Bose McKinney & Evans appelate law blog

The Worker’s Compensation Act’s handling of the statute of limitations can be a perplexing area. This is especially true when there is a medical service provider seeking payment from an employer for an outstanding bill. The Court of Appeal just recently addressed this issue.

In Indiana Spine Group, PC v. Pilot Travel Centers, LLC , on August 2003, Anthony Wetnight sustained a work-related injury while working for Pilot Travel Centers, LLC (“Pilot”). Indiana Spine Group (“ISG”) provides medical services to employees who are injured during the course of their employment. Pilot authorized Mr. Wetnight to receive two medical treatment services from ISG in 2004. ISG sent Pilot a bill for the two services totaling $38,556.00. Pilot made four partial payments to ISG, the last partial payment on June 2008, leaving an unpaid balance of $21,750.96. On June 2009, ISG filed an Application for Adjustment of claim for Provider’s fee (“Application”) with the Worker’s Compensation Board (“Board”) for the purpose to recover the remaining balance on the bill. The Board dismissed ISG’s Application due to the fact that the Application was filed outside the two year statute of limitation set forth in Indiana Code § 22-3-3-27. The Court of Appeals reversed the Board's decision, stating that Indiana Code § 22-3-3-27 and Indiana Code § 22-3-3-3 of the Worker’s Compensation Act did not apply to ISG’s Application.

On appeal, Pilot argued that the term “compensation” in Indiana Code § 22-3-3-3 included medical services, which encapsulated what ISG provided. The Court of Appeals disagreed and determined that the plain meaning of the word “compensation” referred to “employee benefits, not payment to health care providers.”  The Court of Appeals then evaluated the plain language of Indiana Code § 22-3-3-27. The Court stated that “this section establishes a two-year statute of limitation for ‘modification’ of an award due to a ‘change in conditions’.” In this situation there was never a change of conditions, which required a modification of the award of worker’s compensation benefits, which made the previous statute inapplicable. The Court determined that the appropriate statute to apply was Indiana Code § 34-11-1-2, which provided “[a] cause of action that . . . is not limited by any other statute[,] must be brought within ten (10) years.” The Court reasoned that “the legislature enacted the general statutes of limitation for the very purpose of supplying a statute of limitation when one has not otherwise been provided by a more specific statutory scheme”; therefore, ISG timely filed its Application before the Board.

Intentional intervening events will break the chain of negligence in a lawsuit for the proximate cause of an individual’s death. The Court of Appeals recently upheld that the willful and malicious criminal act of a third party breaks the causal chain between the alleged negligence and the resulting harm.

In Beth Ann Johnson, Mother of: Emily Johnson, Deceased Minor Child v. Lance Jacobs, Steven J. Cummins, Stacy Cummings, Lawrence County Board of Aviation Commissioners, Tony Newbold, Lawrence Co. Comm., No. 47A01-1102-CT-35, Eric Johnson and Beth Johnson were in the midst of a divorce. Eric Johnson had been taking flight lessons and decided to take their daughter Emily in a rented plane. Eric Johnson intentionally flew the airplane into his mother-in-law’s house, killing himself and Emily. Beth Johnson sued Lawrence County Board of Aviation Commissioners (Aviation Board) and the Lawrence County Commissioners seeking damages for Emily’s wrongful death. The Aviation Board filed a motion for summary judgment claiming that any negligence that might be attributed to the Aviation Board was superseded by Eric’s intervening act of murdering Emily. The trial court granted the summary judgment motion and this appeal ensued.

On appeal Beth Johnson made two arguments; (1) the actions of the Aviation Board were the proximate cause of Emily’s death, and (2) it was foreseeable that an unauthorized person could have taken the airplane and flown off in it. The Court addressed the first argument by concluding that “Eric’s intentional criminal actions triggered the intervening, superseding cause doctrine and broke the causal chain between the Aviation Board’s alleged negligence and Emily’s death”, thus, the Aviation Board was not the proximate cause of Emily’s death. The Court addressed the second argument by questioning whether the Aviation Board should have foreseen Eric’s actions that led to Emily’s death. The record shows that none of the employees thought Eric was acting unusual and the employees did not see anything out of the ordinary that day. The Court concluded that there was nothing on record that would show that the Aviation Board should have foreseen that Eric would use the plane in the way that he did. The trial court properly granted summary judgment.  

The Court of Appeals recently held that the fact that Indiana Supreme Court has set out different procedures in the Trial Rules for service of process when sending tax sale notices upon organizations has no authority because the delivery of tax sale notices is governed by statute.

In James K. White and Wells Fargo Bank v. Susan Orth, Allen County Treasurer, and Lisbeth A. Blosser, Allen County Auditor No.02C01-1012-MI-2025, the trial court granted the Allen County Treasurer and the Allen County Auditor (collectively, “Allen County”) an issuance of tax deeds on property with delinquent property taxes due and owing. Wells Fargo held the mortgage on the property that the issuance was served upon. Wells Fargo objected to the issuance of the tax deed and argued that Allen County did not properly serve two tax sale notices upon Wells Fargo.

The Court of Appeals cites Indiana Code section 6-1.1-25-4.5 and section 6-1.1-25-4.6 which require “tax sale notices be sent to any person with a substantial interest of public record at the address included in the public record.” Allen County complied with the statutory requirements of sending tax sale notices because they sent both of the tax sale notices by certified mail, return receipt requested, to the address listed in the mortgage document, and to another local address.  Nowhere in the statute does it require compliance with Trial Rules when sending tax sale notices, therefore, the trial court's issuance of the tax deed was affirmed.

 What constitutes just cause for terminating an employee? The Indiana Court of Appeals recently decided that precise question. The Court assessed the employer’s attendance policy in order to determine if the employee was in fact terminated for just cause.

In P.M.T., Inc. v. Review Board of the Indiana Dept. of Workforce Development and L.A., No. 93A02-1105-EX-389, L.A worked as an ambulance dispatcher at P.M.T. P.M.T. had a strict attendance policy where an employee could only miss seven days in a twelve-month period, barring some narrow exceptions. In March 2010, L.A. requested leave through the Family Medical Leave Act (“FMLA) to take care of her terminally ill husband, which accumulated to six absences. After August 19, 2010, L.A. had two emergency absences; one was due to a personal health problem and the other occurred when she was informed by her son that her husband was lying unconscious on the floor at home. After that accident L.A. spent an additional two more days with her husband at the hospital. All of these absences exceeded her seven allowed under P.M.T.'s attendance policy. P.M.T. terminated L.A. due to excessive absences. The Administrative Law Judge awarded L.A. unemployment insurance benefits based on the unreasonableness of P.M.T.’s attendance policy and the insufficiency of evidence to prove that L.A. knowingly violated the attendance policy. P.M.T. appealed the ruling to the Review Board. The Review Board affirmed the Administrative Law Judge’s ruling.

P.M.T. argued on appeal that L.A.’s termination was for just cause because the attendance policy was reasonable and L.A. knowingly violated the attendance policy. Ind. Code § 22-4-15-1 requires “just cause for the termination if the employee is to be ineligible for unemployment insurance benefits.” The Review Board concluded that P.M.T.’s attendance policy was unreasonable because there were “no exceptions for verified emergencies or situations beyond the employee’s control.” The Court agreed and supplemented that personal and family health issues are considered valid reasons for missing work. As for the “just cause” issue, the Court stated that L.A.’s absences were a result of circumstances beyond her control and therefore there was not just cause for her termination. The Court affirmed the Review Board’s decision.

Does an Indiana County Sheriff owe a common law duty to warn the public of known hazardous conditions on a county road?  The Indiana Supreme Court recently decided that as long as the County Sheriff's Department does not own, maintain, or control the county road, the Sheriff does not have a common law duty to warn motorists of dangerous conditions.

In Putnam County Sheriff v. Pamela Price, No. 60S01-1012-CV-665, Pamela Price was driving on a county road when she encountered ice across the roadway. Price lost control of her car and suffered injuries in the resulting accident. Earlier that morning, a deputy sheriff had been called to the same location because of an earlier accident caused by the same icy conditions. The deputy contacted the Putnam County Highway Department, advised the Highway Department of the conditions on the road, but left the area without taking any further action. Price argued the deputy was negligent “in failing to take any steps to alleviate the icy and hazardous condition or warn the traveling public of the known hazard.”

The Supreme Court concluded that, absent ownership, maintenance, or control of the county road, the Sheriff had no duty to warn the public of the hazardous conditions. The duty to warn rested with the county supervisor who was specifically given the job to supervise, maintain, and repair the highways within the county. The Court wrote:  “Absent a duty, there can be no breach of duty and thus no negligence or liability based upon the breach.”

Justice David concurred with the Court's decision but was “hesitant for the subsequent application of this holding that the sheriff can escape any liability on the basis of non-maintenance and control of the county roadway.” Justice David believed that in certain circumstances a sheriff owes a duty of ordinary and reasonable care by remaining on the scene until assistance arrives.

Indiana unemployment insurance contributions are determined based on the past record of unemployment claims against the Indiana employer.  When an Indiana corporation reorganizes to form a new subsidiary, the question may arise whether the subsidiary is a new employer eligible for a lower introductory contribution rate or assumes the same employment experience account rate as its parent and predecessor.  In a recent ruling the Court itself described as "narrow" or limited to the specific facts of the case, the Indiana Supreme Court decided that a company’s newly-formed subsidiaries did not constitute distinct and segregable portions of the business and therefore must pay the same employment experience account rate as their parent company.  

In Franklin Electric Company, Inc. v. Unemployment Insurance Appeals of the Indiana Dept. of Workforce Development, No. 93S02-1102-EX-89, Franklin Electric Co., Inc. formed two new wholly-owned subsidiary corporations, Franklin Electric Manufacturing, Inc. and Franklin Electric Sales, Inc., as part of an expansion and reorganization of its business. Franklin Electric transferred real estate, equipment, and other assets associated with manufacturing to Franklin Electric Manufacturing in exchange for one hundred percent ownership in the new corporation. Franklin Electric transferred all of its sales-related personal property, sales contracts, and other related items to Franklin Electric Sales in exchange for one hundred percent ownership. Subsequently, Franklin Electric started a new employment experience account with a low introductory contribution rate for each subsidiary. A few years later, Franklin Electric, without Franklin Electric Manufacturing as a party, sold a portion of the manufacturing operation to Bluffton Motor Works LLC. The Indiana Department of Workforce Development investigated Franklin Electric and determined Franklin Electric did not transfer to the new subsidiaries a distinct and segregable portion of its organization, trade, or business. Franklin Electric argued its two new subsidiaries were eligible for a 2.7% experience rate as new employers under Indiana Code § 22-4-10-6(c). 

In order for the two subsidiaries to qualify as employers separate from the parent company for purposes of Indiana unemployment insurance, they must prove that they acquired a “distinct and segregable” portion of Franklin Electric’s business. Thus, the Court focused on whether Franklin Electric Sales and Franklin Electric Manufacturing acquired a portion of the business that was separate from Franklin Electric.  The Court considered the following key facts:  Franklin Electric wrote a single check to its payroll provider to fund the wages of employees of all three companies. Also, Franklin Electric provided workers compensation, health insurance, and retirement benefits for all three entities. Finally, Franklin Electric (not Franklin Electric Manufacturing) sold assets to Bluffton Motors that it had previously transferred to Franklin Electric Manufacturing. The Indiana Supreme Court considered all these facts together and decided the two subsidiaries are not distinct and segregable from Franklin Electric and therefore are not employers entitled to a new lower unemployment insurance rate.

Non-settling parties in Indiana class action lawsuits may have a tall hill to climb when attempting to challenge partial settlements to which they are not parties. The Court of Appeals recently decided that a non-settling party must prove plain legal prejudice in order to have standing to challenge a partial settlement.

In Angela K. Farno v. Ansure Mortuaries of Indiana, LLC, et al. , No. 41A01-1007-MF-348, Angela Farno filed a class action lawsuit against Goldberg and others regarding the alleged looting of cemetery trust funds. On June 22, 2010, the trial court issued an order granting preliminary approval of the class action settlement agreement. Goldberg, a non-settling defendant, appealed. During the appeal, Farno quoted a federal court decision in a class action lawsuit that states “[t]he general rule, of course, is that a non-settling party does not have standing to object to a settlement between other parties.” Agretti v. ANR Freight Sys., Inc., 982 F.2d 242, 246 (7th Cir. 1992). The Indiana Court of Appeals held that in order to prove plain legal prejudice, a non-settling party must show that the settlement interfered with its contract rights or its “ability to seek contribution or indemnification” or that the settlement stripped “the party of a legal claim or cause of action, such as a cross-claim or the right to present relevant evidence at trial.” Agretti, 982 F.2d at 247. Goldberg failed to establish plain legal prejudice.

By Steven M. Badger

The "human cannonball," Hugo Zacchini, left an indelible impression on the law in his seminal case against Scripps-Howard 34 years ago.  Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S. 562 (1977).  Zacchini's case affirmed his right to control viewing of his unique 15-second performance in which he was shot from a cannon. The U.S. Supreme Court ruled that the First Amendment did not grant the media the right to broadcast Zacchini's entire performance without his permission. 

 Zacchini's enduring legacy shot down a recent First Amendment challenge by Gannett to the Wisconsin Interscholastic Athletic Association's exclusive licensing of live internet streaming of high school sporting events.  In rejecting Gannett's claims, the Seventh Circuit relied heavily on the Zacchini case in ruling that "nothing in the First Amendment confers on the media an affirmative right to broadcast entire performances." Wisconsin Interscholastic Athletic Association v. Gannett Co., No. 10-2627 (Aug. 24, 2011). The Court distinguished broadcast of an entire performance from coverage of the event, and made it clear that media coverage of high school events could not be granted or restricted on a selective basis.

 The only recourse left to Gannett is to seek certiorari in the United States Supreme Court, which must be filed within 90 days of the Seventh Circuit's decision.

Maintaining medical records for a patient is within the scope of the Medical Malpractice Act. The Medical Malpractice Act generally requires that actions for medical negligence against health care providers must first be submitted to, and an opinion given by, a medical review panel before commencing an action in court.

In Howard Regional Health System, et al. v. Jacob Gordon, et al. , et al. No. 34S02-1009-CV-476, the plaintiff sought damages and moved for partial summary judgment for spoliation against a hospital for lost medical records. The trail court granted partial summary judgment by concluding that the defendant had a duty to maintain the records and their failure to maintain these records breached that duty under Indiana code section 16-3-7-1. The hospital appealed, arguing that maintaining medical records is within the purview of Medical Malpractice Act and thus a medical review panel must give is opinion before an action against the hospital may commence.

The Indiana Supreme Court reasoned that ongoing maintenance of test and treatment records bears strongly on subsequent treatment and diagnosis of patients. It is a part of what patients expect from health care providers. Thus, maintaining medical records falls inside within the scope of the Act and is considered a part of the practice of medicine. The Supreme Court also rejected the plaintiff's argument that it was asserting a third-party spoliation cliam, instead finding that the plaintiff's claim was essentially a first-party spoliation claim that is disallowed under Indiana law.

In an opinion dissenting in part and concurring in part, Judge Dickson was dissatisfied with the court’s view that the maintenance of medical records claim should be governed by the Indiana Medical Malpractice Act. Rather, the maintenance of records does not involve any exercise of professional medical judgment and thus should not be subject to the act.

What if after a jury verdict was established one of the parties tries to impeach that verdict with testimony or an affidavit of the jurors who returned it? The Court of Appeals recently addressed this issue and stated that it has long been established in Indiana law that the jury’s verdict cannot be impeached by testimony or from an affidavit of a juror who returned it.

In Martha Sienkowski v. Frederick E. Verschuure No. 46A03-1101-CT-5, after the jury verdict was announced, the plaintiff tried to impeach that verdict with testimony of one juror and an affidavit from another juror in an attempt to receive a new trial. The defendant filed a motion to vacate the judgment and the request for a new trial. The trial court issued its Order, granting the defendant’s motions to strike the letter and affidavit and denying plaintiff’s motion for a new trial. The plaintiff appealed.

 The Court of Appeals reiterated that the jury verdict may not be impeached by the testimony or an affidavit of the juror who returned it. The policy behind this rule comes from Stinson v. State, 313 N.E.2d 699 (Ind. 1974). In Stinson, the Supreme Court showed concern by saying; “If this [c]ourt were to permit individual jurors to make affidavits or give testimony disclosing the manner of deliberation in the jury room and their version of the reasons for rendering a particular verdict, there would be no reasonable end to litigation. Jurors would be harassed by both sides of litigation and find themselves in a contest of affidavits and counter-affidavits and arguments and re-arguments as to why and how a certain verdict was reached. Such an unsettled state of affairs would be a disservice to the parties litigant and an unconscionable burden upon citizens who serve on juries.” The court did recognize exceptions under the Indiana Evidence Rule 606(b) where a juror may testify with respect to certain aspects of the trial. The three exceptions where testimony would be allowed concern: (1) drug or alcohol use by any juror, (2) the question of whether extraneous prejudicial information was improperly brought to the jury’s attention, or (3) whether any outside influence was improperly brought to bear upon any juror. None of those exceptions were present in this case.

Where a cause of action has both legal and equitable claims, the court will look at the essential features of the suit to decide if a jury trial is appropriate. If the claim as a whole is equitable and the legal causes of action are not “distinct and severable,” then there is no right to a jury trial because the equitable claim will integrate the legal causes of action.

In Mary Beth Lucas and Perry Lucas v. U.S. Bank, N.A., as Trustee for the C-Bass Mortgage Loan Asset-Backed Certificates, Series 2006-MH-1, No. 28S01-1102-CV-78, the loan servicer Litton charged the Lucases late fees, but the Lucases argued they timely paid all their fees. Lucases filed for bankruptcy and the following month requested that Litton discontinue their escrow account. Litton continued to charge the Lucases late fees and sent the Lucases notice that it planned on accelerating their account. The current mortgage holder, U.S. Bank National Association, filed a complaint against the Lucases seeking to foreclose on the mortgaged property for failure to make payments. The Lucases filed affirmative defenses, counterclaims, and a third party complaint, along with a demand for a jury trial on issues deemed triable. U.S. Bank filed a motion to strike the Lucases’ request for a jury trial. The trial court granted U.S. Bank’s motion asserting that seeking foreclosure is essentially an equitable claim. The Court of Appeals reversed the trial court’s order relying on the test used in Songer v. Civitas Bank, 771 N.E.2d 61 (Ind. 2002).

The Supreme Court reiterated the policy from Trial Rule 38(A): “when both equitable and legal causes of action or defenses are joined in a single case, the equitable causes of action or defenses are to be tried by the court while the legal causes of action or defenses are to be tried by a jury.” The Court looked at the facts of the case to ascertain the “essential features of the suit.” The Court implemented a multi-pronged inquiry used in Songer to determine whether a suit is essentially equitable: “The court must examine several factors of each joined claim—its substance and character, the rights and interests involved, and the relief requested. After that examination, the trial court must decide whether core questions presented in any of the joined legal claims significantly overlap with the subject matter that invokes the equitable jurisdiction of the court. If so, equity subsumes those particular legal claims to obtain more final and effectual relief for the parties despite the presence of peripheral questions of a legal nature.” Despite the presence of some legal claims and requests of legal remedies by the Lucases, the Court found that the main legal issues overlap with the foreclosure issues to a substantial degree. Since the essential features of the suit are equitable, the Supreme Court affirmed the trial court’s denial of the Lucases’ request for a jury trial.

In a dissenting opinion, Justice Dickson focused on the fact that the analysis in Songer should not be modified. The modification to include the additional test of “significantly overlap” could often exclude a defendant’s right to a jury trial on distinct and severable legal claims. Legal claims that are distinct and severable from the equitable foreclosure action should be available for trial to a jury and should not be subsumed as an equitable cause of action.

When does a federal tax lien attach to real property? The Court of Appeals stated that it is considered attached to the property at the time of assessment, not at the time the tax lien was recorded.

In Charles David Kelly v. National Attorneys Title Assurance Fund, No. 69A04-1104-CT-215, the Kelly Oil Company issued title to real property by way of warranty deed to Kelly on February 19, 2004, and later recorded that deed on February 24, 2004. The IRS made assessments of the Kelly Oil Company for unpaid taxes on November 11, 2002. The federal tax liens were recorded on September 17, 2004. Kelly subsequently conveyed that same real property to the Grays by way of warranty deed. The deed did not disclose the federal tax lien. Attached to the deed was an affidavit stating among other things that there were no liens, orders, and encumbrances on the property. Gray’s insurance company, National Title Assurance Fund, did not find the recorded federal tax lien during the title search. Thereafter, the United States initiated an action to foreclose on the property. The Grays paid the United States $11,667 in exchange for a release of the lien on their property. National Insurance, as a subrogree of the Grays, filed suit against Kelly for breach of warranty of title. The trial court granted National Insurance's motion for summary judgment.

Kelly’s only argument on appeal was that the notices of the federal tax lien were not timely recorded with respect to the conveyance of the property by Kelly Oil Company to himself. The basis of this argument was that the federal tax lien did not attach to the property until it was recorded on September of 2004. The United States Codes sections 6321 and 6322 state that if a person neglects or refuses to pay any tax, the amount shall be a lien against the property, and the lien imposed attaches at the time of assessment. The Court of Appeals explained that the moment the tax assessment was made on November 11, 2002, the federal tax lien attached and the property became encumbered. Thus, Kelly breached his warranty by conveying title that is not free and clear from all encumbrances. The Court of Appeals affirmed.

Are will contest actions exempt from Trial Rule 7, regarding filing of an answer?  The Indiana Supreme Court just recently decided this question, stating that will contest actions are subject to the Indiana Trial Rules and failure to file an answer may result in a default judgment.

In Rod L. Avery and Marshall K. Avery v. Trina R. Avery, No. 49A05-1004-PL-320, Rod and Marshall Avery filed a petition in the probate estate to remove their sister (Trina) as the personal representative and to probate their mother's will dated November 14, 2008, which named Rod as the personal representative. On February 1, 2010, Trina Avery filed a separate action to contest the 2008 will, emphasizing that it was the product of undue influence, fraud, and duress, and that her mother had executed a subsequent will on January 14, 2009, which superseded and revoked the 2008 will. Notice of the separate action was given to Rod and Marshal Avery, but neither of them filed an answer. Trina Avery moved for a default judgment, and Rod and Marshall Avery filed a motion to dismiss the default judgment maintaining that a will contest does not require an answer. The trial court denied their motion to dismiss and entered a default judgment against them.

Prior to 1970, before the Indiana Rules of Trial Procedure became effective, an answer in a will contest was not required. Post 1970, the Trial Rules became more comprehensive and now govern the practices and procedures in all areas of law in the State of Indiana.  The applicability of the Trial Rules to the statutory will contest proceeding is governed by Robinson v. Estate of Hardin, 587 N.E.2d 683, 685 (Ind. 1992), which explains that the Trial Rules “supersede statutory provisions addressing matters purely civil and procedural in nature, unless otherwise stated." The Trial Rules require a timely filing of an answer and do not exempt will contests. Rod and Marshall Avery failed to file an answer, so they are in default and the trial court’s judgment is affirmed.