By Jane Salem, staff attorney, Nashville

Trial judges in the Court of Workers’ Compensation Claims don’t have jurisdiction to decide insurance coverage disputes when a carrier alleges untimely payment of premiums.

The Tennessee Workers’ Compensation Appeals Board reached that conclusion last week in Martinez v. ACG Roofing, Inc. But the Board’s opinion also gave a list of circumstances where a trial court may exercise jurisdiction over disputes between a carrier and an employer.

The Appeals Board held oral argument in this case last month at the Education Conference in Murfreesboro. They are, left to right, Judge Pele Godkin, Presiding Judge Timothy Conner, and Judge Meredith Weaver.

The opinion affirmed the trial court’s denial of an insurer’s motion for summary judgment, with the Board relying on jurisdictional grounds.

In the case, the immediate employer’s workers’ compensation insurer alleged that the policy had lapsed the day before the work accident for nonpayment of the premium. The trial judge found issues of material fact about whether the policy lapsed and denied the motion. The carrier appealed.

On appeal, the Board didn’t address the findings concerning disputed material facts but instead held that the threshold issue is subject matter jurisdiction.

“The Tennessee Court of Workers’ Compensation Claims is a court of statutorily defined, limited jurisdiction,” the appellate judges emphasized.

Under section 50-6-238, trial judges are authorized to “hear and determine claims for compensation, to approve settlements of claims for compensation, to conduct hearings, and to make orders, decisions, and determinations.” Further, the Court’s scope is limited to “[e]very employer and employee subject to this chapter,” who are obligated to “pay and accept compensation for personal injury or death by accident arising primarily out of and in the course and scope of employment.”

The Board wrote that the primary issue in this case was whether the Court of Workers’ Compensation Claims can adjudicate the rights and obligations of an employer and its insurer when a coverage dispute arises between those two parties.

Attorney Monica Rejaei, Memphis, represents the injured worker, Francisco Martinez.

Earlier this year in Acevedo v. Crown Paving, the Board concluded that a medical provider couldn’t intervene in an action pending in the Court of Workers’ Compensation Claims to protect its interest in the payment of medical bills from a work accident. As in this case, the Board said that was essentially a contract dispute.

The Board distinguished between cases where trial judges are presented with a factual dispute that impacts coverage, versus a coverage dispute hinging on the language of the insurance contract. In the former, the Court isn’t applying contract law but is resolving factual disputes between the parties as authorized by the Tennessee Workers’ Compensation Law. In the latter, however, the Court would be reaching beyond the facts of the case and the Workers’ Compensation Law to resolve a dispute under contract law. 

For example, if the employee and employer allege two different dates of accident, one of is within the period during which the employer is covered by insurance and the other of which is not, the judge may hear evidence and decide the date of injury. The judge won’t have to interpret the contract to find that fact.

The Board additionally listed occasions when the statute calls for judges to assess the terms of an insurance contract, to check an insurer’s compliance with certain provisions of the law. They include:

• Section 50-6-408 lists “mandatory policy provisions” that must be included in a workers’ compensation contract. For example, an insurer couldn’t defend a claim on the grounds that it never received notice of the alleged work-related accident when its insured received notice, because section 50-6-408(1) specifies that notice or knowledge of the insured employer “shall be deemed notice or knowledge, as the case may be, on the part of the insurer.” 
• An insurer couldn’t assert a lack of personal jurisdiction over it when the Court has personal jurisdiction over the insured employer under section 50-6-408(2).
• A policy can’t include arbitrary limits on liability contrary to section 50-6-409(a). 

The Board reminded that coverage disputes are typically resolved through a declaratory judgment action. Under Rule 57 of the Tennessee Rules of Civil Procedure, the parties would have the right to demand a jury, a mechanism that’s unavailable in the Court of Workers’ Compensation Claims. Any appeal of that decision would go to the Tennessee Court of Appeals, which doesn’t have jurisdiction over appeals of workers’ compensation cases.

William Ritchie Pigue, Nashville, represents employer Stephanie Nava d/b/a Nava Roofing and Travelers.

The Board concluded by remanding the case to the trial court, most likely for a compensation hearing.

The case was argued last month before a sizeable audience at the Bureau’s annual education conference. Afterward, a panel of attorneys critiqued the arguments.