Nationwide Agribusiness Insurance Company v. State of Louisiana Worker's Compensation Second Injury Board

STATE OF LOUISIANA

COURT OF APPEAL

FIRST CIRCUIT
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2019 CA 1101

NATIONWIDE AGRIBUSINESS INSURANCE COMPANY

VERSUS

STATE OF LOUISIANA WORKER'S
COMPENSATION SECOND INJURY BOARD
(EMPLOYEE: DARRELL SHANKS)

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JUDGMENT RENDERED: - - - -2020·
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Appealed from the
Nineteenth Judicial District Court
In and for the Parish of East Baton Rouge• State of Louisiana
Docket Number C652386 • Section 22

The Honorable Timothy E. Kelley, Judge Presiding

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Frank R. Whiteley, III ATTORNEYS FOR APPELLEE,
Megan M. Richardson PLAINTIFF-Nationwide
Robert J. May Agribusiness Insurance Company
New Orleans, Louisiana

Jeff Landry ATTORNEYS FOR APPELLANT
Attorney General DEFENDANT-State of Louisiana
Worker's Compensation Second
Shana Veade Injury Board (Employee: Darrell
Claudia Russ Shanks
Assistant Attorney Generals

Karl L. Scott
Darrick M. Lee
Meredith J. Trahant
Baton Rouge, Louisiana

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BEFORE: MCCLENDON, WELCH, AND HOLDRIDGE, JJ.

WELCH,J.

The defendant, the Louisiana Workers' Compensation Second Injury Board

("the Board"), appeals a summary judgment granted in favor of the plaintiff,

Nationwide Agribusiness Insurance Company ("Nationwide"), which awarded

Nationwide reimbursement in the amount of $231,046.26, plus legal interest from

the date of judicial demand until paid, for workers' compensation benefits

Nationwide paid on behalf of Darrell Shanks. Finding no error in the judgment of

the district court, we affirm and issue this memorandum opinion in compliance

with Uniform Rules-Courts of Appeal, Rule 2-16.l(B).

Generally, when an employee is injured while in the course and scope of

employment, an employer or its insurer must pay compensation benefits to the

employee pursuant to La. R.S. 23: 1031, et seq. However, in order to encourage the

employment, re-employment, or retention of employees who have a permanent,

partial disability and to protect employers, group self-insurance funds, and

property and casualty insurers from excess liability for workers' compensation for

disabilities that may result when a subsequent injury to such an employee merges

with his preexisting permanent physical disability to cause a greater disability than

would have resulted from the subsequent injury alone, the legislature created the

Workers' Compensation Second Injury Fund ("Second Injury Fund"). The Second

Injury Fund is administered by the Board. See La. R.S. 23:1371(A); see also La.

R.S. 23:1372 and 23:1377.

An employer who knowingly employs or knowingly retains m his

employment an employee who suffers from a permanent partial disability, as

defined by statute, is entitled to be reimbursed from the Second Injury Fund if that

employee incurs a subsequent injury arising out of and in the course of his

employment resulting in liability for disability due to the merger of the subsequent

injury with the preexisting permanent partial disability. La. R.S. 23:1378(A);

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Nabors Drilling USA v. Davis, 2003-0136 (La. 10/21103), 857 So.2d 407, 413. In

order to be reimbursed from the Second Injury Fund, an employer or insurer has

the burden of proving three elements. Nabors Drilling USA, 857 So.2d at 416.

First, the employer or insurer must prove that the employee had a preexisting

permanent partial disability at the time of the subsequent injury. Id.; La. R.S.

23:1378(A). Second, the employer or insurer must prove that the employer had

actual knowledge of the employee's preexisting permanent partial disability before

the occurrence of the injury forming the basis of the compensation claim. La. R.S.

23:1378(A); Nabors Drilling USA, 857 So.2d at 416. Finally, the employer or

insurer must prove that the permanent partial disability merged with the injury to

produce a greater disability. La. R.S. 23:1371(A); La. R.S. 23:1378(A); Nabors

Drilling USA, 857 So.2d at 416.

The underlying facts of this case are undisputed. On March 27, 2014,

Darrell Shanks was involved in a vehicular accident while in the course and scope

of his employment as a truck driver for Big 4 Trucking, Inc. ("Big 4"). In this

accident, he injured his lower back and right hip and could not return to work in

any capacity until May 9, 2014. On July 2, 2015, again while in the course and

scope of his employment with Big 4, Mr. Shanks' left knee gave way as he was

stepping down stairs and he ruptured his left quadriceps tendon. This injury

required surgery, which was performed by Dr. Kevin Darr on December 4, 2015.

Dr. Darr subsequently referred Mr. Shanks to Dr. Chad Domangue for pain

management. Mr. Shanks presented to Dr. Domangue with complaints of left knee

pain relating to the July 2, 2015 accident and right hip pain relating to the March

27, 2014 accident. According to Dr. Domangue, the injury from the July 2, 2015

accident caused Mr. Shanks' prior back and hip injuries to "flare up." Dr.

Domangue considered both the injuries to Mr. Shanks's lumbar spine and the

injury to Mr. Shanks' left knee to be severe. When Dr. Domangue considered the

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combined effects of the left knee injury and the lumbar injury, Dr. Domangue

found Mr. Shanks was totally disabled. Both Dr. Darr and Dr. Domangue opined

that Mr. Shanks' pre-existing back and hip injuries merged with his subsequent left

knee injury to create a greater disability. Dr. Domangue treated Mr. Shanks

through May 12, 2016, and during this time, Mr. Shanks' injuries did not improve.

Mr. Shanks remained totally disabled and continued to require treatment for the

combination of his low back and left knee injuries.

Approximately one month later, on June 17, 2016, pursuant to an order

signed by a workers' compensation judge ("WCJ"), Nationwide paid Mr. Shanks

$245,000.00 in full and final settlement of all claims arising out of Mr. Shanks'

July 2, 2015 accident. Of this amount, $195,000.00 was paid in settlement of Mr.

Shanks' claim for workers' compensation indemnity benefits and the remaining

$50,000.00 was paid in settlement of Mr. Shanks' claim for workers'

compensation medical benefits. Prior to the settlement being approved by the

WCJ, Nationwide had paid Mr. Shanks $30,253.84 in workers' compensation

indemnity benefits, which was at the maximum rate of $630.00 per week, and had

paid $46,312.42 in workers' compensation medical benefits. Thus, Nationwide

paid a total of $225,253.84 in workers' compensation indemnity benefits and a

total of $96,312.42 in workers' compensation medical benefits as a result of Mr.

Shanks' July 2, 2015 employment related accident.

Nationwide filed a claim with the Board seeking reimbursement from the

Second Injury Fund for benefits it paid as a result of the merger of Mr. Shanks'

two job related injuries. On October 7, 2016, the Board denied Nationwide's

claim. Therefore, on October 25, 2016, Nationwide filed a petition in the district

court seeking review of the Board's decision and the reimbursement from the

Board to which it claimed it was entitled. The Board responded by generally

denying the allegations ofNationwide's petition and asserting that Nationwide was

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not entitled to reimbursement from the Second Injury Fund. Thereafter,

Nationwide filed a motion for summary judgment seeking a judgment awarding it

reimbursement from the Board/Second Injury Fund for the workers' compensation

benefits it paid to and on behalf of Mr. Shanks. The motion was supported by

documents establishing that Mr. Shanks had a pre-existing permanent partial

disability from his March 27, 2014 accident with Big 4 that interfered with his

ability to perform his job duties; that Big 4 had actual knowledge of Mr. Shanks'

pre-existing permanent partial disability and, with that knowledge, retained him as

an employee and accommodated his physical limitations; and that Mr. Shanks'

July 2, 2015 job injury merged with his pre-existing permanent partial disability to

create a greater disability. Nationwide also submitted supporting documentation

regarding the payments it made as a result of Mr. Shanks' July 2, 2015 job-related

accident. The Board did not file an opposition (or any documentation in

opposition) to Nationwide's motion for summary judgment.

At the hearing on the motion for summary judgment, the Board conceded

that Nationwide was entitled to reimbursement from the Second Injury Fund.

However, the Board claimed that it had the right to audit the bills and payments

made by Nationwide before the district court could award reimbursement. The

district court rejected the Board's argument and awarded Nationwide

reimbursement in the amount of $231,046.26, which represented the total sum of

workers' compensation benefits that Nationwide paid, less the deductibles set forth

in La. R.S. 23:1378(A). A judgment in accordance with the district court's ruling

was signed on May 30, 2019, and it is from this judgment that the Board has

appealed.

On appeal, the Board does not challenge whether Nationwide is entitled to

reimbursement from the Second Injury Fund. Instead, it maintains that the trial

court erred in: (1) awarding Nationwide reimbursement without allowing the

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Board the right to audit Nationwide's payments; and (2) awarding Nationwide

legal interest from the date of judicial demand until paid because it is statutorily

protected from liability for legal interest.

For an injury occurring after July 1, 2010, a workers' compensation insurer

(or employer) that qualifies for reimbursement from the Second Injury Fund, shall

be reimbursed for all indemnity benefits paid "[a]fter the first 104 weeks of

indemnity" and "100% of all reasonable and necessary medical expenses actually

paid which exceed $25,000.00." La. R.S. 23:1378(A). As previously set forth, in

support of its motion for summary judgment, Nationwide offered documents

establishing that it paid a total of $225,253.84 in workers' compensation indemnity

benefits (which was based on the maximum compensation rate of $630.00 per

week) and a total of $96,312.42 in workers' compensation medical benefits as a

result of Mr. Shanks' July 2, 2015 employment related accident. Also, as

previously noted, the Board failed to introduce any documents on its behalf in

opposition to the amounts established by Nationwide, or otherwise to suggest that

the medical expenses Nationwide paid were not reasonable and necessary. As

there is no dispute that Nationwide qualified for reimbursement from the Second

Injury Fund, we find that Nationwide was entitled to be reimbursed for all

workers' compensation indemnity benefits paid in excess of $65,520.00, 1 which

sum is $159,733.84. 2 In addition, Nationwide was entitled to be reimbursed for all

reasonable and necessary workers' compensation medical benefits exceeding

$25,000.00, which is $71,312.42. Accordingly, the district court correctly

determined that Nationwide was entitled to be reimbursed by the Board from the

Second Injury Fund in the amount of$231,046.26. 3

1
$630.00 per week x 104 weeks= $65,520.00.
2
$225,253.84 - $65,520.00 = $159,733.84.
3
$159,733.84 + $71,312.42 = $231,046.26.

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To the extent that the Board suggests that it should have been allowed to

"audit" the medical expenses paid by Nationwide to determine whether such

expenses were "reasonable and necessary" prior to the district court ordering

reimbursement, we find no merit to this contention. First and foremost, the

medical expenses paid by Nationwide were included in its motion for summary

judgment. Nothing precluded the Board from filing an opposition challenging

such expenses or from conducting such audit prior to the hearing on the motion for

summary judgment. Next, we note that the district court's appellate review of the

Board's decision is governed by La. R.S. 23:1378(E), which provides, in pertinent

part that the "decision of the [B]oard shall be final; however, an appeal therefrom

may be taken by any of the parties within thirty days after the date of the decision

of the [B]oard .... The appeal shall be to the Nineteenth Judicial District Court ....

All appeals in all such cases shall be tried de novo." Pursuant to this express

statutory provision, the review of the Board's decision by the district court shall be

by trial de novo. Black's Law Dictionary (I Ith ed. 2019) defines the term de novo

as "Anew." Nothing in this statute limits the authority of the district court to

award reimbursement or to condition any award of reimbursement upon an audit of

the expenses by the Board. Indeed, when an appeal of the Board's decision is

taken to the district court, the Board has already denied the claim, the case is

proceeding through the court system, and the district court will be presented the

information to make the determination of whether reimbursement is owed from the

Second Injury Fund anew. See generally Employers Self Insurers Fund v.

Louisiana Workers' Compensation Second Injury Board, 2009-0808 (La. App.

5th Cir. 5/25/10), 40 So.3d 1074. Herein, the Board denied Nationwide's claim for

reimbursement and appealed that decision to the district court. Thus, the district

court was required to determine, de novo or anew, the issue of Nationwide's

entitlement to reimbursement and the amount of reimbursement, if any, that was

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owed. Accordingly, we find no error in the judgment of the district court awarding

Nationwide reimbursement in the amount of $231,046.26.

Next on appeal, the Board maintains that Nationwide was not entitled to

legal interest on the sums awarded by the district court because it is statutorily

protected from having to pay legal interest. The Board's argument in this regard is

based on La. R.S. 23:1378(A)(4)(a), which provides that the "Second Injury Fund

shall not be liable for reimbursement or be obligated to give credit for any amounts

paid by an employer or carrier as attorney fees, penalties, or interest, nor for

any sums paid under the Jones Act or Longshoremen and Harbor Workers

Compensation Act." (Emphasis added.) However, we find the plain language of

this statute means that the Second Injury Fund will not reimburse any interest,

penalty, or attorney fee that an employer or insurer may have paid; it does not

protect the Second Injury Fund from liability for legal interest on any judgment

against the Board or Second Injury Fund for any amount that a court orders the

Board pay or reimburse an employer or insurer. The judgment herein does not

award Nationwide any reimbursement for any interest paid by Nationwide. Rather,

it awards reimbursement for indemnity and medical benefits paid by Nationwide.

As such, we find the district court properly awarded Nationwide legal interest on

the amount of the judgment in its favor. See La. C.C.P. art. 1921.

For all of the above and foregoing reasons, we find no error in and affirm the

May 30, 2019 judgment of the district court. All costs of this appeal in the amount

of $1,053.00 are assessed against the appellant/defendant, the Louisiana Workers'

Compensation Second Injury Board.

AFFIRMED.

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