Dale Brenon v. The 1st Advantage Corp, d/b/a Omega Insurance Services

FOR PUBLICATION
ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:
ROBERT M. EDWARDS, JR. KATHRYN A. MOLL
Jones Obenchain, LLP Nation Schoening Moll
South Bend, Indiana Fortville, Indiana
FILED
Jul 27 2012, 9:26 am
IN THE CLERK
COURT OF APPEALS OF INDIANA of the supreme court,
court of appeals and
tax court
DALE BRENON, )
)
Appellant, )
)
vs. ) No. 93A02-1202-EX-108
)
THE FIRST ADVANTAGE CORP. d/b/a )
OMEGA INSURANCE SERVICES, )
)
Appellee. )
APPEAL FROM THE WORKERS COMPENSATION BOARD
Cause No. C-177310
July 27, 2012
OPINION - FOR PUBLICATION
FRIEDLANDER, Judge
Dale Brenon appeals from a decision of the Worker’s Compensation Board of Indiana
(the Board) dismissing his Application for Adjustment of Claim (the Application) in favor of
The First Advantage Corporation d/b/a Omega Insurance Services (Omega). The sole issue
presented for our review is: Did the Board properly dismiss Brenon’s Application?
We reverse.
In August 2003, Brenon, then a resident of Wisconsin, was hired by Omega to
perform investigative services wherever Omega transacted business. On October 8, 2003,
Omega gave Brenon two investigative assignments that required him to travel to Indiana to
conduct surveillance. On October 9, 2003, Brenon, while driving in Lakeville, St. Joseph
County, Indiana, crossed the center line and caused a head-on collision with another vehicle.
On June 21, 2004, Brenon filed a worker’s compensation claim against Omega in
Wisconsin. In that action Omega challenged whether Brenon was acting in the scope of his
employment when the accident occurred, whether Omega had worker’s compensation
insurance coverage in Wisconsin, and whether the Wisconsin Worker’s Compensation
Division had jurisdiction over Brenon’s worker’s compensation claim. Ultimately, however,
Omega negotiated settlement agreements with two of its worker’s compensation carriers
(Zenith Insurance Company and Zurich American Insurance Company) for a total lump-sum
payment of $100,000 compensation to Brenon to settle his worker’s compensation claim in
Wisconsin, so those matters were never litigated. The limited compromise agreement
between Brenon and Omega and Zenith Insurance Company was presented to and approved
by the Wisconsin Department of Workforce Development, Worker’s Compensation Division
on August 10, 2006. Subsequently, Omega and Zurich American Insurance Company
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executed a “Full and Final Compromise Agreement” with Brenon that was presented to and
approved by the Wisconsin Department of Workforce Development, Worker’s Compensation
Division on January 11, 2007.
On October 3, 2005, prior to the acceptance of the settlement agreements in
Wisconsin, Brenon filed his Application with the Board seeking worker’s compensation
benefits from Omega for the same motor vehicle accident.1 On May 14, 2009, Omega filed a
motion to dismiss Brenon’s Indiana worker’s compensation claim, asserting that Brenon’s
Indiana claim was barred by the doctrine of res judicata and/or claim preclusion in light of
his submission to the jurisdiction of Wisconsin and the settlement of his worker’s
compensation claim in that State. On March 29, 2010, the single hearing member dismissed
Brenon’s claim without issuing findings of fact or conclusions of law. The Board adopted
the single hearing member’s decision in an order dated October 1, 2010.
Brenon appealed, and, in a memorandum decision, another panel of this court
remanded the matter to the Board for “a statement of the specific findings of basic fact which
support its findings of ultimate fact and conclusion of law.” Brenon v. Advantage Corp.,
93A02-1010-EX-1172, slip op. at 3 (Ind. Ct. App. April 15, 2011). The Board then
remanded the matter for a hearing before a single hearing member. The parties waived the
hearing before the single hearing member, but presented additional evidence and arguments
that were ultimately used by the single hearing member in crafting findings of fact and
conclusions of law.
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In Indiana, Omega had worker’s compensation coverage through Lumbermens Mutual Casualty Company.
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The single hearing member concluded that Brenon’s claim for worker’s compensation
was barred by the doctrine of collateral estoppel. The Board affirmed the single hearing
member’s decision. The Board’s findings and conclusions pertinent to our review follow:
13. Plaintiff Dale Brenon chose to first pursue his claim against his
employer Omega Insurance Services for worker’s compensation benefits in
Wisconsin. While his claim for worker’s compensation benefits against his
employer was pending in Indiana, he chose to conclude his litigation against
that employer in Wisconsin by entering into a settlement agreement which
according to Wisconsin law was submitted to the State of Wisconsin,
Department of Workforce Development, Worker’s Compensation Division for
its approval. That approval from the State of Wisconsin was issued and
plaintiff received $100,000.00 from his employer and its worker’s
compensation insurance carriers in Wisconsin. Thus, plaintiff Dale Brenon
chose to submit to the jurisdiction of Wisconsin and its worker’s compensation
system and laws in concluding his claim in Wisconsin through settlement
approved by the Wisconsin Worker’s Compensation Division.
14. In both Wisconsin and Indiana, plaintiff is making a claim for
worker’s compensation benefits for the same motor vehicle accident and both
claims are against his employer Omega Insurance Services which was the
defendant or respondent both in Wisconsin and in Indiana. Different insurance
carriers for Omega Insurance Services are involved in each state.
15. Indiana Courts have recognized that insurance is defined as a
contract whereby one undertakes to indemnify another against loss, damage or
liability arising from an unknown or contingent event. Thus, Mr. Brenon’s
claim for worker’s compensation benefits is against defendant employer
Omega Insurance Services and not against individual insurance carriers. . . .
16. The issue of whether the payment or settlement of a worker’s
compensation claim under the statute of one state bars a claim for worker’s
compensation benefits in Indiana is a matter of first impression as the Indiana
Workers Compensation Act and Indiana case law is silent on this question.
17. Courts in other states have recognized that when an employer or
its worker’s compensation insurance carrier through unilateral initiative of the
employer and/or the worker’s compensation carrier and without the
employee’s knowledge or understanding, makes voluntary payments, those
voluntary payments do not bar the employee from making a worker’s
compensation claim for the same injury under the law of another state. See,
Industrial Track Builders of America v. Lemaster, 429 S.W.2d 403 (Ky. 1968).
18. In this case, Mr. Brenon’s attorney and the insurance carriers for
Omega Insurance Services in Wisconsin negotiated a lump sum settlement of
the claim pending in Wisconsin and obtained approval of that settlement
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pursuant to pursuant to Wisconsin law. The Administrative Law Judge of the
State of Wisconsin, Department of Workforce Development, Workers
Compensation Division issued an Order approving the settlement. Thus, the
settlement of Mr. Brenon’s claim was not simply a “voluntary payment” as
discussed in the Lemaster case, supra.
19. Having submitted to the jurisdiction of Wisconsin and obtaining
approval of his settlement said approval being issued through an Award issued
by an Administrative Law Judge of the State of Wisconsin, Department of
Workforce Development, Workers Compensation Division, Brenon elected to
submit his worker’s compensation claim under Wisconsin’s jurisdiction.
20. Based upon the foregoing, the doctrine of collateral estoppel
would apply to preclude the re-litigation of this claim which plaintiff Dale
Brenon has already had a full and fair opportunity to litigate the other worker’s
compensation claim he filed in Wisconsin against the same parties on the same
claim. Plaintiff Dale Brenon had a full and fair opportunity to litigate the facts
and issues in his Wisconsin claim and chose to negotiate and enter into a
settlement agreement with Omega Insurance Services through its worker’s
compensation insurance carriers in Wisconsin whereby he was paid a lump
sum of $100,000.00. Thus, Mr. Brenon had a full and fair opportunity to
litigate the issues and facts in his Wisconsin claim before he proceeded to
negotiate a settlement of that claim for a lump sum payment to him. Mr.
Brenon and his attorney acquiesced to the jurisdiction of Wisconsin in seeking
approval of the Administrative Law Judge of the State of Wisconsin,
Department of Workforce Development, Workers Compensation Division
pursuant to the Wisconsin worker’s compensation laws. . . .
Appellant’s Appendix at 7-10. Brenon now appeals the Board’s dismissal of his claim against
Omega for worker’s compensation benefits in Indiana.
When the Board’s decision is challenged as contrary to law, the reviewing court
conducts a two-part inquiry into “the sufficiency of the facts found to sustain the
decision and the sufficiency of the evidence to sustain the findings of facts.” Ind.
Code Ann. § 22-4-17-12(f) (West, Westlaw current through legislation effective May
31, 2012). Where, as here, the facts are not in dispute and the matter for our review is
primarily a legal question, we do not grant the same degree of deference to the
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Board’s decision as we would if the issue were of fact, because law is the province of
the judiciary and our constitutional system empowers the courts to draw legal
conclusions. Roberts v. ACandS, Inc., 806 N.E.2d 1 (Ind. Ct. App. 2004) (citing
Walker v. Muscatatuck State Dev. Ctr., 694 N.E.2d 258 (Ind. 1998)).
We begin by considering the case of Indus. Track Builders of Am. v. Lemaster, 429
S.W.2d 403 (Ky. Ct. App. 1968), that the Board relied upon for the proposition that
unilateral, voluntary payments made by the employer or employer’s worker’s compensation
insurance carrier to and without the knowledge or understanding of the injured employee is
the only circumstance where an employee can pursue a worker’s compensation claim for the
same injury under the laws of another state. Applying that principle to the facts of this case
the Board concluded that payment pursuant to the settlement agreements did not constitute
voluntary, unilateral payments, and therefore, Brenon was foreclosed from pursuing his
worker’s compensation claim in Indiana.
Having reviewed the Lemaster case, we conclude that it stands for more than the
proposition relied upon by the Board. In that case, Lemaster was a resident of Indiana but his
employer was located in Kentucky. The employer had construction projects in Indiana as
well as Kentucky and Lemaster worked about 75% of the time in Indiana. Lemaster was
injured while working on a construction project in Indiana. Lemaster signed an agreement
with his employer’s worker’s compensation carrier to accept a stated amount of
compensation in accordance with the worker’s compensation laws of Indiana. He then filed a
claim for worker’s compensation benefits in Kentucky. The worker’s compensation board in
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Kentucky dismissed Lemaster’s claim, finding that he had submitted to the jurisdiction of
Indiana.
The Kentucky Court of Appeals reviewed the history of the law with respect to
whether an award of worker’s compensation benefits in one state precludes recovery in
another state. The court found that the crux of the argument was whether, under the Full
Faith and Credit Clause of the United States Constitution, an award in one state precludes
recovery in another state. The Lemaster court observed that starting with Magnolia
Petroleum Co. v. Hunt, 320 U.S. 430 (1943), the U.S. Supreme Court suggested that an
award of worker’s compensation benefits in Texas precluded recovery of a second and
additional award in Louisiana for the same injury. The Lemaster court further observed,
however, that four years later, in Indus. Comm’n of Wis. v. McCartin, 330 U.S. 622 (1947),
the U.S. Supreme Court seemingly overruled Magnolia Petroleum, and answered the same
question by considering the intent of the worker’s compensation statutes and judicial
decisions in the state of the first award. Indus. Track Builders of Am. v. Lemaster, 429
S.W.2d 403 (citing Bowers v. Am. Bridge Co., 127 A.2d 580 (N.J. Super. 1956)). The
generally accepted view has thus become that “‘unless the statute or decisions of the state of
the first award expressly disallow a later award in another state which has an adequate
interest in the subject matter such an award may be made if credit is given for payments on
the first award.’” Indus. Track Builders of Am. v. Lemaster, 429 S.W.2d at 406 (quoting
Bowers v. Am. Bridge Co., 127 A.2d at 589).
Contrary to the Board’s conclusion, the issue cannot be disposed of simply because
Brenon’s receipt of worker’s compensation benefits was the result of negotiated settlement
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agreements rather than a unilateral, voluntary payment by Omega and Zenith Insurance
Company/Zurich American Insurance Company. The statutes and judicial opinions of the
state of the first award must be examined to determine if they expressly disallow a later
award in a different state.
Here, the parties have not provided us with any analysis of judicial opinions or
statutes in Wisconsin regarding whether such preclude an additional award in another state.
Our research has likewise revealed no judicial opinions or statutes in Wisconsin (or Indiana
for that matter) that prohibit claims in multiple states.
Our best guidance comes from the McCartin case, cited in Lemaster, which is
procedurally similar to the situation presented in this case. In McCartin, as in this case, the
employer and employee entered into a negotiated settlement agreement that was approved by
the Industrial Commission of Illinois. That settlement agreement, like the settlement
agreements in this case, expressly reserved the employee’s right to assert any claims the
employee might have under the Worker’s Compensation Act of the state of Wisconsin. The
U.S. Supreme Court found that the reservation clause was consistent with the worker’s
compensation act of Illinois in that the type of award (i.e., through a settlement agreement)
did not foreclose an additional award under the laws of another state. The employee could
therefore pursue a worker’s compensation claim in Wisconsin.
Here, the settlement agreements executed and approved in Wisconsin specifically
preserved Brenon’s claims against Omega in Indiana. To be sure, the limited compromise
agreement between Brenon and Omega and Zenith Insurance Company provided:
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1) It is expressly understood and agreed that this compromise agreement does
not provide a release or compromise of liability to Omega Insurance Services
solely to the extent that Omega Insurance Services has coverage for payment
of benefits pursuant to any worker’s compensation insurance policy provided
by Kemper Insurance Companies, Zurich Insurance Companies, or any other
workers compensation insurer not previously released herein.
Appellant’s Appendix at 23. Further, the following language was included in the “Full and
Final Compromise Agreement” between Brenon and Omega and Zurich American Insurance
Company:
The parties further stipulate and agree that this full and final compromise
agreement closes out any and all claims or potential claims the applicant has
against only these respondents, (OMEGA INSURANCE SERVICES, THE
FIRST AMERICAN CORP., FIRST ADVANTAGE CORP., ZURICH
AMERICAN INSURANCE COMPANY), in all jurisdictions including, but
not limited to Wisconsin, Indiana and Florida. In consideration for the above
settlement, applicant has agreed to withdraw his Florida claim and will not
amend his pending Indiana claim to include The First American Corporation or
Zurich or its affiliated companies. The only claims that remain open would be
claims for which there is insurance coverage for the employer by insurance
companies not related to or owned by Zurich. All other claims are hereby
closed. For example claims against Lumbermens or Kemper shall remain open
in all jurisdictions.
Id. at 34. We have found no law, judicial or otherwise, that is inconsistent with the
reservation clauses. Pursuant to the terms of the settlement agreements, Brenon can pursue
his claim in Indiana and the Board is free under the Full Faith and Credit Clause to grant an
award of compensation in accord with the worker’s compensation laws of the State of
Indiana. See Indus. Comm’n of Wis. v. McCartin, 330 U.S. 622.
We further note that the Board made no findings with respect to these reservation of
rights clauses found in the Wisconsin settlement agreements. Further, no challenge has been
made to the validity and/or enforceability of the settlement agreements. Omega was part of
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the negotiations that resulted in the settlement agreements and could have sought to include a
provision therein that would have precluded Brenon from pursuing his worker’s
compensation claim in Indiana. Instead, the settlement agreements that were negotiated by
Omega contained express provisions preserving Brenon’s right to pursue his worker’s
compensation claim in Indiana.
We further conclude that the Board erred in relying upon the doctrine of
collateral estoppel as a basis for dismissing Brenon’s claim. “Collateral estoppel
operates to bar a subsequent relitigation of the same fact or issue where that fact or
issue was necessarily adjudicated in a former suit and the same fact or issue is
presented in the subsequent lawsuit.” Connecticut Indem. Co. v. Bowman, 652 N.E.2d
880, 882 (Ind. Ct. App. 1995) (quoting Sullivan v. American Cas. Co. of Reading, Pa.,
605 N.E.2d 134, 137 (Ind. 1992)).
The Board concedes in its brief that there was no adjudication of facts leading to the
award of benefits in Wisconsin. Indeed, the award of benefits to Brenon was pursuant to
negotiated settlement agreements executed between Brenon and Omega and its worker’s
compensation insurance carriers in Wisconsin. Brenon did not have a full and fair
opportunity to litigate the issues in Wisconsin. There is therefore no basis for application of
the doctrine of collateral estoppel.
In summary, the Board’s decision dismissing Brenon’s claim for worker’s
compensation benefits is not sustainable under the doctrine of collateral estoppel, the laws of
the State of Wisconsin, or Supreme Court precedent. Further, the Board’s decision gave no
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effect to the reservation of rights clauses contained in the settlement agreements. We
therefore reverse the Board’s dismissal of Brenon’s claim and remand for further
proceedings.
Judgment reversed.
MAY, J., and BARNES, J., concur.
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