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Hegger v. Valley Farm Dairy Co.

Court of Appeals of Missouri, Eastern District, Fourth Division

May 21, 2019


          Appeal from the Labor and Industrial Relations Commission

          Gary M. Gaertner, Jr., Judge.


         In 2013, after negotiations and an agreement with various interest groups, including employer and employee representatives, the Missouri legislature enacted and amended certain provisions of Chapter 287, Missouri's Workers' Compensation Law. The goal of these statutory revisions was to make Missouri's Workers' Compensation Law the exclusive remedy for employee claims of occupational disease due to toxic exposure and thereby reduce the potential significant civil liability for employers by moving exposure cases from the circuit court to the Division of Workers' Compensation.

         Vincent Hegger (Hegger) died in 2015 from mesothelioma caused by exposure to asbestos while working at Valley Farm Dairy Company (Valley Farm). Prior to his death, Hegger filed a claim for workers' compensation benefits. Hegger and then his children (Claimants) sought workers' compensation benefits, pursuant to one of the amended statutes, Section 287.200.4, effective January 1, 2014.[1] The Administrative Law Judge (ALJ) determined that a company that is no longer in business, such as Valley Farm, cannot "elect to accept" coverage under this statute's language and thus Claimants were not entitled to benefits. The Labor and Industrial Relations Commission (Commission) affirmed the ALJ's decision. We hold that Claimants are entitled to benefits under Section 287.200.4 and reverse the Commission's decision. The cause is remanded for the Commission to determine which insurer is liable under the last exposure rule.


         From 1968 to 1984, Hegger worked for Valley Farm performing maintenance duties. Hegger's duties included maintaining industrial equipment, such as ammonia compressors, boilers, and fireboxes. Much of this work created asbestos dust which Hegger inhaled. Hegger's work for Valley Farm was the last time he worked with or was exposed to asbestos. Amerisure Insurance Company provided Valley Farm with workers' compensation coverage from October 17, 1983 until October 17, 1984, and Travelers Indemnity Company of America provided coverage from October 17, 1984 until October 17, 1985. Valley Farm has not been in "existence" since 1998.

         In March of 2014, Hegger's physician diagnosed Hegger with mesothelioma that was caused by asbestos exposure. Hegger filed his claim for workers' compensation benefits in March of 2014. Hegger gave a deposition in May of 2015. On June 17, 2015, Hegger died as a result of complications from mesothelioma.

         After an evidentiary hearing, the ALJ ruled: (1) Hegger's exposure to asbestos at work was the prevailing factor for Hegger's diagnosis of mesothelioma; (2) Hegger was last exposed to the hazards of asbestos working for Valley Farm; and (3) Claimants did not meet their burden of proving entitlement to the benefits provided in Section 287.200.4(3) because Valley Farm was not in existence as of January 1, 2014, and therefore could not elect to accept coverage under Section 287.200.4(3)(a). The ALJ did not award Claimants any benefits. The Commission affirmed and incorporated the ALJ's decision. Claimants appeal.

         Points on Appeal

         Claimants argue the Commission erred because (1) Valley Farm elected to accept liability for the benefits provided in Section 287.200.4(3) under strict construction of that subsection, and (2) Valley Farm was not required to provide the Division of Workers' Compensation with notice of an election to accept liability for the benefits provided in Section 287.200.4(3).

         Standard of Review

         This Court's standard of review for the Commission's decision is set forth in Section 287.495.1. On appeal, the court may modify, reverse, remand for rehearing, or set aside the Commission's decision only on the following grounds: (1) the Commission acted without or in excess of its powers; (2) the award was procured by fraud; (3) the facts found by the Commission do not support the award; or (4) there was not sufficient, competent evidence in the record to warrant the making of the award. Further, if the Commission incorporates the Administrative Law Judge's decision, we will consider it as part of the Commission's decision. Maryville R-II School Dist. v. Pavton, 516 S.W.3d 874, 880 (Mo. App. W.D. 2017).

         An appellate court defers to the Commission's findings of fact, the credibility of witnesses, and the weight given to conflicting evidence. Malam v. Mo. Dept. of Corrections, 492 S.W.3d 926, 928 (Mo. banc 2016). However, decisions involving statutory interpretation are reviewed de novo. White v. Conagra Packaged Foods. LLC, 535 S.W.3d 336, 338 (Mo. banc 2017).

         Discussion Mesothelioma

         It is well known that mesothelioma is a serious and often fatal disease. Mesothelioma is a malignant condition attributed to asbestos exposure. Hagen v. Celotex Corp., 816 S.W.2d 667, 669 (Mo. banc 1991). "Over a period of years distressing symptoms appeared in persons who had had substantial exposure to asbestos." Id. Mesothelioma "is actuated by asbestos fibers which make their way to the pleural cavity." Id. The latency period can be thirty years or longer.

         Missouri's Worker's Compensation Law

         Missouri voters passed the original version of the Missouri Workers' Compensation Law (Act) in 1926. The passage of the Act constituted what is referred to as the "bargain" between employers and employees. Zueck v. Oppenheimer Gateway Props., Inc., 809 S.W.2d 384, 388 (Mo. banc 1991). The Act "is the product of a trade-off: the employer forfeits [its] common law defenses to suits against [it] [the employer] for [its] employees' injuries and assumes automatic liability; the employee forfeits [the] right to a potentially lucrative common law judgment in return for assured compensation." Id. In 1931, the legislature amended the Act to provide optional coverage for occupational diseases. Section 287.020 RSMo. (1949). In 1974, the legislature made coverage for occupational diseases mandatory. Section 287.110.2 RSMo. (1978). Prior to 2005, Section 287.800 RSMo. (2000) stated that "[a]ll of the provisions of (the workers' compensation law) shall be liberally construed with a view to the public welfare." State ex rel. KCP&L Greater Mo. Operations Co. v. Cook, 353 S.W.3d 14, 22 (Mo. App. W.D. 2011). In 2005, the legislature amended Section 287.800 to require strict construction of workers' compensation law. The legislature also amended Section 287.120.2 RSMo. Cum. Supp. (2007), removing occupational disease claims from the workers' compensation exclusivity provisions. Thereafter, this Court and the Western District held that under strict construction, occupational diseases were no longer subject to workers' compensation exclusivity provisions and a claimant could bring common law claims in the circuit court.[2] Amesquita v. Gilster-Mary Lee Corp., 408 S.W.3d 293, 299 (Mo. App. E.D. 2013) (holding that plaintiffs' injuries were not the result of an "accident" as that term is defined in section 287.020.2 RSMo. Cum. Supp. (2011), and therefore employees claiming work-related occupational disease were not limited to the remedies provided by Chapter 287); Cook. 353 S.W.3d at 30. In 2013, the legislature repealed, enacted, and amended numerous sections in Chapter 287.

         One of these Sections 287.200, effective January 1, 2014, addresses occupational diseases due to toxic exposure which results in permanent and total disability or death. Section 287.200.4 provides:

For all claims filed on or after January 1, 2014, for occupational diseases due to toxic exposure which result in a permanent total disability, or death, benefits in this chapter shall be provided as follows:
(1) Notwithstanding any provision of law to the contrary, such amount as due to the employee during said employee's life as provided for under this chapter for an award of permanent total disability and death, except such amount shall only be paid when benefits under subdivision (2) and (3) of this subsection have been exhausted;
(2) For occupational disease due to toxic exposure, but not including mesothelioma, an amount equal to two hundred percent of the state's average weekly wage as of the date of diagnosis for one hundred weeks paid by the employer; and
(3) In cases where occupational diseases due to toxic exposure are diagnosed to be mesothelioma:
(a) For employers that have elected to accept Mesothelioma liability under this subsection, an additional amount of three hundred percent of the state's average weekly wage for two hundred twelve weeks shall be paid by the employer or group of employers such employer is a member of. Employers that elect to accept Mesothelioma liability under this subsection may do so by either insuring their liability, by qualifying as a self-insurer, or by becoming a member of a group insurance pool. A group of employers may enter into an agreement to pool their liabilities under this subsection. If such group is joined, individual members shall not be required to qualify as individual self-insurers. Such group shall comply with section 287.223. In order for an employer to make such an election, the employer shall provide the department with notice of such an election in a manner established by the department. The provisions of this paragraph shall expire on December 31, 2038; or
(b) For employers who reject mesothelioma under this subsection, then the exclusive remedy provisions under section 287.120 shall not apply to such liability. The provisions of this paragraph shall expire on December 31, 2038; and
(4) The provisions of subdivision (2) and paragraph a of subdivision (3) of this subsection shall not be subject to suspension of benefits as provided in subsection 3 of this section; . . .

(Emphasis added).

         The Missouri Supreme Court considered a constitutional challenge to Section 287.200.4 in Accident Fund Ins. Co. v. Casey, 550 S.W.3d 76 (Mo. banc 2018). In that case, Casey died from mesothelioma caused by repeated exposure to asbestos at his workplace. Id. at 79. At the time of Casey's last employment in 1990, the employer was insured by a "now-defunct" insurance company. Id. at 78 n.3. However, when Casey filed his claim for benefits in February of 2015, the employer was covered under an insurance policy from a different insurer. Id. The policy included an endorsement stating that the policy provides insurance benefits for the additional benefits provided in Section 287.200.4(3). Id.

         The court first considered whether the insurer was liable for "[e]nhanced [m]esothelioma [b]enefits." The court stated:

Missouri's workers' compensation law was amended in 2014 to provide enhanced compensation for persons diagnosed with occupational diseases such as mesothelioma. Section 287.200.4(3). Coverage is provided for "all claims filed on or after January 1, 2014, for occupational diseases due to toxic exposure which result in permanent and total disability or death." Section 287.200.4. Employers may either accept or reject liability for mesothelioma. If an employer elects to accept liability, it must insure its "entire liability" under the [A]ct, which includes accepting all of the [A]ct's provisions. Section 287.280.1; Allen v. Renfrey, 237 Mo.App 542, 174 S.W.2d 345, 350 (1943). In other words, an insurer cannot avoid certain liabilities by constructing its policy to exclude certain provisions of the workers' compensation statute and cover only the provisions it prefers.

Id. at 80.

         The insurer argued that it could not be held liable because it did not insure the employer when Mr. Casey was last exposed to asbestos. Id. Section 287.063.2 is referred to as the "last exposure rule" and provides that the "employer liable for [workers' compensation benefits] shall be the employer in whose employment the employee was last exposed to the hazard of the occupational disease." Id. The court stated that the last exposure rule was immaterial for the case being considered and the "relevant inquiry in this matter is not under whose employment Mr. Casey was last exposed, but whether the terms of Employer's policy provide coverage." Id. at 81. The court held that "[i]nsurer provided coverage to Employer by expressly adopting section 287.200.4 into its endorsement." Id.

         The court next considered the constitutional challenge to Section 287.200. The court concluded that because certain facts, such as Casey's exposure, were antecedent to the 2014 amendments this did not render Section 287.200.4 an unconstitutional retrospective law as applied to Casey's claim. Id. at 81-82. Casey is distinguishable from the present case but is instructive.

         The instant case presents an issue of first impression for this Court. The Commission stated that, "the crux of this matter is whether the insurer of a long-defunct employer can be held liable for the new 'enhanced benefits' set forth in [Section] 287.200.[4]."

         Point I

         In their first point, Claimants contend the Commission erred by denying compensation because Valley Farm elected to accept liability for the benefits set forth in Section 287.200.4(3)(a). Claimants assert "an election to accept is itself defined within the strictly ...

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