Opinion ID: 2287166
Heading Depth: 1
Heading Rank: 2

Heading: sufficiency of the evidence of constructive fraud.

Text: Zurich asserts that the ALJ erred by applying the doctrine of equitable estoppel to preclude it from terminating benefits paid under Tennessee law because no evidentiary foundation existed for finding that Zurich engaged in constructive fraud. Zurich maintains that it properly represented that it owed benefits by operation of Tennessee law during the initial litigation and acted fully within its rights under Tennessee's election of remedies doctrine by terminating payments after the award became final because it owed no additional benefits under the Tennessee policy at that point. Zurich states that the doctrine completely terminates any obligation to continue paying benefits pursuant to Tennessee law when benefits are awarded in any other jurisdiction and also states that its obligation to pay those benefits did not end until the award of benefits in Kentucky became final. Zurich's argument overlooks the fact that these appeals concern the integrity of judgments in claims that were brought under the Kentucky Act. A trial court has the inherent power to determine that its judgments reflect the truth, a power that extends not only to fraud but also to bad faith, abuse of judicial process, deception of the court, and lack of candor to the court. [14] Estoppel is an equitable remedy that courts often invoke to prevent a party from benefiting from its misconduct. [15] The facts and circumstances of a case determine the propriety of resorting to an equitable remedy. [16] Conduct that works a fraud or constructive fraud on the tribunal and has a detrimental effect on the accuracy and integrity of a judgment warrants such a remedy. The facts and circumstances of the present case support the decision to estop Zurich from denying liability at reopening and order it to continue paying the benefits for which it admitted both liability and coverage throughout the initial proceeding. The widows filed claims against Myers in Kentucky. Zurich knew that the policy it issued to Myers did not cover Kentucky claims but did cover Tennessee claims. It also knew that Tennessee's election of remedies doctrine would bar such a claim if the widows acted affirmatively to obtain benefits in another state or knowingly and voluntarily accepted benefits under the law of another state. [17] Acting with that knowledge, Zurich admitted that it was liable for benefits provided by Tennessee law and paid Tennessee benefits voluntarily throughout the litigation. Moreover, it failed to object to either the initial order granting Journey credit for Tennessee benefits paid by Zurich or the order on reconsideration, which indicated clearly that the ALJ construed Zurich's admission of liability for such benefits to mean that it would continue to pay them in the future. Zurich's litigation strategy worked to Journey's detriment (and perhaps the widows') by discouraging the widows from filing Tennessee claims and obtaining a Tennessee judgment against Zurich until such time as the election of remedies doctrine would bar them from doing so. Moreover, it deceived the ALJ. If allowed to succeed, Zurich's strategy would enable it to avoid paying the bulk of its admitted liability under Tennessee law by rendering worthless most of the credit that Journey received against the widows' awards of income benefits. By misrepresenting its true position throughout the initial litigation, Zurich denied the parties and the ALJ an opportunity to address its plan of action and undermined the integrity of the resulting judgment. Such circumstances warranted an estoppel and an order requiring Zurich to pay the Tennessee benefits that its policy covered and for which it admitted having liability initially. The decision of the Court of Appeals is affirmed. All sitting. All concur.