Case Title: Waltrip v. Osage Million Dollar Elm Casino

Citation: 

Docket Number: 109030

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2012-06-26T00:00:00Z

Document:
WALTRIP v. OSAGE MILLION DOLLAR ELM CASINO2012 OK 65Case Number: 109030Decided: 06/26/2012THE SUPREME COURT OF THE STATE OF OKLAHOMA
NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN 
THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR 
WITHDRAWAL. 

John A. Waltrip, Petitioner,v.Osage Million Dollar Elm 
Casino and/or Osage Tribe, Hudson Insurance Co. and the Workers' Compensation 
Court, Respondents.
CERTIORARI TO COURT OF CIVIL APPEALSDivision II
¶0 Injured employee of a tribal enterprise brought a claim against his 
employer's workers' compensation insurer under the estoppel act. The Workers' 
Compensation Court, Honorable Owen T. Evans, dismissed the claim for lack of 
jurisdiction. The Court of Civil Appeals sustained the order denying 
jurisdiction.
CERTIORARI PREVIOUSLY GRANTED;OPINION OF COURT OF CIVIL 
APPEALS VACATED;ORDER OF WORKERS' COMPENSATION COURT REVERSED AND 
REMANDED WITH INSTRUCTIONS.
Bryce A. Hill, Law Office of Bryce A. Hill, Tulsa, Oklahoma, for 
Petitioner.Leah P. Keele, Brandy L. Shores, Brian J. Goree, Latham, Wagner, 
Steele & Lehman, P.C., Tulsa, Oklahoma, for Respondents.
COLBERT, V.C.J.
¶1 An employee of a tribal enterprise seeks to invoke the jurisdiction of the 
Oklahoma Workers' Compensation Court. This Court holds (1) the tribe enjoys 
sovereign immunity and is not therefore subject to the jurisdiction of the 
Oklahoma Workers' Compensation Court and (2) the workers' compensation insurer 
does not enjoy the tribe's immunity and is estopped to deny coverage under a 
policy for which it accepted premiums computed in part on the employee's 
earnings.
FACTS AND PROCEDURAL HISTORY
¶2 The facts are undisputed. The Osage Million Dollar Elm Casino (Employer) 
is a tribal enterprise of the Osage Nation, a federally recognized Indian tribe. 
It carries a policy issued by Hudson Insurance Company (Insurer) for "sovereign 
nation workers' compensation insurance." A third party, Tribal First, 
administers claims asserted under the policy.
¶3 John A. Waltrip (Employee) fell on a patch of ice while working as a 
surveillance supervisor at the casino and injured primarily his right shoulder. 
Employee initially obtained treatment from his personal physician but Tribal 
First sent him to an orthopedic specialist who recommended surgery on August 25, 
2009. The specialist confirmed that the need for shoulder surgery was due to the 
December 9, 2008, injury rather than an injury ten years earlier. No 
authorization for surgery has been provided.
¶4 Employee filed a claim in the Oklahoma Workers' Compensation Court on July 
17, 2009, seeking medical treatment and temporary total disability. Employer and 
Insurer asserted that court lacked jurisdiction based on the tribe's sovereign 
immunity. A hearing was held solely on the jurisdictional issue on November 23, 
2010, at which the parties presented arguments. On December 9, 2010, the 
Workers' Compensation Court denied jurisdiction and dismissed the claim holding 
that the tribe enjoys sovereign immunity and that the provisions of the tribe's 
workers' compensation policy did not subject Insurer to liability for claims in 
state court. The Court of Civil Appeals affirmed and this Court granted 
certiorari review. 
STANDARD OF REVIEW
¶5 This matter presents only the question of the jurisdiction of the Workers' 
Compensation Court over Insurer concerning Employee's claim. A jurisdictional 
issue is reviewed de novo and may be reviewed without a denial or award of 
benefits. Triad Transport, Inc. v. Wynne, 2012 OK 30, ¶ 7, 276 P.3d 1013, 1016.
ANALYSIS
¶6 This is the latest in a series of cases involving an injured employee of 
an Indian tribe or a tribal enterprise who seeks to invoke the jurisdiction of 
the Oklahoma Workers' Compensation Court. Four opinions by this Court in 1997 
are collectively known as the Indian sovereignty causes. See Dominic 
v. Creek Nation, 1997 OK 41, 936 P.2d 935; Little v. Muscogee (Creek) Nation, 
1997 OK 57, 938 P.2d 739; Wahpepah v. Kickapoo Tribe of 
Okla., 1997 OK 
63, 939 P.2d 1151; Muscogee Nation v. Smith, 1997 OK 66, 940 P.2d 498. "In each of these cases the sovereign 
Indian nation purchased insurance policies from the State Insurance Fund and 
paid premiums based on its employees' salaries. Each policy was issued to cover 
claims filed in accordance with the [Workers' Compensation] Act." Shorter v. 
Tulsa Used Equip.& Indus. Engine Servs., 2006 OK 72, ¶ 9 n.21, 148 P.3d 864, 869 n.21. In each case the insurer was 
"estopped to deny coverage based on the tribe/nation's sovereign immunity" 
because the 'estoppel act' became applicable when the insurer collected premiums 
on covered employees. Id. 
¶7 Sections 65.2 and 65.3 of the Workers Compensation Act, collectively known 
as the "estoppel act," prevent those who insure employers against liability 
under the Workers' Compensation Act from denying coverage based on the status of 
the parties. The estoppel act "makes insurers liable, regardless of the 
insured's status as a covered employer, when it is established that - at the 
time of the injury - premiums computed on a claimant's wages were accepted under 
a policy insuring the employer against liability under the Workers' Compensation 
Act." Wahpepah, 1997 OK 63, ¶ 13, 939 P.2d  at 1154-55. Section 65.2 
provides:
Every employer and every insurance carrier who schedules any employee as a 
person employed by the employer for the purpose of paying or collecting 
insurance premiums on a Workers' compensation insurance policy or who pays, 
receives or collects any premiums upon any insurance policy covering the 
liability of such employer under the Workers' compensation law by reason of or 
upon the basis of the employment of any such employee shall be estopped to deny 
that such employee was employed by the employer in a hazardous employment 
subject to and covered by the Workers' compensation law if such person receives 
an accidental personal injury arising out of and in the course of his 
employment, during the period for which such premium was so received, regardless 
of the type of business in which the employer was engaged or the type of 
employment in which the employee was engaged at the time of such 
injury.
Okla. Stat. tit. 85 (Supp. 2010). Section 65.3 provides:
Every contract of insurance issued by an insurance carrier for the purpose of 
insuring an employer against liability under the Workers' Compensation Act shall 
be conclusively presumed to be a contract for the benefit of each and every 
person upon whom insurance premiums are paid, collected, or whose employment is 
considered or used in determination of the amount of premium collected upon such 
policy for the payment of benefits as provided by the Workers' Compensation Act 
regardless of the type of business in which the employer of such person is 
engaged or the type of work being performed by the employee at the time of any 
injury received by such employee arising out of and in the course of his 
employment, which contract may be enforced by such employee as the beneficiary 
thereof. 
Id. The essence of these provisions was carried forward into the 2011 
enactment of the Workers' Compensation Code at section 357 which provides:
Every employer and insurance carrier who schedules any employee as a person 
employed by the employer for the purpose of paying or collecting insurance 
premiums on a workers' compensation insurance policy or who pays, receives or 
collects any premiums upon any insurance policy covering the liability of such 
employer under the workers' compensation law by reason of or upon the basis of 
the employment of any such employee shall be estopped to deny that such employee 
was employed by the employer.
Okla. Stat. tit. 85 (2011). As explained in the Indian sovereignty causes, 
"[t]he rationale of the 'estoppel act' is that an insurer who accepts premiums 
should not evade liability for benefits due under compensation law." 
Dominic, 1997 OK 
41, ¶ 10, 936 P.2d  at 939.
¶8 Since as early as 2007, appellate courts in Oklahoma have been confronted 
with the task of interpreting the provisions of "sovereign nation workers' 
compensation" policies issued to tribe's and their enterprises by Hudson 
Insurance, Inc., the insurer in this matter. Decisions from the Court of Civil 
Appeals that have construed the policies have upheld the tribes' sovereign 
immunity while refusing to apply the estoppel act to the insurer due to the 
provisions of the insurance contract. See Hamby v. Cherokee Nation 
Casinos, 2010 OK CIV APP 
21, 231 P.3d 700; Quinton v. Cherokee Nation Enters., 2010 OK CIV APP 16, 229 P.3d 581; Pales v. Cherokee Nation Enters., 
2009 OK CIV APP 65, 216 P.3d 309; Hall v. Cherokee Nation, 
2007 OK CIV APP 49, 162 P.3d 979 (collectively Cherokee Nation cases). The 
lower courts cited that line of cases to reach the same result. This Court 
granted certiorari review of this matter to explain the application of the 
estoppel act to the claims of injured employees of a tribal enterprise under 
this sovereign nations workers' compensation policy. 
¶9 Insurer in this matter argues that the policy provisions demonstrate no 
intent to cover the claims of injured workers under Oklahoma's Workers' 
Compensation Code and therefore it is not subject to the estoppel act. The 
policy at issue describes its coverage as follows:
Sovereign Nation Workers' Compensation means the workers or workmen's 
compensation benefits as established by you [the tribe]. It does not include any 
state, federal worker or workmen's compensation law, any federal occupational 
disease law or the provisions of any law that provide non-occupational 
disability benefits.
Recognizing the tribe as a sovereign nation, with its corresponding civil 
jurisdiction, the actual benefits provided by this policy are subject to the 
tribal ordinance related to workers compensation benefits, in effect as of the 
effective date of this policy.
In the absence of a tribal ordinance you may or may not elect to utilize a 
state's workers' compensation benefit levels as a guideline for the benefits 
payable under this policy. However, in no event shall benefits payable exceed 
such state level benefits. The mere use of a state's benefit levels as a guide 
for payments, however, does not constitute an adoption of such state's benefit 
levels and shall not be construed as a waiver of your sovereign 
immunity.
The policy further provides that "[f]or the purposes of this policy, law 
shall mean, unless otherwise specifically identified, tribal ordinance or any 
other law to which you are subject."
¶10 The terms of the policy clearly contemplate the claims of injured workers 
will be adjudicated in tribal court pursuant to a tribe's workers' compensation 
ordinance. However, in the Osage Nation there is no tribal ordinance that 
applies to workers' compensation. Instead, in the absence of a tribal ordinance, 
Insured's third party administrator, Tribal First, operates under a set of 
"Workers' Compensation Provisions" which it has crafted to handle workers' 
compensation claims as the "sole and exclusive remedy by which injured workers' 
[sic] or their beneficiaries receive benefits provided for by these Provisions." 
Under the Tribal First Provisions, "[i]f an order is issued that the worker 
disagrees with," the worker may submit a written protest and an "appeal" may be 
filed with the "Tribal First Program Manager." "If it is determined that the 
appeal cannot be resolved, binding arbitration may be considered." 1 
¶11 By its apparently unilateral adoption of the Provisions, Tribal First 
appears to function as legislature, executive, trial court, and appellate court 
regarding the claims of injured workers while functioning as an agent of 
Insurer. No mention of these Provisions or Tribal First appear in the contract 
of insurance between Insurer and the tribal enterprise. There is nothing in the 
record to indicate the Tribe has approved or even considered the Tribal First 
Provisions. "Workers' compensation is a mechanism for providing wage benefits 
and medical care to injured workers and spreading the cost of these benefits 
through insurance." Parret v. UNICCO Serv. Co., 2005 OK 54, ¶ 19, 127 P.3d 572, 578. It is the product of quid pro quo 
between the employer and the employee.
To facilitate workers' compensation and its objectives, an "industrial 
bargain" was imposed. The employee gave up the right to bring a common law 
negligence action against the employer and in return received automatic 
guaranteed medical and wage benefits. The employer gave up the common law 
defenses and received reduced exposure to liability.
Id., ¶ 20, 127 P.3d  at 578. The action of a legislative body is required 
to make such provisions effective, not the unilateral and discretionary acts of 
a workers' compensation insurer. 
¶12 Under the Osage Nation Constitution, the Osage Nation Congress is vested 
with the exclusive authority to enact laws with the signature of the Principal 
Chief. See Osage Nation Const. art. VI, §§ 12&13. No workers' 
compensation ordinance has been enacted, no procedure for adjudicating claims 
has been developed by the Tribe, and no forum for adjudicating such claims is 
currently available within the tribal legal system. Insurer knew or should have 
known these facts at the time it issued the policy. Yet, Insurer wilfully and 
intentionally collects premiums from the tribal enterprise for providing 
workers' compensation benefits under a nonexistent tribal ordinance believing 
that it will step into the shoes of the Tribe and receive the benefit of the 
Tribe's sovereign immunity. Thus, Insurer obtains unjust enrichment from its 
adhesion contract with the Tribe.2
¶13 A decision in 2006 from this Court, in a non-tribal context, relied on 
the Indian sovereignty causes to explain the application and reach of the 
estoppel act. Shorter v. Tulsa Used Equipment and Industrial Engine 
Services, 2006 OK 
72, 148 P.3d 864, explained that the status of an employer or employee as "covered" under 
the Workers' Compensation Code is not controlling. Id.,¶¶ 9&10, 148 P.3d  at 869-870. This Court further explained that the focus of the estoppel act 
is not on the policy terms and noted that the provisions of the estoppel act 
"are utterly devoid of requirements that either contractual or consensual 
elements of claimant's relationship to the insured be established. The focus is, 
rather, on the rights of an injured claimant against the insurance carrier of 
the entity for whom claimant was acting when injured. These rights are purely 
statutory." Id., ¶ 10, 148 P.3d  at 870 (footnotes omitted)(emphasis 
added). "The terms of the estoppel act are plainly contemplated to apply to all 
those situations where a worker's employment is not covered by the specific 
provisions of the insured's policy but whose wages were used in premium 
calculations." Id., ¶ 13, 148 P.3d  at 871-872.3 Thus, the estoppel act is 
directed towards insurers, not insurance policies.
¶14 As this Court explained in the Indian sovereignty causes and further 
explained in Shorter, the estoppel act confers third party beneficiary 
status on the injured worker 4 and prevents the insurer from denying coverage based on 
the employer's status. Therefore, the sovereign immunity of the employer 
constitutes no barrier to its injured employees' invocation of the estoppel act 
absent a tribal ordinance that identifies the applicable law and forum for the 
adjudication of workers' compensation claims.5
¶15 If this Court were to give effect to Insurer's analysis of this matter, 
its obligation to provide benefits on behalf of the tribe and its injured 
workers would render the policy provisions illusory and inane. Insurer would 
possess the ability to arbitrarily deny claims and yet evade any judicial 
review in any tribal, federal, or state court. It would leave no avenue for an 
injured worker of the tribal enterprise to compel Insurer's performance under 
the policy in a judicial forum.
¶16 The issue in this matter is not whether Insurer is arbitrarily denying 
claims. Rather, the question is whether Insurer's promise to pay workers' 
compensation benefits is effectual in the absence of a tribal ordinance and a 
tribally sanctioned process for resolving disputes concerning benefits in either 
tribal or state court. Under such circumstances, Insurer's promise to provide 
benefits would become illusory and a sham but for application of the estoppel 
act. Insurer's third party administrator would by default become the final 
arbiter of the workers' compensation claims of employees of the tribal 
enterprise. No detached and neutral adjudicator would be accessible to a 
claimant without Insurer's consent. Insurer alone would determine whether it 
will pay benefits without the fear of legal action in any tribal, federal, or 
state court. To allow this procedure to go forward would be trampling on the 
fundamental rights of employees to due process under the state and federal 
constitutions and the Osage Nation Constitution.6 
¶17 The Tribe's sovereign immunity does not place Insurer beyond the reach of 
the estoppel act when there is no tribal ordinance or forum for the adjudication 
of workers' compensation claims under a policy of "sovereign nation workers' 
compensation." Such claims will be adjudicated in tribal court under a tribal 
ordinance when both law and a forum exist. Only when such law and forum are 
unavailable to an injured employee will the estoppel act operate to bring the 
Insured alone under the purview of Oklahoma's Workers' Compensation Code.
¶18 It is the absence of a tribal workers' compensation ordinance and the 
lack of a tribal forum that distinguishes this matter from Cherokee Nation cases 
in which the Court of Civil Appeals refused to apply the estoppel act to claims 
asserted under a "sovereign nations workers' compensation" policy. The Cherokee 
Nation has a tribal workers' compensation ordinance by which it adjudicates 
workers' compensation claims in its tribal court. If Insurer wishes to be 
certain that the claims of tribal enterprise employees will not be adjudicated 
in the Oklahoma Workers' Compensation Court pursuant to the Workers' 
Compensation Code, it should require that a tribe enact a tribal ordinance and 
provide a forum for the adjudication of workers' compensation claims before it 
contracts to insure those claims pursuant to tribal ordinance.
¶19 Today's decision in no way holds or implies that the Osage Nation is not 
immune from the jurisdiction of the Oklahoma Workers' Compensation Court. The 
Indian sovereignty causes resolved that issue long ago. Additionally, tribal 
sovereign immunity for the actions of tribal enterprises has been acknowledged 
widely.7 That acknowledgment is not diminished by today's 
holding which is directed only at Insurer's promise to provide workers' 
compensation benefits to employees of the tribal enterprise. The Osage Nation is 
entirely within its authority should it choose to enact a workers' compensation 
ordinance and provide a tribal forum. In the absence of such ordinance or forum, 
however, Insurer is not entitled to evade liability. Regardless of the tribes' 
sovereign immunity, the Oklahoma Workers' Compensation Court may exercise 
jurisdiction over Insurer, which is a Delaware corporation, and its third party 
administrator.
¶20 This claim, brought in the Workers' Compensation Court pursuant to the 
estoppel act, should have been asserted against Insurer and not the tribal 
enterprise. On remand, that court is instructed to reinstate the claim against 
Insurer only.
CERTIORARI PREVIOUSLY GRANTED;OPINION OF COURT OF CIVIL 
APPEALS VACATED;ORDER OF WORKERS' COMPENSATION COURT REVERSED AND REMANDED 
WITH INSTRUCTIONS. 
ALL JUSTICES CONCUR.
FOOTNOTES
1 Insurer asserts that 
arbitration was offered to Employee as a forum for dispute resolution but he 
declined. Apparently that offer was pursuant to this Tribal First provision. The 
contract between Insurer and the tribal enterprise mentions arbitration only "in 
relation to this Insurance (including disputes as to its validity, construction 
or enforceability), or for its breach." As to arbitration of a claim, the 
Provisions leave the decision to arbitrate solely with Insurer. If arbitration 
were pursued, however, presumably the applicable "law" would be the Tribal First 
Provisions. That "law" was crafted on behalf of the "Insurer," which the 
Provisions define to include the claims administrator. There is no Provision 
that describes where a party would seek judicial confirmation of such an 
arbitration award. 
2 An adhesion contract is:a standardized contract 
prepared entirely by one party to the transaction for the acceptance of the 
other; such a contract, due to the disparity in bargaining power between the 
draftsman and the second party, must be accepted or rejected by the second party 
on a "take it or leave it" basis, without opportunity for bargaining and under 
such conditions that the "adherer" cannot obtain the desired product or service 
save by acquiescing in the form agreement.
Rodgers v. Tecumseh Bank, 1988 OK 36, ¶ 14, 756 P.2d 1223, 1226 (quoting Steven v. Fid. & 
Cas. Co., 377 P.2d 284, 297 (Cal. 1963)). "Insurance contracts are generally 
recognized as one-sided when viewed under the circumstances at the time of 
contracting. Because of the disparity in the bargaining positions of the 
parties, these contracts of adhesion are interpreted consistent with the object 
sought to be accomplished . . .." Bratcher v. State Farm Fire & Cas. 
Co., 1998 OK 
63, ¶ 9, 961 P.2d 828, 830 (footnote omitted). 
3 The premiums in this policy were based on remuneration 
which included "payroll and all other remuneration paid or payable during the 
policy period for the services of: 1. all your officers and employees engaged in 
work covered by this policy . . .." 
4 Additionally, "[a] contract made expressly for the 
benefit of a third person, may be enforced by him at any time before the parties 
thereto rescind it." Okla. Stat. tit. 15, § 29 (2011). 
5 The insurance contract in this matter acknowledges the 
estoppel act and the employees' status as third party beneficiaries by 
providing: "We are directly and primarily liable to any person entitled to the 
benefits payable by this insurance. Those persons may enforce our duties; so may 
an agency authorized by law. Enforcement may be against us or against you and 
us." 
6 "The Osage Nation government in exercising sovereign 
powers shall not: . . . deny to any person within its jurisdiction the equal 
protection of its laws or deprive any person of liberty or property without due 
process of law." Osage Nation Const. art. IV, § 3(H). 
7 One general description of tribal immunity states:
As a matter of black-letter law, "Indian tribes are immune from lawsuit or 
court process in both state and federal court unless 'Congress has authorized 
the suit or the tribe has waived its immunity.'" Felix S. Cohen, Cohen's 
Handbook of Federal Indian Law, 635 (Nell Jessup Newton et al. eds., 
LexisNexis Matthew Bender rev. ed. 2005)[hereinafter Cohen 2005 
Handbook](quoting Kiowa Tribe v. Mfg. Technologies, Inc., 
523 U.S. 751, 754 (1998)); See also Three Affiliated Tribes of the 
Fort Berthold Reservation v. Wold Eng'g, P.C., 476 U.S. 877, 
890-891 (1986); Puyallup Tribe v. Dep't of Game, 433 U.S. 165, 
172-173 (1977). A tribe's sovereign immunity extends to its commercial as well 
as governmental activities. Kiowa Tribe, 523 U.S.  at 
759. 
"Tribal sovereign immunity protects a tribal corporation owned by a tribe and 
created under its own laws, absent express waiver of immunity by the tribe or 
Congressional abrogation." Wright v. Colville Tribal Ent. Corp., 147 P.3d 1275, 1278 (Wash. 2006)(citing Kiowa Tribe, 523 U.S. at 
754). 
State judicial jurisdiction over Indian tribes and tribal members in Indian 
country is generally precluded in the absence of express authorization by treaty 
or by Congress. Cohen 2005 Handbook at 521. "Indian country includes 'all 
lands set aside by whatever means for the residence of tribal Indians under 
federal protection, together with trust and restricted Indian allotments.'" 
Id. at 520 (quoting Okla. Tax Comm'n v. Sac & Fox Nation, 
508 U.S. 114, 125 (1993)).Cossey v. Cherokee Nation Enters., 
2009 OK 6, ¶ 2, 212 P.3d 447, 466-467 (Colbert, J. concurring 
specially).