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Digital EditionKentucky Supreme Court Rules Last Exposure Rule Binds Insurers in Workers’ Comp Cases
The Supreme Court of Kentucky has issued a decisive ruling on insurer liability in long-tail workers’ compensation claims, affirming that responsibility follows the statutorily defined “last date of injurious exposure,” even when that date is determined late in a long-running legal battle.
In a case with significant implications for carriers handling occupational disease claims, the court held Encova Mutual Insurance Group liable for a mesothelioma claim, despite the fact that another insurer, Kentucky Employers’ Mutual Insurance (KEMI), had defended the case for years. The Oct. 23 decision in Encova Mutual Insurance Group vs. Hall reinforces the principle that statutory liability trumps procedural arguments about timeliness and lack of direct participation in litigation.
The dispute originated from a workers’ compensation claim filed in 2015 by Roger Hall, a former teacher who developed mesothelioma from asbestos exposure at a high school. Hall initially listed his last exposure as 2003, the year he retired from full-time teaching, and named KEMI as the employer’s workers’ compensation insurance carrier. KEMI proceeded to defend the claim. However, years into the litigation, an Administrative Law Judge (ALJ) ultimately determined that Hall’s last injurious exposure actually occurred on his final day as a substitute teacher in April 2014. This factual finding was critical, as the employer, Letcher County Board of Education, was insured by Encova in 2014, not KEMI.
This change in the exposure date triggered a new dispute over which carrier was on the risk. Encova argued forcefully that it should not be held liable. It contended that KEMI had waited too long to raise the coverage issue, effectively waiving the right to shift responsibility. Encova also asserted that being brought into the case after years of proceedings, in which it had no opportunity to participate in discovery or defense strategy, was a violation of its due process rights.
In contrast, KEMI maintained that Kentucky law is unambiguous: the insurer providing coverage on the last date of injurious exposure is solely liable. KEMI argued it had moved to certify the correct carrier at the first procedurally appropriate moment after the exposure date was finalized and the case was remanded to the ALJ.
In its analysis, the Kentucky Supreme Court focused on the plain language of the Kentucky Workers’ Compensation Act. The court highlighted the “last exposure rule,” a statutory mandate that assigns liability exclusively to the employer and its insurance carrier at the time of the last injurious exposure. The ALJ’s finding that this date was in 2014 was therefore determinative.
The court dismissed Encova’s due process and notice arguments, explaining that the Act legally binds an insurer to its insured. “These provisions unequivocally bind the insurer to the acts and knowledge of its insured, foreclosing any defense based on defective or delayed notice,” the court wrote. It concluded that Encova’s liability arose from its own contractual and statutory obligations, which were triggered the moment the last exposure date fell within its policy period.
The court ultimately affirmed the Court of Appeals’ decision, holding Encova responsible for paying Hall’s benefits. The case was remanded to the Workers’ Compensation Board with instructions to formally certify Encova as the liable carrier.
View the full decision here. &
