Daniel C. Cooper
P. Bush, Jr.
Christopher B. Denson Frank P. Bush, Jr., & Associates
Steptoe & Johnson Elkins, West Virginia
Clarksburg, West Virginia Attorney for the Respondent, John Edens
Attorneys for the Petitioner
The Opinion of the Court was delivered PER CURIAM.
CHIEF JUSTICE MAYNARD, JUSTICE DAVIS and JUSTICE STARCHER concur and reserve the right to file concurring opinions.
JUSTICE McGRAW dissents and reserves the right to file a dissenting opinion.
2. A writ of prohibition will not issue to prevent a simple abuse of discretion by a trial court. It will only issue where the trial court has no jurisdiction or having such jurisdiction exceeds its legitimate powers. W.Va. Code, 53-1-1. Syl. Pt. 2, State ex rel. Peacher v. Sencindiver, 160 W.Va. 314, 233 S.E.2d 425 (1977).
3. In determining whether to entertain and
issue the writ of prohibition for cases not involving an absence of jurisdiction
but only where it is claimed that the lower tribunal exceeded its legitimate
powers, this Court will examine five factors: (1) whether the party seeking
the writ has no other adequate means, such as direct appeal, to obtain the
desired relief; (2) whether the petitioner will be damaged or prejudiced
in a way that is not correctable on appeal; (3) whether the lower tribunal's
order is clearly erroneous as a matter of law; (4) whether the lower tribunal's
order is an oft repeated error or manifests persistent disregard for either
procedural or substantive law; and (5) whether the lower tribunal's order raises new and important problems or issues of law of first impression.
These factors are general guidelines that serve as a useful starting point
for determining whether a discretionary writ of prohibition should issue.
Although all five factors need not be satisfied, it is clear that the third
factor, the existence of clear error as a matter of law, should be given
substantial weight. Syl. Pt. 4, State ex rel. Hoover v. Berger,
199 W.Va. 12, 483 S.E.2d 12 (1996).
This is an original proceeding in which the Petitioner, Abraham Linc Corporation (hereinafter Petitioner), seeks a writ of prohibition against the Honorable Thomas A. Bedell, Judge of the Circuit Court of Harrison County, preventing the respondent judge from conducting a trial on Count II of the Petitioner's complaint and submitting the issue of the Petitioner's workers' compensation coverage to a jury. Upon thorough review of the matter, we grant the requested writ.
The Petitioner filed a motion for summary judgment,
contending that Mr. Johnson's wages did not have to be included in the computation
of workers' compensation premiums since Mr. Johnson served as an independent
contractor rather than an employee of the Petitioner. Further, the Petitioner
asserted that it possesses a Certificate of Coverage, valid from April 1,
2001, through August 31, 2001, issued by the Workers' Compensation Commission (See
footnote 4) and certifying that the Petitioner's
premium account was in good standing at the time of Mr. Edens' injury.
In Mr. Edens' response to the Petitioner's motion for summary judgment,
he asserted the Mr. Johnson's wages had to be included because he was
an employee rather than an independent contractor, that failure to so
include caused a default, and that the Petitioner had lost its immunity
to a common law negligence action. The lower court denied the Petitioner's
motion for summary judgment and ruled that the issue of default and the
proper classification of Mr. Johnson as an employee or an independent
contractor should proceed to a jury. (See
In determining whether to entertain
and issue the writ of prohibition for cases not involving an absence of jurisdiction
but only where it is claimed that the lower tribunal exceeded its legitimate
powers, this Court will examine five factors: (1) whether the party seeking the
writ has no other adequate means, such as direct appeal, to obtain the desired
relief; (2) whether the petitioner will be damaged or prejudiced in a way that
is not correctable on appeal; (3) whether the lower tribunal's order is clearly
erroneous as a matter of law; (4) whether the lower tribunal's order is an oft
repeated error or manifests persistent disregard for either procedural or substantive
law; and (5) whether the lower tribunal's order raises new and important problems or issues of law of first impression. These factors are general
guidelines that serve as a useful starting point for determining whether
a discretionary writ of prohibition should issue. Although all five factors
need not be satisfied, it is clear that the third factor, the existence of
clear error as a matter of law, should be given substantial weight.
The principles underlying the West Virginia Workers'
Compensation system are well-established. The Workmen's Compensation
Act was designed to remove negligently caused industrial accidents
from the common law tort system. Mandolidis v. Elkins Indus., Inc.,
161 W.Va. 695, 700, 246 S.E.2d 907, 911 (1978), superseded by statute
as stated in Handley v. Union Carbide Corp., 804 F.2d 265, 269
(4th Cir. 1986). The benefits of this system accrue both to the employer,
who is relieved from common-law tort liability for negligently inflicted
injuries, and to the employee, who is assured prompt payment of benefits. Meadows v. Lewis, 172 W.Va. 457, 469,
307 S.E.2d 625, 638 (1983); see also Persinger v. Peabody Coal Co.,
196 W.Va. 707, 713, 474 S.E.2d 887, 893 (1996). (See
Any employer subject to this
chapter who shall subscribe and pay into the workers' compensation fund the premiums
provided by this chapter or who shall elect to make direct payments of compensation
as herein provided shall not be liable to respond in damages at common law or
by statute for the injury or death of any employee, however occurring, after
so subscribing or electing, and during any period in which such employer
shall not be in default in the payment of such premiums or direct payments and
shall have complied fully with all other provisions of this chapter. The
continuation in the service of such employer shall be considered a waiver by
the employee and by the parents of any minor employee of the right of action
as aforesaid, which the employee or his or her parents would otherwise have:
Provided, That in case of employers not required by this chapter to subscribe
and pay premiums into the workers' compensation fund, the injured employee has
remained in such employer's service with notice that his employer has elected
to pay into the workers' compensation fund the premiums provided by this chapter, or has elected to make direct payments
W.Va. Code § 23-2-6 (emphasis supplied). As this Court succinctly stated in State ex rel. Frazier v. Hrko, 203 W.Va. 652, 510 S.E.2d 486 (1998), '[w]hen an employer subscribes to and pays premiums into the Fund, and complies with all other requirements of the Act, the employer is entitled to immunity for any injury occurring to an employee and shall not be liable to respond in damages at common law or by statute.' W.Va.Code, 23-2-6 . 203 W.Va. at 659, 510 S.E.2d at 493. Footnote eleven of Frazier explained: This statute is also known as the 'exclusivity' provision, as it makes workers' compensation benefits the exclusive remedy for personal injuries sustained by an employee injured in the course of and resulting from his or her covered employment. Id. at 659 n. 11, 510 S.E.2d at 493 n. 11.
The immunity provided by § 23-2-6 is not easily forfeited. As the District Court for the Southern District of West Virginia explained in Smith v. Monsanto Co., 822 F.Supp. 327 (S.D.W.Va.1992), [u]nder the Act, an employer who is otherwise entitled to immunity under § 23-2-6 may lose immunity in only one of two ways: (1) by defaulting in payments required by the Act or otherwise failing to comply with the provisions of the Act, or (2) by deliberately intending to produce injury or death to the employee. 822 F.Supp. at 330 (citation omitted).
Specifically, West Virginia Code § 23-2-8 (1991) (Repl. Vol. 2002), provides that an employer will lose the statutory immunity of West Virginia Code § 23-2-6 if it is in default in the payment of premiums to the worker's compensation fund or fails to otherwise fully comply with the provisions of West Virginia Code §§ 23-2-5 or 23-2-9. (See footnote 9) The preeminent issue to be acknowledged in this case is that the statutory scheme does not mandate loss of immunity immediately upon an employer's payment delay, mistake, or error in compliance. The statutes construct a detailed process through which employer lapse is resolved. West Virginia Code § 23-2-5(b), for instance, provides that [f]ailure of an employer . . . to maintain an adequate premium deposit, shall cause the employer's account to become delinquent. Pursuant to West Virginia Code § 23-2-5(c), subsequent to a determination that an account is delinquent, the division is required to notify the delinquent employer of its status and explain the legal consequences of a potential default. West Virginia Code § 23-2-5(d) then clarifies that only when the delinquency is not cured within a prescribed period is a default possible. That section provides that [f]ailure by the employer, who is required to subscribe to the fund and who fails to resolve the delinquency within the prescribed period, shall place the account in default and shall deprive such default employer of the benefits and protection afforded by this chapter. . . . West Virginia Code § 23-5-1(a) (1995) (Repl. Vol. 2002) (See footnote 10) provides the authority of the Commission to hear issues within its jurisdiction, as follows:
The workers' compensation division shall have full power and authority to hear and determine all questions within its jurisdiction. In matters arising under articles three and four [§§ 23-3-1 et seq. and 23-4-1 et seq.] of this chapter, the division shall promptly review and investigate all claims. The parties to a claim shall file such information in support of their respective positions as they deem proper. In addition, the division is authorized to develop such additional information that it deems to be necessary in the interests of fairness to the parties and in keeping with the fiduciary obligations owed to the fund. With regard to any issue which is ready for a decision, the division shall explain the basis of its decisions.
W.Va. Code § 23-5-1(a) (emphasis suppl ied).
The West Virginia Code of State Rules further elucidates the procedures established for calculations and resolutions of delinquency and default issues, providing additional details regarding particular requirements for notice of delinquency, notice of default, and the manner in which an employer may seek reinstatement. For instance, Section 85-11-6 provides the mechanism for audits of employers where the division desires verification of the number of employees or wages paid during certain periods. (See footnote 11) Section 85-11-9 provides authority for the commencement of a civil action by the division. Default is specifically defined by West Virginia Code of State Rules § 85-11-2.5a as follows:
The failure by a subscriber or a self-insured employer
which has not made a payment or filed a report due by it under the provisions
of the Act and which has received a subsection 3.3. notice of delinquency but
has further failed to make the payment or file the report within the time period
specified by the notice.
The legislature has also provided an element of protection to employees, as follows in West Virginia Code § 23-2-5(g): With the exception noted in subsection (h), section one of this article, no employee of an employer required by this chapter to subscribe to the workers' compensation fund shall be denied benefits provided by this chapter because the employer failed to subscribe or because the employer's account is either delinquent or in default. (See footnote 12) West Virginia Code § 23-2-5(h)(1) provides: The provisions of this section shall not deprive any individual of any cause of action which has accrued as a result of an injury or death which occurred during any period of delinquency not resolved in accordance with the provisions of this article, or subsequent failure to comply with the terms of the repayment agreement.
This Court must accede to the methodology established by the legislature and the rules and regulations designed to determine an employer's continuing entitlement to workers' compensation coverage, immunities, and defenses. This legislative construct for the workers' compensation system envisions an administrative body which bears the responsibility of determining the delinquency or default status of employers within its own system.
In footnote seven of Erie Insurance Property and Casualty Co. v. Stage Show Pizza, JTS, Inc., 210 W.Va. 63, 553 S.E.2d 257 (2001), this Court acknowledged the mechanism designed by West Virginia Code § 23-2-5(d), specif[ying] that if an employer is delinquent in its duties to the workers' compensation fund, and the employer fails to resolve that delinquency, then the Workers' Compensation Division may choose to place the employer 'in default.' 210 W.Va. at 70 n. 7, 553 S.E.2d at 264 n. 7. This Court has also held that when an employer has been determined to be in default by the Workers' Compensation Commission, that declaration is binding upon trial courts. In syllabus point two of Frazier, this Court stated:
Under W.Va.Code, 23-2-5(d)
, in the absence of a final ruling by the Workers' Compensation Commissioner,
a trial court may find an employer in default under the Workers' Compensation
Act. However, if the Commissioner has made a final ruling that an employer is
in default, then the Commissioner's ruling is binding upon a trial court. The
Commissioner's ruling may not be collaterally attacked in a subsequent proceeding
considering the same issue, and the employer's proper remedy is to seek review
of the ruling through the appellate process established by W.Va.Code,
203 W.Va. at 654-55, 510 S.E.2d at 488-89. The holding in Frazier was ultimately premised upon the following conclusion: We believe that the trial court in this case exceeded its legitimate powers and impinged on the jurisdiction of the Commissioner by failing to accept the Commissioner's determination that Pioneer and Top Flite were in default of their workers' compensation obligations. Id. at 662, 510 S.E.2d at 496. Thus, the issue of loss of immunity in Frazier was determined as a matter of law, based upon fact that the Workers' Compensation Commissioner had issued a notice of default that had become a final order of the Commissioner when the employer failed to seek an appeal.
In support of his position in this matter, Mr. Edens also cites Canterbury v. Valley Bell Dairy Co., 142 W.Va. 154, 95 S.E.2d 73 (1956). In Canterbury, this Court reviewed the question of whether an employer had lost is workers' compensation immunities and defenses because the employer had failed to report as wages certain sums paid an employee by the employee's co-worker. 142 W.Va. at 155, 95 S.E.2d at 74. The employer in Canterbury had paid certain employees, working as helpers to its truck drivers, a very minimal wage and had paid workers' compensation premiums based only upon those wages. The drivers who were assisted by the helpers often paid the helpers an additional stipend, presumably drawn from their own wages. This additional compensation was not reported as wages for the helpers, nor was any premium paid by the employer on that supplemental compensation. When one of the helpers was killed in a workplace accident, his personal representative brought a wrongful death action against the employer, claiming that the employer had lost it workers' compensation immunities and defenses. In the lower court, a verdict was returned and a judgment rendered based upon a determination that the immunities and defenses had been lost. This Court reversed the lower court judgment, finding that the supplemental payments by the drivers to the helpers were not wages paid by the employer. Id. at 159, 95 S.E.2d at 76. This Court did not, however, address the question of whether the procedure employed in the lower court for the determination of the issue of whether workers compensation coverage had been lost was proper.
The wage reporting matter at issue in Canterbury directly concerned the injured employee, the individual whose wages, workplace injury, and death were directly involved in the civil action reviewed by this Court. Conversely, in the case sub judice, the allegedly improper compliance with the Workers' Compensation Act does not relate directly to the injured employee, Mr. Edens, but rather to the contested status of a co-worker not involved in the underlying civil action.
In Kosegi v. Pugliese, 185 W.Va. 384, 407 S. E.2d 388 (1991), this Court recognized the statutory pronouncements that an employer who is in default of its obligation to remit workers' compensation premiums to the Fund is not entitled to immunity from common-law liability. 185 W.Va. at 386, 407 S.E.2d at 390. In exploring that issue, however, the Kosegi Court also acknowledged an intervening alteration in the statutory procedure for the potential loss of immunity which had been accomplished after the employee's death in 1982. This Court explained as follows:
[Employer's] sole basis for contesting
that they were statutorily in default for failure to remit premium payments is
the 1984 amendment to W.Va. Code § 23-2-5. The provisions of W.Va. Code § 23-2-5
as in effect in 1982 required that an employer who was delinquent in the payment
of workers' compensation premiums shall be deprived of the benefits and
protection afforded by this chapter . . . . Pursuant to the 1982 statute,
an employer whose failure to timely remit premiums rendered him delinquent .
. . was thereby mandatorily subjected to common-law negligence.
Id. at 386-87, 407 S.E.2d at 390-91. Pursuant to the 1982 statute, the commissioner was not required to notify an employer that its delinquency rendered it in default. . . . Id. at 387, 407 S.E.2d at 391. However, the amendment of 1984 included a requirement that the commissioner must notify all delinquent employers in writing of their failure to timely pay premiums, to timely file a payroll report, or to maintain an adequate premium deposit. Id. at 87, 407 S.E.2d at 391, quoting W.Va. Code § 23-2-5(b) (1984). The amendment also provided that failure to resolve a delinquency within a prescribed period would place the account in default. The Kosegi Court refused to apply the 1984 amendments retrospectively to the 1982 employee death and therefore held that the employer's failure to pay appropriate premiums at the time of the incident rendered the employer in default and dispossessed it of its statutory immunity. (See footnote 13)
Those 1984 amendments, applicable in the present case,
substantially changed the process by which a delinquent employer may now be found
in default, with the resultant loss of immunities and common law defenses. In
the case before us, no delinquency or default of the employer has been found
or declared by the Workers' Compensation Commission.
In resolving the case before us, we find instructive the analysis utilized by the Supreme Court of Ohio in addressing the issue of entitlement to statutory immunity through a workers' compensation system. That court has recognized the obligation of the judiciary to observe statutory protocol when evaluating issues of delinquency and default. In Bridges v. National Engineering and Contracting Co., 551 N.E.2d 163 (Ohio 1990), the Ohio Supreme Court held that a certificate of coverage served to demonstrate that the employer was in compliance as a matter of law, reasoning as follows in syllabus point two: Once the Industrial Commission has certified that an employer has established industrial coverage and paid its premium, pursuant to R.C. 4123.35, the employer is a complying employer as a matter of law, and is entitled to the benefits of [the workers' compensation act]. 551 N.E.2d at 164. Further, in syllabus point three, the Bridges court held that [a]n employer's failure to include a particular injured employee in a required payroll report does not deprive the employer of its statutory immunity from a civil action brought by the employee, in the absence of a final determination by the commission that the employer is a noncomplying employer who has not settled its liability to the State Insurance Fund. Id.
The employees in Bridges had argued that certificates of premium payment are only prima facie evidence that the proper premium has been paid, and thus evidence showing an employer under-reported its payroll, as they allege [the employer] did here, proves noncompliance. . . . 551 N.E.2d at 169-70. The Ohio Supreme Court rejected that argument and reasoned as follows:
While the accuracy of a premium
payment by an employer is certainly dependent upon the accurate reporting of
payroll by such employer, an employer who fails to fully pay its premiums does
not automatically become a noncomplying employer subject to a common-law
action by its employees. Indeed, once an employer has filed a payroll report,
whether complete or not, and paid the premium thereon, a finding of noncompliance
is a question of fact to be determined in the first instance by the Industrial
Commission, not by a court in an original civil action.
Id. at 170. The Bridges court also noted that the statutory scheme included safeguards which ensure that [a]s between the employer and the commission . . . the certificate is not conclusive. Id. All records under the Ohio system, as in the West Virginia system, are subject to audit by the commission. Moreover, the determination of an employer's failure to comply . . . is an administrative determination. Id. The Bridges court ultimately explained that we agree with the holding of several lower courts that, standing alone, the failure of an employer who has otherwise complied to include one or more employees on a payroll report 'is not an omission which will deprive an employer or immunity.' Id. at 170- 71 (citations omitted). The employer's omission of its Bridge Project employees from its payroll reports was a matter between it and the commission. . . . Id. at 171. Whether [the employer] had a duty to report such employees' payroll is a matter to be decided, in the first instance, by the commission. Id.; see also Keeler v. Schroeder, 1992 WL 19361 (Ohio App. 1992).
Relying upon the principles enumerated in Bridges, the Court of Appeals of Ohio held that a certificate of payment served to demonstrate the [employer] was a complying employer as a matter of law. Fuhrman v. Garrison Feist Const. Co., 2000 WL 1838031, 4 (Ohio App. 2000). The Fuhrman court reasoned as follows:
Moreover, we reject the [plaintiffs']
contention that, had they been permitted to discover and present as evidence
the results of the [workers' compensation] audit, they could have rebutted [the
employer's] proof of compliance, because the audit results would have served
as a final determination of noncompliance. As the court's discussion
of the audit process in Bridges details, an audit revealing inaccurate
payroll reporting or underpayment of premiums by an employer does not alone mean
that the employer is noncomplying for the purposes of statutory immunity.
Rather, an employer becomes noncomplying for the purposes of statutory immunity
only after it fails to pay, within the allowed time, the additional premium ordered
as the result of the audit.
2000 WL 1838031 at *5; see also Walter v. AlliedSignal, Inc., 722 N.E.2d 164, 169 (Ohio App. 1999).
Further, we observe that the certificate issued to the Petitioner covered the time period in which the accident occurred; there is no evidence of challenge, amendment, or revocation to that certificate; the statutory procedure clearly identifies the stages through which a default determination must proceed administratively; and the injured worker's own workers' compensation benefits are not jeopardized, his wages were properly reported with premiums paid thereon, and the alleged error by the Petitioner involves classification of an employee other than the injured worker in question.
Providing due regard to the legislative plan for
addressing perceived delinquencies and eventual defaults in the obligations
of employers to file accurate workers compensation reports and fully pay
all premiums due on the wages reported, it is apparent that the legislative
scheme allows a reasonable means of addressing both errors and oversights
which might arise in the preparation and filing of such reports and the calculation
and payment of appropriate workers' compensation premiums. The procedure
specified by the legislature allows for the correction of errors in the wage
report arising from the omission of an individual employee, the misstatement
of actual wages earned, or even a good faith dispute regarding the proper
classification of a particular person to whom compensation might have been
paid. Certainly, the legislative scheme does not envision that an error in
the wage report, such as the omission of an individual employee by simple,
unintended error, or the misstatement of a wage by computational or scrivener
error, would immediately result in the loss of coverage, immunities, and
defenses. Such error of law or fact, as in the case of adjudging an employee
to be an independent contractor, would not trigger the loss of coverage,
immunities, and defenses without the opportunity to litigate the issue with
the Workers' Compensation Commission and to pay any delinquency upon an adverse
finding. In the absence of a procedure for preliminary notification of a
delinquency and eventual declaration of a default, such as the legislature has devised, even the
most innocent, accidental errors could be the basis for denying workers'
compensation coverage to an employer. This is not the intent of the legislative
Submission of a question to a jury is necessary only when there is a genuine issue of material fact to be decided. As Rule 56(c) of the West Virginia Rules of Civil Procedure specifies, summary judgment is appropriate where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. A material fact has been defined as one that has the capacity to sway the outcome of the litigation under the applicable law. Williams v. Precision Coil, Inc., 194 W. Va 52, 60 n. 13, 459 S.E.2d 329, 337 n. 13. (See footnote 14) Factual disputes that are irrelevant or unnecessary will not be counted. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986).
Finding no justification for the lower court's
proposed action, we conclude that there is no basis upon which this Court
or the trial court may deprive the Petitioner of its immunity or defenses
from suit for common law negligence and no genuine issue of material fact
which might warrant submission of this matter to a jury. The writ shall be granted prohibiting litigation of the issue of the Petitioner's workers'
compensation coverage in the civil action pending below and prohibiting maintenance
of an action under the allegations of Count II of Mr. Edens' complaint.
All employers required
by this chapter to subscribe to and pay premiums into the workers' compensation
fund, except the state of West Virginia, the governmental agencies or departments
created by it, and municipalities and political subdivisions of the state,
and who do not subscribe to and pay premiums into the workers' compensation
fund as required by this chapter and have not elected to pay individually
and directly or from benefit funds compensation and expenses to injured employees
or fatally injured employees' dependents under the provisions of section
nine [§ 23-2-9] of this article, or having so subscribed or elected,
shall be in default in the payment of same, or not having otherwise fully
complied with the provisions of section five or section nine [§ 23-2-5
or § 23-2-9] of this article, shall be liable to their employees (within
the meaning of this article) for all damages suffered by reason of personal
injuries sustained in the course of employment caused by the wrongful act,
neglect or default of the employer or any of the employer's officers, agents
or employees while acting within the scope of their employment and in the
course of their employment and also to the personal representatives of such
employees where death results from such personal injuries, and in any action
by any such employee or personal representative thereof, such defendant shall
not avail himself of the following common-law defenses: The defense of the
fellow-servant rule; the defense of the assumption of risk; or the defense
of contributory negligence; and further shall not avail himself of any defense
that the negligence in question was that of someone whose duties are prescribed
by statute: Provided, That such provision depriving a defendant employer of certain common-law defenses under the
circumstances therein set forth shall not apply to an action brought against
a county court [county commission], board of education, municipality, or
other political subdivision of the state or against any employer not required
to cover his employees under the provisions of this chapter.