that the violations reasonably induced Craig's late filing.
Key quotations
“Equity will not permit a carrier or its principal to blatantly disregard the obligations created by 803 KAR 25:240 and benefit from the misconduct.” (128)
“The regulation protects injured workers from forfeiting viable claims by helping to prevent carriers from engaging in conduct that "runs out the clock."” (127)
Factual background
Craig sustained a work-related back injury on April 8, 2003, and Hitachi voluntarily paid temporary total disability and medical benefits. After the employer terminated temporary total disability benefits on January 12, 2004, the Office of Workers' Claims sent Craig a letter informing him that he had two years to file a claim. During that period, the carrier obtained a permanent impairment rating, discussed the rating and potential settlement issues with Craig, but did not advise him whether his permanent-benefits claim was accepted or denied, identify additional information needed, or provide written reasons for denial. Craig reasonably believed the carrier would make a settlement offer and did not file until the carrier told him in February 2006 that the limitations period had expired.
Procedural history
The ALJ dismissed Craig's application for benefits after finding that he received the required limitations notice but failed to file within two years after termination of voluntary income benefits. The Workers' Compensation Board affirmed. The Kentucky Court of Appeals reversed, and the Supreme Court of Kentucky affirmed the Court of Appeals and remanded the claim to the ALJ to consider its merits.
Remand instructions
The claim was remanded to the administrative law judge to consider the merits of Craig's workers' compensation claim after applying the estoppel ruling.