The Enid News and Eagle, Enid, OK

October 10, 2011

Hearing is delayed in Kremlin workers’ comp insurance case

By Phyllis Zorn, Staff Writer
Enid News and Eagle

ENID — At the request of lawyers for Zaloudek Grain Co., an administrative hearing for a $750 fine imposed for not having workers’ compensation insurance when two teens were injured on the job has been postponed.

The fine was imposed by the Oklahoma Department of Labor because Zaloudek Grain Co. was uninsured when Bryce Gannon and Tyler Zander, both 17, lost legs in the grain auger at the Kremlin elevator on Aug. 4. Labor officials determined the company obtained insurance five days after the accident.

Don Schooler, general counsel for the state Labor Department, said the hearing has been postponed until Nov. 1.

“Their concern is in having the matter heard here before hearings in district court,” Schooler said.

Zaloudek is suing CompSource Oklahoma — its workers’ compensation insurer — claiming the insurance company acted in bad faith and breached its contract.

According to the petition, filed Aug. 25 in Oklahoma County District Court, Zaloudek seeks “well in excess of $1 million” for breach of contract. That amount includes medical expenses for Bryce and Tyler as well as Zaloudek’s legal expenses. Additionally, Zaloudek seeks punitive damages of more than $75,000 from CompSource for “bad faith conduct.”

CompSource denies any wrongdoing in canceling Zaloudek’s insurance on March 3. According to CompSource, the insurance company in February sent Zaloudek notice the policy would be canceled if audit information requested by the insurance company was not received.

Zaloudek officials said they believed their coverage had been reinstated after they sent the requested information to CompSource and did not learn differently until July. The grain company said it contacted CompSource in July, which sent an application Zaloudek filled out.

Schooler said the Oklahoma County District Court could order labor officials to wait until the lawsuit is resolved before making Zaloudek pay the fine.

“It would be best if these children could have some sort of financial resource for this horrible injury they have suffered,” Schooler said. “I hope by the end of the day, someone does right by these children — whether it’s Zaloudek, CompSource or whomever.”

Stephanie Elwood, media liaison for CompSource, confirmed Zaloudek’s workers’ compensation policy currently is in effect.

Neither Richard Hornbeek, the Oklahoma lawyer for Zaloudek, nor James Johnson, the Tulsa lawyer representing CompSource, returned a call Monday.