Appeals court reverses $12 million award in workers’ compensation case
The Oklahoma Court of Civil Appeals on Friday reversed a lower court’s $12 million award, siding with the state’s workers’ compensation administrator and against a grain company near Enid.
A trial court earlier awarded Zaloudek Grain Co. $12 million from the state insurance program. Both sides appealed, Zaloudek saying the payout was too low, and CompSource Oklahoma saying it should not have to pay the grain company at all. In a 3-0 judgment, the appeals court sided with CompSource.
“The trial court’s judgment against CompSource ... is against the clear weight of the evidence, and we therefore reverse,” Judge Barbara Swinton wrote in Friday’s decision.
The case centers on whether the grain company had active workers’ compensation insurance at the time of an Aug. 4, 2011, accident that left two then-17-year-old employees each with an amputated leg, dozens of surgeries and months of physical therapy.
Zaloudek in January 2013 settled for an undisclosed amount a negligence lawsuit filed by the families of the two teenagers injured in the accident when their legs were caught in a grain auger.
The grain facility reopened in May 2016 as Enterprise Grain after it was bought by Brady Sidwell, a nephew of previous owner Gini Zaloudek, according to an article in the Enid News & Eagle.
Representatives for Zaloudek Grain could not be reached for comment Friday, and attorneys for both Zaloudek and CompSource did not return phone calls from
The Oklahoman.
According to Friday’s appellate court ruling, CompSource in January and February 2011 notified Zaloudek manager Mike Parrish that the company failed to return audit information and that the insurance policy was in danger of being canceled. CompSource canceled the policy on March 3, 2011.
The manager in April 2011 worked with CompSource auditor Carl Doss to correct the problem, the records stated.
Parrish testified Doss told him he was “good to go” in April 2011. Doss testified that if he said that to
Parrish, he meant only that the required audit was complete and that Zaloudek management still needed to contact underwriting to gain a new policy, according to the court records.
Instead Parrish “wrongly believed Zaloudek had workers’ compensation coverage in place with CompSource after April 2011, despite receiving monthly notices from CompSource reporting that Zaloudek had an unchanging credit of $1,342 in May, June and July 2011,” the records state.
Zaloudek managers on July 26, 2011, received a check for $1,342 from CompSource. Parrish called CompSource that day to see why the money was returned and learned the company did not have active workers’ compensation coverage, according to the court records.
Parrish then asked what he needed to do to reapply and asked CompSource to fax an application for coverage, records show. CompSource sent the application July 28. Included in the application was a Power of Attorney form designed to allow Parrish to sign the application forms in place of Zaloudek’s owners, the court records state.
Parrish and Zaloudek’s owner executed the Power of Attorney on Aug. 3, and Parrish placed the application in the mail on Aug. 4, the same day as the accident.
On Aug. 5, CompSource notified Parrish that it rejected Zaloudek’s application because it was not signed by an owner, even though it did include the power of attorney form, according to the court records.
The trial court sided with the grain company, finding that it relied in good faith that CompSource would accept the application with the power of attorney form attached.
The appeals court disagreed.
“Regardless of whether this conclusion is supported by the record, it ignores the undisputed evidence that CompSource’s policies provided that once an application was received and accepted, coverage would begin at 12:01 a.m. the next day,” the appeals court wrote in Friday’s decision.
“Parrish mailed the application on the day of the accident and therefore under no circumstances could the policy have been effective that day.”