March 18, 2019

The Court of Appeals of Arkansas determined that a company that did not respond to its employees' negligence suit did not waive its right to the exclusive remedy provision of workers' compensation. The case is Stan v. Vences, 2019 Ark. App. 56 (Ct. App.).

The employee, Jose Juan Vences filed a complaint with the circuit court alleging that in November 2013 he suffered an injury while working for his employer, Renaissance Plaster and Design, and that Renaissances' negligence proximately caused the injury. Vences also claimed that Renaissance did not provide workers compensation benefits for their employees and in doing so, waived its right to the exclusive remedy of workers compensation. Vences asked for remedies including past and future medical bills, past and future lost wages, conscious pain and suffering, and compensation for the permanence of his injury. Renaissance failed to respond and the circuit court entered an order of default. Soon after, the court held that an employment relationship existed between Renaissance and Vences, that the employee suffered the injury during the course and scope of his employment, and that the injury was proximately caused by the negligence of his employer. Next, the court found that the Renaissance failed to provide workers compensation benefits, and in doing so waived its exclusive remedy immunity. The court awarded the employee more than $202,000 plus a $25,000 penalty. The circuit court found that Renaissance was ineligible for and waived the immunity provided by the Workers Compensation Act.

A year later Renaissance moved to set aside the default judgment due to a lack of subject matter jurisdiction and made the argument that they actually did have workers compensation coverage when Vences suffered his injury. Renaissance also argued that the Arkansas Workers Compensation Commission website confirmed that he did indeed have coverage on that day. His conclusion was that the commission should have had exclusive jurisdiction of the case, so it did not trigger the exception to the exclusive remedy rule. The circuit court denied the motion and set the default judgment aside. Renaissance appealed.

The Arkansas Court of Appeals, Division 1, held that the circuit court erred when it found that Renaissance had waived its defense of exclusive remedy. The court of appeals dismissed the argument of the employee that the circuit court had subject-matter jurisdiction in the case because Renaissance did not file an answer to his negligence complaint. The court found that Vences assertion that he was in an employer/employee relationship at the time of the accident, that the accident occurred in the course and scope of employment, and that his employer was negligent, all fall within the exclusive remedy provision of the Act.

The appeals court also found that Vences allegations that Renaissance failed to provide workers compensation benefits should be determined by the commission, noting the evidence that Renaissance introduced that the workers compensation policy was in place at the time of the injury.

Arkansas Rule of Civil Procedure states that a party that responds to a complaint must proffer an affirmative defense and since Renaissance did not file an answer and was unable to introduce an answer as evidence, that left the defense of a judgment based on a lack of subject matter jurisdiction on the table. So, the appeals court held that the circuit court erred in finding that Renaissance waived the exclusive remedy defense.

Editors Note: Subject matter jurisdiction is the jurisdiction of a court to hear a certain case, or a case pertaining to a certain subject. Subject matter jurisdiction is determined on the pleadings, the complaint, answer, or cross-complaint. Arkansas caselaw clearly states that claims of an employer's negligence which result in physical injury are covered exclusively by the Workers Compensation Act, and fall within the exclusive jurisdiction of the Workers Compensation Commission.