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Employer did not waive right to exclusive remedy provision

Posted On: Jan. 31, 2019 1:10 PM CST

Arkansas

An appeals court held that an employer did not waive its right to the exclusive remedy provision of the Workers Compensation Act when it failed to respond to an employee’s negligence lawsuit.

The Arkansas Court of Appeals, Division 1, reversed a circuit court decision Wednesday in Stan v. Vences that awarded $277,430 to an employee who alleged that he sustained a significant injury to his finger while employed by Little Rock, Arkansas-based Renaissance Plaster & Design.

The employee filed a complaint for damages in Arkansas circuit court alleging that on Nov. 21, 2013, he sustained his injury while working for Renaissance and that it was proximately caused by his employer’s negligence. He also claimed that his employer failed to provide workers compensation benefits for his employees and thereby lost its immunity from a negligence lawsuit. The employee requested damages for past and future medical expenses, past and future lost wages, conscious pain and suffering, and for the permanency of his injury.

Renaissance did not respond, and an order of default was entered by the court. On Dec. 10, 2014, the court held that an employment relationship did indeed exist between Renaissance and the employee, that the employee was injured during the course and scope of his employment, and that the injury was proximately caused by his employer’s negligence. The court also found that the employer failed to provide workers compensation benefits, thereby losing its exclusive remedy immunity, and awarded the employee $252,209 plus a penalty of $25,221. On Jan. 20, 2014, the circuit court entered a judgment finding that the employer was “ineligible for and has waived immunity provided” under the Workers Compensation Act.

On Aug. 27, 2015, Renaissance moved to set aside the default judgment for lack of subject-matter jurisdiction and argued that it was covered under a workers comp policy on the date of the employee’s accident, and that the Arkansas Workers Compensation Commission website verified that he had coverage that day. Therefore, he contended, the commission had exclusive jurisdiction of the case and the exception to the exclusive remedy rule was not triggered. The circuit court denied Renaissance’s motion to set aside the default judgment and Renaissance appealed.

The Arkansas Court of Appeals, Division 1, held that the circuit court erred in finding that Renaissance waived the exclusive remedy defense. The appeals court dismissed the employee’s argument that the circuit court had subject-matter jurisdiction in the case because the employer did not file an answer to his negligence complaint. Rather, the court found that his allegations — that he was in an employer/employee relationship at the time of his accident, that his accident occurred in the course and scope of his employment, and that his employer was negligent — fall clearly within the exclusive remedy provision of the Act. The appeals court also found that his allegations that the employer did not provide workers compensation benefits is a matter to be determined by the commission and noted that Renaissance introduced into evidence the workers comp policy that was in place at the time of the incident.

Although Arkansas Rule of Civil Procedure states that a party responding to a complaint must put forth an affirmative defense, such as the exclusivity remedy under workers comp law, the court noted that Renaissance did not file answer, and was therefore unable to introduce that as evidence, leaving a challenge of a judgment based on a lack of subject-matter jurisdiction as the available defense.

Therefore, the appeals court held that the circuit court erred in finding that Renaissance waived the exclusive-remedy defense.