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2009-SC-000015-DG BLACKSTONE MINING COMPANY ON REVIEW FROM COURT OF APPEALS CASE NO . 2007-CA-001 -610-MR PIKE CIRCUIT COURT NO. 97-CI-00684 TRAVELERS INSURANCE COMPANY OPINION OF THE COURT BY JUSTICE VENTERS REVERSING Blackstone Mining Company, Inc ., appeals from an opinion of the Court of Appeals reversing the summary judgment granted to Blackstone by the Pike Circuit Court. Appellee, Travelers Insurance Company, brought suit in the Pike Circuit Court alleging that Blackstone had underpaid premiums under two separate workers' compensation policies issued by Travelers. Blackstone counterclaimed, alleging that it had overpaid the premiums due under the policies and was entitled to a refund. As further explained below, we conclude that the Court of Appeals incorrectly applied well-established burden of proof principles applicable to summary judgment motions, and that the circuit court had correctly determined that Blackstone Mining was entitled to summary judgment . We APPELLEE APPELLANT

accordingly reverse the Court of Appeals, and reinstate the summary judgment entered in favor of Blackstone. FACTUAL AND PROCEDURAL BACKGROUND In the light most favorable to Travelers, the facts are as follows . Blackstone is in the business of providing above-ground supervisory personnel to work at coal mines operated by third-parties. Travelers is an insurance company which, among other things, underwrites workers' compensation insurance policies . Blackstone purchased two workers' compensation insurance policies from Travelers. The first policy period began on August 29, 1992, and ended on August 28, 1993 . The second policy period began on August 29, 1993, and ended on August 28, 1994 . At various times during the periods of coverage, twenty-three of Blackstone's employees executed Department of Workers' Claims forms' rejecting workers' compensation coverage as permitted under KRS 342 .395 . In lieu of workers' compensation coverage, Blackstone provided the employees with a policy of disability and life insurance underwritten by Massachusetts Mutual Life Insurance Company (Mass Mutual) . Because the Mass Mutual policies were available under a plan designated only for "key employees," each of the relevant twenty-three employees was given a formal title as a corporate officer of Blackstone for the sole purpose of qualifying for coverage. 1 Department of Workers Claims Form 4 . The form includes the language "I Hereby Notify My Employer . . . that I do not accept, and do not want to work under the provisions of Kentucky Revised Statutes Chapter 342, commonly known as the Workers' Compensation Act of Kentucky." 2

After the conclusion of the second policy period, Travelers audited Blackstone's employment records for the purpose of adjusting its premium on the workers' compensation policies . Based upon its audit, Travelers concluded that fourteen of Blackstone's employees, all of whom had rejected workers' compensation and enrolled in the Mass Mutual program, had been omitted from the Travelers's policies for each of the periods, and, consequently, no premiums had been paid for their coverage. Travelers believed that the decision of those employees to opt out of their workers' compensation policy was not in compliance with KRS Chapter 342, and that during the applicable period, Travelers was liable for workers' compensation benefits payable to those employees had any of them sustained a work-related injury. 2 Travelers therefore argued that it was entitled to collect premiums based on its potential liability to these fourteen employees . By Travelers's calculation, Blackstone owed an additional $474,870 .00 in unpaid premiums. Blackstone refused Travelers's demand for payment of that amount. On May 2, 1997, Travelers filed a complaint in Pike Circuit Court seeking to recover the additional premiums . In its complaint, Travelers acknowledged that each of the fourteen employees had executed a Form 4 rejection notice and filed it with the Department of Workers' Claims pursuant to KRS 342 .395 to reject workers' compensation coverage . Travelers alleged, however, that the rejections were not voluntarily made by the employees as required by KRS 2 No claims for workers compensation benefits were made by any of the employees who had rejected coverage . Nor did any of the employees make a claim for benefits under the Mass Mutual disability policy. There is nothing in the record to suggest that any of the affected employees were injured during the relevant time period.

342 .395(1), and were therefore invalid . No factual basis for that allegation was stated in the complaint . In response, Blackstone filed a counter-claim alleging that twenty-three, rather than fourteen, of its employees had filed valid rejection notices and, consequently, it had overpaid workers' compensation premiums on the two policies in the amount of $120,361 .00. Blackstone averred that each of the twenty-three employees had voluntarily rejected workers' compensation coverage in favor of the disability insurance policy issued by Mass Mutual. The case proceeded to discovery during which Blackstone's president, Raymond Strawser, and Blackstone employee Harold Dean Thacker were deposed. Strawser testified that his employees were given an unqualified choice of whether to remain covered under workers' compensation, or whether to enroll in the Mass Mutual policy . Thacker testified that he evaluated the two options, and voluntarily chose Mass Mutual as the better plan . No deposition or other evidence from any of the other twenty-two employees whose rejection of workers' compensation protection was at issue was presented . However, each Form 4 rejection notice signed by one of the twenty-three Blackstone Mining employees was filed in the record, along with the business record of the Department of Workers' Claims verifying its receipt of the rejections forms . 3 With discovery thereby completed, the parties filed cross-motions for summary judgment. On August 23, 2004, the trial court entered an order granting partial summary judgment in favor of Blackstone . The court 3 The Department's record also identified eight Blackstone employees who had not filed rejection notices .

concluded that "no genuine issue of material fact exists that 23 of [Blackstone's] employees voluntarily rejected workers' compensation coverage ." The court denied summary judgment on the question of damages and scheduled further proceedings to resolve that issue . In lieu of a trial, it was agreed that each party would submit to the trial court its proposed findings of fact indicating how it believed the court should calculate the alleged overpayment or underpayment of Blackstone's workers' compensation premium. Embedded within this calculation was the additional issue of whether the Mass Mutual policy satisfied Blackstone's duty to provide coverage for pneumoconiosis (black lung) pursuant to the Federal Black Lung Benefits Act, 30 U .S .C .

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