NEWMAN v. R P ENTERPRISES, 1996 AWCC 297

CLAIM NO. E511389

BILL NEWMAN, SR., EMPLOYEE, CLAIMANT v. R P ENTERPRISES and UNITED STATES FIDELITY GUARANTY, EMPLOYER, RESPONDENT NO. 1 and ASHLIN TRANSPORTATION SERVICES, INC., and CUSTARD CLAIMS MANAGEMENT SERVICES, CARRIER, RESPONDENT NO. 2

Before the Arkansas Workers’ Compensation Commission
OPINION FILED NOVEMBER 26, 1996

Upon review before the FULL COMMISSION, Little Rock, Pulaski County, Arkansas.

Claimant represented by MICHAEL HAMBY, Attorney at Law, Greenwood, Arkansas.

Respondent No. 1 represented by CAROL LOCKARD WORLEY, Attorney at Law, Little Rock, Arkansas.

Respondent No. 2 represented by ROBIN NIX, Attorney at Law, Jonesboro, Arkansas.

Decision of Administrative Law Judge: Affirmed in part and reversed in part.

[1] OPINION AND ORDER
[2] Respondent appeals from a decision of the Administrative Law Judge filed April 15, 1996 finding that the Arkansas Workers’ Compensation Commission has jurisdiction over both the parties to and the subject matter of this action; that R P Enterprises a/k/a Holland Enterprises, Inc., was the employer of the claimant from January 18, 1992 through August 21, 1994; that claimant sustained a compensable injury on August 21, 1994 and reached the end of his healing period on June 27, 1995; that claimant is entitled to temporary total disability benefits from the date of his injury until the end of his healing period, and that respondent R P Enterprises and United States Fidelity and Guaranty Insurance Company are not entitled to a credit under the Arkansas Workers’ Compensation Act for benefits previously paid to the claimant. Based upon our de novo review of the entire record, we find that the decision of the Administrative Law Judge must be affirmed in part and reversed in part. Specifically, we find that respondents R P Enterprises and United States Fidelity and Guaranty Company are entitled to a credit for temporary total disability benefits previously paid to the claimant by Ashlin Transportation Services and Custard Claims Management Services.

[3] The record reflects that the claimant was hired by R P Enterprises on January 18, 1992 in their offices in Van Buren, Arkansas. The majority of the claimant’s loads originated from Hiram Walker Whiskey Plant and Rheem Manufacturing Company, both of Fort Smith, Arkansas. On August 2, 1992 Holland Enterprises, the parent company of R P Enterprises, entered into a written lease agreement with Ashlin Transportation Services of Munster, Indiana. This agreement called for Ashlin to provide drivers to Holland. Approximately two years after this lease agreement went into effect, claimant sustained an injury to his back on August 21, 1994 while rolling up the landing gear on a trailer. Ashlin contends that it is the claimant’s employer and thus, Indiana, and not Arkansas is the appropriate state for workers’ compensation jurisdiction. Like Ashlin, R P Enterprises contends that Ashlin is the appropriate and proper employer and that Indiana is the state to hold jurisdiction over this claim. However, claimant contends that he is an employee of R P Enterprises, an Arkansas entity, and as an Arkansas resident, Arkansas is the appropriate state to have workers’ compensation jurisdiction. [4] Under Arkansas law, jurisdiction is a mixed question of fact and law. In essence, there must be significant contacts between the employment activities and the State of Arkansas for Arkansas to have jurisdiction.International Paper Co. v. Tidwell, 250 Ark. 623, 466 S.W.2d 488 (1971); Professor Larson, Workers’ Compensation Law, 86.10. Applying the reasoning under Larson’s and theTidwell case, there are sufficient contacts with the State of Arkansas for the Arkansas Workers’ Compensation Commission to assume jurisdiction of this claim. The cited authority holds that the following criteria governs which state has jurisdiction:

(1) Place where the injury occurred . . . [Arkansas];

(2) Place of making the contract . . . [Arkansas];

(3) Place where the employment relation exists or is carried out . . . [Arkansas];
(4) Place where the industry is localized . . . [Arkansas];
(5) Place where the employer resides [Indiana if Ashlin is employer, Arkansas if R P is employer]; or
(6) Place whose statute the parties expressly adopted by contract . . . [not applicable].

[5] The question which must first be answered in order to address the jurisdiction issue is — “Who is claimant’s employer?” The record reveals that R P Enterprises entered into a lease agreement with Ashlin to shift the burden of workers’ compensation claims away from R P and onto Ashlin. Although claimant signed an acknowledgment on April 2, 1993 indicating that he had received the Ashlin Transportation Services, Inc., Employee Handbook, there is no other evidence in the record indicating that Ashlin actually became claimant’s employer. The mere receipt of the handbook and the lease agreement between Ashlin and R
P is not sufficient to actually transfer the employment responsibilities from R P onto Ashlin. These are matters of form which do not supersede the substance of claimant’s relationship with R P. Claimant continued to receive all written and verbal directives regarding his employment from Ron and Pam Holland who did business as R P. Moreover, the documentation claimant received from the Arkansas Employment Securities Department identified R P Enterprises as claimant’s employer. Accordingly, I find that R P Enterprises, and not Ashlin, was claimant’s employer at the time of his accident. [6] Now that the issue of employer has been determined, the criteria set forth in Tidwell clearly reveals that Arkansas is the state to hold jurisdiction over this claim. The law provides that one of the first three criteria set forth in Tidwell must apply to Arkansas in order for Arkansas to assume jurisdiction. As noted above, Arkansas is the locus of all applicable criteria. The injury occurred in Arkansas. The contract of employment occurred in Arkansas. The employment relationship exists in Arkansas. The industry is localized in Arkansas, and claimant’s employer, R P resides in Arkansas. Thus, all contacts are with Arkansas. Therefore, we find that Arkansas has jurisdiction over this claim. [7] With regards to the compensability of the claim, the evidence reveals that the claimant did sustain a compensable injury to his lower back during the course and scope of his employment with R P Enterprises on August 21, 1994. Claimant testified that the injury occurred on a Sunday when he was on his way to the east coast with a load of freight when he injured his back rolling the landing gear up on the trailer. According to the claimant, although the injury occurred on Sunday, August 21st, he was unable to receive medical treatment until Monday, August 22nd. [8] From our review of the record, it is clear that respondent offered no evidence to rebut claimant’s testimony regarding how the accident occurred or the severity of claimant’s injury. Moreover, the record clearly reveals that respondent Ashlin Transportation Services, Inc., and Custard Claims Management Services accepted claimant’s injury as compensable and paid benefits pursuant to Indiana Workers’ Compensation. Therefore, we find that claimant has proven by a preponderance of the credible evidence that he sustained an injury arising out of and during the course and scope of his employment on August 21, 1994. We further find that the medical evidence substantiates a finding that the claimant reached the end of his healing period on June 27, 1995 and that he sustained a 13% permanent physical impairment rating to the body as a whole as assigned by Dr. Albert McDade on June 27, 1995. [9] With regard to the Administrative Law Judge’s finding that R P Enterprises is not entitled to an offset, it is our opinion that this finding of the Administrative Law Judge should be reversed. As noted above, claimant’s injury was originally accepted as compensable by Ashlin Transportation Services and claimant received workers’ compensation benefits through Ashlin’s carrier pursuant to Indiana Workers’ Compensation law. [10] In McGehee Hatchery Co. v. Gunter, 234 Ark. 113, 350 S.W.2d 608 (1961), the Arkansas Supreme Court held that to allow double recovery is contrary to the fundamental principle of workers’ compensation. Specifically, the Court stated:

This possibility of double recovery presents the second question in this case. Where there is only a single employer, the imposition of duplicate liability under the applicable laws of two states is universally condemned. `To allow double recovery is contrary to one of the fundamental principles of workers’ compensation.’ Snyder,
Workers’ Compensation Per-med 160; See also, Leflar, The Law of Conflicts of Laws 138.

[11] McGehee Hatchery Co. v. Gunter, 234 Ark. at 115. [12] In our opinion, to allow the claimant a double recovery is contrary to public policy. Claimant only had one period of temporary total disability and should receive compensation from only one employer for that disability. To require R P Enterprises to pay temporary total disability benefits when the claimant has already received the benefits from whom the respondent assumed was the appropriate employer is allowing the claimant an impermissible double recovery. [13] The Court in McGehee Hatchery Co. v. Gunter,
supra, allowed the claimant to receive benefits in both Arkansas and Mississippi since the claimant had two separate employers, one in Arkansas and one in Mississippi. However, in our opinion, while the facts in this case may be distinguishable from those in McGehee since there is only one employer in this case, the plain language of the case law is not. The Arkansas Supreme Court stated in McGehee:
“Where there is only a single employer, the imposition of duplicate liability under the applicable laws of two states is universally condemned.” 234 Ark. at 115. [14] The Court then went on to state:

On the other hand, we think it almost too plain for discussion that Gunter is not entitled to be unjustly enriched by receiving a duplicate cash award for hospital and medical expenses that have already been paid in full by his Mississippi employer.

[15] 234 Ark. at 117. [16] The Court in McGehee did allow the claimant to receive double disability recovery so long as the smaller award was credited upon the larger one. But, the Court upheld the case law that “duplicate liability” when only one employer is involved is against public policy. However, the Court explained that double recovery in an instance where a claimant is to be “unjustly enriched” is simply too plain to deserve discussion. It is not allowed. [17] In the case at hand, the claimant only has one employer. Although R P Enterprises and Ashlin assumed Ashlin was claimant’s employer, as it turns out, R P and not Ashlin is the proper employer. However, Ashlin assumed the position of the employer with regards to workers’ compensation liability and benefits were paid. Claimant received temporary total disability benefits from the employer, albeit the wrong employer. To allow the claimant to receive a double recovery would fly in the face of the Court’s admonition against unjustly enriching a claimant by allowing him to receive a duplicate cash award when all benefits to which he is entitled have already been paid. Moreover, it must noted that the Court in McGehee used both the phrase “duplicate liability” with regards to a single employer and “double recovery” with regards to an employee. Both practices are universally condemned. [18] Finally, if there has been fraud on the part of R P Enterprises and Ashlin Transportation, as insinuated by the claimant and the Administrative Law Judge, it is not our place to grant a windfall and unjustly enrich the claimant just to punish R P Enterprises. If any fraud has occurred, it should be addressed by the workers’ compensation Fraud Unit, not by an opinion. Regardless of whether or not fraud has occurred, the fact cannot be ignored that the claim was accepted as compensable and benefits were paid (albeit by the wrong employer). The only issue is whether respondent employer, R P Enterprises, is entitled to a credit, and based upon our de novo review of the entire record, we find that they are. [19] Accordingly, we find that the decision of the Administrative Law Judge finding that Arkansas has jurisdiction over this claim; that claimant sustained a compensable injury on August 21, 1994; that claimant’s healing period extended through June 27, 1995 and that claimant is entitled to all reasonably necessary and related medical expenses resulting from his compensable injury are supported by a preponderance of the evidence and are hereby affirmed. We further find that the decision of the Administrative Law Judge’s finding that R P Enterprises is not entitled to a credit for all workers’ compensation benefits paid to the claimant by Ashlin Transportation Services is not supported by a preponderance of the evidence and is hereby reversed. [20] IT IS SO ORDERED.

JAMES W. DANIEL, Chairman ALICE L. HOLCOMB, Commissioner

[21] Commissioner Humphrey dissents.