MEMORANDUM
JED S. RAKOFF, District Judge.
Plaintiff Firefly Equities LLC ("Firefly") brings this action alleging breach of contract, unjust enrichment, and fraud arising from an investment Firefly made in defendant Ultimate Combustion Co., Inc. ("UCC"), whose president is defendant Naum Staroselsky. On May 3, 2010, Staroselsky moved to dismiss the complaint against him for lack of personal jurisdiction. The Court received briefing on this motion, and following oral argument, directed supplemental briefing on the question of whether Staroselsky should be bound by a New York forum selection clause contained in an agreement with Firefly that he signed in his capacity as President of UCC. After having carefully considered these submissions, the Court denied the motion by a "bottom-line" order dated August 19, 2010. This Memorandum sets forth the reasons for that ruling.
The factual allegations relevant to the instant motion are the following: Firefly is a New York limited liability corporation. Compl. ¶ 2. UCC is a Florida corporation with an office in Sunny Isles Beach, Florida. Id. ¶ 3. Upon Firefly's information and belief, Staroselsky is a Florida resident, a member of UCC's board, and its majority shareholder. Id. Firefly's complaint in substance alleges that through a series of meetings in Europe and Florida, Staroselsky induced Alex Molozanov and Sergey Porotsky, who ultimately became members of Firefly, to invest in UCC, which aimed to develop and market a fuel charger for use in internal combustion engines. Certain terms of the investment were memorialized in a "Memorandum of Understanding" between the parties dated April 9, 2008 (the "MOU"). Id. ¶ 15. The complaint alleges that following Firefly's decision to invest, Staroselsky engaged in "unreasonable delays, and bizarre and erratic behavior": among other things, he wasted Firefly's resources, refused to provide basic financial information about UCC, refused to issue Firefly additional shares of common stock as required under the MOU, and refused to appoint Molozanov to UCC's board of directors as required under the MOU. Id. ¶¶ 18-28.
In support of his motion to dismiss for lack of personal jurisdiction, Staroselsky has submitted a declaration attesting that he has been a permanent Florida resident since 2003; that he has never owned real property in New York; that he does not own personal property in New York; and that he does not hold bank accounts, offices, or vehicles in New York. He also avers that the MOU was signed by UCC in Florida; that he never transacted business in New York; and that he had no meetings or discussions with Firefly regarding the MOU in New York. See Decl. of Naum Staroselsky, 4/30/10, ¶¶ 4-9. In addition, Staroselsky has submitted a reply declaration in which he denies being a majority shareholder of UCC; rather, he asserts that he owns less than 17% of its outstanding shares. Reply Decl. of Naum Staroselsky, 6/2/10 ("Staroselsky Reply Decl."), ¶ 5. In this declaration, Staroselsky also takes issue with many of the allegations of the complaint, and specifically denies having negotiated with Firefly's lawyer regarding the MOU. Id. ¶ 17.
Staroselsky's moving papers also attach a copy of the MOU referenced in the complaint. Decl. of Michael W. Freudenberg, 5/3/10, Ex. C ("MOU"). This agreement between UCC and Firefly was signed by Staroselsky on UCC's behalf in his capacity as "N. Staroselsky, President." Paragraph 12 of the MOU contains a choice-of-law and forum selection clause, which reads in relevant part as follows:
This Agreement shall be governed by the laws of the State of New York. Each party hereby irrevocably (a) submits to the jurisdiction of the United States District Court for the Southern District of New York and in the event that such court is without subject matter jurisdiction, the Supreme Court of the State of New York, County of New York [and] (b) admits to the personal jurisdiction of such courts over them in any such action.
As noted, the Court directed the parties to submit supplemental briefing on the question of whether this forum selection clause binds Staroselsky — who signed the MOU in his capacity as UCC's president — in his individual capacity as well. The mere difference in Staroselsky's capacities is not necessarily dispositive in his favor, as the Second Circuit has recognized that "the fact a party is a non-signatory to an agreement is insufficient, standing alone, to preclude enforcement of a forum selection clause."Aguas Lenders Recovery Group v. Suez, S.A., 585 F.3d 696, 701 (2d Cir. 2009) (citing cases from the Third, Seventh, Eighth, Ninth, and Eleventh Circuit Courts of Appeals). Indeed, courts in this Circuit and elsewhere have articulated and applied the "closely related" doctrine in ways that would easily support the exercise of jurisdiction here over Staroselsky in his individual capacity.See, e.g., MGM Studios Inc. v. Canal+ Distrib. S.A.S., 2010 WL 537583, at *5 (S.D.N.Y. Feb. 9, 2010) ("Under New York law, a signatory to a contract may invoke a forum selection clause against a non-signatory if the non-signatory is `closely related' to one of the signatories such that `enforcement of the forum selection clause is foreseeable by virtue of the relationship between the signatory and the party sought to be bound.'");Thibodeau v. Pinnacle FX Inv., 2008 WL 4849957, at *5 n. 4 (E.D.N.Y. Nov. 6, 2008) ("[B]ecause defendants Bell and Francis are alleged to be principals of Pinnacle and are being sued in connection with their activities at Pinnacle, it was foreseeable to plaintiff that the forum selection clause would be applicable to any lawsuit against these closely-related individuals in connection with their work at Pinnacle."); Weingard v. Telepathy, Inc., 2005 WL 2990645, at *5 (S.D.N.Y. Nov. 7, 2005) ("[I]t is well established that `a range of transaction participants, parties and non-parties, should benefit from and be subject to forum selection clauses.'" (internal quotation marks omitted));Nanopierce Techs., Inc. v. Southridge Capital Mgmt., Inc., 2003 WL 22882137, at *6 (S.D.N.Y. Dec. 4, 2003) (enforcing forum selection claims against non-signatory Chief Financial Officer by virtue of her position in signatory corporation); see also, e.g., Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 514 n. 5 (9th Cir. 1988) (enforcing forum selection clause against non-signatory directors of a corporation). And this Court has endorsed the proposition that "[a]fter Aguas, there can be no dispute that forum selection clauses will be enforced even against non-signatories where they meet the `closely related' standard." In re Refco Sec. Litig., 2009 WL 5548666, at *10 (S.D.N.Y. Nov. 16, 2009) (Special Master's Report and Recommendation), adopted by 2010 U.S. Dist. LEXIS 5832 (S.D.N.Y. Jan. 20, 2010).
After careful consideration, the Court finds that Staroselsky's attempts to avoid the application of the "closely related" doctrine are unavailing. First, Staroselsky distinguishes some (but not all) of the above-cited cases on the ground that they involve binding successors in interest to a signatory, whereas here, there is no relationship of successorship. But that is a distinction without a difference, given that the standard applied by these cases is one of whether the entities are "closely related" and thus, by its terms, is not limited to circumstances involving successorship. And this distinction, even if it does exist, does not address those of the above-cited cases that bind non-signatory corporate officers and directors.
Next, Staroselsky points out that the MOU's forum selection clause is defined in reference to the parties to this agreement and does not include language as broad as that in some of the clauses discussed in the above-cited cases. From there, he argues that the MOU's clause does not cover non-contractual claims against Staroselsky and, in any event, evinces a clear intent to apply only to the corporate entities that were parties to the agreement but not to Staroselsky individually. This construction of the clause — which provides that each party "irrevocably . . . admits to the personal jurisdiction" in this Court — is insupportably cramped. For one thing, "[a] forum selection clause cannot `be defeated by artful pleading of claims not based on the contract containing the clause if those claims grow out of the contractual relationship, or if "the gist" of those claims is a breach of that relationship.'" Weingard, 2005 WL 2990645, at *4. And although it is true that this forum selection clause refers only to the parties to the MOU, this fact does not preclude application of the "closely related" doctrine, which exists precisely because there are some situations where courts believe that parties who are not signatories to such a clause should nonetheless be bound by that clause.
It is clear to the Court that Staroselsky is related to UCC closely enough that he should be bound by the forum selection clause to which he agreed on UCC's behalf. Based on the fact that Staroselsky himself signed the MOU (albeit in his representative rather than individual capacity), it was — or should have been — foreseeable to him that the clause might have application to disputes arising under that agreement that also involved him.See, e.g., id. ("[The signatory] is bound by the terms of the forum selection clause even if he did not take the time to read it because `a signatory to a contact is presumed to have read, understood and agreed to be bound by all terms, including the forum selection clauses, in the documents he or she signed.'"). Staroselsky acknowledges that he is UCC's president and holds approximately 17% of its outstanding shares. He admits to having been involved in discussions about the MOU, to having personal knowledge of the facts of circumstances of this matter by virtue of the fact that he is UCC's president, and to having met and spoken with Porotsky and Molozanov numerous times in connection with their proposed investment. Staroselsky Reply Decl. ¶¶ 2, 7-8, 23. It is apparent that due to his involvement in the transactions underlying this litigation, Staroselsky will need to be deposed and testify at trial in his representative capacity even if he were not a party to this case in his individual capacity. In sum, it is difficult for the Court to imagine parties more closely related than Staroselsky qua UCC's president and Staroselsky qua individual.
Accordingly, the Court holds that the forum selection clause applies to Staroselsky in his individual capacity, and hereby denies his motion to dismiss for that reason alone without need for further inquiry. See, e.g., Atl. Mut. Ins. Co. v. M/V HUMACAO, 169 F. Supp. 2d 211, 215 (S.D.N.Y. 2001) ("[W]hen parties choose a particular forum, their selection will be enforced without the need to engage in traditional personal jurisdiction analysis, including determining whether constitutional due process requirements have been met.").
The Court also notes that Firefly has made at least a prima facie showing that Staroselsky is subject to jurisdiction under New York's long-arm statute, CPLR § 302(a), by virtue of the well-pleaded allegations that Staroselsky used UCC as his agent,see Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460 (1988). But while Staroselsky might be entitled to an evidentiary hearing to test Firefly's allegations in this regard were this the only basis for jurisdiction, there is no need for such a hearing due to the fact that Staroselsky is bound by the New York forum selection clause as a matter of law under the "closely related" doctrine.
f41 Kan. App. 2d at 537. But the Board has used, and other Court of Appeals panels have affirmed, conflicting methods for calculating an award under similar circumstances. See,
e.g., Redd v. Kansas Truck Center, 2008 WL 4149955, at *12 (Work. Comp. Bd., No. 1,020,892, filed August 27, 2008);
Conrow v. Globe Engineering Co., No. 99, 718, unpublished Court of Appeals opinion filed March 13, 2009. This statutory interpretation issue is a question of law over which we have unlimited review. See
Redd, 291 Kan. at ___;
Ft. Hays St. Univ. v. University Ch., Am. Ass'n of Univ. Profs, 290 Kan. 446, 457,
228 P.3d 403 (2010).
The Mitchell panel interpreted K.S.A. 44-510d to allow compensation at the highest level of injury when multiple injuries occur within a single extremity. It noted the statutory structure of the scheduled injuries is progressive, meaning an injured worker is entitled to more weeks if the injury occurs at a higher level, i.e., 200 weeks for a forearm, but 210 weeks for the loss of an arm. 41 Kan. App. 2d at 537-38. The panel also relied upon Casco, 283 Kan. at 522, which found that if an injury is on the schedule, the amount of compensation stated in the statutory schedule includes compensation for the complete loss of the member or the partial loss of the member. The panel then reasoned that because the number of weeks is reduced by the percentage of the loss, "the principle of compensating an extremity at the highest level affected applies regardless of whether the loss is total or partial." 41 Kan. App. 2d at 537. In the end, this justified the Board majority's statutory interpretation, which the Mitchell panel found was entitled to judicial deference. 41 Kan. App. 2d at 538.
But in Redd, a Board majority awarded an injured worker five scheduled injuries to his left hand, left forearm, left arm, right forearm, and right arm. The employer argued the Board was required to combine the individual impairment ratings into a whole body impairment because K.S.A. 44-510d(a)(23) requires loss of a scheduled member be based on the permanent impairment of function to that member as determined using the American Medical Association Guides to Evaluation of Permanent Impairment (4th ed. 1995) (Guides). The Guides instruct physicians to generate a whole body impairment rating as part of a recommended three-step evaluation process. We agreed that this created an ambiguity in the statute, but we rejected the employer's statutory interpretation in Redd, 291 Kan. at ___, because it rendered meaningless the statutory schedules set out in K.S.A. 44-510(d)(a)(1)-(22).
To reach this conclusion, we analyzed the governing statutes from the Workers Compensation Act, K.S.A. 44-501 et seq.; the case law interpreting those statutes; the Guides; and the legislative history for K.S.A. 44-510(d)(a)(23). We found the legislature created its own statutory mechanism to calculate permanent partial disability awards in K.S.A. 44-510d and K.S.A. 44-510e. Thus, the more reasonable interpretation for K.S.A. 44-510d(a)(23) was that the legislature meant to adopt the evaluation requirements and methods for combining impairments to the same statutorily specified level, but not the Guides' process for combining multiple scheduled injuries occurring at different levels or on different members. Redd, 291 Kan. at ___.
For example, if there are several injuries causing impairment to an injured worker's thumb, those injuries should be combined to generate a total impairment to the thumb because it is specifically identified in K.S.A. 44-510d. But the thumb injury should not be combined with a scheduled injury to the hand, which also is specifically identified in the statute. This view, we reasoned in Redd, 291 Kan. at ___, maintains the Guides' purpose of bringing greater objectivity to the physician's task of estimating the magnitude of permanent impairments but also allows for application of the scheduled injury calculations specified in the statute. See K.S.A. 44-510d(a)(1)-(22).
In Redd, we also touched on the Mitchell panel's decision to combine impairments to the highest level of the extremity, by stating:
"Admittedly, [the
Mitchell] approach does not render the statutory schedule meaningless, but it does read something into K.S.A. 44-510d(a)(1)-(22) that does not exist.
The schedule does not contain any language requiring the combination of scheduled injuries, and the panel does not explain where it finds the authority permitting the Board to combine injuries in the manner the panel approved." (Emphasis added.)
Redd, 291 Kan. at ___.
While in Redd we found that the adoption of the Guides in K.S.A. 44-510d(a)(23) created an ambiguity in the statute, the schedule's plain language helps us resolve the arguments made by Travelers and adopted by the Court of Appeals' panel in this case. See Higgins v. Abilene Machine, Inc., 288 Kan. 359, 362, 204 P.3d 1156 (2009) (Canons of statutory construction are used to resolve an ambiguity only if the plain reading of a statute yields an ambiguity or lack of clarity.). We find the statutory schedule plainly does not authorize the combining of impairment values to be found for the specific scheduled members identified in K.S.A. 44-510d(a)(1)-(22).
K.S.A. 44-510d defines a permanent partial disability as a disability "partial in character but permanent in quality." K.S.A. 44-510d(a) then states permanent partial disability compensation "is to be paid for not to exceed the number of weeks allowed" in the following schedule:
"(1) For the loss of a thumb, 60 weeks.
. . . .
"(12) For the loss of a forearm, 200 weeks.
"(13) For the loss of an arm, excluding the shoulder joint, shoulder girdle, shoulder musculature or any other shoulder structures, 210 weeks, and for the loss of an arm, including the shoulder joint, shoulder girdle, shoulder musculature or any other shoulder structures, 225 weeks.
. . . .
"(21) Permanent loss of the use of a finger, thumb, hand, shoulder, arm forearm, toe, foot, leg or lower leg . . . shall be equivalent to the loss thereof.
For the permanent partial loss of the use of a finger, thumb, hand, shoulder, arm, toe, foot or leg, or the sight of an eye or the hearing of an ear, compensation shall be paid as provided for in K.S.A. 44-510c . . . per week during that proportion of the number of weeks in the foregoing schedule provided for the loss of such finger, thumb, hand, shoulder, arm, toe, foot or leg, or the sight of an eye or the hearing of an ear, which partial loss thereof bears to the total loss of a finger, thumb, hand, shoulder, arm, toe, foot or leg, or the sight of an eye or the hearing of an ear; but in no event shall the compensation payable hereunder for such partial loss exceed the compensation payable under the schedule for the total loss of such finger, thumb, hand, arm, toe, foot or leg, or the sight of an eye or the hearing of an ear, exclusive of the healing period. As used in this paragraph (21), `shoulder' means the shoulder joint, shoulder girdle, shoulder musculature or any other shoulder structures." (Emphasis added.)
There are three relevant points apparent from the statute. First, it does not contain a provision treating multiple injuries differently than singular injuries. Second, it also does not expressly provide for the combination of impairment values. Third, K.S.A. 44-510d(a)(21) states that the permanent partial loss of the "finger, thumb, hand, [arm, or shoulder]" shall be compensated by the number of weeks which the "partial loss thereof bears to the total loss of [the] finger, thumb, hand, [arm, or shoulder]. . . ." It does not provide that the permanent partial loss shall be compensated by the percentage of loss of the extremity.
Unlike the arguments made in Redd, the Mitchell panel did not rely upon the adoption of the Guides as justification for combining impairments. It found the statute's progressive nature, which allots more weeks for the higher levels of the extremity, justified the Board majority's decision to combine Mitchell's injuries under the operative construction doctrine, which allows judicial deference to an administrative agency's statutory interpretation when it is supported by a rational basis. Mitchell, 41 Kan. App. 2d at 537-38.
But this ignores this court's recent decisions recognizing there is little utility for such deference given the long-standing admonition that appellate courts are always free to substitute their judgment for that of the administrative agency when reviewing a question of law. Ft. Hays St. Univ., 290 Kan. at 457 ("In this matter, an appellate court exercises unlimited review on the determinative question of statutory interpretation without deference to [the agency's] view as to its own authority."); Higgins, 288 Kan. at 361 ("No significant deference is due [an administrative law judge's] or the [Workers Compensation] Board's interpretation or construction of a statute."). Indeed, when an agency applies the same statute in conflicting ways, as the Board has on this question, any judicial deference is stymied. Redd, 291 Kan. at ___. Therefore, the Mitchell panel's rationale is not compelling.
Travelers presents a better argument in its brief by contending that the number of weeks contained on the schedule compensates the injured worker for the complete loss of the body member. For example, when a claimant suffers an amputation at the level of the shoulder, the 225 weeks on the schedule necessarily includes the loss of the entire arm. Since the number of weeks for the complete loss is simply reduced by the percentage of loss in partial loss cases, Travelers argues the number of weeks assigned to the highest level must include the lower parts of the member. But this argument also fails because it is contrary to the plain language of the statute and reads a rule into the schedule that does not exist.
We find the Act requires that an injured worker is entitled to an award at each separate level for multiple injuries to the same extremity corresponding to the statutory schedule set out in K.S.A. 44-510d. Redd, 291 Kan ___, Syl. ¶ 5. We reverse the Board's and the Court of Appeals' determinations combining the multiple scheduled injuries/impairments to the same extremity, and this case is remanded to the Board for a recalculation of Mitchell's award consistent with this opinion.
ISSUE TWO: THE PERMANENT PARTIAL DISABILITY REDUCTION
Mitchell was awarded 18 weeks of temporary total disability for injuries sustained to his right upper extremity. He also received a permanent partial disability award. Under the K.S.A. 44-510d(a)(13) schedule, an injured worker is typically awarded 225 weeks for the loss of the arm at the shoulder. In calculating Mitchell's permanent partial disability award, the Board first reduced the 225 weeks assigned under K.S.A. 44-510d(a)(13) by the 18 weeks of temporary total disability. Then, the Board multiplied the reduced weekly total by Mitchell's functional impairment rating. Mitchell argues it was improper to deduct the 18 weeks of temporary total disability.
K.A.R. 51-7-8(b)(1) expressly provides for this deduction. But Mitchell argues a different interpretation to the regulation, citing the preceding section, K.A.R. 51-7-8(a)(1), to contend the regulation was misapplied. K.A.R. 51-7-8 states in relevant part:
"(a)(1) If a worker suffers a loss to a member and, in addition, suffers other injuries contributing to the temporary total disability, compensation for the temporary total disability shall not be deductible from the scheduled amount for those weeks of temporary total disability attributable to the other injuries.
. . . .
"(b) If a healing period of 10% of the schedule or partial schedule is granted, not exceeding 15 weeks, it shall be added to the weeks on the schedule or partial schedule before the following computations are made.
(1)
If a loss of use occurs to a scheduled member of the body, compensation shall be computed as follows:
(A)
deduct the number of weeks of temporary total compensation from the schedule;
(B) multiply the difference by the percent of loss or use to the member; and
(C) multiply the result by the applicable weekly temporary total compensation rate." (Emphasis added.)
Mitchell claims K.A.R. 51-7-8(a)(1) pertains to workers with both scheduled and nonscheduled injuries and that it prohibits the deduction of temporary total disability paid from a claimant's permanent partial disability award for the scheduled member. We agree the plain language of K.A.R. 51-7-8(a)(1) prohibits the deduction of temporary total disability from the permanent partial disability award — if the temporary total is caused by both a scheduled injury and some other injury. But these are not the facts in this case because all of Mitchell's injuries are scheduled. Mitchell's argument misses the relevant point that K.A.R. 51-7-8(b)(1) explicitly provides for the calculation employed in his case when a loss of use occurs to a scheduled member, which is what happened here. We find Mitchell's argument to be without merit under these facts.
In the alternative, Mitchell argues K.A.R. 51-7-8 is void because allowing the deduction for temporary total disability paid contradicts K.S.A. 44-510c and K.S.A. 44-510d. The Mitchell panel upheld the Board's calculation, finding K.A.R. 51-7-8 was a valid regulation and the deduction of the temporary total disability weeks approved by previous case law, citing another Court of Appeals decision, Cowan v. Josten's American Yearbook Co., 8 Kan. App. 2d 423, 427, 660 P.2d 78 (1983). Mitchell, 41 Kan. App. 2d at 538-39. We note a second Court of Appeals panel addressed this issue in a later decision and adopted the same conclusion. Barbury v. Duckwall Alco Stores, 42 Kan. App. 2d 693, Syl. ¶ 3, 215 P.3d 643 (2009).
Regulations an administrative agency is authorized to adopt are presumed valid, and the party challenging a regulation bears the burden to establish its invalidity. In re Tax Appeal of City of Wichita, 277 Kan. 487, 495, 86 P.3d 513 (2004). It is undisputed the director of workers compensation is authorized to adopt regulations administering and enforcing the Act. K.S.A. 44-573 and K.S.A. 74-717. The only remaining issue then is whether the regulation is inconsistent with the relevant statutes. Because Mitchell received temporary total disability followed by an award for permanent partial disability, the relevant statutes are K.S.A. 44-510c and K.S.A. 44-510d.
K.S.A. 44-510c governs compensation for temporary and permanent total disability. It states a claimant can only receive medical benefits during the first week the claimant is totally disabled, unless the claimant is disabled a minimum of 3 weeks. After the first week, "weekly payments shall be made during such temporary total disability." K.S.A. 44-510c(b)(1). K.S.A. 44-510c(c) then states that the scheduled injury statute, K.S.A. 44-510d, governs when a permanent total or temporary total disability is followed by a permanent partial disability contained on the schedule.
As discussed above, K.S.A. 44-510d governs compensation to injured workers who are permanently, but not totally, disabled — if their injury appears on the schedule. It begins by restricting an injured worker to medical benefits during the first week of injury. Thereafter, compensation is to be paid according to the schedule, and the award is calculated using the statutorily provided formula. The statute then goes on to state disability is presumed to exist immediately after the injury if permanent disability is awarded and "compensation is to be paid for not to exceed the number of weeks allowed in the following schedule." (Emphasis added.) K.S.A. 44-510d(a). K.S.A. 44-510d(b) provides:
"Whenever the employee is entitled to compensation for a specific injury under the foregoing schedule,
the same shall be exclusive of all other compensation except the [medical] benefits provided . . ., and no additional compensation shall be allowable or payable for any temporary or permanent, partial or total disability." (Emphasis added.)
The Barbury panel did a persuasive job of reconciling these statutes. It began by noting the injured worker clearly was entitled to temporary total disability under K.S.A. 44-510c, but that the statute directed the Board to K.S.A. 44-510d to calculate the award. The panel continued by explaining that K.S.A. 44-510d indicates the disability exists immediately following the injury. This suggests the number of weeks on the schedule encompasses the entire award for an injury to that scheduled member. Further, the panel reasoned the concluding statement in the statute that compensation is not to exceed the number of weeks on the schedule further emphasizes that the number of weeks contained on the schedule is designed to cover the entire award for an injury to a member, whether it is calculated as a total or a permanent award. 42 Kan. App. 2d at 697.
In Barbury, the injured worker received temporary total disability followed by permanent partial disability to his leg. The panel's analysis concluded:
"[T]he legislature has set an overall compensation limit for a scheduled injury to the leg of 200 weeks, part of which may have been provided as a temporary-total-disability compensation under K.S.A. 44-510c. Although K.S.A. 44-510c lets the employee receive temporary-total-disability compensation, it defers to K.S.A. 44-510d to determine compensation when a permanent scheduled injury follows a temporary total disability. And K.S.A. 44-510d explicitly provides that the compensation provided there `shall be exclusive of all other compensation' except medical benefits and amputation cases."
42 Kan. App. 2d at 697.
We find this reasoning logically follows the statutory language. K.A.R. 51-7-8 is in keeping with that reasoning.
But Mitchell poses a final challenge to this view by urging this court to contrast these provisions with K.S.A. 44-510e, which establishes how an unscheduled permanent partial disability award is calculated. That provision requires the deduction of temporary total disability in the following calculation:
"(2) find the number of disability weeks payable by subtracting from 415 weeks the total number of weeks of temporary total disability compensation was paid, excluding the first 15 weeks of temporary total disability compensation that was paid, and multiplying the remainder by the percentage of permanent partial general disability as determined under this subsection [a]." K.S.A. 44-510e(a)(2).
Admittedly, this is a very clear instruction, and the above analysis of K.S.A. 44-510c and K.S.A. 44-510d is more difficult. But as the Barbury panel considered, this distinction is not surprising based on the differences in these statutory schemes. 42 Kan. App. 2d at 698. K.S.A. 44-510e provides detailed instructions on how to calculate general body disability awards, i.e., injuries not on the schedule. K.S.A. 44-510c and K.S.A. 44-510d do not. Without doubt, the legislature could have made the instructions for calculating a scheduled injury more explicit, but that does not alter the analysis suggesting the legislature intended deducting temporary total disability awards. As such, K.A.R. 51-7-8 does not violate the statutes.
The Board did not err by reducing the number of weeks assigned for Mitchell's permanent partial disability award by the number of weeks of temporary total disability awarded.
ISSUE THREE: JOINT AND SEVERAL LIABILITY
As discussed above, the Board found that both the overcompensation for the initial injury and the sustained repetitive work over a longer period of time after that injury combined to cause Mitchell's left and right extremity impairments. It assigned Mitchell's last day worked as the date of accident under the Act. But Travelers argues the secondary injury rule applies, which would make the date of accident under the statute December 31, 2003 — the date Mitchell suffered the initial thumb injury. The issue underlying this argument is which insurance carrier is liable. Travelers believes that if the secondary injury rule applies the date of accident is within Royal's coverage period. We first consider whether the secondary injury rule applies.
Travelers argues the subsequent bilateral shoulder, carpal tunnel, and right elbow injuries flowed as a direct and natural result from the original thumb injury. Citing Dr. Do's testimony, Travelers claims the facts show the residual effect from the initial left thumb injury led to the right upper extremity injury, which in turn led to the left upper extremity injury. Travelers argues the secondary injury rule applies because the subsequent injuries were the natural and probable consequence of the left thumb break, so the date of injury for all impairments was the date the left thumb broke.
Royal argues the subsequent injuries were new and distinct. Royal notes Mitchell began developing bilateral hand numbness 7 months after the break, even though Travelers claims Mitchell was overusing the right extremity as a result of trying to protect his initial thumb injury. Royal finds support for these arguments in the testimony of Mitchell and Dr. Murati. Royal further notes Mitchell was released to return to work with no cast and no restrictions on April 15, 2005, which was 2 months before Mitchell first noticed right extremity problems.
In dealing with Travelers' arguments, the Mitchell panel held the secondary injury rule did not apply because there was sufficient evidence supporting the Board's decision that a combination of the thumb injury and Mitchell's subsequent work activities caused his injuries. Therefore, the panel concluded the Board did not err in determining the dates of accident for each of Mitchell's repetitive trauma injuries were separate and distinct from the date of accident for his initial thumb injury. 41 Kan. App. 2d at 533.
As to the evidence regarding the cause of Mitchell's subsequent injuries, the panel found Travelers mistaken in its arguments that the evidence was undisputed. The panel noted Dr. Do's testimony, which Travelers relies upon, was arguably inconsistent and contradicted by other medical testimony that concluded Mitchell's subsequent injuries resulted from both the left thumb break and repetitive mini traumas each day he engaged in work activities. See 41 Kan. App. 2d at 531-33. The panel concluded:
"[C]ontrary to Travelers' suggestion, the Board did not ignore evidence establishing that Mitchell's repetitive trauma injuries were the natural and probable consequence of the initial thumb injury.
Instead, the Board found that repetitive work and overcompensation contributed equally to cause Mitchell's injuries." (Emphasis added.)
41 Kan. App. 2d at 533.
We apply the standard of review applicable at the time of the agency action under review. K.S.A. 77-621(a)(2); see K.S.A. 2009 Supp. 77-621(a)(2); Redd, 291 Kan ___, Syl. ¶ 1. At the time at issue in this appeal, K.S.A. 77-621(c)(7) required review of the agency's factual determinations for evidence "that is substantial when viewed in light of the record as a whole." Caselaw defines substantial evidence as evidence possessing something of substance and relevant consequence to induce the conclusion that the award was proper, furnishing a basis to act from which the issue raised could be easily resolved. Graham v. Dokter Trucking Group, 284 Kan. 547, 553-54, 161 P.3d 695 (2007). Under this analysis, the Board's decision should be upheld if supported by substantial evidence, even though there is other evidence in the record supporting contrary findings. 284 Kan. at 554.
We agree with the Court of Appeals panel and hold the Board's findings are supported by substantial competent evidence in light of the record as a whole. As correctly noted by the panel, Dr. Do's opinion was conditioned on factors that both Mitchell and other medical experts disputed. The Board made a factual determination based upon that disputed testimony, which we will not disturb on appeal based on this record. The evidence supports a finding that Mitchell's subsequent bilateral shoulder, carpal tunnel, and right elbow injuries were the combined result of both repetitive work and overcompensation use from the initial thumb injury. Now we must determine the date of accident under the statutory scheme.
K.S.A. 2009 Supp. 44-508(d), which was amended effective July 1, 2005 (L. 2005, ch. 55, sec. 1), and was thus applicable prior to Mitchell's last day worked, establishes the date of accident for work-related injuries caused by a series of events, repetitive use, cumulative traumas, or microtraumas. It states:
"[T]he date of accident shall be the date the authorized physician takes the employee off work due to the condition or restricts the employee from performing
the work which is the cause of the condition. In the event the worker is not taken off work or restricted as above described, then the date of injury shall be the earliest of the following dates: (1) The date upon which the employee gives written notice to the employer of the injury; or (2) the date the condition is diagnosed as work related, provided such fact is communicated in writing to the injured worker. In cases where none of the above criteria are met, then the date of accident shall be determined by the administrative law judge based on all the evidence and circumstances; and in no event shall the date of accident be the date of, or the day before the regular hearing."
Kansas appellate courts have set as a bright-line rule that in repetitive microtrauma situations like carpal tunnel syndrome, the date of injury is the last day worked. See Kimbrough v. University of Kansas Med. Center, 276 Kan. 853, 855-57, 79 P.3d 1289 (2003). The Board's decision to set the date of accident for Mitchell's repetitive trauma injuries as his last day worked is in agreement with the statute and our case law. We hold the Board correctly recognized the date of accident for Mitchell's subsequent injuries (other than the initial left thumb) as July 15, 2005, i.e., Mitchell's last day of work for Petsmart. Given this particular factual scenario, we next consider the Board's decision to impose joint and several liability.
Royal argues its coverage ended on January 31, 2004. It claims it would be unfair to impose joint and several liability when Royal no longer had a contractual obligation to provide coverage, especially since Mitchell's wage had increased and any benefits awarded would be higher than anticipated by the premium collected from Petsmart. Royal also argues joint and several liability cannot be imposed because the Kansas Workers Compensation Act does not provide for it. The Board found the injuries to Mitchell's left thumb and the repetitive activities he engaged in for his work combined to cause Mitchell's subsequent bilateral shoulder, carpal tunnel, and right elbow injuries.
The Mitchell panel treated Travelers' and Royal's challenges to joint and several liability as separate issues for each insurer. It refused to address Royal's argument that Travelers was solely responsible because Royal failed to file a cross-appeal, depriving the panel of jurisdiction to consider this argument under K.S.A. 60-2103(h) (appellee must file notice of cross-appeal from adverse rulings in order to obtain appellate review of those issues). 41 Kan. App. 2d at 528. We note Royal also did not seek this court's review of the panel's jurisdictional determination. Therefore, we have no jurisdiction to hear any challenge to the joint and several liability order as it relates to Royal's arguments because it failed to appeal from the Board's ruling.
Turning to Travelers' argument, the insurance carrier predicates its entire attack against the Board's joint and several liability holding on the basis of its factual dispute with the Board's decision that Mitchell's subsequent injuries resulted from both the initial thumb injury and regular job activities. But we have upheld the Board's factual determinations, so Travelers' premise fails at its starting point. The argument is without merit.
Finally, we agree generally with the notion expressed by the ALJ and in the case law that insurance carriers should not litigate disputes about their respective liabilities for the compensation awarded to an injured worker in the compensation proceedings. Instead, these matters should be decided in separate proceedings between the carriers brought for such purposes and outside the Board's jurisdiction. See Kuhn v. Grant County, 201 Kan. 163, Syl. ¶¶ 3-5, 439 P.2d 155 (1968) (discussing the hardship that may confront a claimant when insurance carriers litigate claims and equities existing between themselves during the injured worker's compensation process); Hobelman v. Krebs Construction Co., 188 Kan. 825, 830-33, 366 P.2d 270 (1961) (where employee of two employers is injured, degrees of liability between employers and their carriers are not to be decided in workers compensation proceedings); Tull v. Atchison Leather Products Co., 37 Kan. App. 2d 87, 93-94, 150 P.3d 316 (2007) (not an erroneous application of law when an ALJ or the Board embraces the general rule stated in Kuhn).
We affirm the Board's judgment assigning joint and several liability to Royal and Travelers.
CONCLUSION
We reverse the Board and the Court of Appeals in their determinations that Mitchell's multiple injuries should be combined at the highest level of the scheduled injury. Instead, the Board is required to calculate Mitchell's permanent partial disability as separate injuries under the schedule set out in K.S.A. 44-510d, as more fully explained in this opinion and Redd v. Kansas Truck Center, 291 Kan ___, 239 P.3d 66 (2010). We remand the case for the purpose of making that recalculation consistent with this ruling.
We affirm the Board's deduction of the weeks of Mitchell's temporary total disabilities benefits from the permanent partial disability award.
We affirm the Board's factual findings that Mitchell's subsequent repetitive trauma injuries resulted from the combination of his work activities and his initial thumb injury. We also affirm the Board's decision to assign joint and several lability to both Royal and Travelers for Mitchell's subsequent bilateral shoulder, carpal tunnel, and right elbow injuries.
Affirmed in part, reversed in part, and remanded with directions.
DAVIS, C.J., not participating.