Waln v. Clarkson Construction Co.

861 P.2d 1355, 18 Kan. App. 2d 729, 1993 Kan. App. LEXIS 129

• Court: Court of Appeals of Kansas
• Decided: June 25, 1993
• Docket: 68,441
• Status: Published

Opinions

Schmisseur, J.:

Claimant Beth Ann Wain filed a workers compensation action against her employer, respondent Clarkson Construction Company (Clarkson). Clarkson and its insurance carrier appeal from a district court order which reversed the Director of Workers Compensation and reinstated an Administrative Law Judge’s (ALJ) order assessing penalties pursuant to K.S.A. 1992 Supp. 44-512a. We reverse and remand with directions.

The facts are well known to the parties and will be cited here only as is necessary to identify the issues.

Clarkson appealed to the Director from an ALJ order directing payment of additional temporary total disability benefits during a second vocational rehabilitation evaluation. Clarkson did not pay the benefits while the appeal was pending but promptly paid the same lump sum when the Director upheld the ALJ ruling.

While the Director’s appeal was pending, Wain sent a demand letter to Clarkson for the benefits. After the payments were made, Wain sought an assessment of penalties for late payment pursuant to K.S.A. 1992 Supp. 44-512a. After a hearing, the ALJ denied the application for penalties. Wain then filed a motion for rehearing on her application for penalties. The rehearing was held, and the ALJ assessed penalties. pursuant to K.S.A. 1992 Supp. 44-512a in the amount of $40,320, using a pyramid formula.

Clarkson filed an application for Director’s review of the penalty award, alleging numerous errors including lack of jurisdiction to rehear the penalty application after the initial ruling. The Director held the ALJ order imposing penalties was void ab initio because the ALJ had no authority to rehear a matter already ruled upon. The district court reversed the Director and reinstated the ALJ penalty award.

Wain contends this court has no jurisdiction over this appeal because the penalty order was preliminary in nature and, under K.S.A. 1992 Supp. 44-534a(a), preliminary findings and awards are not appealable. Lively v. MBPXL Corp., 7 Kan. App. 2d 204, 638 P.2d 999 (1982). Clarkson did not address this issue in its brief.

Preliminary orders and awards are not appealable because they are not binding at the frill hearing on a claimant’s compensation claim. K.S.A. 1992 Supp. 44-534a(a). K.S.A. 1992 Supp. 44-534a(b) provides that an employer or insurer can recover payments made pursuant to a preliminary order if the award is reduced or totally disallowed at the full hearing on the claim.

K.S.A. 1992 Supp. 44-512a provides a procedure quite independent of K.S.A. 1992 Supp. 44-534a whereby a claimant can seek assessment of civil penalties against recalcitrant employers and insurers. Though interrelated to the extent they both arise from the same injury, compensation proceedings and 44-512a actions are separate and distinct. Crow v. City of Wichita, 222 Kan. 322, 332, 566 P.2d 1 (1977).

This court reviewed assessment of 44-512a penalties prior to entry of a final award in Stout v. Stixon Petroleum, 17 Kan. App. 2d 195, 836 P.2d 1185, rev. denied 251 Kan. 942 (1992). In Stout, an ALJ assessed penalties because the respondent-failed to make temporary total payments pursuant to a K.S.A. 1991 Supp. 44-534a preliminary award. 17 Kan. App. 2d at 196-97. No final award had been issued in the case at the time judicial review of the Director’s order affirming assessment of pénalties commenced.

K.S.A. 1992 Supp. 44-551(b)(l) and (2)(A) make all ÁLJ acts reviewable by the Director except preliminary'awards made pursuant to K.S.A. 1992 Supp. 44-534a. K.S.A. 1992 Supp. 44-551(b) does not preclude review of K.S.A. 1992 Supp. 44-512a penalty assessments made prior to entry of a final award. This court has jurisdiction to hear this appeal.

The next question is whether the ALJ had jurisdiction to conduct a rehearing on the application for assessment of penalties. This is a question of law. This court may substitute its judgment for that of the trial court. Reeves v. Equipment Service Industries, Inc., 245 Kan. 165, 173, 777 P.2d 765 (1989).

The ALJ originally denied the application for penalties in an order dated February 16, 1990. Wain did not apply for Director’s review of that order within 10 days as provided in K.S.Á. 1992 Supp. 44-551(b)(l). Wain did file a request for a rehearing of her application for penalties on March 2, 1990.. On rehearing, the ALJ assessed penalties.

There is no provision in the Workers Compensation Act for motions for new trial, rehearing, or other post-judgment motions. Norcross v. Pickrell Drilling Co., 202 Kan. 524, 449 P.2d 569 (1969). The rules of civil procedure are not applicable in workers compensation proceedings. Crow v. City of Wichita, 222 Kan. at 332. Clarkson argues that, if the legislature had intended that parties in a workers compensation proceeding have a right to a rehearing on denial of K.S.A. 1992 Supp. 44-512a penalties, it would have clearly expressed that intent as it did in K.S.A. 44-554 providing for use of the civil rules relating to depositions.. The Supreme Court has held that the workers compensation commissioner could not reopen a compensation case after a final award had been entered to consider additional evidence and adjust the award based on this consideration. Fleming v. National Cash Register Co., 188 Kan. 571, 363 P.2d 432 (1961).

The trial court relied principally upon K.S.A. 1992 Supp. 44-523(a), which mandates that an ALJ not be bound by technical rules of procedure, when it reversed the Director’s order and reinstated penalties. Wain considers the two hearings held before the ALJ on the issue of penalties to be K.S.A. 1992 Supp. 44-534a preliminary hearings. Wain points out that there is no limit on the number of preliminary hearings which can be held prior to a final hearing and award. In light of K.S.A. 1992 Supp. 44-523(a) and the ALJ’s authority to entertain multiple preliminary hearings, Wain argues this court should decide in her favor on this technical issue.

This appeal concerns a K.S.A. 1992 Supp. 44-512a penalty proceeding, not a preliminary or final compensation order. When Wain failed to timely seek the Director’s review of the ALJ order dated February 16, 1990, denying penalties, the ALJ order became final.

In light of the foregoing determinations, it is not necessary to resolve the remaining issues raised on appeal. The decision of the trial court is reversed, and the matter is remanded with directions to reinstate the order of the Director of Workers Compensation.