Wyoming High Court Says Both Employer and Division of Workers’ Compensation Estopped From Using Statute of Limitations Defense
In a complex case, with procedural twists and turns, the Supreme Court of Wyoming reversed a finding that an employee’s claim for workers’ compensation benefits was barred because he failed to file a claim with the Division of Workers’ Compensation within one year of his date of injury [Sweeralla v. State ex rel. Dep’t of Workforce Servs., Workers’ Compensation Div., 2019 WY 91 (Sept. 6, 2019)]. The Court ruled that under the circumstances of the case, not only did his former employer lull him into failing to file a claim by continuing to pay his salary and out-of-pocket expenses, but later, the communications of the Division itself were so imprecise as to mislead the former employee into thinking it would be futile for him to file a claim until after he received a formal denial of benefits. Reliance on the Division's statements and communications trapped the employee into “an indefensible position.”
Background
On January 16, 2014, the employee injured his shoulder in a work-related incident and immediately notified his employer and sought medical care that same day. The employer requested that the employee not file a claim with the Division of Workers’ Compensation. In exchange for not filing an injury report, the employer kept the employee on salary and paid his out-of-pocket medical expenses. The employee subsequently underwent two shoulder surgeries and extensive rehabilitation, but he did not return to work. On December 28, 2015, Legend Services terminated the employee’s employment and told him it would no longer pay his medical expenses.
On February 14, 2016, the employee filed a report of injury with the Division. Ultimately, following a contested hearing, the Office of Administrative Hearings (OAH) upheld the Division’s Final Determination that the employee’s claim was barred by the one-year statute of limitations contained in Wyo. Stat. § 27-14-503(a). The OAH found that the employee had met his burden of showing that the employer was estopped from utilizing the statute of limitations defense for the period up to its termination of the employee, but the OAH also found that the employee had nevertheless failed to file a claim for benefits as of December 28, 2017—one year after his termination.
The employee sought to amend the order, contending the equitable estoppel also applied to the Division from December 28, 2015 through January 26, 2017 (the date of the contested hearing), because he reasonably and justifiably relied to his detriment on the Division’s statements that his claims would be denied because he did not file an injury report within one year of his injury and he would need to request a hearing when he received the denial letter. He contended that the Division's affirmative statements “led him to believe that it would be futile to file any claims for workers' compensation benefits until after a hearing had been held.”
The OAH refused to modify the order and, on judicial review, the district court affirmed OAH’s determination. The employee appealed the district court’s decision. The Supreme Court of Wyoming reversed.
The Court noted that it had repeatedly recognized that equitable estoppel applies in workers' compensation cases; and the Court had applied it where either the employer or a Division representative unintentionally made misleading statements to the claimant or the claimant’s representative, and to prevent the employer and the Division from asserting a statute of limitations defense. The Court added that this case presented unique circumstances that required the Court to address when the application of equitable estoppel was limited.
The Court stressed the the doctrine did not eliminate the statute of limitations. Rather it barred the defendant from pleading the statute. But the Court further stressed that the bar did not last forever.
The Court indicated that the record reflected that the Division affirmatively and repeatedly conflated the injury reporting requirements with the claim requirements, and the Final Determination Regarding Compensability suggested that he had filed a claim when he had not. The Division then instructed the employee that he could initiate a contested case proceeding before OAH if he disagreed with its denial of benefits. It was only after the employee requested a hearing that the Division asserted, vaguely and then more precisely, that the employee’s request for benefits should be denied because he failed to timely file a claim for benefits.
The Court concluded that the employee had sufficiently demonstrated on the record that he relied, to his detriment on the Division’s incorrect and misleading communications. After he received the final determination letter, the employee timely requested a contested case hearing and objected to the final determination, as the Division told him he could. The employee’s reliance on the Division’s conduct was detrimental for many of the same reasons OAH found his reliance on the employer’s conduct detrimental. The Court concluded:
[The employee’s] reliance was justifiable and reasonable “under the circumstances of the case considered as a whole.” Shortly after his termination from employment and the end of any justifiable reliance on [the employer’s] conduct, [the employee] filed an injury report with the Division and pursued his right to request a contested case hearing based on the status of his filing and appeal rights as characterized by the Division. To the extent the Division tried to correct its mischaracterization in the context of its Statement of Issues and Defenses and Disclosure Statement filed with OAH, that effort was too little, too late. The Division had already trapped [the employee] in an indefensible position [Opinion, ¶ 35].
Because the Division was also estopped from asserting the statute of limitations as a defense, the Court reversed the district court’s order and remanded the case to the district court with instructions to vacate OAH’s findings and determination.