Opinion
W.C. Nos. 4-447-171 4-449-330
January 28, 2002
FINAL ORDER
Terra Firma d/b/a Resource One L.L.C. (Terra), through its insurer Zurich American Insurance Company (collectively the Zurich respondents), and Rocky Mountain Panel L.L.C. (RMP), Sovereign Homes of Colorado L.L.C. (Sovereign Homes), Sovereign Companies L.L.C., and Settlers Chase L.L.C. seek review of an order of Administrative Law Judge Harr (ALJ) which determined the claimant suffered a compensable injury and held Zurich American Insurance Company (Zurich) solely responsible for the injury. We reverse the contested portion of the order.
On December 27, 1999, the claimant was injured while working as a framing carpenter for Hipolito Gonzales d/b/a H G. Framers (H G). At the time of the injury, H G was a subcontractor hired by RMP and Terra to install trusses at the Settlers Chase housing project. Sovereign Homes, whose parent company was Sovereign Companies L.L.C., was the general contractor.
It is undisputed that H G procured a workers' compensation insurance policy from the Colorado Compensation Insurance Authority d/b/a Pinnacol Assurance (CCIA) effective July 28, 1999 to August 1, 2000. However, the ALJ found CCIA effectively canceled the policy on November 10, 1999, for nonpayment of periodic premiums. Although the CCIA reinstated the policy in January 2000, the ALJ found the reinstated policy was void ab initio. Consequently, the ALJ determined H G was uninsured at the time of the claimant's injury.
The ALJ also determined Terra and Sovereign were the claimant's statutory employers who were insured by Zurich. Therefore, the ALJ held Zurich solely liable for the temporary disability and medical benefits awarded on account of the claimant's injury.
On appeal, the Zurich respondents contend, inter alia, the ALJ erroneously determined H G's workers' compensation insurance policy was effectively canceled prior to the industrial injury. The Zurich respondents contend CCIA failed to present sufficient evidence it sent a copy of the notice of intent to cancel the policy to the Division of Workers' Compensation (Division), as required by § 8-45-113(1)(b), C.R.S. 2001.
The CCIA contends the Zurich respondents lack standing to challenge the sufficiency of the insurance cancellation. Alternatively, the CCIA contends the Zurich respondents waived this argument. We reject the CCIA's contentions and agree with the Zurich respondents that the ALJ erroneously dismissed the claim against the CCIA.
The claimant filed the workers' compensation claim against the CCIA as H G's worker's compensation insurer. The CCIA defended the claim on grounds H G's insurance coverage lapsed prior to the industrial injury, and the subsequent reinstatement was void ab initio. Contrary to the CCIA's contention, it was their burden to prove that the initial policy was effectively canceled prior to the injury. See Omni Development Corp. v. Atlas Assurance Co. of America, 956 P.2d 665 (Colo.App. 1998), citing Butkovich v. Industrial Commission, 713 P.2d 940 (Colo.App. 1985). Consequently, the issue could not be waived by the Zurich respondents.
Furthermore, the record does not support the CCIA's contention that the Zurich respondents stipulated the initial policy was effectively canceled by the CCIA. The Zurich respondents' Response to the Application for Hearing listed the "Application of § 8-45-113 C.R.S." as an issue for adjudication.
Section 8-45-113(1)(a), C.R.S. 2001, provides:
"Before canceling a policy of coverage, the Colorado compensation insurance authority shall notify the employer for whom the authority issued the policy that the authority intends to cancel the policy. Such notice shall be sent by certified mail at least thirty days before the effective date of the cancellation of the policy, and the authority shall forward a copy of the notice to the division."
Section 8-45-113(1)(b)(IV) further provides that "[n]otice may be sent less than thirty days before the effective date of the cancellation of the policy if cancellation is based on" nonpayment of a periodic premium.
It follows that by listing the application of § 8-45-113 as an issue, the Zurich respondents disputed the effectiveness of the CCIA's attempt to cancel H G's workers' compensation insurance prior to the industrial injury. In addition, the Zurich respondents' trial brief explicitly alleged H G was insured for workers' compensation by CCIA at the time of the injury. (Position Statement, September 8, 2000, p. 3).
Although the opening statements of the issues were unclear in this respect, we note that when the CCIA's attorney moved for a directed verdict dismissing the CCIA, the Zurich respondents' attorney argued the CCIA had failed to meet its burden to prove the initial policy was canceled. (Tr. September 11, 2000, p. 32). The CCIA's attorney did not express surprise at the Zurich respondents' argument or request a continuance. See Robbolino v. Fischer-White Contractors, 738 P.2d 70 (Colo.App. 1987) (failure to object was waiver of objection to litigation of issue). Rather, the CCIA's attorney argued there was sufficient evidence presented to prove H G's insurance coverage was canceled prior to the industrial injury. (Tr. September 11, 2000, p. 41). Moreover, the ALJ apparently considered cancellation of the initial policy a disputed issue by entering specific findings of fact on the issue. (Finding of Fact 31; Conclusions of Law A).
Alternatively, the CCIA contends they sustained their burden to prove the policy was canceled in compliance with § 8-45-113 because the statute does not require the insurer forward a copy of the notice of intent to cancel the policy to the Division where the policy is canceled for failure to pay a periodic premium. Again, we disagree.
The rules of statutory construction require that statutes be construed to give effect to the legislative purpose. BCW Enterprises, Ltd. v. Industrial Claim Appeals Office, 964 P.2d 533 (Colo.App. 1997). To discern the legislative intent, we must first look to the language in the statute, giving words and phrases their plain and ordinary meaning. Bestway Concrete v. Industrial Claim Appeals Office, 984 P.2d 680 (Colo.App. 1999). Christie v. Coors Transportation Co., 933 P.2d 1330 (Colo. 1997). If the statutory language is clear and unambiguous, the statute must be applied as written. Humane Society of the Pikes Peak Region v. Industrial Claim Appeals Office, 26 P.3d 546(Colo.App. 2001). When two or more statutes address the same issue, they should be construed in a manner that gives consistent, harmonious, and sensible effect to all of its parts. Kinder v. Industrial Claim Appeals Office, 976 P.2d 295 (Colo.App. 1999); PDM Molding, Inc. v. Stanberg, 898 P.2d 542 (Colo. 1995). Further, a statute should not be construed in a manner that would result in absurd consequences. People v. Haghshenas, ___ P.2d ___ (Colo.App. No. 00CA0436, June 21, 2001).
The notice requirements for cancellation of a workers' compensation insurance policy by the CCIA are contained in § 8-43-113(1). The express language in subsection (1)(b) only reduces the time period for advance notice of the CCIA's intent to cancel a policy from 30 days to 10 days where the cancellation is due to fraud, material misrepresentation, failure to file a wage report or nonpayment of a periodic premium.
Subsection 8-45-113(1)(b) does not separately address or define the recipients to whom notice is to be provided. Moreover, we can think of no rational basis for dispensing with the requirement to notify the Division of cancellations based on fraud, material misrepresentation, failure to file a wage report, or nonpayment of a periodic premium. The Division is required to make efforts to ensure that employers comply with the insurance requirements of § 8-44-101, C.R.S. 2001, et.seq. See § 8-47-111, C.R.S. 2001. We believe the requirement to notify the Division of cancellations was intended, at least in part, to assist the Division in these efforts.
Under these circumstances, the General Assembly must have intended that the remaining provisions of § 8-45-113(1)(a) apply to the cancellations set forth in § 8-45-113(1)(b). See Humane Society of the Pikes Peak Region v. Industrial Claim Appeals Office, supra. (legislating with a broad stroke does not necessarily equate with ambiguity). Consequently, we conclude that even where the policy is canceled for nonpayment of a periodic payment, § 8-45-113 requires the insurer to send a copy of the notice of intent to cancel to the Division.
We also reject the CCIA's contention that the requirement to forward a copy of the cancellation notice to the Division does not render an otherwise valid cancellation ineffective. Section 8-45-113(1)(a) states that the notice of intent to cancel "shall" be sent to both the insured and the Division. The term "shall" refers to a mandatory act. Logan County Hospital v. Slocum, 165 Colo. 232, 438 P.2d 240 (Colo. 1968).
Furthermore, the requirements for cancellation of insurance are generally exacting and strictly construed. A. Larson, Workers' Compensation Law, § 150.03(1) (2000). Where the Workers' Compensation Act requires notice of the pending cancellation be provided to the Division, the cancellation is generally not effective in the absence of notice to the Division. Ibid § 150.03(2); citing In re Armstrong, 47 Mass. App. Ct. 693, 716 N.E.2d 114 (1999) (insurance company failed in attempt to cancel policy for lack of payment by failing to send notice of intended cancellation as specifically required by statute); Lazier v. Zawaski, 92 A.D.2d 689, 460 N.Y.S.2d 186 (1983) (cancellation was held ineffective where there was no credible evidence notice of cancellation filed with workers' compensation board). Thus, we are persuaded that all the requirements of § 8-45-113(1) must be fulfilled to effect the CCIA's cancellation of a workers' compensation insurance policy in Colorado.
Here, the ALJ found on substantial evidence that the CCIA gave H G timely notice by certified mail of its intent to cancel H G's workers' compensation insurance policy. (Finding of Fact 30). However, there is no finding that the CCIA forwarded a copy of the cancellation notice to the Division of Workers' Compensation. Therefore, the ALJ's findings do not support his determination that the insurance cancellation complied with § 8-45-113)(1)(a).
Furthermore, we are unable to locate any evidence in the record which indicates any of the CCIA's cancellation notices were forwarded to the Division. ( See Tr. September 11, 2000, pp. 41; 240). In particular, the record does not support the CCIA assertion that its adjuster, Terry Dorchak, testified she "canceled H g's policy properly." ( See Dorchak depo. June 16, 2000 pp. 3-53; Tr. September 8, 2000, pp. 127-247). Under these circumstances, the evidence is insufficient as a matter of law to support a conclusion that the CCIA effectively canceled H G's insurance policy prior to the industrial injury. Consequently, the ALJ erred in finding H G was uninsured for workers' compensation at the time of the claimant's injury.
Because CCIA was H G's insurer at the time of the injury, the CCIA is solely liable for the claim and the ALJ's order dismissing the CCIA must be set aside. Furthermore, because the direct employer was insured, the identity of the statutory employers is immaterial. Consequently, we do not consider the appellants' remaining arguments in support of their contention the ALJ erroneously held Zurich American Insurance Company liable for the claimant's workers' compensation benefits.
IT IS THEREFORE ORDERED that the ALJ's order dated November 20, 2000, is reversed insofar as it dismissed and denied the claim against CCIA and held Zurich liable for the workers' compensation benefits due on account of the claimant's injury. The CCIA is solely liable for the claimant's injury.
INDUSTRIAL CLAIM APPEALS PANEL
__________________________________ Kathy E. Dean
__________________________________ Dona Halsey
NOTICE
This Order is final unless an action to modify or vacate this Order is commenced in the Colorado Court of Appeals, 2 East 14th Avenue, Denver, CO 80203, by filing a petition for review with the Court, within twenty (20) days after the date this Order is mailed, pursuant to § 8-43-301(10) and § 8-43-307, C.R.S. 2001. The appealing party must serve a copy of the petition upon all other parties, including the Industrial Claim Appeals Office, which may be served by mail at 1515 Arapahoe, Tower 3, Suite 350, Denver, CO 80202.
Copies of this decision were mailed January 28, 2002 to the following parties:
Gumaro Gomez, 9280 Hooker St., Westminster, CO 80031
Hipolito Gonzales d/b/a H G Framing, 1901 Peoria St., #201, Aurora, CO 80010
AGO Builders, Inc., Anthony Osborn, 22296 County Road 150, Agate, CO 80101
Gary Hoover, General Counsel, Rocky Mountain Panel L.L.C. et al, 140 E. 19th Ave., #500, Denver, CO 80203
Kirk Kilpatrick, Terra Firma d/b/a Resource One, L.L.C., 600 Grant St., #500, Denver, CO 80203.
Legal Department, Colorado Compensation Insurance Authority d/b/a Pinnacol Assurance — Interagency Mail
Gayle Trottnow, Zurich American Insurance Company, P. O. Box 370308, Denver, CO 80237
Pepe J. Mendez, Esq., 700 Broadway, #1101, Denver, CO 80203 (For Claimant)
W. Berkeley Mann, Jr., Esq., P. O. Box 22833, Denver, CO 80222 (For Respondents Rocky Mountain Panel, L.L.C. et al)
Frank M. Cavanaugh, Esq., 1801 Broadway, #1500, Denver, CO 80202 (For Respondents Terra Firma d/b/a Resource One, L.L.C. and Zurich American Insurance Company)
Paul D. Feld, Esq. and Jennifer S. Cavel, Esq., 999 18th St., #3100, Denver, CO 80202 (For Respondent Colorado Compensation Insurance Authority d/b/a Pinnacol Assurance).
BY: A. Pendroy