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HATFIELD v. WAL-MART STORES

January 26, 1990.

JACK R. HATFIELD, Guardian and Conservator of Diene Hatfield, an incapacitated person, Appellee,
v.
WAL-MART STORES, INC., ALEXIS, INC., and WESTERN INSURANCE GUARANTY ASSOCIATION, Appellants.



Wal-Mart Stores, Inc., (Wal-Mart) and its insurance carriers appeal the amount of attorney fees awarded in a workers' compensation case. At issue is the construction of K.S.A. 1988 Supp. 44-512a(b) as it pertains to the awarding of attorney fees by the district court for collection of past due compensation.

In 1983, Diene Hatfield was injured while working at Wal-Mart. Her initial temporary total disability award was increased in 1986 to include permanent total disability. Diene is now a permanent resident of the Medicalodge nursing home in Coffeyville. Wal-Mart's failure to pay bills covered by the award as they came due became a recurring problem. In a follow-up order on January 20, 1987, the administrative law judge found the medical expenses incurred by Diene at Medicalodge were reasonable and necessary and ordered Wal-Mart to pay Medicalodge $5,567 "for care rendered to claimant [Diene] from October 1, 1986 to February 1, 1987, and continue such care as prescribed by Dr. Sandhu [Diene's treating physician]." (This statement has been interpreted by the parties and the district court as a direction from the ALJ that Wal-Mart continue to pay the medical expenses as they are incurred by Diene at Medicalodge.) The ALJ also ordered Wal-Mart to reimburse Diene's guardian the sum of $1,149.51 for reasonable and necessary medical expenses paid by him and ordered that Wal-Mart pay the sum of $105 to Four County Mental Health.

When no payments were made, the guardian sent a demand for compensation on May 8, 1987. No payments were made within 20 days of the letter. The guardian then filed a motion for civil penalties on July 13, 1987. On November 10, 1987, the ALJ found there were eight medical bills totalling $9,383.68, which were past due without payment for more than 20 days subsequent to the service of the statutory written demand letter, and therefore assessed civil penalties of $200. The ALJ denied civil penalties on unpaid medical bills omitted from the demand letter.

  On August 10, 1987, Wal-Mart paid Four County Mental Health and the guardian two of the past due bills addressed in the ALJ's order. The guardian received no other payments and, on December 28, 1987, he filed a petition in district court pursuant to 44-512a(b) to collect $13,701.73 for outstanding and unpaid

[14 Kan. App. 2d 195]

      medical expenses, $200 for unpaid civil penalties, and in excess of $10,000 for attorney fees. Wal-Mart paid the $200 for civil penalties and $10,441.18 to Medicalodge by checks dated December 23, 1987. It was stipulated at trial that these checks were not received prior to the filing of the petition.

  The sole issue at the trial on October 28, 1988, was the amount of attorney fees to be awarded the guardian. The parties agreed the guardian was entitled to reasonable attorney fees under 44-512a(b), but they disagreed as to what amount would be reasonable.

  The district court found that slightly more than $30,000 had been paid by Wal-Mart since the filing of the action in district court. The court found Wal-Mart had paid all medical expenses which were due at the date of filing and also had paid expenses incurred after the date of filing, although most of these payments were late. The district court found $13,815.87 in bills incurred in 1987 had been paid and ordered a 50 percent contingent fee of that amount. The court found $17,729.68 in bills incurred in 1988 also had been paid and ordered a 33 1/3 percent contingent fee on that amount, less $7,519.22 which Wal-Mart had timely paid. The attorney fees awarded totalled $10,311.42 (one-half x $13,815.87 one-third x [$17,729.68 - $7,519.22] = $10,311.42).

  Wal-Mart contends the district court erred in awarding attorney fees based upon medical bills which were not first determined by the director of workers' compensation to be past due and subject to the enforcement provisions of 44-512a. Specifically, Wal-Mart argues the district court's authority to enforce collection was limited to the amounts set forth in the ALJ's order of November 10, 1987, which remained unpaid. The guardian contends the district court could consider all medical bills which were paid by Wal-Mart after the filing of his petition. Some were past due at the time the petition was filed; others became due after it was filed. The guardian relies upon the ALJ's order of January 20, 1987, for authority that Wal-Mart had a continuing duty to pay these bills whether they came due before or after the filing of the petition.

  The resolution of this dispute centers around the interpretation of K.S.A. 1988 Supp. 44-512a, which provides in part:

  "(a) In the event any compensation, including medical compensation, which has been awarded under the workers' compensation act, is not paid

[14 Kan. App. 2d 196]

      when due to the person, firm or corporation entitled thereto, the employee shall be entitled to a civil penalty, to be set by the director and assessed against the employer or insurance carrier liable for such compensation in an amount of not more than $100 per week for each week any disability compensation is past due and in the sum of $25 for each past due medical bill, if: (1) Service of written demand for payment, setting forth with particularity the items of disability and medical compensation claimed to be unpaid and past due, has been made personally or by registered mail on the employer or insurance carrier liable for such compensation and its attorney of record; and (2) payment of such demand is thereafter refused or is not made within 20 days from the date of service of such demand.

 
"(b) After the service of such written demand, if the payment of disability compensation or medical compensation set forth in the written demand is not made within 20 days from the date of service of such written demand, plus any civil penalty, as provided in subsection (a), if such compensation was in fact past due, then all past due compensation and any such penalties shall become immediately due and payable. Service of written demand shall be required only once after the final award. Subsequent failures to pay compensation, including medical compensation, shall entitle the employee to apply for the civil penalty without demand. The employee may maintain an action in the district court of the county where the cause of action arose for the collection of such past due disability compensation and medical compensation, any civil penalties due under this section and reasonable attorney fees incurred in connection with the action." (Emphasis added.)
  As stated in Lackey v. D & M Trucking, 9 Kan. App. 2d 679, 681, 687 P.2d 23 (1984), the following general rules apply to the construction of the Workers Compensation Act:
 
"`[T]his court has been firmly committed to the rule of liberal construction of the act in order to award compensation to the workman where it is reasonably possible to do so, and to make the legislative intent effective and not to nullify it. [Citations omitted.]. . . .
. . . .
"`. . . Legislative intent is to be determined by a general consideration of the entire act. Effect should be given, if possible, to the entire statute and every part thereof. To this end it is the duty of the court, so far as practicable, to reconcile the different provisions so as to make them consistent, harmonious and sensible. [Citation omitted.] Where a statute is plain and unambiguous, this court must give effect to the intention of the legislature as expressed rather than determine what the law should or should not be. [Citation omitted.] Where various provisions of an act conflict, this court should ...

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