Travelers Cas. Insurance v. Karns

No. 121,344
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
TRAVELERS CASUALTY INSURANCE,
Appellant,
v.
LARRY G. KARNS and ONEBEACON AMERICAN INSURANCE COMPANY,
Appellees.
SYLLABUS BY THE COURT
1.
An intermediate appellate court cannot vest jurisdiction in a tribunal that does not
otherwise have jurisdiction by remanding the case to the tribunal.
2.
The Workers Compensation Board and the Division of Workers Compensation,
through its Director, are separate agencies for purposes of the Kansas Judicial Review
Act (KJRA).
Appeal from Workers Compensation Board. Opinion filed September 17, 2021. Appeal
dismissed.
William L. Townsley and Lyndon W. Vix, of Fleeson, Gooing, Coulson & Kitch, L.L.C., of
Wichita, for appellant Travelers Casualty Insurance.
Glenn H. Griffeth, special assistant attorney general, Kansas Department of Labor, for appellee
Larry G. Karns.
Timothy A. Emerson, of Wallace Saunders, Chtd., of Wichita, for appellee Kansas Workers
Compensation Fund.
1
Kip A. Kubin, of Martin Pringle, of Overland Park, for appellee OneBeacon American Insurance
Company.
Before ARNOLD-BURGER, C.J., HILL and ATCHESON, JJ.
ARNOLD-BURGER, C.J.: Sometimes even an appellate court can overlook the
obvious and complicate a case beyond the recognition of the parties. That is what
happened here. At one point, the parties presented this court with a straightforward
question: Could the Director of the Workers Compensation Fund (Fund) deny a request
for payment from the Fund that an administrative law judge (ALJ) ordered and instead
impose payment on a third party? We then complicated that question beyond recognition
by remanding the case that came to us from the Shawnee County District Court, with no
involvement of the Workers Compensation Board (Board), to the Board for them to
basically reconsider and clarify their ruling that was final months after any time to appeal
had passed. This was a result neither party requested, and no party agrees with. But rather
than appeal that decision, the parties accepted it, further complicating what we do next.
After carefully peeling back the layers, we agree with the parties that the Board
never acquired jurisdiction over this case, and just as the parties cannot stipulate to
jurisdiction, an intermediate appellate court cannot create it out of whole cloth.
Therefore, the appeal is dismissed for lack of jurisdiction.
FACTUAL AND PROCEDURAL HISTORY
The facts of this case can be found in two prior opinions of this court—Barker v.
Grace, Unruh & Pratt, No. 108,223, 2013 WL 5187413 (Kan. App. 2013) (unpublished
opinion), and Travelers Cas. Insurance v. Karns, 56 Kan. App. 2d 388, 431 P.3d 301(2018). Those facts are unimportant here. At this stage of the litigation suffice to say that
Tamera Barker suffered two distinct accidents, one in 2005 and one in 2007. These
2
occurred while she was working for two employers, each with different workers
compensation insurance carriers, OneBeacon American Insurance Company
(OneBeacon) and Travelers Casualty Insurance (Travelers) respectively for purposes of
this appeal. Barker, 2013 WL 5187413, at *2.
This appeal arises from a dispute—not over the amount the worker should recover,
but over who should pay for the roughly $152,000 in preliminary medical benefits paid—
the Workers Compensation Fund (the Fund) or Travelers. Travelers, 56 Kan. App. 2d at
390. So we will examine how this particular dispute came to be.
OneBeacon paid preliminary medical benefits it was not required to pay.
Early in the history of Barker's workers compensation claim, OneBeacon paid
about $152,000 in preliminary medical benefits to Barker. See Travelers, 56 Kan. App.
2d at 390. Later, Travelers was held responsible for much of Barker's workers
compensation award as well as all future medical benefits. See Barker, 2013 WL
5187413, at *2. The ALJ and arguably the Board (through its affirmance of the ALJ
order) found that if preliminary medical bills were ordered to be paid outside listed
coverage dates, the orders were issued in error and the "expenses [were] recoverable by
the respective carriers through the [Fund]." No one contested this order, although there
would later be significant disagreement about its meaning and scope. The case bounced
back and forth between the Board and this court. During that time, there was no further
discussion about whether overpayments by OneBeacon should be paid by the Fund. Once
the Board and this court resolved all disputes and the time to appeal had passed,
OneBeacon went to the Fund to get reimbursement.
3
OneBeacon seeks reimbursement from the Fund.
OneBeacon wrote a letter to the chief administrative officer of the Division of
Workers Compensation, Larry G. Karns (Director), explaining that based on the two
distinct accidents, it should not have been responsible for the preliminary medical
benefits and that it was entitled to reimbursement from the Fund in the amount of
$151,782.59. It was OneBeacon's position that it was simply requesting reimbursement
from the Fund as it believed the Board and ALJ had directed it to do.
The Director denies OneBeacon's request and orders Travelers to reimburse OneBeacon.
As the gatekeeper of the Fund, the Director requested additional written
submissions from the two insurance carriers in the case "[b]efore certifying
[$151,782.59] to be reimbursed and paid to [OneBeacon] by [Travelers]." Travelers, who
had not been part of any request to the Director, responded, arguing that the Fund was
responsible for any reimbursement, stating that K.S.A. 2017 Supp. 44-534a(b) controlled.
See Travelers, 56 Kan. App. 2d at 391. Travelers did not dispute the amount OneBeacon
had paid in excess of the amount for which it was legally responsible based on the Board
ruling. Instead, it argued that the Fund was responsible for payment. This was based on
the one statement from the ALJ—that bills that were ordered to be paid outside listed
coverage dates should be paid by the Fund—and not on the final decision of the Board
finding Travelers responsible for expenses incurred during its coverage period.
After considering the arguments from both parties, the Director ultimately directed
Travelers to reimburse OneBeacon for the full amount of the preliminary medical
benefits, citing K.S.A. 2017 Supp. 44-556(e) as the controlling statute. 56 Kan. App. 2d
at 392.
4
Travelers appeals the decision of the Director under the Kansas Judicial Review Act and
adds two equitable claims.
Travelers faced a conundrum—how to obtain judicial review of an order from the
Director denying payment from the Fund and ordering it to reimburse OneBeacon for
overpayment.
So in July 2015, Travelers filed an action titled "Petition for Judicial Review or for
Writ of Prohibition and an Injunction" with the Shawnee County District Court. Through
the petition, Travelers sought "review by the Court of the order entered by the Workers
Compensation Director." Travelers identified the parties to the action as OneBeacon and
itself. It asserted that it was a party that had standing to seek judicial review because it
was a person to which the agency action was specifically directed.
Travelers asserted that a petition for judicial review was the proper avenue to
obtain relief because the order "was not issued by an Administrative Law Judge and is
therefore not reviewable by the Workers Compensation Board under K.S.A. 44-555c(a).
Nor [was] it an action of the Board which may be reviewed directly by the Court of
Appeals under K.S.A. 44-556(a)." Although it argued that review under the Kansas
Judicial Review Act (KJRA) was appropriate, Travelers—as was its duty of candor to the
court—discussed and attached to its petition a copy of a memorandum decision filed by
District Judge Franklin Theis that was issued a few months before this action was filed in
the same judicial district. His opinion held that the KJRA was not the statutory basis for a
review of the Director's order based mainly on the Supreme Court decision in Schmidtlien
Electric, Inc. v. Greathouse, 278 Kan. 810, 104 P.3d 378 (2005). Thus, as an alternative
basis for relief, Travelers included a writ of prohibition against the Director and an
injunction against OneBeacon.
5
We pause to explain those terms. A writ of prohibition is "[a]n extraordinary writ
issued by an appellate court to prevent a lower court from exceeding its jurisdiction or to
prevent a nonjudicial officer or entity from exercising a power." Black's Law Dictionary
1465 (11th ed. 2019). Similarly, an injunction is a "court order commanding or
preventing an action." Black's Law Dictionary 937 (11th ed. 2019). To obtain an
injunction a party must show that there is no adequate remedy at law and "irreparable
injury will result unless the relief is granted." Black's Law Dictionary 937 (11th ed.
2019); see also Hodes & Nauser, MDs v. Schmidt, 309 Kan. 610, 619, 440 P.3d 461(2019). While injunctive relief is defined by statute in Kansas, writs of prohibition are
solely a common-law remedy. See K.S.A. 60-901 (nature of injunction). They are both
equitable remedies and we review a judge's decision to grant or deny them for an abuse
of discretion. See State ex rel. Stovall v. Meneley, 271 Kan. 355, 379, 22 P.3d 124 (2001).
So Travelers was asking that we prevent the Director from exercising his power in a way
to require Travelers to pay on the claim, and an injunction to prevent OneBeacon or the
Fund from trying to collect on the Director's order.
The district court relied on stipulated facts to reach its decision. The district court,
in an extremely well written and thorough opinion, held Travelers could not obtain
judicial review of the reimbursement ruling through the KJRA. It also held that Travelers'
request for a writ of prohibition was more properly characterized as a writ of mandamus
and if Travelers could establish that the Director's decision was wrong based on the facts
and law he had before him, then Travelers could prevail on this theory. But based on the
facts and law, the district court found that Travelers could not establish the Director was
wrong or that his decision was arbitrary or unreasonable; therefore, its claim failed on the
merits.
The district court noted the following in support of its conclusion that the Director
did not err.
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1. The Director is the gatekeeper for reimbursement claims against the Fund, whether
based on K.S.A. 2020 Supp. 44-534a or K.S.A.2020 Supp. 44-556.
2. The judge noted the difference between K.S.A. 2020 Supp. 44-534a(b) and K.S.A.
2020 Supp. 44-556(d) and (e). He noted that payments from the Fund under
K.S.A. 2020 Supp. 44-556(d)(1) are paid to the insurer when it is later determined
after review—as a matter of fact or law—that the worker was not entitled to the
benefits awarded by the Board. In that case, the Fund reimburses the employer or
insurance company—basically absorbing the overage so that the worker's recovery
remains constant. Likewise, K.S.A. 2020 Supp. 44-534a(b) requires payment from
the Fund when an insurer has overpaid an employee.
Instead, the court noted that K.S.A. 2020 Supp. 44-556(e) is the applicable
provision here. It provides that an insurer that has overpaid under circumstances
like those here is to be reimbursed by the party who was ultimately held liable for
such payment. It goes on to provide that the Director is tasked with determining
the amount of money to be reimbursed and by whom in accordance with the final
decision in the case. No specific request is required—although OneBeacon made
such a request by letter here. Although the statutes require that the Director
determine the amount of reimbursement due, he or she must do so in accordance
with the final Board decision. The court cited Mitchell v. Petsmart, Inc., 291 Kan.
153, 174, 239 P.3d 51 (2010), for the proposition that disputes between insurance
carriers concerning the respective liabilities for payments should be litigated
separately and not as part of the workers compensation case.
The court held if it were to interpret the statutes as the insurance companies
argue here, the court would be required:
7
"[T]o implement a widely improbable view that, because of a coverage question
between insurers, one not grounded on a worker's need arising under the workers
compensation laws, the legislature intended that a company paying a valid
workers compensation medical expense, but one that should have been paid by
another carrier, should instead be reimbursed from the Workers Compensation
Fund rather than the actual carrier responsible."
In further explaining the error in the interpretation sought by the insurance
companies, the judge noted:
"The Workers Compensation Fund is made up of tax dollars, death
benefits from workers with workers compensation benefit coverage, but who had
no beneficiaries to enforce their rights, and from insurance industry fees. It is
designed to be a pool of money available for reimbursement such as to
incentivize the prompt payment of claims to workers so claiming without the
payors worrying that if, ultimately, no claim entitlement is found, the money paid
out could not be recovered from the worker. No such worry about the ability to
make a recovery of a payment made by one insurer that another insurer should
have made can remotely be discerned for requiring such a character of mis-
payment as one that should be reimbursed by the Fund. . . . The mischief between
insurers that could be created from such a holding would certainly assure the
Fund would be neither long lasting nor inexpensive to maintain. Simply, the
legislature intended no payment from the Workers Compensation Fund for that
character of insurer error."
3. The judge found that Travelers cannot rely on the language in the ALJ's opinion
discussing reimbursement by the Fund. He noted that the Board's award stated:
"'The Award of the ALJ regarding the previously ordered medical bills,
current medical expenses, unauthorized medical expenses, if any and future
medical treatment is affirmed.'"
But, he pointed out, there were no "'unauthorized medical expenses.'"
8
"However, the fact that no one involved in the case would be prone or interested
in the issue—having been proffered a route to absolution from payment
responsibility by the ALJ—would exemplify some of that 'mischief' upon which
the Court earlier reflected."
The judge had no trouble finding that the ALJ's comments were not the absolution
Travelers thought it was. First, the ALJ said "'if'" certain medical expenses were
ordered in error, they are recoverable from the Fund. The district court found that
this was an expression of opinion, not an order. Moreover, there was no finding
that Barker was not entitled to the benefits she received, so there were no benefits
ordered in error to the worker. The ALJ had no jurisdiction to enter an order
requiring the Fund to make payments that were properly due the worker from an
insurance carrier.
4. The question here, the district court opined, is whether the final award was clear
enough that the Director could decide it in a purely ministerial fashion, without
adjudication. Because OneBeacon and Travelers never litigated who was to
reimburse OneBeacon as between the two of them, the court determined it needed
to look at whether the liability and court orders related to reimbursement were
clear.
5. The district court held they were clear. It pointed out that the Board's final
decision clearly stated that medical expenses incurred by Barker within the
stipulated coverage dates of a carrier were that carrier's responsibility. It held that
Grace and Travelers owed the claimant $96,595.40. OneBeacon was assessed a
total owed claimant of $58,474.54. All future medical expenses were assessed
against Travelers. In essence, this order trumped any other orders. It was final and
specific as to liability.
9
"Hence, given the absence of some assertion by Travelers that it has some viable
defenses that could not be raised within the workers compensation proceedings
that would justify the Director's abstention from acting or otherwise, the
existence of a positive declination by OneBeacon of the offer of the Director's
assistance, the Director's . . . action should stand."
Contrary to the panel's statement in Travelers, the district court did affirmatively
endorse the Director's decision. It found that Travelers' lawsuit could be interpreted as an
action in mandamus (rather than prohibition), and, considering it such, the Director's
decision was within the law, was not arbitrary or capricious, and Travelers had not
proven otherwise. But see Travelers, 56 Kan. App. 2d at 392 ("The district court's ruling
effectively left Karns' order undisturbed without explicitly endorsing its substantive
conclusion on reimbursement."). Travelers appealed the district court's ruling, which
brought the case to this court a second time. And this is where, in our opinion, the case
went off the rails.
We discuss the panel's decision in Travelers.
In Travelers, the panel began by holding that the Director overstepped his
statutory authority by going beyond his role by adjudicating the dispute regarding
reimbursement between the parties. See 56 Kan. App. 2d at 394-97. The court noted that
it seems as though reimbursement issues are "often raised through a letter to the director,
who then steps in and decides them." 56 Kan. App. 2d at 396. But, the panel opined, this
is not the proper procedure according to the statutes governing such issues. Instead, it
seemed "to be one of those procedural bypasses a specialized agency and regular
practitioners before that agency have developed to promote efficiency notwithstanding a
different—and arguably more cumbersome—statutory process." 56 Kan. App. 2d at 396.
This court then expressed concern that the Fund might be liable for
reimbursement, even though the Fund was not a party to the workers compensation
10
proceedings. 56 Kan. App. 2d at 394, 396-97. This court could not "endorse the informal
bypass of the Board's statutorily established adjudicative authority" when the Director
issued his order, which contained factual findings and legal conclusions, rather than a
mere certification after the Board had resolved all disputes. 56 Kan. App. 2d at 397.
Before addressing the remaining issues, the court held that it was going to "fashion
a remedy returning the issue to the Board for consideration consistent with the provisions
of the Workers Compensation Act governing reimbursements, the law applicable to
repetitive use injuries, and the earlier findings in this case regarding the legal secretary's
multiple injuries and accidents." 56 Kan. App. 2d at 397. To support this chosen remedy,
the court cited to K.S.A. 77-622(b) for the proposition that "[u]nder the KJRA, a court
may remand to the agency 'for further proceedings.'" 56 Kan. App. 2d at 397. The panel
failed to note that the "agency" it found was subject to the KJRA was the Director, not
the Board.
The panel then addressed the district court's rejection of Travelers' petition under
the KJRA and as an original action. This court held that the district court erred when it
determined that the Director's decision was not an agency action appealable under the
KJRA. 56 Kan. App. 2d at 398. By doing so, the panel expressed its disagreement with
Cincinnati Insurance Co. v. Karns, 52 Kan. App. 2d 846, 379 P.3d 399 (2016), which the
Travelers court acknowledged appeared to limit "application of the KJRA to Board
determinations and precluding any review of the director's actions." 56 Kan. App. 2d at
398-99. Because the panel believed that the Director's decision was an agency action, the
panel held that the KJRA applied to his order and the district court erred in ruling that it
could not consider Travelers' petition under the KJRA. 56 Kan. App. 2d at 401.
The court in Travelers continued by stating that if it was correct that the Director's
actions were reviewable under the KJRA, then Travelers would not need to resort to an
extraordinary remedy. But, the court cautioned, if the panel was mistaken, then Travelers
11
"likely could bring an action for extraordinary relief whether characterized as mandamus
or prohibition to correct Karns' action in issuing an order exceeding the statutory
authority granted the director in K.S.A. 2017 Supp. 44-556(e)." 56 Kan. App. 2d at 404.
That said, it failed to address the request for extraordinary relief that Travelers did make,
and the district judge did rule on.
The panel concluded by stating:
"[The Director's] reimbursement order exceeds the statutory authority afforded
the director in K.S.A. 2017 Supp. 44-556(e). On its face, the order is an agency action
subject to review under the KJRA. Because the order oversteps [the Director's] authority,
it is invalid at least as an erroneous application of the law and as a failure to follow
prescribed procedures. See K.S.A. 2017 Supp. 77-621(c)(4), (c)(5).
"We, therefore, remand the issue of the reimbursement due OneBeacon to the
Workers Compensation Board for further proceedings." Travelers, 56 Kan. App. 2d at
404.
The court then provided several issues for the Board to consider on remand. 56 Kan. App.
2d at 404-05. No petition for review was filed with the Kansas Supreme Court.
After the Travelers court remanded the case, things got even dicier. The Director
impleaded the Fund. The parties filed briefs with the Board to address the issues on
remand. Travelers mainly argued that the Board lacked jurisdiction to take any action.
OneBeacon, the Fund, and the Director agreed that the Board lacked jurisdiction over the
case on remand. Other issues were discussed, such as who was properly a party to the
case.
In a split decision, the Board determined that it had jurisdiction to hear the appeal.
Even so, it made it clear that it had strong reservations about doing so. The majority of
12
the Board stated: "The Court of Appeals remanded this matter to the Board. Implicit in
such decision, the Board must have jurisdiction to hear the remand. However, we share
some of the well-reasoned concerns raised by the parties, as well as the dissenting
opinion, about how and why we have jurisdiction." The majority continued that it wanted
to agree "with the parties and the dissenting opinion that it should not have jurisdiction
over this matter, at least in the path it was delivered to us." But the majority noted that it
was duty bound to follow this court's directions.
The dissenting opinion, referred to by the majority, would have dismissed the case
based on lack of jurisdiction. The dissent believed that this court "conferred jurisdiction
that does not exist in the Board's authorizing statute."
The Board's majority ultimately held that the Fund should have been, and was,
impleaded, that OneBeacon properly made and preserved a request for reimbursement,
the ALJ correctly held each insurance carrier liable for benefits incurred during the
carrier's dates of coverage, the ALJ could not order the Fund to reimburse any carrier for
benefits incurred outside the carrier's period of coverage, and that Travelers must
reimburse OneBeacon. This aligned with the law as outlined by Judge Theis in his
opinion in the Travelers case. Travelers timely appealed.
ANALYSIS
In beginning our review of this case, a case that seems simple on its face, we are
reminded of the prophetic words of Justice Carol Beier speaking to the dangers of giving
a simple answer to a case that has so much going on beneath the surface.
"Although the issues before us are simply summarized, their resolution is not
because they arise in a complicated factual and procedural context, revealed in fits and
starts over the life of a series of cases. Like icebergs, the appearance of the issues above
13
the waves is relatively benign; their mass and shape below the waves goes unnoticed or
ignored at peril." State v. Comprehensive Health of Planned Parenthood, 291 Kan. 322,
325, 241 P.3d 45 (2010).
We must examine the iceberg before us. We could look at this simply, skip over
the issue of the jurisdiction of the Board to hear the case based solely on our remand, and
find that the Board was acting reasonably and within the law when it found, just as it had
in 2013, that Travelers was responsible for all expenses incurred after the second injury.
We could hold that based on the Board's ruling the Director was correct to find that
Travelers must pay OneBeacon for its overpayment. In failing to address the jurisdiction
issue beneath the surface, we would be essentially holding no harm no foul, since the
worker has already been compensated. To do otherwise would result in a windfall to
Travelers at the expense of the Fund. Our decision would also align with K.S.A. 2020
Supp. 44-556(e), which requires each insurer to be responsible for their own coverage
periods. But if we did that, we would be ignoring the ice beneath the surface. Looming
beneath the surface is the argument from all parties to this litigation that the Board never
had jurisdiction to hear this case and an appellate court cannot make it so by fiat. We
choose to look beneath the surface—as we are required to do when a party questions our
jurisdiction—and examine whether the Board and, therefore, we have any jurisdiction to
consider this issue.
To reiterate, all parties here maintain that the Board did not have jurisdiction
regardless of this court's order. The parties differ only in their reasons.
Our review of jurisdiction is unlimited.
Whether jurisdiction exists is a question of law over which this court's scope of
review is unlimited. In re Care & Treatment of Emerson, 306 Kan. 30, 34, 392 P.3d 82(2017). An agency has jurisdiction over a case only if the jurisdiction is authorized by
14
statute. See Ft. Hays St. Univ. v. University Ch., Am. Ass'n of Univ. Profs., 290 Kan. 446,
Syl. ¶ 1, 228 P.3d 403 (2010). The issue of jurisdiction is so central to any case that it is
the responsibility of an appellate court to consider the issue of jurisdiction sua sponte if it
resolves an issue before it. Comprehensive Health of Planned Parenthood, 291 Kan. 322,
Syl. ¶ 1. If a lower court lacks jurisdiction to enter an order, an appellate court does not
acquire jurisdiction over the subject matter on appeal. See In re Care & Treatment of
Emerson, 306 Kan. at 39.
In sum, it is no secret that the right to appeal is entirely statutory and is not
contained in the United States or Kansas Constitutions. Subject to certain exceptions,
Kansas appellate courts have jurisdiction to entertain an appeal only if the appeal is taken
in the manner prescribed by statutes. Wiechman v. Huddleston, 304 Kan. 80, 86-87, 370
P.3d 1194 (2016). To address the jurisdictional issue, we return to the decision in
Travelers, which ostensibly delivered jurisdiction to the Board through its remand.
Travelers properly pled its appeal of the Director's decision as well as its equitable
claims.
The first claim that Travelers made in its petition in the Travelers case was a
request to review the Director's reimbursement decision under the KJRA. It then added
two equitable claims, one for a writ of prohibition and one for injunctive relief. It is not
unusual for a party to bring a claim for review of an agency action under the KJRA and a
separate claim for either equitable relief or constitutional, contract, or tort relief. See
Heiland v. Dunnick, 270 Kan. 663, 668-69, 19 P.3d 103 (2001) (actionable claims which
fall outside the authority of an agency to grant can support a separate action by an
aggrieved party); Lindenman v. Umscheid, 255 Kan. 610, 619, 875 P.2d 964 (1994)
(finding KJRA not exclusive remedy for tort claims against agency).
15
Nor is there anything untoward about such a strategy as the dissent suggests. We
agree with the dissent that they may be "dissimilar legal creatures." Slip op. at 26. But
just as a dog can have ticks and fleas, the claims may not be mutually exclusive. We
recognize that the manner the litigation proceeds with regards to a KJRA administrative
review in the district court is quite different than the process for an independent equitable
or other Chapter 60 claim, where discovery would occur. And granted, equitable
remedies are not available if there is an adequate remedy at law. See Nelson v. Nelson,
288 Kan. 570, 597, 205 P.3d 715 (2009); Friedman v. Kansas State Bd. of Healing Arts,
287 Kan. 749, 755, 199 P.3d 781 (2009) (holding that where relief sought could have
been provided under KJRA, injunction relief is not proper). Moreover, the district court
may end up finding that the KJRA is the exclusive remedy under the facts of the case. So
we also agree with the dissent, that review by the district court of the KJRA claim must
come first—which it did here. But a "party may set out two or more statements of a claim
or defense alternately or hypothetically, either in a single count or defense or in separate
ones. If a party makes alternative statements, the pleading is sufficient if any one of them
is sufficient." K.S.A. 2020 Supp. 60-208(d)(2).
Travelers rightfully found such an approach necessary in light of our Supreme
Court's decision in Schmidtlien, holding that "[t]he Workers Compensation Act does not
provide for the right to appeal the Director's determination on reimbursement." 278 Kan.
810, Syl. ¶ 4. By bringing the claim under the KJRA, in spite of its claim being
disallowed under Schmidtlien, it preserved its ability to challenge Schmidtlien on appeal.
If no relief was available under the KJRA, Travelers' equitable claims could prevail.
Predictably, the district court found—as it had before—that Travelers could not
bring an action under the KJRA challenging the Director's denial of reimbursement
because the Supreme Court in Schmidtlien had closed that avenue. The panel in Travelers
acknowledged that Cincinnati Insurance Co., 52 Kan. App. 2d 846—a case decided after
Judge Theis entered his decision in this case and also rooted in Schmidtlien—seemed to
16
"establish a rule precluding review under the KJRA of anything the director does." But
the panel in Travelers "disagree[d] with that broad rule." 56 Kan. App. 2d at 399.
Because it disagreed, it believed that the case was properly before it as an appeal of the
Director's decision and found that the district court erred in not addressing the case on
that basis.
We pause here to note that although the majority believes Cincinnati Insurance is
more persuasive than the panel's arguments against its application in Travelers, we need
not get into a discussion about the conflicting opinions from our court. It makes no
difference in our final decision here. So we will assume, without deciding, for purposes
of this appeal that the KJRA applies, and Travelers had a right to appeal on that basis. We
instead examine how the Travelers court decided to resolve that issue.
An intermediate appellate court cannot vest jurisdiction in a tribunal that does not
otherwise have jurisdiction by remanding the case to the tribunal.
Typically, when a district court fails to address an issue that an appellate court
finds it should have addressed, it remands the case to the district court to decide the issue
under the proper framework. With an appeal under the KJRA, when reviewing a district
court's decision, we first determine whether the district court "observed the requirements
and restrictions placed upon it. [We] then [conduct] the same review of the administrative
agency's action as did the district court." Jones v. Kansas State University, 279 Kan. 128,
139, 106 P.3d 10 (2005). Appellate courts exercise the same statutorily limited review of
the agency action as does the district court: as though the party had filed the appeal
directly with the appellate court. Kansas Dept. of Revenue v. Powell, 290 Kan. 564, 567,
232 P.3d 856 (2010). We start with the presumption that the agency action was valid.
Jones, 279 Kan. at 140. The burden of proving the invalidity of the agency action rests on
the party asserting the invalidity. K.S.A. 77-621(a)(1).
17
So traditionally, finding that the lower court failed to analyze the case under the
proper framework, an appellate court would remand the case to the district court to
review the case under the proper framework, in this case the KJRA. But it is also not
unheard of for the appellate court to keep the case since its standard of review is the same
as the district court and it has all the same information before it as the district court did to
review the agency action. That is particularly likely in a case such as this where the
district court may not have considered the matter under the KJRA but conducted the same
analysis when reviewing whether a writ of mandamus was appropriate. But the panel in
Travelers did neither. Instead, it remanded the case to the Board, in a noble effort to give
the Board the opportunity to weigh in on who owed what to whom.
As Travelers points out in its brief, "remand" is defined as "[t]he act or an instance
of sending something (such as a case, claim, or person) back for further action." Black's
Law Dictionary 1547 (11th ed. 2019). For example, the Nebraska Court of Appeals
recently noted that "[i]n appellate procedure, a 'remand' is an appellate court's order
returning a proceeding to the court from which the appeal originated for further action in
accordance with the remanding order." Molina v. Salgado-Bustamante, 21 Neb. App. 75,
83, 837 N.W.2d 553 (2013).
This case came to the Travelers court from the District Court of Shawnee County.
If an error needed to be corrected, it was the only entity to which to remand it. Instead,
the panel in Travelers decided to, admittedly, "fashion" its own remedy—remanding it to
the Board. 56 Kan. App. 2d at 397. The problem with this approach is that there was no
pending case before the Board. The Board and this court had already finally and
conclusively decided the case in Barker. While K.S.A. 77-622(b) allows a court to
remand to the agency "for further proceedings," the Board here did not have any
proceedings to further. It had ruled on this issue. That ruling was final and not appealed.
Although the parties may later have disputed the clarity and effect of the Board's order,
that does not make it any less final. There was no statutory basis to vest the Board with
18
jurisdiction to hear the case. An intermediate appellate court cannot vest jurisdiction in a
tribunal that does not otherwise have jurisdiction by remanding the case to the tribunal.
Moreover, even if this court could accept the appeal as one validly filed under the
KJRA and remand the case directly to the agency instead of the district court, the
"agency" subject to the KJRA procedure was the Director of the Division of Workers
Compensation, not the Board. See K.S.A. 77-602(k) (defining state agency for purposes
of the KJRA as "officer" or "division"); K.S.A. 75-5708 (noting that the Director of
Workers Compensation is the chief administrative officer of the Division of Workers
Compensation). The Director and the Board are two distinct entities. See K.S.A. 2020
Supp. 44-549(b) ("The director and the board, for the purpose of the workers
compensation act, shall have power to administer oaths, certify to official acts . . . ."
[Emphasis added.]); K.S.A. 2020 Supp. 44-536a(d) ("the administrative law judge,
director or board, upon motion or upon its own initiative . . . ." [Emphasis added.]). As
the dissent concedes, K.S.A. 2020 Supp. 44-556(e) bifurcates the process of
reimbursement between the Board and the Director, recognizing them as two separate
entities. Slip op. at 32. In short, even if there was jurisdiction for the Travelers court to
remand this case to the agency for further action, there was no statutory authority for the
Travelers court to remand the case to the Board. The Board was not the agency from
which the disputed decision was made and the appeal arose.
One panel of the Court of Appeals has no authority to overrule another.
We recognize that there is no authority for one panel of the Court of Appeals to
overrule a decision of another panel. In re Marriage of Cray, 254 Kan. 376, 382, 867
P.2d 291 (1994). But separate panels of the Court of Appeals should strive to be
consistent in decision-making. "[U]ltimately the court must do its best to decide each
case based on the facts and the law, bearing in mind that the Kansas Supreme Court is the
19
final arbiter of all disputes." State v. Horselooking, 54 Kan. App. 2d 343, 350, 400 P.3d
189 (2017).
Although we firmly believe—and agree with all the parties—that the panel in
Travelers erred by remanding the case to the Board, we are not overruling its opinion. Its
opinion was final and not appealed. By not appealing that decision, but then arguing on
appeal here that the action the Travelers court took deprived the Board of jurisdiction,
Travelers must accept the fact that its new appeal must stand or fall on its own merits.
See Rosales-Mireles v. United States, 585 U.S. ___, 138 S. Ct. 1897, 1911, 201 L. Ed. 2d
376 (2018) (Thomas, J., and Alito, J., dissenting) (noting that the court must protect
against so-called "'sandbagging'" "'remaining silent about [the litigant's] objection and
belatedly raising the error only if the case does not conclude in his favor'").
Our ruling here is confined to whether we have jurisdiction to hear the matter before us.
We have a separate duty to examine our jurisdiction to hear the case before us. We
find that this court cannot vest jurisdiction in an entity that has no jurisdiction to begin
with. Just as parties to a case cannot confer subject matter jurisdiction by consent, waiver,
estoppel, or by failure to object to jurisdiction, neither can the appellate court create
jurisdiction out of whole cloth. Decisions made by a court without subject matter
jurisdiction are legally void. See Kingsley v. Kansas Dept. of Revenue, 288 Kan. 390,
395, 204 P.3d 562 (2009) ("[p]arties cannot confer subject matter jurisdiction by consent,
waiver, or estoppel"); Jahnke v. Blue Cross and Blue Shield of Kansas, Inc., 51 Kan.
App. 2d 678, 686, 353 P.3d 455 (2015) (holding proceedings conducted or decisions
made by a court are legally void when there is an absence of subject matter jurisdiction).
This court is not free to fashion a remedy granting jurisdiction where it does not exist
through statute.
20
While typically the law-of-the-case doctrine would prevent any challenge to the
holdings of the court in a case that a party has not appealed, the law-of-the-case doctrine
"cannot prohibit a court from disregarding an earlier holding in an appropriate case."
Castro v. United States, 540 U.S. 375, 384, 124 S. Ct. 786, 157 L. Ed. 2d 778 (2003). It
simply expresses common judicial practice and does not limit the courts' power. 540 U.S.
at 384; see also State v. Soto, 310 Kan. 242, 255, 445 P.3d 1161 (2019). We simply
cannot ignore the fact that a judgment without subject matter jurisdiction is void. In re
Care & Treatment of Easterberg, 309 Kan. 490, 493, 437 P.3d 964 (2019).
Even though we find that the Board lacked jurisdiction to hear this case on
remand, we appreciate and understand the Board's willingness to do so rather than defy
an order of this court. We placed it in an untenable position of our creation, not theirs.
But because it had no jurisdiction, neither do we.
Conclusion
So where does that leave OneBeacon and its unreimbursed claim? Litigation in
this case has been in the pipeline for approximately seven years. Litigation in which
OneBeacon, the party who all parties agree has paid money it did not have to pay, has
failed—or consciously refused—to collect directly against Travelers as Judge Theis
suggested might be the proper route under Mitchell, 291 Kan. at 174. Litigation that over
the course of about seven years has surely cost both insurance carriers and unfortunately
the taxpayers of the State of Kansas more than the amount of the recovery sought.
Litigation in which both Travelers and OneBeacon elected not to appeal the Travelers
opinion, which if accepted, may have resulted in clarification regarding the application of
Schmidtlien, the continuing jurisdiction, if any, of the Board, the ministerial nature of the
Director's decision, and the availability of equitable relief. To borrow from Judge Theis,
any question as to what happens next is unfortunately the natural result of the mischief of
21
the insurance companies involved and their strategic decisions in this case. They will
have to decide their next steps.
Because we find that the Board lacked jurisdiction to hear the case and thus, we
lack jurisdiction to hear this appeal, our only available action is to dismiss the case for
lack of jurisdiction.
Appeal dismissed for lack of jurisdiction.
***
ATCHESON, J., dissenting: This is the latest chapter and second appeal in the legal
maneuvering of Travelers Casualty Insurance to avoid reimbursing another insurance
carrier for about $150,000 in benefits paid to an injured worker. After this court applied
the Kansas Judicial Review Act (KJRA), K.S.A. 77-601 et seq., to remand the
reimbursement issue to the Workers Compensation Appeals Board in Travelers Cas.
Insurance v. Karns, 56 Kan. App. 2d 388, 431 P.3d 301 (2018) (Travelers I), the Board
concluded Travelers should reimburse OneBeacon American Insurance Company for the
benefits that company had paid. The Board's ruling should have drawn everyone close to
the final chapter of this matter.
But the majority subscribes to a misbegotten jurisdictional argument Travelers has
advanced in its continuing effort to deflect any legal responsibility for the benefits. In
doing so, the majority vacates the Board's order, creating a legal void it doesn't endeavor
to fill. Contrary to the plain language of the KJRA, the majority concludes Travelers I
had no authority to remand that appeal to the Board to resolve the substantive dispute
over reimbursement in the first instance. The KJRA explicitly affords a reviewing court
the option of remanding the appeal of an agency action to the agency for further
proceedings. K.S.A. 77-622(b) ("The court may . . . remand the matter for further
22
proceedings."); K.S.A. 77-622(d) ("If the court . . . remands the matter to the agency for
further proceedings," it may enter temporary orders necessary to protect the interests of
the litigants and the public "pending further proceedings or agency action."). Contrary to
the majority's suggestion, the Board and the director of the Division of Workers
Compensation are not distinct agencies separate from each other or from the Division
itself for jurisdictional purposes of the KJRA—a decidedly strange proposition that
undermines the legislative intent behind and the statutory scope of judicial review. See
K.S.A. 77-603(a) ("This act applies to all agencies and all proceedings for judicial review
. . . not specifically exempted[.]").
In short, the remand remedy in Travelers I entails a statutorily proper way of
handling appeals of agency actions under the KJRA. The ruling did not transgress some
jurisdictional barrier that negates the Board's recent decision on the merits—the matter
presently before us—that Travelers should reimburse OneBeacon for benefits everyone
agrees were properly due Tamera Barker, the injured worker.
As the author of Travelers I, I dissent from the gross distortion of the KJRA that
underlies the majority's decision today. Apart from the jurisdictional challenge, Travelers
has otherwise disputed the Board's decision. We should reject the jurisdictional argument
and take up the other points. Because the majority has not addressed Travelers'
alternative claims of error, I, too, refrain from commenting on them.
I.
As a recurrent theme in its opinion, the majority castigates the Travelers I panel
for recognizing the statutory authority to adjudicate those reimbursement disputes lies
with the Board rather than with the workers compensation director under K.S.A. 2020
Supp. 44-556(e). But that really is a question of workers compensation law separate from
23
the authority of a court to remand an agency action to the agency for further proceedings
under the KJRA.
So Travelers I recognized that when insurance carriers have a substantive dispute
over which of them ultimately should be responsible for benefits properly paid to an
injured worker, the Board resolves the dispute, thereby permitting the director to then
issue a certification for reimbursement from one carrier to the other, if necessary. K.S.A.
2020 Supp. 44-556(e) (after administrative law judge or, on review, Board or appellate
court determines insurance carriers' responsibility for benefits properly paid worker,
director is then to "determine the amount . . . to be reimbursed . . . in accordance with the
final decision on appeal or review and shall certify . . . such amount to be reimbursed").
The director's certification amounts to a purely ministerial function that itself is not
subject to challenge. K.S.A. 2020 Supp. 44-556(e) ("Upon receipt of such certification,
the party required to make the reimbursement shall pay the amount . . . in accordance
with such certification."). In this case, the director impermissibly decided the substantive
question of Travelers' responsibility for benefits OneBeacon had paid by issuing in a five-
page order with findings of fact and conclusions of law. The director combined the order
with a certification of reimbursement directing Travelers to pay OneBeacon $151,782.59.
The director entered the substantive order and the reimbursement certification in Barker's
workers compensation case.
The director's order did more than determine an amount to be reimbursed. And
whether correct or not on Travelers' legal liability, the order usurped the authority of the
ALJ and the Board under K.S.A. 2020 Supp. 44-556(e). The majority acknowledges the
director entertained and resolved substantive legal arguments from the insurance carriers.
After inviting letter briefs, the director: (1) effectively rejected Travelers' written
argument that echoed OneBeacon's suggestion the Workers Compensation Fund should
be liable under K.S.A. 2020 Supp. 44-534a(b); (2) expressly held K.S.A. 2020 Supp. 44-
556(d) to be inapplicable because the worker never received excessive benefits; and (3)
24
relied on K.S.A. 2020 Supp. 44-556(e) to order Travelers to reimburse OneBeacon based
on the date of the governing accident that had been previously determined in adjudicating
Barker's claim.
When Travelers challenged the director's agency action—the combined order and
reimbursement certification—in a KJRA appeal in Travelers I, the panel found the
director exceeded his limited authority under K.S.A. 2020 Supp. 44-556(e), since the
Board never directly considered, let alone resolved, the dispute between the insurance
carriers over their legal responsibility for the benefits. Rather than decide the substantive
issue of Travelers' liability to OneBeacon, the panel remanded the matter to the agency
consistent with K.S.A. 77-622(b) for the Board to exercise its authority in the first
instance as outlined in K.S.A. 2020 Supp. 44-556(e). Now that the Board has done so
adversely to Travelers, the insurance company has ginned up a phony jurisdictional
objection to Traveler I's otherwise prudential exercise of judicial restraint under the
Workers Compensation Act and unremarkable exercise of statutory authority under the
KJRA to remand to the agency for further proceedings.
II.
A fundamental flaw in Travelers' argument and the majority's reasoning lies in the
notion the KJRA appeal of the director's order amounted to an original action in the
Shawnee County District Court and, therefore, the panel in Travelers I could not remand
to the agency for further proceedings notwithstanding the authority to do so in K.S.A. 77-
622(b). Relying on that faulty premise, the majority tosses around several largely
unconnected theories as to why the panel in Travelers I should not have asked the Board
to exercise its authority in K.S.A. 2020 Supp. 44-556(e) to specifically address and
resolve the insurance carriers' dispute, so the director could then issue a certification of
the precise amount to be reimbursed. I address those notions shortly.
25
Travelers has aided and abetted the majority's confusion with the way it fashioned
its initial legal challenge to the director's order. Travelers filed a single petition in the
Shawnee County District Court that combined an appeal of an agency action under the
KJRA with an original Chapter 60 action for an order of mandamus or prohibition against
the director under K.S.A. 60-801 et seq., to block enforcement of his order. I doubt the
two properly can be combined in a single opening pleading or even in a single case. But
even if they can, they are dissimilar legal creatures in material ways.[1]
[1]The majority chooses to quibble over whether a KJRA appeal of an agency
action properly can be combined with an original Chapter 60 action in a single petition or
case. As I have indicated, the answer to that point of administrative law and civil
procedure makes no difference to the outcome here. The majority mistakenly implies that
such a combined action is "not unusual" by suggesting parties often bring a "claim" for
relief under the KJRA and a separate "claim" for relief grounded in tort or contract law.
Slip op. at 15. The majority then cites to K.S.A. 2020 Supp. 60-208(d)(2) that permits a
party to "set out two or more statements of a claim or defense alternately or
hypothetically, either in a single count or defense or in separate ones." But it is hardly
obvious K.S.A. 2020 Supp. 60-208 governs administrative appeals under the KJRA or
that such an appeal constitutes such a claim. In Pieren-Abbott v. Kansas Dept. of
Revenue, 279 Kan. 83, 97, 106 P.3d 492 (2005), the court recognized that the KJRA
could be supplemented by the Code of Civil Procedure as "a logical necessity" to
adjudicate an administrative appeal when the KJRA fails to address a procedural point.
That's well short of an endorsement for combining an administrative appeal with a
Chapter 60 action, especially when the KJRA provides a detailed description of a petition
for appellate review that does not authorize the joinder of other causes of action. K.S.A.
77-614.
The case authority the majority cites doesn't support its position or Travelers'
hybrid action. In Heiland v. Dunnick, 270 Kan. 663, 668-69, 19 P.3d 103 (2001), the
court acknowledged a party may file an action independent of the KJRA to vindicate
rights and obtain relief that fall outside the agency's authority. In Lindenman v.
Umscheid, 255 Kan. 610, 619-20, 875 P.2d 964 (1994), the court allowed the plaintiffs to
go forward with claims against various state actors for abuse of process, malicious
prosecution, and other torts based on their conduct in securing the emergency suspension
of a daycare facility's license. The plaintiffs alleged they had already prevailed in an
agency proceeding to restore the license, so there was no KJRA appeal incorporated with
their Chapter 60 action. Apart from that inapt authority, the majority invokes a canine
simile for support, likening Travelers' hybrid petition to a dog that can be simultaneously
26
afflicted with ticks and fleas. When it comes to dual afflictions, a legal argument may be
both irrelevant and wrong.
Most significantly here, a petition for review of an agency action under the KJRA
is not an independent original legal proceeding; it is an appeal, in a judicial forum, of an
administrative rule or order. See Lindenman v. Umscheid, 255 Kan. 610, 619, 875 P.2d
964 (1994) (recognizing judicial review under the KJRA as a "'[f]orm of appeal from an
administrative body to the courts for review of either the findings of fact, or of law, or of
both'") (quoting Black's Law Dictionary 849 [6th ed. 1990]); see also Bd. of Cherokee
County Comm'rs v. Kansas Racing & Gaming Comm'n, 306 Kan. 298, 318, 393 P.3d 601(2017) (district court ruling in KJRA action reviewed "'as though the appeal had been
made directly to'" the appellate court); Coma Corp. v. Kansas Dept. of Labor, 283 Kan.
625, 628, 154 P.3d 1080 (2007) (same). Judicial review under the KJRA typically is
confined to the agency record, and the grounds for granting relief are statutorily limited.
See K.S.A. 77-618 (judicial review limited to agency record); K.S.A. 77-619(a) (narrow
bases for court to receive evidence outside agency record); K.S.A. 77-621(c) (grounds for
relief from agency action). In short, judicial review of an agency order entails a limited
examination of a final decision entered on a full record compiled in an administrative
proceeding. Those are marked differences from an original Chapter 60 action in which
the plaintiff brings an unadjudicated claim for initial determination. The parties may
freely engage in discovery and motion practice leading to a judgment.
Likewise, a Chapter 60 petition differs in content and purpose from a petition for
review under the KJRA. See K.S.A. 2020 Supp. 60-208; K.S.A. 77-614. A Chapter 60
petition need only contain "[a] short and plain statement of the claim" coupled with a
demand for relief. K.S.A. 2020 Supp. 60-208(a). Conversely, a petition under the KJRA
must contain a recitation of facts demonstrating an entitlement to relief, "reasons" relief
should be granted, and a specific description of the type and extent of relief sought.
K.S.A. 77-614(b). The exceptional detail makes sense, since the KJRA petition triggers
27
judicial review of a fully adjudicated agency action in an appellate-style examination of
an administrative order on a fixed record.
Assuming an appeal under the KJRA can be combined with an original Chapter 60
action in a single initial filing with a district court, the amalgamated proceeding cannot
and does not alter the statutory grounds for setting aside an agency action in K.S.A. 77-
621(c) or the forms of relief under K.S.A. 77-622(b) and (d). In a joint filing like
Travelers', the district court should first consider the KJRA appeal and defer any ruling
on a petition for mandamus or prohibition as an extraordinary remedy. (The same would
be true if they were filed as separate proceedings; the district court hearing the Chapter
60 action for mandamus would properly stay that proceeding pending the resolution of
the KJRA appeal, whether in that district court or another district court.)
The district court effectively did that in Travelers I. It found it did not have
authority to consider a KJRA appeal from an agency action by the director of workers
compensation. And the district court then weighed and rejected Travelers' request for an
order in prohibition blocking the director's order and reimbursement decision. Travelers
appealed both of those rulings in Travelers I.
An appellate court owes no deference to the district court's ruling in a KJRA
appeal and should examine the issues as if the petition had been originally filed in the
appellate court. Kansas Dept. of Revenue v. Powell, 290 Kan. 564, 567, 232 P.3d 856(2010); Yeasin v. University of Kansas, 51 Kan. App. 2d 939, 947, 360 P.3d 423 (2015).
The panel in Travelers I concluded the district court incorrectly determined it could not
review the director's order under the KJRA—a conclusion the majority does not dispute
for purposes of this appeal. The panel then held K.S.A. 2020 Supp. 44-556(e) gave the
Board rather than the director the statutory authority to decide the substantive dispute
between Travelers and OneBeacon. Travelers I, 56 Kan. App. 2d at 397. So, as I have
explained, Travelers I remanded the dispute to the Board, and the Board duly issued an
28
order in favor of OneBeacon—or at least it had until today with the majority's decision
erasing that ruling for some amorphous lack of jurisdiction. Having found the director
overstepped his statutory authority and having remanded to the agency for further
proceedings, Travelers I declined to substantively consider the district court's denial of
Travelers' request for an order in mandamus or prohibition in the Chapter 60 action.[2]
[2]For some reason, the majority devotes pages to outlining the district court's
analysis of Travelers' Chapter 60 action to the effect the director's substantive resolution
of the dispute in OneBeacon's favor was not arbitrary, capricious, or otherwise so
obviously at odds with the law as to warrant extraordinary relief. The discussion is rather
beside the point. The director may have correctly determined that Travelers was obligated
to reimburse OneBeacon; the Board has now come to the same conclusion. The panel in
Travelers I never suggested otherwise and did not remand the KJRA appeal because the
director's assessment of the substantive dispute was wrong. The panel returned the matter
to the agency because the director lacked the statutory authority to decide the issue at all
under K.S.A. 2020 Supp. 44-556(e). See K.S.A. 77-621(c)(4) (court may grant relief if
"the agency has erroneously interpreted or applied the law"); K.S.A. 77-621(c)(5) (court
may grant relief if "the agency has engaged in an unlawful procedure or has failed to
follow prescribed procedure").
III.
The majority has advanced a series of arguments supporting Travelers' claim the
Board lacked jurisdiction. I turn to those now.
⦁ The majority incorrectly characterizes what Travelers filed in the Shawnee
County District Court challenging the director's order and reimbursement certification as
an original Chapter 60 action. Travelers has promoted that misrepresentation as a
cornerstone of its jurisdictional argument. But as I have already explained, Travelers filed
a procedurally dubious mashup combining an administrative appeal of an agency action
under the KJRA with an original Chapter 60 action for an order in mandamus or
prohibition. They are entirely separate legal vehicles that must be considered
independently of each other. The majority compounds its mistake by suggesting
Travelers was not seeking review of a Board decision, as such, in Travelers I. While
29
that's true, it doesn't somehow negate the KJRA appeal of the director's order as an
agency action.
The majority later buys a related and equally miscast argument Travelers has
advanced: The Travelers I panel could remand only to the district court because that's
where the case began. As to the Chapter 60 action for mandamus or prohibition, that's
correct. If Travelers I had concluded the district court erred in denying an order for
mandamus or prohibition, the panel should have remanded to the district court with
directions to issue an appropriate order. But the panel never reached the Chapter 60
action because it found the KJRA applied and provided a mechanism for resolving the
insurance carriers' dispute over the legal responsibility for Barker's benefits. Under
K.S.A. 77-622(b), the panel properly returned the KJRA appeal to the agency for
resolution.
The majority relies on Travelers' citation of the definition of "remand" drawn from
Black's Law Dictionary 1547 (11th ed. 2019) as "[t]he act or an instance of sending
something (such as a case, claim, or person) back for further action." But, of course, the
definition encompasses a court returning an administrative order to the agency, especially
in conformity with a statute like K.S.A. 77-622(b) permitting that precise course of
action. In turn, both Travelers and the majority try to plug that hole in the argument with
a quote from the Nebraska Court of Appeals to the effect that a "'remand'" entails
"returning a proceeding to the court from which the appeal originated for further action."
Molina v. Salgado-Bustamante, 21 Neb. App. 75, 83, 837 N.W.2d 553 (2013). In that
case, the Nebraska Court of Appeals was discussing the mandate rule in the context of a
paternity action it had sent back to the district court to reassess the amount of child
support. The court did not presume to comment on the judicial treatment of
administrative appeals and most certainly did not endeavor to construe the KJRA. This
line of argument highlights the sort of legal fast shuffle permeating Travelers' position on
jurisdiction.
30
⦁ The majority suggests that K.S.A. 77-622(b) doesn't apply here because the
director issued the contested order and Travelers I remanded to the Board. In doing so,
the majority holds that the director and the Board constitute separate agencies under the
KJRA, thereby divesting this court of authority to remand to the agency. But the
governing statutory definitions bely that reasoning. Moreover, the "agency" here is the
Division of Workers Compensation.
Under K.S.A. 77-602(a), an "agency" for purposes of the KJRA is defined as "a
state agency," and, in turn, K.S.A. 77-602(k) broadly defines "state agency" as "any
officer, department, bureau, division, board, authority, agency, commission or institution
of this state." So the Division of Workers Compensation is an agency. Indeed, in its
petition for judicial review under the KJRA, Travelers identified the Division as the
agency. See K.S.A. 77-614(b)(1) (KJRA petition "shall set forth . . . the name and
mailing address of the agency whose action is at issue").
But the majority—without any supporting legal authority—misconstrues the
definition of "state agency." The purpose of the statutory definition is to bring the widest
range of decision-making within the KJRA and to avoid inadvertently excluding some
decision-maker within an executive department, division, or other entity. See Heiland,
270 Kan. at 668 (KJRA "applies to all agencies and all proceedings for judicial review"
and "establishes the exclusive means of judicial review"). To that end, the governmental
entities and positions identified in the definition of "state agency" are not mutually
exclusive but pyramiding or interlocking to assure the KJRA's broad application.
Construed that way, the definition effectuates the legislative directive in K.S.A. 77-
603(a) that the KJRA governs "all agencies and all proceedings for judicial review . . . of
agency actions not specifically exempted by statute from the provisions of this act." No
statutory exemption has been extended to the Division of Workers Compensation, the
director, or the Board.
31
In effect, the majority performs something like a judicial vivisection of the
Division as a state agency when it carves out the director and the Board as independent
agencies for jurisdictional purposes or for remand under K.S.A. 77-622(a). By doing so,
the majority fragments the Division and presumably other executive departments and
divisions into multiple jurisdictional fiefdoms. The result confounds the statutory
language and the legislative purpose of the KJRA outlined in both K.S.A. 77-602 and
K.S.A. 77-603.
The Division may be an unusual agency in that two principals—the director and
the Board—have spheres of decision-making authority. For example, the director
promulgates administrative rules and regulations for the agency. K.S.A. 44-573. The
adoption of those procedures constitutes an agency action. See K.S.A. 77-602(b)(1)
("agency action" includes "a rule and regulation or an order"). The director also sets and
biennially updates a schedule of maximum fees for medical treatment and other services
provided to injured workers and otherwise performs administrative duties, such as
receiving claims for benefits and assigning them to administrative law judges. K.S.A.
2020 Supp. 44-510i(c) (reimbursement schedule); K.S.A. 2020 Supp. 44-534(a) (receipt
and assignment of claims). The Board is charged with reviewing determinations of
administrative law judges awarding or denying benefits to injured workers and deciding
ancillary matters, such as reimbursement requests from insurance carriers. K.S.A. 2020
Supp. 44-556(e). The Board's orders are agency actions.
When it comes to disputes among insurance carriers over their legal responsibility
for benefits properly paid injured workers—the situation we have here—K.S.A. 2020
Supp. 44-556(e) allocates authority and divides duties between the Board and the director
within the agency. As I have explained, the Board has the responsibility for substantively
examining the circumstances of the particular claim and determining which carrier owes
what. And that is an action of the Division, as an agency, subject to review under the
KJRA. Based on the Board's determination, the director then issues a certificate of
32
payment identifying the amount to be reimbursed and who is to pay whom. That is not an
agency action, since it is simply a ministerial and mechanical implementation of the
Board's substantive decision. See K.S.A. 77-602(e) (an order, as an agency action,
"determines the legal rights, duties, . . . or other legal interests of one or more specific
persons").
Allocating the substantive decision-making to the Board makes sense, since the
obligations of the insurance carriers presumably will be closely tied to the circumstances
of the injured worker's underlying claim and the benefits awarded. Here, for example,
Barker's claim arose from a repetitive use injury for carpal tunnel syndrome she suffered
while working as a legal secretary; the injury spanned a considerable time, required serial
treatments of limited effectiveness, and involved two employers with several insurance
carriers. Arcane and somewhat artificial rules governed Barker's repetitive use injuries.
See Barker v. Grace, Unruh & Pratt, No. 108,223, 2013 WL 5187413, at *5 (Kan. App.
2013) (unpublished opinion). Sorting out the legal obligations for those benefits was not a
simple task, and K.S.A. 2020 Supp. 44-556(e) entrusts that task within the agency to the
Board.
The panel in Travelers I properly remanded the reimbursement dispute to the
Division, as the agency, and directed that the Board, as the statutory decision-maker
under K.S.A. 2020 Supp. 44-556(e), review and resolve the substantive disagreement.
The Board has done so, consistent with the judicial remand authority conferred in K.S.A.
77-622(b).
The majority tries to bolster its position by suggesting there was no extant workers
compensation case because the benefits due Barker had been determined and were no
longer subject to any legal challenge. But the suggestion misses the mark. Although the
benefits had been paid and were effectively beyond contest, the workers compensation
case had not been concluded precisely because the insurance carriers were disputing their
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respective responsibilities for those benefits. The dispute may have been ancillary to
Barker's claim for benefits, and she had no legal interest in which party ultimately
covered those benefits. But the residual disagreement between the insurance carriers
presented an issue to be decided within the workers compensation case. It was not a
freestanding administrative proceeding. The director, thus, entered his order in the
workers compensation case, and both Travelers and OneBeacon identified their letter
briefs as being submitted in the case. So there remained an active workers compensation
case.
⦁ The majority makes multiple references to Schmidtlien Electric, Inc. v.
Greathouse, 278 Kan. 810, 104 P.3d 378 (2005), as if it were supporting authority. To the
extent Schmidtlien Electric is relevant here, it lends backing to Travelers I. The dispute in
Schmidtlien Electric centered on K.S.A. 44-534a(b), a different reimbursement statute.
Under K.S.A. 44-534a(b), an insurance carrier or employer providing benefits to an
injured worker during the pendency of a compensation claim is entitled to reimbursement
from the Fund if an administrative law judge or the Board later determines the worker
was not legally entitled to the benefits. Upon that determination, the director is to issue a
certificate of reimbursement to the commissioner of insurance who, in turn, reimburses
the employer or insurance carrier from the Fund.
In Schmidtlien Electric, the court considered two workers compensation claims in
which administrative law judges made preliminary awards of benefits. In one case, an
administrative law judge later entered a final order denying the claim upon an agreed
submission of the parties that the worker did not timely prosecute the claim. The worker
also agreed the injury did not occur in the scope or course of her employment. The
dismissal order included the dollar amount of preliminary benefits the worker received.
In the other case, an administrative law judge entered an order dismissing the claim,
finding that the worker had abandoned it. That dismissal order specified the preliminary
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benefits paid the worker. The director (one of Karns' predecessors) refused to issue
certificates of reimbursement in both instances.
The court held that the director performs a ministerial, nondiscretionary function
in issuing a certificate of reimbursement under K.S.A. 44-534a(b) precisely because an
administrative law judge or the Board has found that specifically identified preliminary
benefits were erroneously paid to the claimant. 278 Kan. at 833 ("Since the ALJs in both
matters found that compensation should be totally disallowed, [the director's] statutory
duty to certify these claims for reimbursement is clear."). The director had no authority to
do otherwise in that circumstance. 278 Kan at 833 (director lacked statutory basis to
reverse ALJ and disallow reimbursement claims under K.S.A. 44-534a[b]). The insurance
carriers, therefore, could bring mandamus actions under Chapter 60 to compel the
director to perform that ministerial function. Conversely, a properly executed certificate
of reimbursement entails no exercise of discretion and cannot be appealed. The
reimbursement process in K.S.A. 2020 Supp. 44-556(e) is comparable in the sense that an
administrative law judge or the Board is to resolve the substantive dispute between the
insurance carriers and the director is then limited to a ministerial duty in certifying any
reimbursement. Karns exceeded the ministerial role assigned the director in that process.
In those respects, Schmidtlien Electric is consistent with Travelers I, and nothing in the
decision undermines Travelers I.
⦁ The majority finally posits in a single paragraph that the Board lacked subject
matter jurisdiction to decide the dispute between Travelers and OneBeacon on remand.
The majority recites the general principle that an order or judgment issued by a court (or
presumably by an administrative agency) without subject matter jurisdiction is void. But
the majority doesn't explain why the rule applies here. The Division of Workers
Compensation, as the administrative agency, plainly has the statutory authority (and duty)
to settle the kind of dispute that has arisen between Travelers and OneBeacon. That
authority translates into subject matter jurisdiction. See Rodewald v. Kansas Dept. of
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Revenue, 296 Kan. 1022, 1038, 297 P.3d 281 (2013) (Kansas Department of Revenue, as
administrative agency, "must derive its subject matter jurisdiction from statutory
authority").
In K.S.A. 2020 Supp. 44-556(e), the Legislature conferred jurisdiction on the
agency and bifurcated the processing of the reimbursement disputes or claims between
the Board and the director. As I have said, the Board holds the authority within the
agency to settle those substantive disputes, and the director has a ministerial duty to
implement the resolution through a reimbursement certification. The intra-agency
division of legal responsibility between the Board and the director entails the mechanism
for dispute resolution or a claims-processing rule rather than the grant of subject matter
jurisdiction to the agency. See Union Pacific R. Co. v. Brotherhood of Locomotive
Engineers, 558 U.S. 67, 81-82, 130 S. Ct. 584, 175 L. Ed. 2d 428 (2009); Cebollero-
Bertran v. Puerto Rico Aqueduct and Sewer Authority, 4 F.4th 63, 70-71 (1st Cir. 2021).
That's particularly true in the sense OneBeacon initially requested reimbursement with a
letter to the director rather than a motion to the Board. OneBeacon simply followed the
wrong procedure to present its claim to the agency.
Accordingly, contrary to the majority's suggestion, even if Travelers I
misallocated the intra-agency authority of the Board and the director under K.S.A. 2020
Supp. 44-556(e)—meaning OneBeacon did the right thing in submitting the
reimbursement request to the director—the Division was never deprived of its subject
matter jurisdiction over the dispute between Travelers and OneBeacon. In turn, the
allocation of authority set out in Travelers I became law of the case for this matter even if
it were otherwise erroneous. See State v. Collier, 263 Kan. 629, Syl. ¶ 3, 952 P.2d 1326(1998); Garetson Brothers v. American Warrior, Inc., 56 Kan. App. 2d 623, 650-51, 435
P.3d 1153 (2019). Although legally irrelevant to the application of law of the case,
Travelers has little room to complain now since it chose not to ask the Kansas Supreme
Court to review Travelers I. And similarly irrelevant, I (not surprisingly) see no error in
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how Travelers I applied K.S.A. 2020 Supp. 44-556(e). Regardless, the Division had and
has subject matter jurisdiction.
IV.
Along the way, the majority has added color to its analytical pastiche by invoking
train wrecks ("the case went off the rails" with Travelers I), jurisdictional icebergs ("[w]e
must examine the iceberg before us"), and unfortunate canines (dogs hosting fleas and
ticks). Slip op. at 10, 14, 16. So I close with some color, as well. Travelers' jurisdictional
argument and the majority's endorsement of it amount to Shakespearian "sound and fury,
signifying nothing." Shakespeare, Macbeth, Act 5, scene 5 (available online at numerous
sites, e.g., shakespeare.mit.edu/macbeth/full.html). I would reject the jurisdictional
argument and move on to the other points Travelers has offered for casting aside the
Board's determination that it should reimburse OneBeacon.
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