Travelers Property Casualty Insurance Company of America, A Connecticut Stock Insurance Company Plaintiff- Appellant
Jet Midwest Technik, Inc., A Missouri Corporation Defendant-Appellee
Submitted: April 11, 2018
from United States District Court for the Western District of
Missouri - St. Joseph
COLLOTON, SHEPHERD, and STRAS, Circuit Judges.
case involves a workers' compensation insurance carrier
that brought a breach-of-contract action to recover unpaid
insurance premiums. The district court dismissed the action,
concluding that the insurer, before bringing a collection
suit, first had to exhaust its administrative remedies.
Because we conclude that the administrative procedures
available to the insurer were too informal to require
exhaustion under then-applicable Missouri law, we reverse and
remand for further proceedings.
benefit workers injured on the job, Missouri requires
employers to purchase workers' compensation insurance.
See Mo. Rev. Stat. § 287.060. Some employers
cannot buy insurance on the open market, so Missouri
supplements the open market with a residual market. See
id. § 287.896. The Missouri Department of Insurance
establishes the rules and rates for the residual market.
See id. It assigns code classifications to different
types of work depending on the potential risk of injury.
Cf. Travelers Indem. Co. v. Int'l Nutrition,
Inc., 734 N.W.2d 719, 722 (Neb. 2007) (describing
Nebraska's similar assigned-risk program). The assignment
of these codes is the key component in determining an
employer buys a policy on the residual market, it pays an
estimated premium upfront. The insurer then calculates the
exact amount due from the employer at the end of the term
based on the amount of work performed by employees in each of
the various code classifications. If the employer's
payroll involves more high-risk work than initially
estimated, its actual premium at the end of the term will be
higher than its estimated premium, so it will owe more to the
insurer. When an insurer and employer disagree about the
classification of work, they can resolve their dispute before
an administrative panel, Missouri's Workers'
Compensation Determinations Review Board (the
"Board"), which has the power to modify
code-classification determinations. See Mo. Rev.
Stat. § 287.335(2). Missouri law additionally provides a
right to appeal the Board's decision to the Director of
the Missouri Department of Insurance (the
"Director"), who may also correct erroneous
code-classification determinations. Id.
dispute involves a workers' compensation policy sold by
Travelers Property Casualty Insurance Company of America to
Jet Midwest Technik, Inc. on Missouri's residual market.
During the policy term, Travelers disputed some of the code
classifications in Jet Midwest's policy application and
demanded a higher premium. It did so based on an audit that
allegedly revealed that Jet Midwest, which paints
commercial-sized aircraft, had failed to accurately report
some of its work. In particular, Travelers believed that Jet
Midwest underreported the time its employees spent painting
metal structures over two stories in height, which is in a
higher risk category than the code classification assigned to
the work by Jet Midwest.
Midwest refused to pay the higher premium, prompting
Travelers to cancel the policy. Travelers then issued a final
bill, which Jet Midwest has paid only in part. Jet Midwest
has vigorously disputed its responsibility for the remainder
and filed an application with the Board to resolve the
parties' code-classification dispute. The Board agreed
with Travelers that Jet Midwest had misclassified some of the
tasks it had workers perform, but not to the extent that
Travelers had thought. The Board advised the parties that
they could appeal the decision, but neither did so.
instead filed this lawsuit against Jet Midwest, invoking
diversity jurisdiction and alleging state-law claims for
breach of contract and account stated. Following discovery,
the parties filed cross-motions for summary judgment.
Travelers requested summary judgment on its
breach-of-contract claim. Jet Midwest sought partial summary
judgment precluding Travelers from relitigating the issues
that the Board had already decided. The district court, for
its part, adopted a different approach and dismissed the case
based on Travelers' failure to fully exhaust its
administrative remedies. It then denied the parties'
competing summary-judgment motions as moot. Travelers argues
on appeal that it had no obligation to exhaust its
issue here is the scope of Missouri's exhaustion
requirement. Missouri law requires parties to exhaust their
administrative remedies in certain types of cases. See
Green v. City of St. Louis, 870 S.W.2d 794, 796 (Mo.
1994). To fully exhaust, a party must complete "every
step" of the administrative process. See Parker v.
City of Saint Joseph, 167 S.W.3d 219, 221 (Mo.Ct.App.
2005). Failing to do so may preclude "judicial review of
the [agency's] determination," although
"nothing prevents" a party from raising any other
claims or defenses that the agency did not resolve. Impey
v. Mo. Ethics Comm'n, 442 S.W.3d 42, 48 (Mo. 2014).
recently, the applicability of the exhaustion requirement
depended on whether a case was "contested" or
"non-contested." These terms do not mean what they
seem. They describe the degree of formality of the
administrative procedures available, not the vigor of the
parties' disagreement or the extent to which they have
actively litigated the dispute. See City of Valley Park
v. Armstrong, 273 S.W.3d 504, 506 (Mo. 2009). As a
class, contested cases provide the parties with "a
measure of procedural formality," including "notice
of the issues; oral evidence taken upon oath or affirmation
and the cross-examination of witnesses; the making of a
record; adherence to evidentiary rules; and written decisions
including findings of fact and conclusions of law."
Id. at 507 (internal quotation marks and citations
omitted); see also Mo. Rev. Stat. § 536.010(4)
(requiring a "hearing" for a case to qualify as
contested). The same types of procedural protections are not
available in non-contested cases; there is often no hearing
or formal presentation of evidence and ...