Opinion
112,760.
08-14-2015
Leticia MERA–HERNANDEZ, Appellee, v. U.S.D. 233, Appellant.
Kip A. Kubin, of Bottaro, Kubin & Yocum, P.C., of Leawood, for appellant. C. Albert Herdoiza, of Kansas City, and Gary P. Kessler, of Kessler Law Offices, Inc., of Kansas City, for appellee.
Kip A. Kubin, of Bottaro, Kubin & Yocum, P.C., of Leawood, for appellant.
C. Albert Herdoiza, of Kansas City, and Gary P. Kessler, of Kessler Law Offices, Inc., of Kansas City, for appellee.
Before SCHROEDER, P.J., GREEN, J., and JOHNSON, S.J.
MEMORANDUM OPINION
PER CURIAM.
Unified School District No. 233 (U.S.D.233) appeals from the Workers Compensation Board's order awarding Leticia Mera–Hernandez workers compensation benefits for a back injury she suffered on the job March 1, 2012. U.S.D. 233 hired Mera–Hernandez in 2009. During the hiring process, Mera–Hernandez gave U.S.D. 233 a false name and other false personal information. After her injury she made a claim for compensation in her true name. U.S.D. 233 defended, arguing that Mera–Hernandez' misrepresentations fraudulently induced her hiring, any resulting employment contract was void ab initio, and she therefore was not an employee covered by workers compensation at the time of her injury. The Board awarded Mera–Hernandez compensation. Because the Board did not err in making that award, we affirm.
Factual and Procedural Background
Mera–Hernandez obtained her employment as a custodian for U.S.D. 233 in 2009. On her job application Mera–Hernandez gave U.S.D. 233 an assumed name, Hilda Reina, and a false Social Security number. Once she was hired she signed a Form I–9 Employment Eligibility Verification that contained the same false information. She also represented on that form that she was a permanent resident alien and gave a resident alien number, but that information, too, was false. Mera–Hernandez testified that she was an unauthorized worker at the time of her hiring and knew she would not be hired if she provided truthful biographical information.
Nearly 3 years after her hiring, Mera–Hernandez suffered a back injury on the job, a fact not in dispute in this appeal. U.S.D. 233 initially paid benefits and provided treatment. Mera–Hernandez was then released to return to work. She attempted to return, but believed she needed more treatment. At that time U.S.D. 233 denied further benefits. Mera–Hernandez obtained counsel and filed an application for hearing on her claim for compensation using her true name.
U.S.D. 233 defended claiming that Mera–Hernandez, by providing false information, had fraudulently induced U.S.D. 233 to hire her. It argued that any purported employment contract between them was void ab initio, she was not an employee, and she was not entitled to compensation. On May 14, 2014, the administrative law judge (ALJ) entered an award of compensation to Mera–Hernandez in which the ALJ determined that an employment relationship did exist between the parties. U.S.D. 233 appealed that determination, and other issues not relevant here, to the Board. On October 14, 2014, the Board affirmed the ALJ's decision that Mera–Hernandez was an employee of U.S.D. 233 and awarded her workers compensation benefits. U.S.D. 233 has timely appealed from that decision.
Analysis
Final orders of the Workers Compensation Board are subject to review under the Kansas Judicial Review Act, K.S.A. 77–601 et seq. , as amended. K.S.A.2014 Supp. 44–556(a). The facts are not in dispute, and neither party has asserted a challenge under K.S.A.2014 Supp. 77–621(c)(7) to any of the Board's determinations of fact. U.S.D. 233 specifically invokes K.S.A.2014 Supp. 77–621(c)(4) as the basis for our jurisdiction to review the Board's Order. Under that subsection, we can grant U.S.D. 233 relief if we determine that the Board erroneously interpreted or applied the law. Our review over such a question of law is unlimited. We owe no deference to the Board's interpretation or construction of the law. Messner v. Continental Plastic Containers, 48 Kan.App.2d 731, 741, 298 P.3d 371, rev. denied 297 Kan. 1246 (2013). “The burden of proving the invalidity of agency action is on the party asserting invalidity .” K.S.A.2014 Supp. 77–621(a)(1).
The Board determined that Mera–Hernandez was in fact U.S.D. 233's employee at the time of her injury. On appeal, U.S.D. 233 reprises the assertions it made to the Board: (1) that Mera–Hernandez fraudulently induced it to hire her by giving it false biographical information; and (2) such fraudulent inducement renders its agreement to employ her void ab initio. U.S.D. 233 argues that, unc er its analysis, the immigration status of a claimant is irrelevant. The rule it suggests would render any “employment contract a ity” if the claimant had made a “know ng misrepresentation” in the hiring process. U.S.D. 233 does not contend in this appeal that it can avoid liability under the Board's order for any other reason. In other words, if the hiring was not void ab initio, U.S.D. 233 owes Mera–Hernandez the compensation she was awarded because she was after all an employee as defined in K.S.A.2014 Supp. 44–508(b).
We note that the Workers Compensation Act is “substantial, complete, and exclusive, covering every phase of the right to compensation and of the procedure for obtaining it.” Acosta v. National Beef Packing Co., 273 Kan. 385, 396, 44 P.3d 330 (2002). We, as did the Board, have scrutinized the Act and find nothing that renders a hiring void ab initio when the employee has given a false name or biographical information during the hiring process.
Pursuant to K.S.A.2014 Supp. 44–508(b), “any person who has entered into the employment of ... an employer” is an “employee” covered by workers compensation. Mera–Hernandez, clearly qualifying as any person, did enter into the employment of U .S.D. 233. She did the work she was directed to do by U.S.D. 233, and U.S.D. 233 paid her for that work, albeit under a different name. Because Mera–Hernandez fits the broad definition of an employee under the Act, she is entitled to its coverage. That status as an employee alone trumps any defect U.S.D. 233 asserts regarding her original hiring.
Nevertheless, we will consider U.S.D. 233's void ab initio argument that fraud in the inducement of a hiring tmmps the Act, rather than the vice versa we just indicated.
Our Supreme Court has frequently examined claims of fraudulent inducement. Recently, in Stechschulte v. Jennings, 297 Kan. 2, 19, 298 P.3d 1083 (2013), the court reiterated the elements of fraudulent inducement:
“(1) The defendant made false representations as a statement of existing and material fact; (2) the defendant knew the representations to be false or made them recklessly without knowledge concerning them; (3) the defendant made the representations intentionally for the purpose of inducing another party to act upon them; (4) the other party reasonably relied and acted upon the representations; (5) the other party sustained damages by relying upon the representations. [Citations omitted.]”
The Board concluded that U.S.D. 233 had failed to demonstrate “damages, injury, or detriment” from its reliance on the false information Mera–Hernandez provided. The Board held in fact that “[b]oth parties benefitted from the employment relationship.” We note that, while U.S.D. 233 briefs the first four elements of fraudulent inducement, it does not brief a claim that the damage element is even present here. It only complains that the Board erred by ignoring uncontroverted evidence that U.S.D. 233 relied on MeraHernandez' false information in hiring her. This misses the point the Board was making: A fraudulent inducement claim requires more than reliance on a false statement, it requires a showing that the induced party was damaged or injured. If there is no damage or injury, there is no relief for fraudulent inducement. The Board did not disregard the reliance evidence. It found from uncontroverted facts, including that reliance evidence, that U.S.D. 233 “presented insufficient evidence” to show injury from Mera–Hernandez' misrepresentations. The Board's conclusion of law that U.S.D. 233's fraudulent inducement claim failed was not erroneous.
We recognize that in In re Doe, 277 Kan. 795, 801–04, 807, 90 P.3d 940 (2004), the Kansas Supreme Court determined that an employee had committed fraudulent and abusive acts in violation of K .S.A. 44–5,120(d)(4)(A) and (B) (Furse 1993) by making false statements about and concealing her true identity during her pursuit of her workers compensation claim. The claimant was an unauthorized worker. She used false information regarding her name and Social Security number to be hired. However, the fraudulent and abusive acts she committed in violation of the statute were that she lied about her identity and history under oath as she pursued her claim to obtain compensation. Those acts were material in that they compromised the employer's ability to discover preexisting impairments and work history. The violations there subjected the worker, in a separate administrative proceeding, to civil fines for her fraudulent and abusive acts.
The In re Doe court limited its ruling only to the false statements, misrepresentations, and concealments the worker made during her workers compensation proceedings. U.S.D. 233 does not claim that Mera–Hernandez committed any fraudulent or abusive practices during the pursuit of her compensation claim. She made and pursued that claim under her true name. Doe does not support U.S.D. 233's contention that contractual fraudulent inducement occurred here or its void ab initio argument.
We also find that the Board properly discounted the persuasiveness of U.S.D. 233's authorities supporting its void ab initio assertion. U.S.D. 233 relies on two cases: Waxse v. Reserve Life Ins. Co., 248 Kan. 582, 809 P.2d 533 (1991), and Chute v. Old American Ins. Co., 6 Kan.App.2d 412, 629 P.2d 734 (1981), overruled in part on other grounds by Harper v. Prudential Ins. Co. of Am., 233 Kan. 358, 662 P.2d 1264 (1983).
In Waxse, the estate of a deceased policyholder sued an insurer for refusing to pay medical expenses under the contract. The insurer argued on summary judgment, successfully in the district court, that it had properly rescinded the contract due to material misrepresentations made by the decedent regarding his health history on the application for insurance. The power to rescind was a part of the insurance contract. The Supreme Court reversed, finding that any health history omissions were made in good faith, and granted summary judgment to the estate. 248 Kan. at 586–88. This case is not precedent for a finding that a fraudulently induced contract is void ab initio.
In Chute, a panel of this court held that an insurer is relieved of all liability under a life insurance policy if it can prove that the policy was procured by a beneficiary who at the time the beneficiary secured the insurance intended to murder the insured. 6 Kan.App.2d at 417. The beneficiary who intended to kill the insured committed fraud by taking out the life insurance policy, and therefore the policy was void ab initio. The case does not stand for the far broader proposition advanced by U.S.D. 233, i.e., that “where there is fraud in the inducement of a contract, then the contract is void ab initio. ” The court in Chute pointed out that the general rule is that an insurer pays the policy to the decedent's estate when the beneficiary has killed the decedent. 6 Kan.App.2d at 415–16. Thus, voiding a policy ab initio only follows when the beneficiary has fraudulently obtained the insurance while intending to rill and then killing the insured. Again, Chute is of no help to U.S.D. 233's contention.
These cases are also readily distinguishable from our issue, even if they supported the void ab initio proposition. They concern the specialized area of insurance law rather than employment law as construed under the terms of the Workers Compensation Act. Neither of these cases supports U.S.D. 233's argument that if Mera–Hernandez committed fraud in the inducement then the employment contract under the provisions of the Act is rendered void ab initio.
Even though Mera–Hernandez made fraudulent misrepresentations, we have found no authority that states that those misrepresentations automatically void her employment. We note that, generally, a party who has been induced into a contract by fraud has the option of disaffirming the contract and suing for rescission to equitably restore the parties to their precontract positions or affirming he contract and suing for damages. See Nordstrom v. Miller, 227 Kan. 59, 68–69, 605 P.2d 545 (1980).
We agree with the Board's decision that Mera–Hernandez was U.S.D. 233's employee at the time of her accident. U.S.D. 233 has failed to persuade us that Mera–Hernandez' misrepresentations rendered the parties' employment relationship void ab initio.
Affirmed.