United States District Court, W.D. Missouri, St. Joseph Division
ORDER AND OPINION (1) DENYING PLAINTIFF'S MOTION
FOR SUMMARY JUDGMENT, (2) DENYING DEFENDANT'S MOTION FOR
PARTIAL SUMMARY JUDGMENT, AND (3) DISMISSING MATTER WITHOUT
D. SMITH, SENIOR JUDGE
are Plaintiff Travelers Property Casualty Company of
America's motion for summary judgment (Doc. #59), and
Defendant Jet Midwest Technik, Inc.'s motion for partial
summary judgment (Doc. #60). Because the Court finds
Plaintiff failed to exhaust its administrative remedies, the
Court denies both motions, and dismisses the matter without
a stock insurance company, issued a workers' compensation
and employers' liability insurance policy to Defendant in
January 2013 as part of Missouri's residual market for
workers' compensation. Doc. #68, at 3. Defendant, whose
business involves painting aircraft, provided an application
in which Defendant estimated its payroll during the policy
term, and provided code classifications which were used to
calculate premium due on the policy. Id.
2013, pursuant to the policy terms, Plaintiff conducted an
audit of Defendant's business to determine whether the
code classifications appropriately captured the type of work
performed by Defendant's employees. Id. at 11.
Based on the audit, Plaintiff endorsed the policy to add an
additional code classification to include coverage for work
painting aircraft exceeding thirty feet in height.
Id. at 12-13. The parties disagreed about the
applicability of this additional code, and the amount of
payroll applied to various code classifications under the
policy. In October 2013, the National Council on Compensation
Insurance conducted a site inspection and issued a report
about Defendant's operations, but the parties dispute the
correct interpretation and application of this report.
Id. at 18-27. Based on the disagreement and
nonpayment of premium Plaintiff alleged were due, Plaintiff
cancelled the policy in December 2013. Id. at 27.
audit was conducted, but the parties continued to disagree
about the amount, if any, of premium Defendant owed
Plaintiff. Most relevant to the Court's decision,
Defendant filed a dispute before the Missouri Workers'
Compensation Determinations Review Board (“the
Board”) in August 2015. Id. at 44. The Board
determined “the entire payroll for [Defendant's]
employees that paint aircraft that exceeds 30 feet in height
is correctly classified to Code 5037. Based on the documents
presented during the Board meeting, the payroll correctly
classified to Code 5037 is $76, 620. The balance of painting
payroll is correctly classified to Code 5474.” Doc.
#62-8, at 3. The Board informed the parties of their right to
appeal, which will be discussed in further detail infra.
date, Defendant has paid $151, 462.57 under the policy. Doc.
#69, at 47. Plaintiff believes it is owed additional premium
based on its calculations and audits, and filed this suit
seeking to recover that amount. Defendant moves for partial
summary judgment, asking the Court to find as a matter of law
that the Board's ruling is binding on Plaintiff. Doc.
#61, at 8. Plaintiff moves for summary judgment on Counts I
and II, alleging a breach of contract and account stated.
Doc. #62, at 35.
argues Plaintiff failed to exhaust administrative remedies by
failing to appeal the Board's decision, and thus, is
prohibited from contesting the Board's findings in this
Court. Plaintiff argues the Board's decision was the
result of a non-contested case, and therefore, Plaintiff was
not required to exhaust administrative remedies prior to
filing this suit.
Missouri law, when a remedy before an administrative agency
is available, Plaintiff must ordinarily exhaust those
remedies before a court can act. Lederer v. Dir. of Div.
of Aging, 865 S.W.2d 682, 684 (Mo.Ct.App. 1993)
(citations omitted). The exhaustion requirement prevents
premature interference with agency process, and affords
courts the benefit of administrative experience and expertise
in matters of which the agency is most knowledgeable. See
Farm Bureau Town & Country Insur. Co. of Mo. v.
Angoff, 909 S.W.2d 348, 352 (Mo. banc. 1995). The Court
lacks subject matter jurisdiction if administrative remedies
are not exhausted prior to judicial review. Lederer,
865 S.W.2d at 684 (citation omitted). Accordingly, the Court
must dismiss the matter if Plaintiff failed to exhaust its
administrative remedies. Nowden v. Div. of Alcohol &
Tobacco Control, No. 79897, 2017 WL 1485545, at *2
(Mo.Ct.App. Apr. 25, 2017) (citation omitted).
Court must determine whether an administrative remedy was
available to Plaintiff, and whether Plaintiff was required to
pursue an administrative remedy prior to filing this suit. In
1993, the Missouri legislature authorized the Director of the
Department of Insurance, Financial Institutions and
Professional Registration (“the Director”) to
develop a residual market “that will guarantee
insurance coverage and quality loss prevention and control
services for employers seeking coverage through the
plan.” Mo. Rev. Stat. § 287.896 (2017).
Subsequently, the Director formalized operations of a new
Alternative Residual Market Plan (“ARM Plan”). 20
C.S.R. § 500-6.960. A “Dispute Resolution
Procedure” contained in this regulation provides:
(A) Any person affected by the operation of the ARM Plan
including, but not limited to, insured employers, covered
employees, producers, the contract carrier, the plan
administrator, a servicing carrier or a direct assignment
carrier who may have a dispute with respect to any aspect of
the plan, may seek a review of the matter by the department
by setting forth in writing with particularity the nature of
the dispute, the parties to the dispute, the relief sought
and the basis thereof. The department may secure such
additional information as it deems necessary to make a
(B) Appeals from insured employers and covered employees on
plan matters regarding individual employer disputes shall be
within the jurisdiction of the mechanism established to
handle such appeals under the applicable ...