Kentucky

WORKERS COMP: Equitable estoppel applied on statute of limitations since carrier failed to offer settlement or deny claim: HITACHI AUTOMOTIVE PRODUCTS USA, INC. V. CHESTER R. CRAIG, JR. (SC 10/23/2008)

By Michael Stevens

HITACHI AUTOMOTIVE PRODUCTS USA, INC. V. CHESTER R. CRAIG, JR.
WORKERS COMP:  Equitable estoppel applied on statute of limitations since carrier failed to offer settlement or deny claim
2007-SC-000631-WC.pdf
PUBLISHED: AFFIRMING
OPINION OF THE COURT; ABRAMSON NOT SITTING
FROM COURT OF APPEALS
DATE RENDERED: 10/23/2008

Mr. Craig was injured at work and underwent surgery to his low back. After he returned to work, his employer's workers' compensation insurance carrier asked his treating physician to give an impairment rating. Dr. Wheeler assigned a 13% rating to the body as a whole. Mr. Craig then received the standard WC-3 letter from the Office of Workers' Claims informing him that his temporary total disability had stopped and that under the statute of limitations he had until January 12, 2006 in which to file a claim. The worker's compensation adjuster did not offer a settlement and did not deny the claim, but wrote a letter to the claimant stating that she felt there was a pre-existing condition. She also wrote a letter to the claimant's doctor inquiring about a pre-existing condition and any pre-existing impairment, based on information that the claimant had had a previous back injury and surgery. She stated that she never received a response to her inquiry. On February 7, 2006, she informed Mr. Craig that the limitations period had expired and that the company would not pay any further benefits. 

Mr. Craig obtained an attorney and filed a claim on February 28, 2006. The Administrative Law Judge dismissed the claim, citing the statute of limitations, and failing to find that the carrier was estopped by its conduct from asserting the statute of limitations defense. The Workers' Compensation Board affirmed, but the Court of Appeals reversed, holding that the insurance carrier, although it had information which would give rise to an obligation to offer a settlement, had failed to do so. The Court of Appeals held that the insurance adjuster had lulled Mr. Craig into thinking that he did not need to do anything further to obtain a settlement, and did not need to file a claim. The Supreme Court affirmed, taking the extraordinary step of finding that overwhelming evidence compelled a finding that the carrier had violated its duty to offer a settlement of the claim or inform him that his claim was denied. Thus, equity required that the insurance carrier be estopped from asserting the statute of limitations defense under the circumstances. The case was remanded to the Administrative Law Judge for consideration of the merits of the claim. 

By: Peter J. Naake, Editor 

Full post as published by Kentucky Cases on December 15, 2008 (boomark / email).