Court Opinion

ID: 9909904
Source: CourtListenerOpinion
Date Created: 2023-12-14 16:05:41.58975+00
Date Added: 2024-06-11T12:49:28.653221
License: Public Domain

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                                              RENDERED: DECEMBER 14, 2023
                                                      NOT TO BE PUBLISHED

               Supreme Court of Kentucky
                                2023-SC-0040-WC

MS COMPANIES                                                           APPELLANT

                  ON APPEAL FROM COURT OF APPEALS
V.                         NO. 2022-CA-0032
                WORKERS’ COMPENSATION NO. WC-17-01865

JONATHAN HAWK; GRANT ROARK,                                            APPELLEES
ADMINISTRATIVE LAW JUDGE; AND
WORKERS’ COMPENSATION BOARD

                  MEMORANDUM OPINION OF THE COURT

                         REVERSING AND REMANDING

      In this workers’ compensation case, Appellee Jonathan Hawk (Hawk)

filed an application for benefits, alleging he suffered wrist injury due to

repetitive motion. Hawk later joined Appellant MS Companies (MS) as a

defendant, but MS never filed an answer. The question addressed in this

appeal is whether MS may be liable for workers’ compensation benefits if Hawk

failed to amend his complaint to allege that he suffered an injury while

employed by MS. Because we conclude that MS may not be liable under these

circumstances, we reverse the Court of Appeals’ decision and remand the case

for reinstatement of the Workers’ Compensation Board’s (Board) Opinion which

vacates the Administrative Law Judge’s (ALJ) July 26, 2021 Opinion, Order,
and Award and August 20, 2021 Order on Petition for Reconsideration and

remands the claim for additional findings.

                 FACTUAL AND PROCEDURAL BACKGROUND

      In November 2016, Hawk was employed by Express Employment

Professionals (Express), a temporary employment agency, and assigned to work

on Faurecia’s assembly line, manufacturing car seats. Hawk’s employment

with Express terminated in April 2017. In November 2017, Hawk filed a

workers’ compensation claim (Form 101) 1 alleging wrist injury from work-

related repetitive motion which manifested November 15, 2016, while working

for Express.

      MS, another temporary employment agency, later employed Hawk. Hawk

was again assigned to work on the Faurecia assembly line, although

performing a different job. By the time of his deposition, Hawk had been

working for MS for approximately one and one-half months. He alleged no

specific injury during that time. Following the deposition, Express filed a

motion to dismiss Hawk’s workers’ compensation claim. Express argued that

MS was the company liable for Hawk’s alleged injury. 2 On July 2, 2018, the

      1 Application for Resolution of a Claim – Injury.

      2 Based upon Hawk returning to the same assembly line performing job duties

requiring repetitive use and manipulation of his hands/wrists/fingers like his job in
November 2016, Express argued that under Kentucky case law, MS would be liable for
the entire award of benefits for Hawk’s alleged cumulative trauma as it was Hawk’s
most recent employer exposing Hawk to the kind of injurious activities which allegedly
caused his cumulative trauma condition. Express cited Hale v. CDR Operations, Inc.,
474 S.W.3d 129 (Ky. 2015); Hill v. Sextet Mining Corp., 65 S.W.3d 503 (Ky. 2001);
Alcan Foil Prods. v. Huff, 2 S.W.3d 96 (Ky. 1999); Special Fund v. Clark, 998 S.W.2d
487 (Ky. 1999); O.K. Precision Tool & Die Co. v. Wells, 678 S.W.2d 397 (Ky. 1984); and
                                           2
ALJ entered an order stating, “The Plaintiff will amend the claim to include[]

the current employer.” Hawk contemporaneously filed a motion to join then-

current employer MS as a defendant to the claim. By order dated July 26,

2018, the ALJ granted the motion; Hawk was ordered to serve MS with all

pleadings, including Form 101 and attachments. 3 The ALJ passed

consideration of Express’s motion to dismiss until all proof had been

developed. MS did not file a Notice of Claim Denial or Acceptance (Form 111).

      Between November 2018 and May 2019, multiple status conferences, 4

including a Benefits Review Conference, were scheduled. MS did not

participate in the conferences and did not respond to the ALJ’s November 2018

or December 2018 orders to show cause why the claim should not proceed. 5 In

October 2019, Express renewed its motion to dismiss, but also moved

alternatively to bifurcate the claim on the issue of employer liability so that a

final determination could be made as to which employer was liable. By order

dated January 2, 2020, the ALJ bifurcated the claim. However, following a

March 6, 2020 status conference, the ALJ entered an order dismissing Express

Southern Kentucky Concrete Contractors, Inc. v. Campbell, 662 S.W.2d 221 (Ky. App.
1983), in support of its motion.
      3 It is unclear from the record whether any service was made upon MS.

      4 Unless otherwise indicated, the conferences were telephonic.

      5 The December order was returned as “unable to forward.”     The record reflects
that MS was not on the distribution list of many orders and when on the distribution
list, for an extended period of time, orders were returned as “unable to forward.”

                                           3
as a defendant on the claim. 6 Following a May 6, 2021 conference 7 the ALJ

entered an order scheduling a combined Benefit Review Conference and Formal

Hearing on May 27, 2021; the ALJ noted that no one had entered an

appearance on behalf of MS. 8

      The May 27 conference began with the ALJ identifying MS as the

defendant/employer remaining in the case; summarizing the pre-hearing

discussion that MS had been joined and served, but no one had entered an

appearance or any kind of response since it was joined as a party; and noting

that no one was present on behalf of MS. Hawk’s counsel then stipulated to

jurisdiction; employment relationship; notice; the date of injury being

November 15, 2016; and Hawk’s average weekly wage, date of birth, and

educational level. Counsel identified the issues as: benefits under KRS

342.730, including multipliers; compensability for past and future medical

expenses; and temporary total disability benefits. Following the hearing,

Hawk’s counsel submitted a brief regarding the contested issues.

      6 Although the order does not state the basis of the dismissal, Hawk’s appellate

briefs state that Express was dismissed as a party pursuant to Hill, 65 S.W.3d 503;
Alcan Foil Prods., 2 S.W.3d 96; and Special Fund, 998 S.W.2d 487.
       7 The order scheduling the May 6, 2021, conference did not contain MS within

the distribution list.
       8 The order stated that Zoom invitations would be emailed separately to any

party that had filed an appearance. MS was not on the order’s distribution list.

                                          4
      Before the ALJ rendered a decision, a notice of representation was

entered on behalf of MS. 9 MS requested and was granted leave to file a brief.

MS moved the ALJ to dismiss the claim against it.

      MS argued that although it was joined as a party defendant after Hawk

returned to work at Faurecia in February 2018, Hawk never amended his claim

to change the November 15, 2016 injury date and never alleged an alternative

injury date. Therefore, because Hawk was not employed by MS but Express at

the time of the November 15, 2016 injury, MS was not the employer

responsible for workers’ compensation benefits which may be due Hawk.

Furthermore, because Hawk never alleged an alternative injury date, MS had

no obligation to defend a claim that was sustained prior to its employment of

Hawk. 10

      The ALJ entered an Opinion, Order and Award (Order) in Hawk’s favor on

July 26, 2021. The ALJ’s Order provided a statement of the case and a

summary of evidence, and listed stipulations and contested issues. The

stipulations included: 1) “Jurisdiction under the ACT.”; 2) “An employment

relationship existed between the plaintiff and the defendant-employer at all

times herein relevant.”; and 3) “Plaintiff sustained a work-related injury or

injuries on November 15, 2016”.

      9 Counsel representing MS stated that he became aware of MS’ involvement in

the case on July 21, 2021.
      10 MS also argued that Hawk failed to prove his symptoms were work related.

                                         5
      The ALJ’s Findings of Fact and Conclusions of Law included the

following:

      For the first time, on July 22, 2021, legal counsel entered an
      appearance on behalf of the defendant employer, MS Companies.
      At the same time, counsel filed a posthearing brief. In its brief, the
      defendant attempts to argue plaintiff’s alleged injuries are not work
      related. However, this defendant never filed a form 111, Notice of
      Claim Denial or Acceptance, and as such, all allegations alleged in
      plaintiff’s form 101, including those as amended, were deemed
      admitted. 803 KAR 25:010 Sec. 5 (2)(b). Moreover, causation and
      work relatedness were not listed as a contested issue at the benefit
      review conference conducted on May 27, 2021 at the beginning of
      the final hearing. Similarly, whether plaintiff was an employee of
      the defendant, MS Companies[, on] the date of injury was also not
      listed as a contested issue so, again, the defendant is precluded
      from making that argument at this time. For these reasons, the
      defendant is precluded from arguing causation which is now
      presumed as a matter of law.

(Emphasis added.)

      MS filed a petition for reconsideration, requesting additional findings of

fact. MS maintained the arguments presented in its post-hearing brief. MS

also explained that it did agree that there was an employment relationship with

Hawk, but that employment relationship began at a time after the stipulated

injury date.

      Hawk, citing Gray v. Trimmaster, 11 responded, arguing that any and all

of MS’ complaints and issues could have been addressed simply by filing a

Form 111. And because of MS’ failure to do so, all of the issues which MS

could have denied, including coverage on the date of accident and the date of

injury, were deemed admitted.

      11 173 S.W.3d 236 (Ky. 2005).

                                        6
      The ALJ concluded that there were no patent errors to justify dismissing

Hawk’s claim against MS. While the ALJ noted that there may be some merit

to the fact that no order was issued which would specifically require MS to file

Form 111, an order was entered on May 6, 2021 scheduling the May 27, 2021

Benefit Review Conference and Formal Hearing, and MS did not appear and

participate at the Benefit Review Conference during which the stipulations and

contested issues were entered. The ALJ reasoned that regardless of whether

MS was ever required to file Form 111 upon its joinder, only contested issues

listed at the Benefit Review Conference remained to be determined by the ALJ,

that is, issues not listed as contested were waived.

      MS appealed to the Workers’ Compensation Board. MS maintained its

arguments made to the ALJ. Hawk, in response, argued that MS had not

identified an appealable issue and was asking the Board to reweigh the

evidence as to questions of fact, which is beyond the Board’s authority.

Nevertheless, even if the Board reviewed the ALJ’s decision, the ALJ’s decision

was not clearly erroneous and must be affirmed. 12 Hawk further argued that

      12 KRS 342.285(2) provides the following standards for the Board’s review of an

ALJ order or award:
      No new or additional evidence may be introduced before the board except
      as to the fraud or misconduct of some person engaged in the
      administration of this chapter and affecting the order, ruling, or award,
      but the board shall otherwise hear the appeal upon the record as
      certified by the administrative law judge and shall dispose of the appeal
      in summary manner. The board shall not substitute its judgment for
      that of the administrative law judge as to the weight of evidence on
      questions of fact, its review being limited to determining whether or not:
      (a) The administrative law judge acted without or in excess of his powers;
      (b) The order, decision, or award was procured by fraud;
                                          7
because MS Companies did not participate in the Benefit Review Conference

and contest that it was Hawk’s employer on November 15, 2016, and did not

seek relief from the stipulations in the manner prescribed in 803 KAR 25:010

Section 16(2), MS was prohibited from raising the employment relationship

stipulation as an issue on appeal to the Board. The Board concluded that

      an award against MS cannot be based upon a November 15, 2016
      injury date. Liability of MS necessarily depends on exposure to
      cumulative trauma occurring during its employment period.
      During litigation of this claim, no ALJ made an explicit finding of

      fact that Hawk was exposed to cumulative trauma while employed
      by MS. . . .

      Given that lack of finding by an ALJ and considering MS’ argument that

“Hawk never moved to amend his claim to include an allegation of a cumulative

rauma injury during his employment with MS or to allege a later injury date,”

the Board vacated the ALJ’s July 26, 2021 Opinion, Award, and Order and

August 30, 2021 Order on Petition for Reconsideration and remanded the case

to the ALJ to determine if Hawk had made a viable claim against MS. The

Board directed the ALJ to determine whether Hawk ever amended the Form

101 to include his employment period with MS, and if not, MS must be

      (c) The order, decision, or award is not in conformity to the provisions of
      this chapter;
      (d) The order, decision, or award is clearly erroneous on the basis of the
      reliable, probative, and material evidence contained in the whole record;
      or
      (e) The order, decision, or award is arbitrary or capricious or
      characterized by abuse of discretion or clearly unwarranted exercise of
      discretion.
                                           8
dismissed because it cannot be held liable for any injury occurring prior to

employing Hawk.

          Hawk appealed the Board’s decision to the Court of Appeals. 13 The

Court of Appeals vacated the Board’s decision on two grounds, one based upon

jurisdiction. First, the Court of Appeals concluded that the Board lacked

jurisdiction to decide MS’ appeal because MS failed to name Express as a party

to the appeal; the Court of Appeals considered Express to be an indispensable

party. Second, agreeing with the ALJ, the Court of Appeals concluded that MS’

inaction and failure to participate in the case for three years constituted a

waiver of the contested issue of MS being liable for Hawk’s injuries. The Court

of Appeals stated that the Board clearly erred as a matter of law by not

addressing the issue and recognizing that MS had waived this argument by not

participating in the Benefit Review Conference and raising the issue at that

time as required by 803 KAR 25:010 Section 13(12). The Court of Appeals

directed that upon remand, the Board was to dismiss MS’ underlying appeal

and affirm the ALJ’s July 26, 2021 Opinion, Award, and Order. MS appealed

to this Court.

          13 As to a review of the Board’s decision by the Court of Appeals, KRS 342.290

states:
          The decision of the board shall be subject to review by the Court of
          Appeals pursuant to Section 111 of the Kentucky Constitution and rules
          adopted by the Supreme Court. The scope of review by the Court of
          Appeals shall include all matters subject to review by the board and also
          errors of law arising before the board and made reviewable by the rules of
          the Supreme Court for review of decisions of an administrative agency.
                                              9
      While the Court of Appeals vacated the Board’s Order on two grounds,

the only question remaining at issue is whether MS may be liable for workers’

compensation benefits due to its lack of participation in the case. Hawk does

not dispute that any issues related to the Board’s particular-case jurisdiction

due to Express not being named in the appeal were waived. 14,15

      14 See Commonwealth v. Steadman, 411 S.W.3d 717 (Ky. 2013) (explaining the

difference between subject-matter jurisdiction and particular-case jurisdiction and
unlike subject-matter jurisdiction, particular-case jurisdiction is subject to waiver).
      15 MS’ brief presented both subject-matter and particular-case jurisdiction

arguments. MS expressed that if this were a subject-matter jurisdiction case due to
an alleged procedural defect in MS not naming Express as a party in its appeal to the
Board, the Court of Appeals would undoubtedly have discretion to sua sponte rule on
this issue. However, the alleged procedural defect is not a subject-matter jurisdiction
issue. On the contrary, the alleged procedural defect pertains to particular-case
jurisdiction, which can be waived if not properly preserved. MS argued that in this
case, even if it were a legitimate issue, the parties failed to preserve it and
consequently, this was not an issue for the Court of Appeals to address.
        Hawk’s brief addressed MS’ argument that the Court of Appeals did not have
authority to vacate the Board’s decision on jurisdictional grounds. Hawk expressed
that the Court of Appeals itself had subject-matter jurisdiction to vacate the Board’s
decision and then agreed with MS that procedural rules are concerned with particular-
case jurisdiction and that a particular-case jurisdiction issue is waived if not properly
preserved. Nevertheless, MS also briefed its agreement with the Court of Appeals that
Express was an indispensable party to the appeal. While we do not view the question
of whether Express was an indispensable party to the appeal as a live issue, we note
that even if it were, we do not necessarily agree with the Court of Appeals. In
Browning v. Preece, 392 S.W.3d 388, 391 (Ky. 2013), dealing with dismissal of an
appeal, this Court stated that “an indispensable party is defined as a party ‘whose
absence prevents the Court from granting complete relief among those already
parties,’” and that
      [i]n determining whether a party is truly necessary on appeal, the court
      must ask ‘who is necessary to pursue the claim. . . . If a party’s
      participation in the appeal is unnecessary to grant relief, and requiring
      its participation would force unnecessary expense on the party, then . . .
      such a party is not indispensable’ So, the issue is whether [the unnamed
      party has] an interest that would be affected by the decision of the Court
      of Appeals, regardless of whether that interest is affected adversely or
      favorably.
392 S.W.3d 388, 391 (Ky. 2013) (internal citation omitted). In that case, the unnamed
party had been participating in the underlying case. Here, because Express had been
dismissed as a party, Hawk’s claim for benefits was only against MS, against whom,
                                           10
                                    ANALYSIS

I. Standard of Review

      In Western Baptist Hospital v. Kelly, we described the standard of review

as follows:

      The function of further review of the [Workers’ Compensation
      Board] in the Court of Appeals is to correct the Board only where
      [the] Court perceives the Board has overlooked or misconstrued
      controlling statutes or precedent, or committed an error in
      assessing the evidence so flagrant as to cause gross injustice. The
      function of further review in our Court is to address new or novel
      questions of statutory construction, or to reconsider precedent
      when such appears necessary, or to review a question of
      constitutional magnitude.[16]

II. Before MS May Be Liable for Benefits, the ALJ Must Find that Hawk
    Amended His Complaint to State a Cause of Action Against MS.

      Before beginning the analysis, we note that while the General Assembly

enacted legislation to resolve worker’s compensation claims efficiently, 17 MS

did not bring its motion for dismissal early within the process and aid in that

goal. Nevertheless, like the Board, we conclude that the foundation for

assigning liability to MS has yet to be established by the ALJ, the fact finder in

this case. Furthermore, considering Gray v. Trimmaster 18 and Neace v.

Asplundh Tree Expert Co., Inc., 19 construing 803 KAR 25:010’s default-related

according to the practice of this case, complete relief may have been granted. When
the ALJ rendered an opinion in Hawk’s favor, it was against MS only. On appeal, the
issue was whether MS is liable for Hawk’s worker’s compensation benefits. There was
no basis to believe that Express would be affected by the Board’s decision.
      16 827 S.W.2d 685, 687–88 (Ky. 1992).

      17 See KRS 342.260(4) (“Processes and procedures under this chapter shall be

as summary and simple as reasonably possible.”).
      18 173 S.W.3d at 240.

      19 2007-SC-000236-WC, 2008 WL 1850622 (Ky. Apr. 24, 2008).

                                        11
provisions to be analogous to default within the civil rules, 20 we view the ALJ’s

Order as a default judgment resulting from MS’ failure to answer Hawk’s

complaint. We resolve this case based upon the established principle that “a

default judgment may not be based on a complaint which completely fails to

state a cause of action.” 21

      MS argues that Hawk, as the initiating party, presented its claim,

then moved to join MS as an additional party, but did not amend the

claim to set forth any additional allegations or introduce any proof

stating a claim against MS upon which relief might be granted.

Therefore, because Hawk failed to meet his burden of proving a cause of

action against MS entitling him to benefits, Hawk’s claim must be

dismissed. MS further argues that its failure to timely respond to the

claim filed does not change the underlying facts or confer liability.

Instead, MS was deemed to have admitted all allegations of the

application pursuant to 803 KAR 25:010 Section 7(2)(b).

      Gray v. Trimmaster summarizes the workers’ compensation statutory and

administrative regulation provisions prescribing the time by which an employer

must file an answer and the consequences for not doing so. 22 Gray explains:

              KRS 342.270(2) provides that within 45 days of the issuance
      of the notice of the filing of a claim, the employer or carrier “shall”
      file a notice of denial or acceptance. 803 KAR 25:010, § 5(2)(a)

      20 At the time the decisions cited in this opinion were rendered, the default

provision was codified under 803 KAR 25:010 Section 5. The default provision is
currently codified under 803 KAR 25:010 Section 7.
      21 Crowder v. American Mut. Liab. Ins. Co., 379 S.W.2d 236, 238 (Ky. 1964).

      22 173 S.W.3d 236, 241 (Ky. 2005).

                                           12
      requires a Form 111 to be filed within 45 days after notice of the
      scheduling order.[23] Subsection (b) provides that if a Form 111 is
      not filed, all allegations of the application shall be deemed
      admitted. These provisions are mandatory. Their purpose is to
      facilitate the prompt and orderly resolution of workers’
      compensation claims. . . .

      Gray further explains, analogous to a civil judgment by default and the

subsequent hearing to establish damages, when the employer fails to file Form

111 and admits the allegations contained in the employee’s application, i.e.,

that the employee sustained an injury and the injury occurred within the

course and scope of employment, the employee must still prove the extent of

the employer’s liability. 24

      Soon after Gray, Neace v. Asplundh Tree Expert Co., Inc., 25 unpublished,

dealt with the Board’s decision that the ALJ, upon a finding of good cause, may

      23 MS agrees that the relevant statute, regulation, and case law require a Form

111 to be filed within 45 days after the notice of application. However, MS argues that
the 45-day requirement does not apply in cases of joinder, unless explicitly required
by ALJ order. MS contends that the requirement to file a Notice of Claim Denial or
Acceptance when a party is subsequently joined to an action is absent from 803 KAR
25:010 Section 7(2)(a) and KRS 342.270(2). Because this appeal is resolved in MS’
favor because Express’s complaint failed to state a cause of action against MS, we
need not address MS’ alternative argument here.
      24 See id. at 241 (citing Roark v. Alva Coal Corp., 371 S.W.2d 856 (Ky. 1963);

Wolf Creek Collieries v. Crum, 673 S.W.2d 735 (Ky. App. 1984); Snawder v. Stice, 576
S.W.2d 276 (Ky. App. 1979)).
      25 2007-SC-000236-WC, 2008 WL 1850622 (Ky. Apr. 24, 2008).         Although the
analysis regarding default judgments was not as extensive as in Neace, preceding
decisions in Clark Reg’l Med. Ctr. v. Lovings were based upon the Board analogizing
803 KAR 25:010, § 5 to default judgment. See 2005-CA-000965-WC, 2005 WL
3334734 (Ky. App. Dec. 9, 2005) (“The Workers’ Compensation Board, in its opinion,
held that relief from the requirement for filing a Form 111 within 45 days following an
order sustaining a motion to reopen an injury claim may be had upon good cause
shown, in the same manner as relief from a default judgment in a civil action.”); 2006-
SC-0027-WC, 2006 WL 2987038 (Ky. Oct. 19, 2006) (affirming) (“Among the issues
raised in the claimant's appeal to the Board was the effect of the employer’s failure to
file a timely Form 111. The Board determined that relief from the requirement to file a
                                          13
allow the employer to file an untimely Form 111. Pertinently, in Neace, this

Court agreed with the Board’s analysis that 803 KAR 25:010 Section 5(2)

(currently Section 7(2)) essentially operates as a default judgment provision in

the context of a claim for workers’ compensation benefits. 26 Considering the

Board’s opinion that 803 KAR 25:010 Section 5(2) did not demand strict

compliance, this Court concluded it was reasonable to view 803 KAR 25:010

Section 5(2) in relation to default judgment rules:

            KRS 342.270(2) requires an employer to respond within 45
      days of the scheduling order and admit or deny the allegations
      contained in the worker’s application for benefits. It does not
      address the effect of a delay in doing so or a failure to do so. 803
      KAR 25:010, § 5 operates as the equivalent of a default judgment
      provision. Its purpose is to facilitate the prompt and orderly
      resolution of claims.
            In a civil action, CR 8.02, CR 8.04, and CR 12.01 operate to
      admit an averment in a pleading if the opposing party fails to
      answer and deny it within 20 days of service of the summons and
      complaint. CR 55.01 provides for the entry of a default judgment if
      a party fails to defend a cause of action and lists but a few
      exceptions. Ryan v. Collins, 481 S.W.2d 85 (Ky. 1972), notes,
      however, that the courts disfavor such judgments and that CR
      55.02 permits the trial court to set aside a default judgment upon
      a showing of good cause in accordance with CR 60.02. Liberty
      National Bank & Trust Co. v. Kummert, 305 Ky. 769, 205 S.W.2d
      342 (Ky. 1947), and Howard v. Fountain, 749 S.W.2d 690, 692 (Ky.
      App. 1988), direct the trial court to apply a liberal standard when
      judging whether good cause exists and state that the exercise of
      discretion will not be disturbed absent abuse. Likewise, Moffitt v.
      Asher, 302 S.W.2d 102 (Ky. 1975), applies an abuse of discretion
      standard to a decision granting or denying a request under CR
      6.02 to plead after the time allowed in CR 12.01 has expired.
            As explained in J.B. Blanton Co. v. Lowe, 415 S.W.2d 376
      (Ky. 1967), the courts afford an administrative agency’s

timely Form 111 would be proper ‘upon good cause shown, in the same manner as
relief from a default judgment in a civil action.’”).
                               Neace v. Asplundh Tree Expert Co., Inc., 2006-CA-
      26 2008 WL 1850622, at *2.

001328-WC, 2007 WL 625275 (Ky. App. Mar. 2, 2007), adopted the Board’s opinion.
                                       14
      construction of its own regulation great weight when determining
      the regulation’s meaning. Although 803 KAR 25:010, § 5 does not
      indicate that the time for filing a Form 111 may be enlarged after it
      expires, the claimant points to no statute or regulation that
      prohibits it from being enlarged despite a showing of good cause.
      The Board’s construction of 803 KAR 25:010, § 5 is reasonable. It
      considers a worker’s interest in the prompt resolution of a claim
      but also ensures that an employer who shows good cause for
      tendering a tardy Form 111 will receive a day in court. We
      conclude, therefore, that 803 KAR 25:010, § 5 permits an employer
      to file a Form 111 outside the 45–day period if the ALJ finds that it
      has shown good cause for the delay.[27]

      Here, MS concedes that by not filing Form 111, it has admitted the

allegations contained in Hawk’s application. But, like before the ALJ, the

Board, and the Court of Appeals, MS argues that because Hawk never

amended his application to allege an injury date within MS’ employment or

introduced proof stating a claim against MS upon which relief might be

granted, liability cannot be imposed upon MS and Hawk’s claim against it must

be dismissed.

      Hawk likewise maintains his arguments and contends that the ALJ made

a clear and concise decision as a matter of law, consistent with Gray, that by

failing to file Form 111, MS was deemed to have admitted everything, including

that Hawk sustained a work related-injury under the employ of MS, and that

the only remaining issue for determination was the extent and duration of the

claim. Along with arguing that the Board ignored Gray’s precedent, Hawk also

argues that the Board exceeded its authority and committed flagrant error by

completely ignoring the fact that MS was properly deemed to have admitted

      27 Neace, 2008 WL 1850622, at *2–3.

                                       15
everything, except the extent and duration of the claim, by failing to participate

in the Benefit Review Conference/Final Hearing. This argument is based on

the ALJ’s entry of stipulations offered by Hawk, not stipulations agreed upon

by the adverse parties, as apparently anticipated by the administrative

regulations. 28 While the workers’ compensation claim resolution process

promotes stipulations by the parties to aid in timely dispositions, we fail to see

how a “stipulation” entered by the complainant against the interest of the

absent adversary—that an employment relationship existed between the parties

at the time of the alleged injury—may be viewed as a stipulation which would

alter the allegations contained within Hawk’s complaint and allow entry of

judgment by default.

      It has long been policy that “litigation should be disposed of as early as is

possible consistent with the due administration of justice.” 29 And while default

judgment rules are a means of relief against the delay and neglect of

defendants, it is a fundamental rule that a judgment by default must be

justified by the pleadings. 30 Furthermore, when the complaint fails to state a

cause of action or show ground for relief, the defendant’s default does not

      28 See 803 KAR 25:010 § 13(4) and (11).

      29 See Vanover v. Ashley, 183 S.W.2d 944, 945 (Ky. 1944).

      30 See Holzknecht v. Louisville Deutsche Scheutzen Gesselschoft, 241 S.W. 804,

805 (Ky. 1922) (“The rule is universal, so far as we have been able to find, that a
default judgment cannot be sustained unless it is supported by the pleadings.”);
Mullins v. Commonwealth, 262 S.W.2d 666, 667 (Ky. 1953) (“Since the policy of the law
is to have every litigated case tried on its merits, judgments by default are not favored,
and, as such a judgment deprives a defendant of substantial rights, it is lawful only
when duly authorized.”).

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change or improve the complaint. This rule is based on the proposition that

the default admits nothing more than what is alleged in the complaint. This

Court’s predecessor long ago stated, “Nor will a confession of the allegations of

the pleading by failing to appear and respond, and the consequent suffering of

a default judgment, waive the defects of an insufficient pleading, since

defendant’s default operates as an admission only of those facts which are well

and properly pleaded in plaintiff’s declaration or complaint.” 31

                                   CONCLUSION

      The Court of Appeals vacated the Board’s Opinion, concluding that the

Board erred as matter of law by not addressing that MS had waived the

contested issue of its liability for Hawk’s by not participating in the case for

three years. However, upon review, the Board’s Opinion is consistent with

long-established principles that a default judgment may not be based on a

complaint which fails to state a cause of action. Consequently, we reverse the

Court of Appeals’ decision and remand for reinstatement of the Board’s

Opinion.

      All sitting. All concur.

COUNSEL FOR APPELLANT:

Donald J. Niehaus
Lori V. Daniel
Walton Niehaus Law, PLLC

      31 Holzknecht, 241 S.W. at 805 (citations and internal quotations omitted).

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COUNSEL FOR APPELLEE:

James R. Martin II
Morgan & Morgan

ADMINISTRATIVE LAW JUDGE:

Hon. Grant S. Roark

WORKERS’ COMPENSATION BOARD:

Hon. Michael Wayne Alvey, Chairman

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