ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:
W. F. CONOUR JULIA BLACKWELL GELINAS
Conour Doehrman DAVID T. KASPER
Indianapolis, Indiana NELSON D. ALEXANDER
Locke Reynolds LLP
Indianapolis, Indiana
ATTORNEYS FOR AMICUS CURIAE ATTORNEY FOR AMICUS CURIAE
INDIANA STATE AFL-CIO IN THE INSURANCE INSTITUTE OF
OPPOSITION TO TRANSFER: INDIANA, THE INDIANA CHAMBER
OF COMMERCE, THE AMERICAN
WILLIAM R. GROTH INSURANCE ASSOCIATION, THE
GEOFFREY S. LOHMAN NATIONAL ASSOCIATION OF
Fillenwarth Dennerline Groth & Towe INDEPENDENT INSURERS, AND
Indianapolis, Indiana THE ALLIANCE OF AMERICAN
INSURERS IN SUPPORT OF
TRANSFER:
NATHAN B. MAUDLIN
Ice Miller
Indianapolis, Indiana
IN THE
SUPREME COURT OF INDIANA
JOHN SIMS, )
)
Appellant (Plaintiff), ) Supreme Court Cause Number
) 49S02-0105-CV-229
v. )
)
UNITED STATES FIDELITY & ) Court of Appeals Cause Number
GUARANTY COMPANY, ) 49A02-9904-CV-295
)
Appellee (Defendant). )
APPEAL FROM THE MARION SUPERIOR COURT NO. 12
The Honorable Susan Macey Thompson, Judge
Cause No. 49D12-9904-CT-489
CIVIL TRANSFER
January 28, 2003
RUCKER, Justice
Indiana Code section 22-3-4-12.1 grants exclusive jurisdiction to the
Worker’s Compensation Board to determine whether a worker’s compensation
insurance carrier committed an independent tort in adjusting or settling
the injured worker’s claim. Specifically subsection (a) of the statute
provides:
The worker’s compensation board, upon hearing a claim for benefits,
has the exclusive jurisdiction to determine whether the employer, the
employer’s worker’s compensation administrator, or the worker’s
compensation insurance carrier has acted with a lack of diligence, in
bad faith, or has committed an independent tort in adjusting or
settling the claim for compensation.
We decide today that the statute is not constitutionally infirm.
Facts and Procedural History
John Sims was employed as a laborer for Hagerman Construction
Corporation. On September 9, 1998, he was injured while working at Conseco
Fieldhouse in Indianapolis. More particularly, while walking down a flight
of metal stairs, Sims tripped over a welding lead that had been draped
across the stairway. Falling down the stairs, Sims sprained his left ankle
and sustained a fracture to his left tibia.
Hagerman Construction filed a “First Report of Injury” notice with its
worker’s compensation carrier, United States Fidelity and Guaranty Company
(“USF&G”). On October 20, 1998, USF&G sent Sims a letter requesting that
he complete a “Statement of Claim” form. Sims did so and returned the
form. On October 22, 1998, Sims contacted USF&G by letter seeking to
schedule medical care and requesting payment of temporary total disability
benefits under the Worker’s Compensation Act (“Act”). USF&G did not
respond. He followed up the request on November 11, 1998. Again the
insurance carrier failed to respond. On November 23, 1998, Sims filed a
complaint in the Marion Superior Court alleging USF&G was grossly
negligent, intentionally inflicted emotional distress, and intentionally
deprived him of certain statutory rights by refusing to provide worker’s
compensation benefits and by denying him access to timely medical care and
physical therapy.
In response, USF&G filed a motion to dismiss under Indiana Trial Rule
12(B)(1) alleging lack of subject matter jurisdiction. Citing Indiana Code
section 22-3-4-12.1, USF&G argued that the Worker’s Compensation Board had
the exclusive jurisdiction over the claims alleged in Sims’ complaint. The
trial court agreed and granted the motion to dismiss. Sims appealed making
several Indiana constitutional challenges to the statute. Finding two of
the challenges dispositive, a divided panel of the Court of Appeals
reversed the trial court holding Indiana Code section 22-3-4-12.1 violated
the “open courts” provision of Article I, Section 12 of the Indiana
Constitution and the right to a trial by jury as expressed in Article I,
Section 20 of the Indiana Constitution. See Sims v. U.S. Fid. & Guar. Co.,
730 N.E.2d 232, 234 (Ind. Ct. App. 2000). Having previously granted
transfer, we conclude the statute violates neither section of the Indiana
Constitution and thus affirm the trial court.
Standard of Review
When a statute is challenged as an alleged violation of the Indiana
Constitution, our standard of review is well settled. A statute is
presumed constitutional until the party challenging its constitutionality
clearly overcomes the presumption by a contrary showing. Boehm v. Town of
St. John, 675 N.E.2d 318, 321 (Ind. 1996). If a statute has two reasonable
interpretations, one constitutional and the other not, we will choose the
interpretation that will uphold the constitutionality of the statute. Id.
We do not presume that the General Assembly violated the constitution
unless the unambiguous language of the statute so mandates. Id. This
Court should “nullify a statute on constitutional grounds only where such
result is clearly rational and necessary.” Bd. of Comm’rs of the County of
Howard v. Kokomo City Plan Comm’n, 263 Ind. 282, 330 N.E.2d 92, 95 (1975).
Discussion
I.
Article I, Section 12 of the Indiana Constitution provides: “All
courts shall be open; and every person, for injury done to him in his
person, property, or reputation, shall have remedy by due course of law.
Justice shall be administered freely, and without purchase; completely, and
without denial; speedily, and without delay.” Ind. Const. art I, § 12
(emphasis added). Sims contends, and the Court of Appeals agreed, that
granting the Worker’s Compensation Board the exclusive jurisdiction to
adjudicate independent tort claims “effectively closes the courthouse doors
to workers seeking to pursue redress against errant employers or worker’s
compensation insurance carriers in attempting to settle their worker’s
compensation claims.” Sims, 730 N.E.2d at 235.
The Worker’s Compensation Act contains an exclusivity provision that
provides:
The rights and remedies granted to an employee . . . on account
of personal injury or death by accident shall exclude all other rights
and remedies of such employee, the employee’s personal
representatives, dependents, or next of kin, at common law or
otherwise, on account of such injury or death, except for remedies
available under IC 5-2-6.1.
Ind. Code § 22-3-2-6 (West Supp. 2002). This statute limits an employee
whose injury meets the jurisdictional requirements of the Act to the rights
and remedies provided therein. Perry v. Stitzer Buick GMC, Inc., 637
N.E.2d 1282, 1285 (Ind. 1994); Campbell v. Eckman/Freeman & Assocs., 670
N.E.2d 925, 930 (Ind. Ct. App. 1996), trans. denied. Accordingly, if an
employee’s injury occurred by accident arising out of and in the course of
employment, then the employee is entitled to worker’s compensation
benefits. The exclusivity provision bars a court from hearing any common
law action brought by the employee for the same injuries. Campbell, 670
N.E.2d at 930; see Wine-Settergren v. Lamey, 716 N.E.2d 381, 384 (Ind.
1999). However, the Act permits an action against third party tortfeasors,
so long as the third party is neither the plaintiff’s employer nor his
fellow employee. I.C. § 22-3-2-13 (West Supp. 2002); see Wine-Settergren,
716 N.E.2d at 384; Campbell, 670 N.E.2d at 930. Under the Act, the term
“employer” includes the worker’s compensation carrier. See I.C. § 22-3-6-
1(a) (West Supp. 2002).
In Stump v. Commercial Union, 601 N.E.2d 327 (Ind. 1992) this Court
was called upon to respond to a certified question from the United States
District Court, Northern District of Indiana, Fort Wayne Division. We were
asked whether Indiana law permitted a cause of action by an injured
employee against a worker’s compensation insurance carrier for injuries
proximately caused by the insurance carrier’s tortious conduct such as
gross negligence, intentional infliction of emotional distress, and
constructive fraud. Id. at 329. This Court held that the exclusive remedy
provision of the Act does not preclude an employee from filing a complaint
in court against a worker’s compensation insurance for such claims. Id. at
333. We reasoned that the exclusive remedy provision precludes an
employee’s action outside the Act only when the injury occurs by accident
and in the course of employment. Id. at 331. However an additional harm
caused by a carrier’s mishandling of a claim was not the type of harm the
Act was intended to compensate. Id. Although not expressly analyzing the
point, we also noted that this interpretation was consistent with the “open
courts” provision of Article I, Section 12. Id.
Relying on the reasoning in Stump, the Court of Appeals majority in
this case held that the portion of Indiana Code section 22-3-4-12.1 which
declares that the Worker’s Compensation Board “‘has the exclusive
jurisdiction to determine whether the . . . employer’s worker’s
compensation insurance carrier has . . . committed an independent tort in
adjusting or settling the claim for compensation ’” violates Article I,
Section 12 of the Indiana Constitution. Sims, 730 N.E.2d at 235 (quoting
I.C. § 22-3-4-12.1(a)). However, Indiana Code section 22-3-4-12.1 was
enacted after Stump and likely represented a legislative response to it.
The Court of Appeals majority acknowledged as much but nonetheless found
that the statute violated the “open courts” clause of the Indiana
Constitution by unreasonably denying Sims access to the courts and denying
him a complete remedy for the insurance carrier’s alleged independent tort.
Id. However, because of the legislative enactment, Stump is no longer
controlling.
In Martin v. Richey, 711 N.E.2d 1273 (Ind. 1999), this Court examined
Article I, Section 12 in the context of considering the constitutionality
of the medical malpractice statute of limitations. In so doing, we noted
that this Court has never held that there is a “fundamental right” to
access to the courts. Id. at 1283. Rather, the legislature “has the
authority to modify or abrogate common law rights provided that such change
does not interfere with constitutional rights.” Id. We reiterated “there
is a right of access to the courts, and . . . the legislature cannot
unreasonably deny citizens the right to exercise this right.” Id.
Here, the Court of Appeals seized on the quoted language to support
the conclusion that the statute violated Article I, Section 12 of the
Indiana Constitution. However, our ruling in Martin did not sweep quite so
broadly. Instead, we determined that the occurrence-based statute of
limitations was unconstitutional as applied to the plaintiff primarily
because otherwise the statute “would impose an impossible condition on
plaintiff’s access to courts and ability to pursue an otherwise valid tort
claim.” Id. at 1284 (emphasis added). In other words, the statute as
applied completely denied plaintiff Martin all access to the courts.
Unlike Martin, Sims is not completely denied access to the courts.
Rather, he is merely required to present his claim first to the full
Worker’s Compensation Board. Thereafter, if he receives an adverse ruling,
then he may invoke the jurisdiction of the appellate courts. See I.C. § 22-
3-4-8(b); Sheets v. Disabilities Servs., Inc., 602 N.E.2d 506, 506 (Ind.
1992). As the Court of Appeals has previously observed, “[t]he
legislature, in enacting [I.C. § 22-3-4-12.1(a)], has merely acted to
restrict the remedy available for a breach of duty imposed upon the
worker’s compensation insurance carrier.” Borgman v. State Farm Ins. Co.,
713 N.E.2d 851, 856 (Ind. Ct. App. 1999), trans. denied, (rejecting a claim
that the statute violated the “open courts” provision of Article I, Section
12). We agree with the Borgman court. Accordingly, we conclude that Sims
has failed to overcome the presumptive constitutional validity of the
challenged statute.
II.
Sims also contends that Indiana Code section 22-3-4-12.1
unconstitutionally deprives him of a jury trial by requiring that his claim
be submitted to the Worker’s Compensation Board. He relies on Article I,
Section 20 of the Indiana Constitution, which dictates, “In all civil
cases, the right of trial by jury shall remain inviolate.” Ind. Const.
art. I, § 20. The phrase “civil cases” has been construed to preserve a
jury right in those civil cases triable by jury at common law. Wright v.
Fulz, 138 Ind. 594, 38 N.E. 175, 175 (1894); Allen v. Anderson, 57 Ind.
388, 389 (1877); Lake Erie, Wabash & St. Louis R.R. Co. v. Heath, 9 Ind.
558, 559-60 (1857). It is true that actions for injuries caused by another
were known under the common law and triable by jury. Warren v. Ind. Tel.
Co., 217 Ind. 93, 26 N.E.2d 399, 403 (1940). However, Sims’ right to
pursue the insurance carrier arose only because of the existence of the
Act. Namely, because of his on-the-job injury, and regardless of fault,
Sims is entitled to compensation. In the words of Judge Baker, “but for
the Act there would be no insurance carrier against whom to bring an
action.” Sims, 730 N.E.2d at 237-38 (Baker, J., dissenting). We agree.
As explained in more detail below, Indiana Code section 22-3-4-12.1 is part
of a special statutory proceeding, and not a “civil case” as contemplated
by Article I, Section 20.
Prior to the enactment of worker’s compensation acts, workers were
faced with the harshness of the common law. An action in tort against the
employer was the only remedy available to an employee injured in the
workplace by the alleged negligence of an employer. These claims were
rarely successful due to the common law defenses of contributory
negligence, assumption of risk, and injury by a fellow servant. See
Frampton v. Cent. Ind. Gas Co., 260 Ind. 249, 297 N.E.2d 425, 427 (1973).
The basic policy underlying the Act was to shift the economic burden for
employment connected injuries from the employee to the employer:
When an injury to a servant is found to be covered by a workers’
compensation act, it is uniformly held that the statutory compensation
is the sole remedy, and that any recovery against the employer at
common law is barred. It is recognized that this remedy is in the
nature of a compromise, by which the worker is to accept a limited
compensation, usually less than the estimate which a jury might place
upon his damages, in return for an extended liability of the employer,
and an assurance that he will be paid.
W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 80, at 574
(5th ed. 1984) (footnotes omitted). This quid pro quo regime represents a
deliberate policy choice by the General Assembly in an apparent response to
the Industrial Revolution when “more and more men poured their lives, their
limbs, and their health into the might of industry.” Ben F. Small,
Workmen’s Compensation Law of Indiana, § 1.2, at 4-5 (1950). As Justice
Dickson has pointed out, “the continuing vitality of a workmen’s
compensation system not only serves the interests of the injured worker, it
also benefits the business community in providing protection from large
verdicts and by permitting the business community to more easily predict,
quantify and plan for anticipated costs from employee injuries.” Evans v.
Yankeetown Dock Corp., 491 N.E.2d 969, 971 (Ind. 1986).
By enacting the Worker’s Compensation Act, the General Assembly has
changed the common law by establishing a statutory scheme that approaches
strict liability: if the accidental injury arises out of and in the course
of employment, then the employer must pay. And this is so regardless of
whether the employee contributed to the injury, assumed the risk of working
in a particular environment, or was injured not by the act of the employer,
but by a fellow employee.
Sims is correct that we have long held that the General Assembly has
the authority to modify or abrogate the common law “so long as such change
does not interfere with constitutional rights.” Martin, 711 N.E.2d at
1283; State v. Rendleman, 603 N.E.2d 1333, 1336 (Ind. 1992). However,
“Indiana’s Constitution does not forbid abolition of old rights recognized
by the common law in order to attain permissible legislative [objectives].”
Rendleman, 603 N.E.2d at 1336. It is axiomatic that because the
employee’s common law right to proceed in court against an allegedly
negligent employer for work related injuries has been abolished by the
Legislature, all attendant rights have been abolished as well. In its
place, the Legislature has provided a special statutory scheme as the
exclusive remedy for such claims. We of course acknowledge that the right
to a jury trial is a “fundamental right in our democratic judicial system”
that must be “scrupulously guarded” against encroachment. Levinson v.
Citizens Nat. Bank of Evansville, 644 N.E.2d 1264, 1267 (Ind. Ct. App.
1994). Nonetheless, this court has held “that there is no ‘fundamental
right’ . . . to bring a particular cause of action to remedy an asserted
wrong.” Martin, 711 N.E.2d at 1283.
Considering the underlying policy and purpose of the Act, the
prohibition against trial by jury is reasonable in our view. The Act is
designed for the humanitarian purpose of providing injured workers with an
expeditious and adequate remedy. Walker v. State, 694 N.E.2d 258, 266
(Ind. 1998); see also Leisure v. Leisure, 605 N.E.2d 755, 758 (Ind. 1993)
(explaining “[t]he Act was enacted to remove obstacles and insure a more
certain remedy for the injured worker.”). One may argue that the remedy
here was neither certain nor expeditious in that USF&G’s delay and non-
responsiveness prompted Sims to file a complaint in the first place.
However, the Act itself is not the culprit. And it still provides an
avenue for redress unencumbered by the inherent delay caused by congested
trial court dockets. In sum, we conclude that Indiana Code section 22-3-4-
12.1 does not violate Article I, Section 20 of the Indiana Constitution.
III.
Last, Sims argued before the Court of Appeals that Indiana Code
section 22-3-4-12.1 also violates Article I, Section 23 of the Indiana
Constitution which provides, “The General Assembly shall not grant to any
citizen, or class of citizens, privileges or immunities, which, upon the
same terms, shall not equally belong to all citizens.” Ind. Const. art. I,
§ 23. Because the court ruled in favor of Sims on other grounds, it did
not reach this issue. We now address this claim as well.[1]
According to Sims, the statute creates an impermissible distinction
between worker’s compensation carriers on the one hand and all other
insurance carriers on the other hand. Sims also complains that injured
workers are treated differently than other injured parties. Specifically,
he says, “under the statute, a tort claimant who suffers additional injury
at the hands of a worker’s compensation insurance carrier faces a greater
burden, diminished remedies, and less compensation than other tort
claimants seeking similar recovery from other types of insurance companies
or insurance coverage.” Br. of Appellant at 19.
Claims asserted under Article I, Section 23 are subject to a two-part
test. First, the disparate treatment accorded by the legislation must be
reasonably related to inherent characteristics, which distinguish the
unequally treated classes. Collins v. Day, 644 N.E.2d 72, 78-79 (Ind.
1994). Second, the preferential treatment must be uniformly applicable and
equally available to all persons similarly situated. Id. at 80. In
determining whether a statute complies with or violates Article I, Section
23, courts must exercise substantial deference to legislative discretion.
Legislative classification becomes a judicial question only
where the lines drawn appear arbitrary or manifestly unreasonable. So
long as the classification is based upon substantial distinctions with
reference to the subject matter, we will not substitute our judgment
for that of the legislature; nor will we inquire into the legislative
motives prompting such classification.
Id. The burden is on the challenger “to negative every conceivable basis
which might have supported the classification.” Id. In this case, Sims
challenges the statute only upon the first part of the Collins two-part
test.
The underlying purposes and policy of the Act, as more fully
discussed in Part II above, justify the difference in treatment that
Indiana Code section 22-3-4-12.1 affords worker’s compensation insurance
carriers versus other insurance carriers as well as injured workers versus
other injured claimants. To provide an “expeditious and adequate remedy”
for workers injured in work-related accidents, regardless of fault, Walker,
694 N.E.2d at 266, and to “insure a more certain remedy for the injured
worker,” Smith v. Smith, 676 N.E.2d 388, 390 (Ind. Ct. App. 1997), the Act
obligates employers covered thereby to provide compensation to injured
employees who at common law were precluded from recovery because of the
common law defenses of contributory negligence, assumption of risk, or
injury by a fellow servant. Unlike other tort claimants, a worker covered
under the Act is absolutely assured of compensation provided the injury was
by accident and arose out of and in the course of employment. Too, the Act
imposes obligations on worker’s compensation carriers that are unique
within the insurance industry. For example, an employer’s notice or
knowledge of an employee’s injury is imputed to the worker’s compensation
carrier, I.C. § 22-3-5-5(c)(3) (West Supp. 2002); the worker’s compensation
carrier is obligated to pay benefits to an injured employee regardless of
any default by the employer after the injury occurred, I.C. § 22-3-5-
5(c)(4), -5.5 (d) (West Supp. 2002); and the employer is required to give
ten days notice to the Worker’s Compensation Board before a worker’s
compensation carrier can terminate an employee’s coverage, I.C. § 22-3-5-
5(c)(5) (West Supp. 2002). By vesting in the Worker’s Compensation Board
the authority to determine whether a worker’s compensation carrier has
committed an independent tort in adjusting or settling a claim, the General
Assembly has drawn classifications between injured claimants and insurers
that are neither arbitrary nor manifestly unreasonable. Because the
disparate treatment in this case is reasonably related to inherent
characteristics, which distinguish the unequally treated classes, we
conclude that Indiana Code section 22-3-4-12.1 does not violate Article I,
Section 23 of the Indiana Constitution.
Conclusion
A party challenging the constitutionality of a statute carries a
heavy burden. In this case, Sims has not carried his burden of
demonstrating that Indiana Code section 22-3-4-12.1 violates Article I,
Section 12; Article I, Section 20; or Article I, Section 23 of the Indiana
Constitution. Therefore, we affirm the judgment of the trial court.
SHEPARD, C.J., and SULLIVAN and BOEHM, JJ., concur.
DICKSON, J., dissents with separate opinion.
DICKSON, J., dissenting.
In Stump v. Commercial Union, 601 N.E.2d 327, 333 (Ind. 1992), we
held that the Indiana Worker's Compensation Act does not authorize injured
employees to seek separate recourse in the courts for claims against their
employers' worker's compensation insurance carriers based on either (a)
breach of duty to act in good faith and to engage in fair dealings with the
employee, or (b) breach of fiduciary obligation owed the employee. However,
we recognized that an injured employee could maintain a common law claim
against the carrier for "tortious conduct such as to constitute gross
negligence, intentional infliction of emotional distress, or constructive
fraud." Id.
In 1997, the Indiana General Assembly enacted a statute declaring that
the Worker's Compensation Board has "exclusive jurisdiction to determine
whether the employer, the employer's worker's compensation administrator,
or the worker's compensation insurance carrier has acted with a lack of
diligence, in bad faith, or has committed an independent tort in adjusting
or settling the claim for compensation" and providing for maximum recovery
of $20,000. Ind. Code § 22-3-4-12.1(a), (b).
This statute does not abolish the civil cause of action recognized
under Stump, but rather compels exclusive recourse to an administrative
tribunal, depriving an injured claimant from seeking redress through courts
of law, and denying the right to a jury trial. I remain convinced that the
statute thereby violates Article I, Section 12 ("All courts shall be open;
and every person, for injury done to him in his person, property, or
reputation, shall have remedy by due course of law. Justice shall be
administered . . . completely, and without denial; . . .") and Section 20
("In all civil cases, the right of trial by jury shall remain inviolate.")
of the Indiana Constitution. Our Constitution prohibits the legislature
from eviscerating a recognized common law cause of action by proclaiming it
ineligible for jury trial.
For these reasons, I would reverse the trial court's order granting
the motion to dismiss.
-----------------------
[1] Sims also contended the statute violates several other Indiana
constitutional provisions: (i) the separation of powers as expressed in
Article III, Section 1; (ii) the prohibition of special legislation found
in Article IV, Sections 22 and 23; and (iii) the grant of judicial
authority as expressed in Article VII, Section 1. Because Sims cites no
authority in support of his contentions, they are waived. In addition,
Sims argued before the Court of Appeals that Indiana Code section 22-3-4-
12.1 was unconstitutional because it limited recovery to a maximum of
$20,000. The Court of Appeals majority declined to address this issue on
the ground that it was not properly raised in the trial court. Sims has
not raised this issue on transfer, and therefore we decline to address it.