Miller v. KVC Behavioral Healthcare, Inc.

No. 123,376
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
CAROLYN L. MILLER,
Appellant,
v.
KVC BEHAVIORAL HEALTHCARE, INC.,
d/b/a KVC PRAIRIE RIDGE HOSPITAL,
Appellee.
SYLLABUS BY THE COURT
Since a preliminary hearing order under K.S.A. 44-534a in a workers
compensation case is nonbinding and essentially nonappealable, it does not satisfy the
elements of collateral estoppel and has no preclusive effect in subsequent proceedings.
Appeal from Wyandotte District Court; BILL KLAPPER, judge. Opinion filed January 28, 2022.
Reversed and remanded for further proceedings.
Robert A. Bruce and Daniel L. Doyle, of Doyle & Associates LLC, of Kansas City, for appellant.
Vaughn Burkholder and Eric Turner, of Foulston Siefkin LLP, of Overland Park, for appellee.
Before MALONE, P.J., POWELL and CLINE, JJ.
CLINE, J.: KVC Behavioral Healthcare, Inc. (KVC) terminated Carolyn Miller for
cause a few weeks after she filed a workers compensation claim. Miller sued KVC for
wrongful termination while her workers compensation claim was pending. After the
administrative law judge (ALJ) preliminarily determined KVC terminated Miller for
cause and denied Miller temporary workers compensation benefits, Miller and KVC
settled her workers compensation claim. The parties agreed the settlement only resolved
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the workers compensation claim, and Miller was not giving up any rights in her wrongful
termination civil suit.
After the workers compensation settlement, KVC amended its answer in the civil
suit to assert new affirmative defenses of res judicata, claim preclusion, collateral
estoppel, and issue preclusion. It then moved for judgment on the pleadings, asserting the
doctrine of collateral estoppel barred Miller's claim for wrongful termination because the
issue of whether KVC terminated Miller for cause was already litigated and decided as
part of her workers compensation claim. The district court granted KVC's motion and
dismissed Miller's civil suit.
We find the court erred in dismissing Miller's civil suit because the ALJ's order
entered under K.S.A. 2019 Supp. 44-534a was preliminary, nonbinding, and
nonappealable, and thus could not satisfy the requirements of collateral estoppel. We
reverse the dismissal of Miller's civil suit and remand the matter for further proceedings.
FACTUAL BACKGROUND
Miller worked for KVC as a behavioral health tech, assisting children with
developmental and behavioral issues. On May 23, 2019, she injured her back at work
while playing with the children in a "'bouncy house'" during an event to celebrate the end
of the school year. She informed her supervisor of the injury and received authorized
medical treatment as a result. She was kept off work for two days and given work
restrictions.
After Miller returned to work, she alleges one of her supervisors repeatedly asked
her about the workers compensation benefits she was receiving. On June 18, 2019, Miller
says he became visibly upset after she told him she was still receiving benefits checks.
Later that day, Miller's direct supervisor, Tanise Smith, called Miller into a meeting and
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terminated her employment. Smith said KVC was discharging Miller for an incident that
occurred on May 4, 2019, and three absences, all of which occurred before Miller's work
injury.
Miller sued KVC for wrongful termination on August 13, 2019, alleging KVC
discharged her because she exercised her rights for workers compensation benefits under
the Kansas Workers Compensation Act. KVC answered on October 15, 2019, generally
denying Miller's claim.
On October 23, 2019, a preliminary hearing was held under K.S.A. 2019 Supp.
44-534a in Miller's workers compensation case to address Miller's eligibility for
temporary total disability (TTD) compensation. The ALJ found KVC legitimately
terminated Miller for cause and denied her request for TTD benefits. In support of its
findings, the ALJ noted that in the two years before Miller's injury, KVC had written up
Miller several times for workplace violations including poor attendance, insubordinate
behavior, and failure to follow protocol with a disruptive student. The ALJ also pointed
out Miller had an adversarial relationship with Smith.
The ALJ found that the day before the accident, Smith recommended to her
supervisors that Miller be terminated for excessive absences, the May 4, 2019 incident,
and Miller's resistance to "'coaching'" for the May 4, 2019 incident. Smith lacked the
authority to terminate Miller, so her recommendation was passed on to KVC's executive
director and others in the chain of command for an ultimate decision. The ALJ
acknowledged the timing of Miller's June 18, 2019 termination tended to suggest an
association to Miller's injury report. Still, the ALJ found the record showed a history of
performance problems before the injury to justify termination.
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KVC and Miller settled Miller's workers compensation claim, and a settlement
hearing was held before a different ALJ on March 3, 2020. After the parties
acknowledged the terms of the settlement, the ALJ asked Miller's counsel if she wanted
to make a record of any other matters. In response, Miller's counsel mentioned Miller's
civil suit. She also clarified, "I just want to make sure that everybody understands that
well, not only does the judge, the work comp judge, not have jurisdiction over the civil
suit, that in no way, shape or form are we giving up any rights for the civil suit that is
currently pending." The ALJ acknowledged he had no jurisdiction over the civil suit, then
asked KVC's counsel if he had any questions. KVC's counsel responded, "No questions,
Judge. This is just resolving the workers' compensation case." The ALJ went on to
approve the workers compensation settlement.
Several months later, KVC filed an amended answer, adding new affirmative
defenses of res judicata, claim preclusion, collateral estoppel, and issue preclusion. That
same day, KVC moved for judgment on the pleadings, arguing Miller's claim for
wrongful termination was barred by issue preclusion because the issue of whether KVC
terminated Miller for cause was already litigated and decided at the preliminary hearing
in Miller's workers compensation case. The district court granted KVC's motion and
dismissed Miller's lawsuit with prejudice. Miller timely appealed.
ANALYSIS
Miller argues on appeal the district court erred by finding a preliminary hearing
order under K.S.A. 2019 Supp. 44-534a "conclusively determined" her wrongful
termination claim. KVC counters by asserting Miller is reading a requirement of finality
into the elements of issue preclusion which it claims does not exist.
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Because the district court considered matters outside the pleadings in rendering its
decision, we apply the same standard of review as we do for summary judgment. See
Fairfax Portfolio LLC v. Carojoto LLC, 312 Kan. 92, 94, 472 P.3d 53 (2020); K.S.A.
2020 Supp. 60-212(d). And since the parties stipulated to the facts, we need only review
the district court's application of the law to those facts to determine de novo if KVC was
entitled to judgment as a matter of law based on issue preclusion. See In re Care &
Treatment of Sigler, 310 Kan. 688, 699, 448 P.3d 368 (2019); Trear v. Chamberlain, 308
Kan. 932, 936-37, 425 P.3d 297 (2018); In re Tax Appeal of Fleet, 293 Kan. 768, 777,
272 P.3d 583 (2012).
Our Supreme Court explained the doctrine of res judicata in Jackson Trak Group,
Inc., ex rel. Jackson Jordan, Inc. v. Mid States Port Authority., 242 Kan. 683, 751 P.2d
122 (1988):
"The doctrine of res judicata has two aspects: claim preclusion and issue
preclusion. Claim preclusion prevents parties from relitigating a cause of action that has
been finally adjudicated. It is founded on the principle that the party, or some other party
in privity, has litigated or had an opportunity to litigate the same matter in a former action
in a court of competent jurisdiction. An issue is res judicata when four conditions concur:
(1) identity in the things sued for, (2) identity of the cause of action, (3) identity of
persons and parties to the action, and (4) identity in the quality of the persons for or
against whom the claim is made.
"Res judicata also includes issue preclusion or collateral estoppel, which prevents
relitigation in a different claim of issues conclusively determined in a prior action. Under
Kansas law, collateral estoppel may be invoked where the following is shown: (1) a prior
judgment on the merits which determined the rights and liabilities of the parties on the
issue based upon ultimate facts as disclosed by the pleadings and judgment, (2) the
parties must be the same or in privity, and (3) the issue litigated must have been
determined and necessary to support the judgment. [Citations omitted.]" 242 Kan. at 690-
91.
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As Miller points out, this appeal centers on whether the ALJ's order denying
Miller's request for TTD benefits satisfied the first element of collateral estoppel. Miller
contends this "preliminary, non-binding and non-appealable ruling" did not "conclusively
determine" the issue of why Miller was discharged. KVC says the dispositive issue in the
wrongful termination case was the same issue the ALJ determined in the workers
compensation case—whether Miller was terminated for cause—and thus Miller was
prohibited from relitigating the issue.
The ALJ's order was issued under K.S.A. 2020 Supp. 44-534a, which sets forth
the procedures for a preliminary hearing to address a TTD benefits request. It provides
that, except for certain specified jurisdictional findings, "no such preliminary findings or
preliminary awards shall be appealable by any party to the proceedings, and the same
shall not be binding in a full hearing on the claim, but shall be subject to a full
presentation of the facts." K.S.A. 2020 Supp. 44-534a(a)(2). Our court has characterized
the K.S.A. 2020 Supp. 44-534a preliminary hearing process as merely an "initial
determination," with the goal being to "temporarily secure prompt compensation while
the parties proceed with a more thorough exposition of the evidence." See Butera v.
Fluor Daniel Const. Corp., 28 Kan. App. 2d 542, 544, 18 P.3d 278 (2001); Hampton v.
Professional Security Co., 5 Kan. App. 2d 39, 42, 611 P.2d 173 (1980).
Given the statutory restrictions on the potency of a preliminary hearing order
under K.S.A. 2020 Supp. 44-534a, we do not find such an order "conclusively
determines" the rights of the parties on an issue based on ultimate facts. Under the
language of K.S.A. 2020 Supp. 44-534a, the findings made at the preliminary hearing are
just that, preliminary. And such an avowedly tentative determination of the rights of the
parties does not carry the determinative weight required to preclude further litigation on
the issue. See Restatement (Second) of Judgments § 13 Requirement of Finality,
comment g (1982) (noting the preclusive effect of a judgment turns on whether the
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conclusion reached was "procedurally definite" and "preclusion should be refused if the
decision was avowedly tentative").
KVC tries to bolster its position by pointing to Griffin v. Dodge City Cooperative
Exchange, 23 Kan. App. 2d 139, 927 P.2d 958 (1996), but it overstates Griffin's holding.
While it is true that this court held in Griffin "[t]he doctrine of collateral estoppel may
preclude a party in a retaliatory discharge case from relitigating an issue decided in a
previous workers compensation proceeding," that issue must have been "conclusively
determined" in the workers compensation proceeding before the decision has a preclusive
effect. 23 Kan. App. 2d 139, Syl. ¶ 7; see Jackson Trak Group, Inc., 242 Kan. at 690-91.
The ALJ order was not preclusive since it was, by statute, a nonbinding, nonappealable
order.
Griffin did not involve a decision on temporary disability benefits made after a
preliminary hearing. It involved both an ALJ and a district court decision on permanent
disability benefits; that is, on Griffin's overall workers compensation claim. The ALJ
awarded Griffin permanent disability benefits because of a work injury, finding Griffin
permanently disabled and unable to perform his former job duties. Griffin's employer
appealed to the district court. The district court upheld the ALJ's order, which Griffin's
employer appealed to this court. Griffin did not cross-appeal. Griffin's employer then
voluntarily dismissed its appeal after it resolved its case with Griffin. 23 Kan. App. 2d at
142.
After dismissal of the appeal and resolution of the workers compensation claim,
Griffin filed a retaliatory discharge claim against his employer. Griffin's employer moved
for summary judgment, and one of the issues was whether Griffin could perform the
duties of his former job. The district court granted Griffin's employer summary judgment,
finding Griffin could not perform those job duties. Griffin then appealed, arguing he was
"'ready, willing and able'" to resume those job duties. 23 Kan. App. 2d at 143. Griffin's
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employer countered that Griffin was collaterally estopped from claiming he could
perform his job duties, since the ALJ's award of permanent disability benefits stemmed
from its finding that Griffin was permanently disabled and could not, in fact, perform
those job duties.
This court found Griffin collaterally estopped from relitigating the "'ability to
work'" issue, noting that both the ALJ and the district court had found Griffin unable to
perform his job duties. 23 Kan. App. 2d at 143, 150. It also noted that Griffin did not
appeal the "final order" in his workers compensation proceeding, the district court order.
23 Kan. App. 2d at 149-52. Thus the final order in Griffin (a district court order
upholding an ALJ's final order), which this court found had preclusive effect, was
different than Miller's preliminary ALJ order in this case.
KVC also argues Miller should be precluded from litigating why she was
discharged because she dismissed her workers compensation claim, citing Grimmett v.
S&W Auto Sales Co., 26 Kan. App. 2d 482, 988 P.2d 755 (1999). Yet Grimmett is also
distinguishable. Grimmett sued to recover injuries she sustained in an automobile
accident. One of the defendants, S&W Auto Sales Co., Inc., received summary judgment
because it had no legal liability for Grimmett's injuries. Grimmett moved to alter or
amend the summary judgment decision, which was denied. She appealed, but later
voluntarily dismissed her appeal. 26 Kan. App. 2d at 483-84.
Grimmett refiled her lawsuit against the same parties, alleging the same claims,
several months later. This court found Grimmett's claims against S&W Auto Sales Co.,
Inc. in the refiled case were barred by res judicata, based on the prior summary judgment
ruling and Grimmett's dismissal of her appeal of that ruling. When explaining its
decision, this court noted: "[A] trial court's decision on summary judgment satisfies the
final judgment on the merits requirement for purposes of claim preclusion when the
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parties were fully heard, the decision is made with a reasoned opinion, and the ruling is
subject to appeal or, in fact, reviewed on appeal." 26 Kan. App. 2d at 488.
Thus Grimmett addressed claim preclusion (not issue preclusion) in the context of
a summary judgment decision (not a preliminary, nonbinding order). It also involved a
dismissed appeal of that adverse summary judgment decision (not a nonappealable
order), followed by a duplicate lawsuit asserting the very same claims (not a pending
lawsuit asserting a different claim). Unlike Grimmett, here Miller was not seeking a
"fresh start" to avoid the adverse ruling which dismissed her claim. 26 Kan. App. 2d at
488. Indeed, Miller's civil lawsuit was already on file before she received the preliminary
ruling in the workers compensation case. And she specifically reserved all rights in that
civil lawsuit when she settled and dismissed her workers compensation case (with no
objection from KVC).
Res judicata is an important doctrine, grounded in both public policy and common
sense. Grimmett, 26 Kan. App. 2d at 488 (quoting Reed v. Allen, 286 U.S. 191, 198-99,
52 S. Ct. 532, 76 L. Ed. 1054 [1932]); see Herington v. City of Wichita, 314 Kan. 447,
458, 2021 WL 5990322, at *7 (2021). It is not a game of "gotcha justice." Infusing a
preliminary, nonbinding, and nonappealable order with preclusive effect would not serve
public policy or common sense.
KVC seeks to punish Miller for settling and dismissing her workers compensation
case, yet it voiced no objection to Miller's recorded reservation of all rights in her civil
suit as part of that settlement and dismissal. If we agreed with KVC's position that Miller
waived her right to be fully heard on why she was discharged simply by dismissing her
workers compensation case after a preliminary order, we would not only discourage
settlements, but we would also be ignoring the statutory restrictions on the effect of an
order under K.S.A. 2020 Supp. 44-534a (which is against public policy and common
sense). And we would encourage parties to stand silent rather than voice their
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disagreement with an opposing party's recitation of the terms of the parties' settlement
(also against public policy and common sense).
Since we are reversing the district court's dismissal of Miller's civil case because
of its mistaken application of res judicata, we need not reach Miller's second argument on
appeal, which voices an alternative reason for reversal.
Reversed and remanded for further proceedings.
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