Oklahoma Appeals Court Finds against Grain Company in $12M Workers’ Comp Case


Posted by: Chris

On August 4, 2011, two 17-year-old employees required amputations and extensive surgeries after their legs were caught in a grain auger while working for Zaloudek Grain Co., now known as Enterprise Grain. Zaloudek Grain settled with the two victims in a negligence lawsuit in 2013, but six years later, the grain company is still involved in a lawsuit against their workers’ comp insurance provider, CompSource Oklahoma.

CompSource claims that the grain company’s policy lapsed in early 2011 after they failed to report audit information. The company was first notified in January about the missing audit information and again in February, until the policy officially lapsed in March 2011. A month later, Zaloudek contacted CompSource auditor Carl Doss to fix the issue and have the policy reinstated. After the audit was complete, Doss made a comment to Zaloudek manager Mike Parrish that the grain company was “good to go.” Parrish interpreted this as meaning that the insurance policy had been reinstated, however Doss claims he only meant that the audit process was complete.

Due to this misunderstanding, Zaloudek was under the impression that they were covered by CompSource, despite the fact that they continued to receive notices in the mail about outstanding payments. It was not until July that Zaloudek management discovered they did not have workers’ compensation insurance. Management immediately requested paperwork to have the policy reinstated. Parrish included a Power of Attorney form within the application that gave him the legal right to sign on behalf of the grain company’s owners.

The application was not put in the mail until August 4, 2011, which was the same day the accident took place. The next day, CompSource notified Zaloudek that the application was rejected because it was not signed by the owners, even though the Power of Attorney form was included. Therefore, Zaloudek was not covered by CompSource on the day of the accident.

Initially, a court ruled that Zaloudek had every right to believe that coverage would begin on the day that they completed the application, and ordered CompSource to pay $12 million to Zaloudek. However, an appeals court overturned this decision. The court stated that even if the application was accepted, CompSource’s company policy states that coverage would not have started until the next business day. The appeals court agreed that CompSource should not have to pay anything to Zaloudek because they were not policyholders at the time of the accident.

This case illustrates how important it is for employers to have workers’ compensation insurance. Have you been injured in the workplace? If so, you will need an experienced attorney to help you recover the benefits you deserve. Call Armstrong & Vaught, P.L.C.  today at 918-582-2500, or toll free at (800) 722-8880, or contact us online for a free consultation.