Tuesday, July 7, 2015
To Have or Have Not
Two cases out of the Mississippi Supreme Court highlight this dichotomous phenomenon.
Milton Harper had worked as the managing partner and president of the Banks, Finley, White & Co. accounting firm. Harper never bought a comp policy to cover the firm's employees since he believed the company had less than five employees, and thus exempt from providing coverage under state law.
Harper died in July 2001 at the age of 49, after suffering a major stroke. His family filed a claim for workers' compensation death benefits, asserting that Harper's work-related stress caused his high blood pressure, which, in turn, caused his stroke.
An administrative judge approved an award of death benefits, finding that Harper's stroke arose out of and in the course of employment. A divided Mississippi Workers' Compensation Commission affirmed this finding, as did the Hinds County Circuit Court.
However, the circuit court judge ruled that Harper’s decision not to obtain workers’ compensation insurance disqualified his family from collecting any benefits for his death.
A divided Court of Appeals reversed the circuit court judge last April, finding that Harper had been wrong in believing the Banks firm had less than five employees.
Thus, the majority said the firm was required to have comp coverage, and that Harper had never executed a written waiver, which was required by Section 71-3-79 of the Mississippi Code.
The Banks firm then petitioned the Mississippi Supreme Court for review, which ruled that Section 71-3-79 was inapplicable to this case. "Because Banks did not have workers' compensation insurance coverage, there was no coverage for Harper to opt out of in writing as contemplated by Section 71-3-79," the majority said.
A slim majority of the court agreed that the Banks firm was liable for benefits, and said that Harper was an "employee," thus finding in favor of Harper's dependents.
But while the families of small companies in the state will still be able to collect benefits, corporate officers may be held personally liable to the employee's family because of their omission, which the court concluded in a separate case.
Ray Dillard had gotten hurt while working for Dixie Products Inc. and he secured an award of temporary total disability benefits in 1997.
Dillard's attorney then filed a lis pendens notice encumbering the title to several properties owned by Dixie's president and majority shareholder, Larry Jarret, since Dixie had no workers' compensation insurance coverage and allegedly lacked the assets to pay Dillard's benefits.
The lis pendens was released in 2001, since Dillard had no judgment against Jarret to justify encumbering his property.
An administrative judge later determined that his total disability was going to be permanent, and Dixie never appealed this ruling.
After Dillard died, his estate filed a complaint in the Pontotoc County Circuit Court seeking to collect the PTD award from Jarret personally. The judge granted summary judgment in favor of the estate, finding Jarret and Dixie were jointly and severally liable for $223,000 in benefits to Dillard's estate.
The Court of Appeals reversed, finding the estate should have raised its arguments about Jarret's personal liability during the proceedings before the Workers' Compensation Commission. Since it didn't, the court said its arguments were barred by principles of res judicata.
The appellate court also said the estate's claim was time-barred, as more than seven years had elapsed between the date of the PTD award and the date of the estate's motion to enforce it.
On Thursday, the Supreme Court unanimously reversed the Court of Appeals.
"(A)s Dixie's president at the time of the injury, Jarrett, by statute, is liable to Dillard," the high court explained. The court said the comp judgment against Dixie was "tantamount to a judgment against Jarrett personally," and so Dillard could seek enforcement of the judgment.
The court also said the enforcement action was not time-barred since it was filed in 2009, just over a year after the administrative judge entered the award of PTD benefits.
Work comp - sometimes its great, sometimes its not.
The lesson: employers don't guess about whether or not someone is or isn't an employee, because you probably don't understand the law; and if you don't understand the law your family could lose everything.
And isn't that what the "grand bargain" was intended to avoid?
To read the court's decision in the Harper case, click here.
To read the court's decision in the Jarrett case, click here.