$12 Million Dollar Workers' Comp Case Reversed in OK

Tulsa, OK (WorkersCompensation.com) - A $12 million dollar workers’ compensation award decision has been reversed for two injured workers who lost their legs in a graining accident.

Zaloudek Grain Company v. CompSource began in 2011 when the Oklahoma-based grain company filed a lawsuit against their workers’ compensation insurer for unrightfully denying compensation to 17-year-olds Bryce Gannon and Tyler Zander, whose legs were lost while using a drill for boring holes.

CompSource’s defense in the matter was that the grain company failed to comply with annual audit information needed for CompSource to price premiums, which resulted in cancellation of the policy. The decision was based on paperwork wrongfully filled out by then Zaloudek manager Mike Parrish, who did not have the application for reinsurance correctly signed by the owners.

“The manager in April 2011 worked with CompSource auditor Carl Doss to correct the problem, the records stated. Parrish testified Doss told him he was ‘good to go’ in April 2011. Doss testified that if he said that to Parrish, he meant only that the required audit was complete and that Zaloudek management still needed to contact underwriting to gain a new policy, according to the court records,” NewsOk reported.

A Reinsurance Law Blog by Stauffer & Nathan, out of Tulsa, reported on the case in 2012, and how four months after the cancellation of the policy, “Zaloudek sent in an application and a check for insurance. A few days after that, two workers were seriously injured in Zaloudek’s grain auger,” according to the blog. The blog’s author hadn’t returned calls and emails by press time. 

“When CompSource said there was no coverage, Zaloudek sued, claiming that CompSource lacked legal justification for terminating its policy and requested orders to establish there was no lapse in coverage and requiring CompSource to provide coverage for its two injured employees,” according to the blog. The grain company won the case, which was immediately appealed by CompSource Oklahoma counsel James Johnson.

Five years later on Friday, June 2, Judge Barbara Swinton reversed the decision, saying “The trial court's judgment against CompSource... is against the clear weight of the evidence, and we therefore reverse," according to a NewsOK report. 

"Regardless of whether this conclusion is supported by the record, it ignores the undisputed evidence that CompSource's policies provided that once an application was received and accepted, coverage would begin at 12:01 a.m. the next day," wrote the court, adding, "Parrish mailed the application on the day of the accident and therefore under no circumstances could the policy have been effective that day.”

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