280_C015

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COVERAGE APPLIED TO EMPLOYEE WORKING SOLELY AT OUT-OF-STATE LOCATION

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Bruce Knutson (Knutson) claimed to have injured his sciatic nerve in the spring of 2004 while employed by John Kruid (Kruid) at his Pax Equipment location in Sioux Falls, South Dakota. Knutson worked for Kruid only in South Dakota. Kruid's workers compensation insurance carriers, Farm Bureau Mutual Insurance Company and Western Agricultural Insurance Company (collectively Farm Bureau) denied coverage.

Kruid owned Madison Farm Supply (Madison) in Madison Nebraska. It sold livestock feeding equipment, assembled feed bins, and warehoused and distributed Pax brand equipment to dealers. Kruid had employees in Madison to help him run the business. He purchased the Pax Equipment location in 1999 to warehouse and serve his customers in other states and to pick up Pax merchandise they had ordered. Kruid owned both locations personally and did not do business through any form of business entity. He ran both operations from Madison and only kept the Pax Equipment sign on the building in Sioux Falls to identify the company.

Kruid's workers compensation policy listed "John Kruid D/B/A Madison Farm Supply" as the insured and the Madison, Nebraska location as the business location insured. No other workplace addresses or states were listed. After coverage was denied, Kruid filed a complaint in the district court for Madison County, Nebraska, alleging that the policy covered his employees in South Dakota, requesting a judgment for the attorney fees he spent defending Knutson's subsequent workers claim in South Dakota, and a declaration that the policy covered his South Dakota employees. He also alleged a second cause of action to reform the insurance contract. Farm Bureau filed an amended answer denying coverage and alleged misrepresentations on Kruid's application for insurance. Farm Bureau moved for summary judgment on Kruids first cause of action only. Kruid did not move for summary judgment. The district court granted Farm Bureau's motion for summary judgment. Kruid appealed because of the unresolved second cause of action. After the district court granted Kruid's motion to voluntarily dismiss his second cause of action, he appealed.

On appeal, Kruid argued that the district court erred in finding that Farm Bureau's workers compensation policies did not cover employees working in South Dakota and for sustaining Farm Bureau's motion for summary judgment. The appellate court agreed. It determined that the terms of the insurance contract cover only workplaces in Nebraska but that the Workers Compensation Act mandates additional coverage and, to the extent of any conflict, overrides the insurance contract. The insurance company may limit its liability and impose restrictions and conditions on its obligations as long as they are not inconsistent with public policy or statute. The Act mandates that insurance companies must cover all employees under the Act. The Nebraska Act requires that all insurance policies "shall include within their terms the payment of compensation to all employees, officers, or workers who are within the scope and purview of the … Act." Statutory interpretation presents questions of law. Unless addressed elsewhere, statutory language is given its plain meaning and courts are not to look beyond or interpret it when the meaning of its words are plain, direct, and unambiguous. The appellate court found that the plain language of the statute required that a workers compensation insurance policy must cover all employees who fall within the purview of the Act.

Because Kruid presented sufficient evidence to create questions of material fact as to whether the Act covered Knutson at Kruid's South Dakota location, the appellate court found that the district court erred in granting Farm Bureau summary judgment. It reversed that judgment and remanded back to the district court for further proceedings consistent with this judgment.

Court of Appeals of Nebraska. John Kruid, appellant, v. Farm Bureau Mutual Insurance Company and Western Agricultural Insurance Company, appellees. No. A-08-883. June 16, 2009. 17 Neb.App. 687, 770 N.W.2d 652