Court Opinion

ID: 2758592
Source: CourtListenerOpinion
Date Created: 2014-12-09 16:10:35.408787+00
Date Added: 2024-06-11T10:36:17.619637
License: Public Domain

COURT OF APPEALS OF VIRGINIA

            Present: Judges Frank, Beales and Senior Judge Clements
PUBLISHED

            Argued at Richmond, Virginia

            NATIONWIDE MUTUAL INSURANCE COMPANY
                                                                                OPINION BY
            v.     Record No. 0322-14-2                                    JUDGE ROBERT P. FRANK
                                                                              DECEMBER 9, 2014
            THE ESTATE OF PHILLIP HARRISON AND
             UNINSURED EMPLOYER’S FUND

                        FROM THE VIRGINIA WORKERS’ COMPENSATION COMMISSION

                           Adam E. Strauchler (Robey, Teumer, Drash, Kimbrell & Counts, on
                           brief), for appellant.

                           Charlene A Morring (Montagna, Klein, Camden LLP, on brief), for
                           appellee the Estate of Phillip Harrison.

                           Robert A. Rapaport (Bonnie P. Lane; Clarke, Dolph, Rapaport,
                           Hull & Brunick, P.L.C., on brief), for appellee Uninsured
                           Employer’s Fund.

                   Nationwide Mutual Insurance Company (“Nationwide”), appellant, appeals the decision

            of the Workers’ Compensation Commission (“commission”) finding that the commission has

            jurisdiction to award compensation to the claimant. In the alternative, Nationwide challenges the

            commission’s refusal to stay proceedings before the commission pending the outcome of a

            declaratory judgment action in the circuit court to resolve the coverage dispute. For the

            following reasons, we affirm the commission’s decision.

                                                    BACKGROUND

                   Claimant filed a claim against D&W Garages, Inc. (“D&W”) seeking compensation for

            the death of claimant’s decedent, Phillip Harrison. At the time of his death, Harrison was an

            employee for Home Crafters of Tidewater and a statutory employee of D&W.
       D&W alleged it was covered under a workers’ compensation policy issued by

Nationwide. Nationwide defended on the basis that its policy was void ab initio due to a

material misrepresentation made by D&W, i.e., that D&W failed to disclose its use of

subcontractors. The Uninsured Employer’s Fund was joined in the case.

       The parties stipulated that decedent was subject to the jurisdiction of the Workers’

Compensation Act (“the Act”) at all times, that he was working for Home Crafters of Tidewater

on August 29, 2012 when he was electrocuted resulting in his death on September 5, 2012, that

his wife was the sole dependent at the time of his death, that his average weekly wage was

$78.86, and that subject to the resolution of a coverage dispute with the employer, Nationwide is

responsible for any award of benefits the commission may enter.

       Nationwide asked the deputy commissioner to resolve the coverage dispute between it

and D&W. The deputy ruled he had no jurisdiction to address the coverage dispute.1

Nationwide then contended that the commission had no jurisdiction to enter an award against it

because the deputy refused to determine coverage.

       In the alternative, Nationwide moved for a stay in the proceedings pending the resolution

of the declaratory judgment proceeding pending in circuit court. Nationwide did not indicate

how long that proceeding would take.2

       The deputy denied Nationwide’s motions. Nationwide appealed to the full commission

which upheld the deputy’s rulings.

       This appeal follows.

       1
           Nationwide, in this appeal, does not contest this ruling.
       2
         As of the date of the panel hearing, the declaratory judgment action had not yet been set
for a hearing.
                                                -2-
                                            ANALYSIS

         Nationwide raises two issues on appeal. First, it contends the commission had no

jurisdiction to enter an award against it. Second, Nationwide claims the commission erred in

refusing to stay the proceedings pending the results of the declaratory judgment action in circuit

court.

                                             Jurisdiction

         Nationwide contends the commission had no jurisdiction to enter an award against it.

This argument is premised on the commission’s ruling that it had no jurisdiction over

Nationwide to decide the coverage issue. It contends any award by the commission pre-supposes

Nationwide is D&W’s insurer. Until that issue is resolved, Nationwide argues, it is not properly

before the commission until it is determined Nationwide is D&W’s insurer.

         A question regarding jurisdiction is a matter of law. Craig v. Craig, 59 Va. App. 527,

539, 721 S.E.2d 24, 29 (2012). “[W]e review the trial court’s statutory interpretations and legal

conclusions de novo.” Navas v. Navas, 43 Va. App. 484, 487, 599 S.E.2d 479, 480 (2004).

         Clearly, the commission has jurisdiction to resolve claims made under Title 65.2. See

Code § 65.2-700. Nationwide cites no cases nor argues why the commission should be divested

of that jurisdiction because of a coverage issue.

         Nationwide is bound by the provisions of Code § 65.2-811 which states:

                         No policy of insurance against liability arising under this
                title shall be issued unless it contains the agreement of the insurer
                that it will promptly pay the person entitled to the same all benefits
                conferred by this title and all installments of the compensation that
                may be awarded or agreed upon and that the obligation shall not be
                affected by any default of the insured after the injury or by any
                default in giving notice required by such policy or otherwise. Such
                agreement shall be construed to be a direct promise by the insurer
                to the person entitled to compensation, enforceable in his name.

                                                -3-
        Contractually, Nationwide agreed to pay compensation and that duty is a “direct

promise” to the claimant to pay. As the commission opined, “there is no caveat in the statute that

the claimant must first establish coverage . . . .”

        Code § 65.2-804(B) provides:

                No policy of insurance hereafter issued under the provisions of this
                title, nor any membership agreement in a group self-insurance
                association, shall be cancelled or nonrenewed by the insurer
                issuing such policy or by the group self-insurance association
                cancelling or nonrenewing such membership, except on 30 days’
                notice to the employer and the Workers’ Compensation
                Commission, unless the employer has obtained other insurance and
                the Workers’ Compensation Commission is notified of that fact by
                the insurer assuming the risk, or unless, in the event of
                cancellation, said cancellation is for nonpayment of premiums;
                then 10 days’ notice shall be given the employer and the Workers’
                Compensation Commission.

        Hartford Fire Ins. Co. v. Tucker, 3 Va. App. 116, 348 S.E.2d 416 (1986), aids our

analysis. The issue there was whether the commission had jurisdiction to decide an insured’s

claim for restitution against another insurer, specifically, which carrier was responsible for

paying benefits to the claimant. Hartford had paid benefits for claimant pursuant to various

agreements until it discovered that its policy did not become effective until after claimant

suffered his injury. Hartford then sought to have another carrier be responsible for future

benefits and to have that carrier make restitution to Hartford for payments previously made.

        We held the commission had no jurisdiction to resolve disputes between carriers that do

not affect an award of the commission. “The purpose and effect of the [Act] are to control and

regulate the relations between the employer and the employee.” Id. at 120, 348 S.E.2d at 418.

“When the rights of the claimant are not at stake, the Act clearly leaves the litigants to their

common law remedies . . . .” Id. at 121, 348 S.E.2d at 419.

        Nationwide seeks to distinguish Hartford because in that case Hartford had already

voluntarily assumed responsibility for compensating claimant for his injuries. Hartford had
                                                  -4-
agreed to and had been paying benefits prior to discovering the coverage problem. Nevertheless,

whatever the underlying facts, the commission determined it had jurisdiction to rule on

compensation despite finding it had no jurisdiction to determine restitution between conflicting

carriers.

        In the instant case, the commission found:

                       When Virginia workers’ compensation policies are reported
               to the commission, the commission presumes coverage under the
               registered policy, absent a ruling to the contrary. Valid coverage is
               presumed by the commission, so long as the insurance is reported
               and registered with the commission, and there is no requirement
               that coverage be affirmatively proven in every case. If the insurer
               asserts that it is not responsible for payment of the disputed claim,
               the insurer must prove that the policy it issued and reported to the
               commission was cancelled or voided. Moreover, if an insurer
               seeks to avoid coverage, which is facially valid by its report and
               registration of such policy with the commission, it must act to
               avoid coverage by providing the requisite notice of cancellation or
               nonrenewal, or by seeking a declaratory judgment voiding the
               policy.

                       In this case, at the time of the claimant’s accident the
               employer’s policy with the employer was in place, it had been
               reported and registered with the commission, and there had been
               no notice provided of a cancellation or nonrenewal of the policy.
               Nor had there been any declaratory judgment action in which the
               policy had been declared void. Thus, under Va. Code § 65.2-811,
               the insurer was obligated to pay the claimant benefits owed under
               the Act, and the commission had jurisdiction to enter an award
               against the insurer in this case. Under these circumstances, a stay
               of the proceedings would be inappropriate.

        The commission’s opinion is well grounded in the Act. An insurer is required to pay

benefits until the policy has been cancelled, not renewed or declared void. At the time of the

claim, the policy was in full force and effect.3

        3
        At oral argument, appellant contended that the commission should have ordered
payment from the Uninsured Employer’s Fund for payment. We disagree.
      Pertinent to this issue, Code § 65.2-1203(A) provides as follows:

               Whenever, following due investigation of a claim for
               compensation benefits, the Commission determines that (i) the
                                             -5-
       Nationwide does not contend it cancelled the policy or did not renew it under the

provisions of Code § 65.2-804(B). Thus, we conclude the commission did not err in finding it

had jurisdiction over Nationwide to award compensation.

                             Denial of Nationwide’s Motion to Stay

       Essentially, Nationwide asked the commission to delay awarding the deceased’s widow

death benefits because it disputed coverage with its insured. Clearly, the claimant was not

involved in that dispute.

       The decision to stay a proceeding is a discretionary matter. See Harris v. Harris, 184 Va.

124, 127, 34 S.E.2d 378, 379 (1945) (addressing whether the circuit court “abuse[d] its

discretion in refusing to stay the proceedings”). Similarly, a “ruling on a motion for a

continuance will be rejected on appeal only upon a showing of abuse of discretion and resulting

prejudice to the movant.” Haugen v. Shenandoah Valley Dep’t of Soc. Servs., 274 Va. 27, 34,

645 S.E.2d 261, 265 (2007). We review such a decision “in view of the circumstances unique to

each case.” Id.

               employer of record has failed to comply with the provisions of
               § 65.2-801 . . . , and (ii) the claim is compensable, the Commission
               shall . . . order payment of any award of compensation benefits
               pursuant to this chapter from the Uninsured Employer’s Fund.

        The Fund was created “for the purpose of providing funds for compensation benefits
awarded against any uninsured or self-insured employer under the provisions of this chapter.”
Uninsured Employer’s Fund v. Flanary, 27 Va. App. 201, 206, 497 S.E.2d 912, 914 (1998);
Code § 65.2-1201. The commission is authorized to “order payment of any award of
compensation benefits . . . from the . . . Fund” when the commission determines that an employer
has failed to acquire the requisite workers’ compensation insurance or cannot satisfy a
compensable claim in whole or in part. Code § 65.2-1203(A). This Court has held that the
“purpose of the Fund is to insure that injured employees will be paid their compensation benefits
even though their employer has breached his duty to secure compensation insurance.” A.G. Van
Metre, Jr., Inc. v. Gandy, 7 Va. App. 207, 213, 372 S.E.2d 198, 202 (1988).
        Contractually, Nationwide is employer’s insurer. Nothing in the record establishes that
employer failed to comply with any of the statutory provisions of Code § 65.2-801. Therefore,
we find no merit to Nationwide’s assertion that the Fund is responsible for paying compensation
to the claimant.
                                                 -6-
       “The purpose of the Act is to protect employees.” Turf Care, Inc. v. Henson, 51 Va. App.

318, 336, 657 S.E.2d 787, 795 (2008). “Thus, it is to be ‘construed liberally and favorably as to’

employees.” Id. (quoting Ellis v. Commonwealth Dep’t of Highways, 182 Va. 293, 303, 28

S.E.2d 730, 734 (1944)). “‘Further, it is a universal rule that statutes . . . which are remedial in

nature, are to be construed liberally, so as to suppress the mischief and advance the remedy, as

the legislature intended.’” 7-Eleven, Inc. v. Dep’t of Envtl. Quality, 42 Va. App. 65, 75, 590

S.E.2d 84, 89 (2003) (en banc) (quoting Bd. of Sup. v. King Land Corp., 238 Va. 97, 103, 380

S.E.2d 895, 897-98 (1989)).

       Nationwide’s position frustrates the purpose of the Act. The Act is remedial in nature; its

purpose is “the prompt payment of compensation to injured workers. The purpose of the penalty

provision of Code § [65.2-524] is to compel prompt payment. . . . [The statute’s] time limit is

designed to discourage ‘slow and circuitous’ payment of benefits due and to discourage inaction

or inattention to a claim.” Weston v. B.J. Church Constr. Co., 9 Va. App. 283, 286-87, 387

S.E.2d 96, 97-98 (1989).

       Code § 65.2-811 states in part:

               No policy of insurance against liability arising under this title shall
               be issued unless it contains the agreement of the insurer that it will
               promptly pay the person entitled to the same all benefits conferred
               by this title and all installments of the compensation that may be
               awarded or agreed upon . . . .

       The legislature clearly understood the financial needs of injured employees and their

dependents. It must be remembered that the purpose of the Act is to compensate injured

employees, based on the claimant’s income. See Arlington Cnty. Fire Dep’t v. Stebbins, 21

Va. App. 570, 572, 466 S.E.2d 124, 125-26 (1996) (“The purpose of the Workers’ Compensation

Act is to compensate employees when they lose an opportunity to engage in work after suffering

                                                 -7-
work-related injuries.”). Those payments are income substitutes. Failure to receive income or

its substitute creates financial hardship on the claimant and his/her dependents.

       Since the coverage issue does not involve the claimant’s right to an award, the claimant

should be awarded timely benefits. Nationwide’s argument only addresses prejudice to itself,

ignoring a delay’s impact on the decedent’s spouse. Such a result does not protect the employee,

but prejudices him.

       We note that the deputy found no prejudice to Nationwide. However, the full

commission never explicitly ruled on prejudice. It found Nationwide was obligated by statute

and the terms of its policy to pay the award of compensation. Any resolution of the disputed

coverage issue is not relevant to Nationwide’s present duty to pay. It can reasonably be inferred

that the commission found no prejudice to Nationwide because any stay granted would not affect

Nationwide’s present duty to pay.

       We therefore conclude the commission did not abuse its discretion in not granting

Nationwide’s motion for a stay.

                                         CONCLUSION

       For the foregoing reasons, we conclude the commission did not err in finding that it had

jurisdiction to award compensation to the claimant. We further find that the commission did not

err in refusing to stay proceedings pending the outcome of a declaratory judgment action in the

circuit court. Therefore, the decision of the commission is affirmed.

                                                                                        Affirmed.

                                               -8-