Hill v. Kansas Dept. of Labor

248 P.3d 1287, 292 Kan. 17
CourtSupreme Court of Kansas
DecidedApril 1, 2011
Docket99,726
StatusPublished
Cited by15 cases

This text of 248 P.3d 1287 (Hill v. Kansas Dept. of Labor) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hill v. Kansas Dept. of Labor, 248 P.3d 1287, 292 Kan. 17 (kan 2011).

Opinion

248 P.3d 1287 (2011)

Ted HILL, Individually, and OT Cab, Inc., Appellants,
v.
KANSAS DEPARTMENT OF LABOR, DIVISION OF WORKERS COMPENSATION, Appellee.

No. 99,726.

Supreme Court of Kansas.

April 1, 2011.

*1288 Stephen M. Kerwick, of Foulston Siefkin, LLP, of Wichita, argued the cause, and Gary L. Ayers, of the same firm, was with him on the briefs for appellants.

Heather Wilke, staff attorney, Kansas Department of Labor, argued the cause, A.J. Kotich, chief counsel, and Darren E. Root, staff attorney, of the same department, were with her on the briefs for appellee.

The opinion of the court was delivered by ROSEN, J.:

The Kansas Department of Labor, Division of Workers Compensation (Division) imposed a $10,000 civil penalty against OT Cab, Inc., and its owner, Ted Hill, for failure to maintain workers compensation insurance pursuant to K.S.A.2010 Supp. 44-532. The Secretary of the Department of Labor (Secretary) and the district court affirmed the Division's final order. The judgment of the Court of Appeals on the issue subject to our review is affirmed in part, reversed in part, and the case is remanded for a determination of whether a civil penalty is to be imposed. OT Cab sought review of the Court of Appeals interpretation of K.S.A.2010 Supp. 44-532(d).

BACKGROUND

When Ted Hill purchased OT Cab in April 2004, the company employed a full-time manager, a dispatcher, and several drivers. OT Cab maintained a workers compensation policy from July 9, 2004, to January 1, 2005. Due to decreasing profits, Hill terminated the employment of the dispatcher and the part-time drivers. He retained the manager on a part-time basis and two full-time drivers under service agreements which purportedly changed the drivers' status to that of independent contractors as of January 1, 2005. At this time, OT Cab canceled the workers compensation policy because Hill believed the drivers were independent contractors.

On June 1, 2005, an anonymous caller informed the Division that OT Cab was operating without workers compensation insurance. On July 1, 2005, the Division's investigator *1289 met Hill at the OT Cab office to discuss the matter. On July 19, 2005, Hill's attorney contacted the Division's investigator to arrange a meeting, which took place August 18, 2005.

After the Kansas Department of Labor's Employment Security Division determined in an unrelated matter that OT Cab's drivers were employees rather than independent contractors, OT Cab reinstated its workers compensation insurance policy effective November 17, 2005, for a $3,400 annual premium.

The Division filed a statement of charges alleging that Hill and OT Cab knowingly and intentionally failed to maintain workers compensation insurance in violation of K.S.A.2010 Supp. 44-532 and requested a $25,000 civil penalty. After an evidentiary hearing, the administrative hearing officer issued an order reciting findings of fact and conclusions of law and imposed a $10,000 penalty.

Hill and OT Cab jointly sought review with the Secretary, who summarily affirmed the hearing officer's findings and conclusions except for the imposition of a $10,000 civil penalty. On remand, the hearing officer articulated the reasons for imposing a $10,000 civil penalty and again imposed that amount. The hearing officer issued an amended supplemental order to include the appeals language mandated by K.S.A. 77-526(c). The Secretary denied the subsequent request for review, ruling that the hearing officer's initial order and supplemental order would constitute the final order. The district court affirmed the final order.

Hill and OT Cab jointly appealed, claiming that the district court erred in (1) determining that the cab drivers were employees of OT Cab rather than independent contractors; (2) making the erroneous legal assumption that K.S.A.2010 Supp. 44-532(d) required a civil penalty to be imposed regardless of any mitigating facts; and (3) piercing the corporate veil to impose joint and individual civil liability upon Hill and OT Cab. Hill v. Kansas Dept. of Labor, 42 Kan.App.2d 215, 217, 210 P.3d 647 (2009).

The Court of Appeals affirmed the determination that the drivers were employees of OT Cab rather than independent contractors and reversed the imposition of joint and individual liability for the civil penalty against Hill. Hill, 42 Kan.App.2d 215, Syl. ¶¶ 4, 6, 210 P.3d 647. The Court of Appeals further determined that upon finding of a violation, K.S.A.2010 Supp. 44-532(d) mandates a $25,000 civil penalty with no discretion for the imposition of either no penalty or a reduced penalty and remanded to the Division for the imposition of a $25,000 civil penalty. Hill, 42 Kan.App.2d at 233, 210 P.3d 647. OT Cab sought review with this court alleging that (1) the Court of Appeals erred as a matter of law in dramatically increasing the penalty imposed below without any cross-appeal or attack on the original penalty by the Division and (2) the Court of Appeals erred in its interpretation of K.S.A.2010 Supp. 44-532(d).

At oral argument, OT Cab cited to the final chapter of Mick Jagger and Keith Richards' learned treatise "Let It Bleed" for legal authority on the first issue, saying: "You don't always get what you want, but you shouldn't get what you don't ask for." This court responds with an accurate quotation of the Rolling Stones classic, which perhaps better summarizes these and many litigants' posture before this court: "You can't always get what you want/But if you try sometimes you just might find/You get what you need."

In the more conventional parlance of this court, because the second issue is dispositive, we will begin with an analysis of K.S.A.2010 Supp. 44-532(d).

Interpretation of K.S.A.2010 Supp. 44-532(d)

On appeal to the Court of Appeals, OT Cab argued that the hearing officer erroneously limited his discretion by considering a civil penalty between $6,800 and $25,000 rather than considering the full range of $0 to $25,000, which includes the option to impose no civil penalty at all. OT Cab further argued that the district court avoided ruling on whether a penalty was mandatory under the statute, which effectively affirmed the hearing officer's erroneous interpretation of the statute. The Division responded by arguing *1290 that the $10,000 civil penalty imposed was not arbitrary, capricious, or unreasonable.

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Bluebook (online)
248 P.3d 1287, 292 Kan. 17, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hill-v-kansas-dept-of-labor-kan-2011.