Opinion
W.C. No. 4-430-471.
December 14, 2006.
FINAL ORDER
The respondents and the claimant both seek review of an order of Administrative Law Judge Friend (ALJ) dated July 10, 2006 that determined that the employer was uninsured and that ordered the payment of penalties pursuant to § 8-43-408(1), C.R.S. 2006. We reverse.
Several hearings were held on the issue of whether the employer had complied with the statutory requirements that it insure for purposes of the Workers' Compensation Act. Following the hearing, the ALJ entered findings of fact that may be summarized as follows. Arthur L. Twiggs sustained a work-related injury on May 11, 1999 and Continental Casualty Insurance Company (Continental) filed several general admissions of liability in August and October 1999. Continental filed a final admission of liability on January 21, 2000. On March 12, 2002, Continental Casualty Company filed a general admission of liability, reopening the claim. Arthur Twiggs died on July 16, 2005, and on July 26, 2005, a third party administrator, G.E. Young Company, filed a final admission of liability without identifying the insurer on whose behalf it was filed. Vivian Twiggs, who was Arthur Twiggs' dependent, objected to the final admission.
The ALJ also found that Continental Casualty Company did not insure the employer on the decedent's date of injury; rather, the employer was insured by American Risk Funding Insurance Company (now known as ACIG Insurance Company). American Risk has been licensed by the Colorado Division of Insurance to issue workers' compensation insurance policies since 1990, and ACIG Insurance Company's policy has been approved by the Division of Insurance. The ALJ further found that ACIG Insurance Company has members and is a "group captive insurance company" that reinsures its members. Because the group members retain a portion of the risk that is insured, the ALJ concluded that "[e]ssentially, this is a self-insurance program." He also found that ACIG Insurance Company is not a stock or mutual corporation within the meaning of § 8-44-101, C.R.S. 2006.
Based upon his factual findings, the ALJ concluded that the employer was uninsured at the time of the decedent's work-related injury. Consequently, he increased the compensation paid by fifty percent pursuant to § 8-43-408(1).
I.
The respondents appealed the ALJ's order and argue that the ALJ erred in concluding that the employer was uninsured for purposes of this claim, that the ALJ erred in concluding that ACIG is not a "stock or mutual corporation" within the meaning of § 8-44-101, and that, in any event, the ALJ erred in imposing a penalty for the employer's failure strictly to comply with § 8-44-101. We agree with the respondents that the employer did not violate § 8-44-101 and that, therefore, the ALJ erred in increasing the amounts of compensation and benefits by fifty percent pursuant to § 8-43-408(1).
The Workers' Compensation Act (the Act) requires every employer subject to its provisions to obtain insurance in one of several ways:
(1) Any employer subject to the provisions of articles 40 to 47 of this title shall secure compensation for all employees in one or more of the following ways, which shall be deemed to be compliance with the insurance requirements of said articles:
(a) By insuring and keeping insured the payment of such compensation in the Pinnacol Assurance fund;
(b) By insuring and keeping insured the payment of such compensation with any stock or mutual corporation authorized to transact the business of workers' compensation insurance in this state. If insurance is effected in such stock or mutual corporation, the employer or insurer shall forthwith file with the division, in form prescribed by it, a notice specifying the name of the insured and the insurer, the business and place of business of the insured, the effective and termination dates of the policy, and, when requested, a copy of the contract or policy of insurance.
(c) By procuring a self-insurance permit from the executive director as provided in section 8-44-201, except for public entity pools as described in section 8-44-204(3), which shall procure self-insurance certificates of authority from the commissioner of insurance as provided in section 8-44-204.
(d) By procuring a self-insurance certificate of authority from the commissioner of insurance as provided in section 8-44-205.
Section 8-44-101, C.R.S. 2006. It is undisputed here that the employer was not insured by Pinnacol Assurance and had not obtained a permit or certificate of authority permitting self-insurance. As noted, the ALJ determined that ACIG was not a "stock or mutual corporation" and, therefore, that the employer had failed to comply with its insurance requirements under the Act.
We agree with the respondents that ACIG is a "stock corporation" within the meaning of § 8-44-101. The ALJ relied upon the following definitions: "A stock corporation is a company organized and owned by stockholders, as distinguished from a mutual corporation, which is owned by its policyholders." Findings of Fact, Conclusions of Law and Order at 3, ¶ 12. The ALJ further concluded that ACIG is a "group captive insurance company that reinsures its members." He noted that the members of the group both "retain a portion of the risk," and also "are liable for losses not paid by ACIG Insurance Company." The ALJ concluded that "[e]ssentially, this is a self-insurance program." Order at 3, ¶ 13. In our view, however, none of the ALJ's conclusions in this regard preclude ACIG from being a "stock corporation" as contemplated by § 8-44-101.
The reference to insuring with any "stock or mutual corporation" was included in the Act at its inception. See 1919 Colo. Sess. Laws at 707, § 21. At the time this language was incorporated in the Act, those two entities were virtually the only ones providing insurance:
An insurer is the person who in a certain sense assumes the risk and undertakes to indemnify or pay a certain sum on the happening of the specified contingency. The person may be a corporation or association or individual when not precluded by statute. Formerly a large proportion of the risks were underwritten by private individuals, but the business of insuring in this country is almost exclusively in the hands of corporations or associations, which are divided into either stock companies and mutual companies or associations. Sometimes a company combines both plans of insurance.
J. Joyce, 1 A Treatise on the Law of Insurance of Every Kind at 731-32, § 325 (1917). See also R. Long, Richards on the Law of Insurance at 7, § 5 (1932) ("In this country corporations are usually organized under general laws instead of special charters and are divided into stock, mutual, and mixed companies."). Because stock and mutual corporations were virtually the only forms of insurance when the legislature enacted this language, we infer that it is appropriate to construe those terms broadly rather than to apply a narrow and restrictive reading to the statute. Indeed, one commentator "arbitrarily" included as stock companies every insurer not specifically designated as a mutual company: "Therefore, in this discussion, the author has arbitrarily placed under the category of stock companies those organizations not employing the term 'mutual' in their title writing old line policies on a level premium plan." J. Appleman, 18 Insurance Law and Practice at 2, § 10001.
Moreover, we infer that a broad construction of the statutory scheme is consistent with the understanding of the Director of the Division of Workers' Compensation. Thus, we note that Workers' Compensation Rule of Procedure 1-1(H) defines an "insurer" as "every mutual company or association, every captive insurance company, and every other insurance carrier, including Pinnacol Assurance, providing workers' compensation insurance in Colorado. . . ." (Emphasis added). We interpret the language of this rule as recognizing that there may be insurers that do not fit precisely within a restrictive interpretation of the terms "stock or mutual corporation" that might nonetheless provide workers' compensation insurance to Colorado's employers.
The principal criteria of the "stock company" appears to have been that its capital was formed through the issuance of shares of stock, and that the stockholders were not necessarily included among the insured: "A stock or proprietary company has for its basis capital stock owned by stockholders who constitute the corporation, and who may be quite distinct from the insured." W. Freedman, 1 Richards on the Law of Insurance at 25, § 8 (5th ed. 1952). The mutual corporation or association was generally distinguished from the stock corporation by the identity of the insurer and the insured:
In strictly mutual companies there are no stockholders, but the insured themselves are members of the company entitled to manage its affairs through officers and agents and to receive any share of divisible surplus over and above the funds retained to meet losses and other liabilities. Thus the members of a mutual company in their aggregate or corporate capacity are the insurers while individually they are the insured. While a stockholder need not be one of those insured by his company, one insuring in a mutual company thereby becomes a member of the association and thus occupies in a sense the dual relationship of insured and insurer.
Id. at 26, § 8. See also A. Biddle, 1 A Treatise on the Law of Insurance at 37, § 42 (1893) ("Both in Great Britain and the United States there exist, besides stock companies, companies formed on a mutual plan without shareholders, in which the insured and insurer is each a member of the same organization, and each member is an insurer of all the others; the principal idea of such companies being not so much to make a profit, as to indemnify or pay the insurance when the contingency happens.").
In our opinion, ACIG has the attributes of both a stock corporation and a mutual company within the meaning of § 8-44-101. Thus, the ALJ characterized the policy here as "essentially" a program of self-insurance, which is one of the criteria that distinguishes the mutual insurer from the stock company. See J. May, 2 The Law of Insurance at 1280, § 548 (1900) (Under the mutual plan of insurance "[e]ach person insured becomes a member of the body corporate, clothed with the rights and subject to the liabilities of a stockholder. He is at once insurer and insured."). Whether or not, however, ACIG could reasonably be considered a "mutual corporation" under § 8-44-101(1)(a), we conclude that it is a stock corporation. See § 10-12-218, C.R.S. 2006 ("No mutual insurance company organized under the laws of this state shall insure liability under any workers' compensation law of this state unless such company is organized under this part 2, and such liability shall be insured by corporations only.").
The interpretation by a reviewing forum of documentary evidence, including articles of incorporation, is generally a matter of law, e.g., Ginter v. Palmer Co., 39 Colo. App. 221, 566 P.2d 1358 (1977), as is the interpretation of a statute on review. E.g., Frank C. Klein Co. v. Colorado Compensation Insurance Authority, 859 P.2d 353 (Colo.App. 1993). Insofar as the ALJ's findings of fact are supported by substantial evidence, we are bound by them concerning the methods of operation of ACIG. Section 8-43-301(8), C.R.S. 2006; Dover Elevator Co. v. Industrial Claim Appeals Office, 961 P.2d 1141 (Colo.App. 1998). Here, however, the ALJ's findings concerning ACIG were somewhat sparse. Hence, he found essentially only that ACIG was comprised of members that retained a portion of the risk and that were liable for losses not paid by ACIG. Order at 3, ¶ 13. However, as previously noted, these findings do not preclude the conclusion that ACIG is stock company in compliance with § 8-44-101(1)(b).
The record contains ACIG's original articles of incorporation under the laws of the state of Texas. See Exhibit F. (Although the exhibit refers to the American Risk Funding Insurance Company, it is apparently undisputed and the ALJ found that ACIG was formerly identified by that name.) The articles identify the insurer as a corporation authorized to issue two hundred thousand shares of stock with a certain par value, fifty percent of which had been subscribed, creating an initial capital sum of $100,000 and a surplus of $50,000. The holders of the stock are entitled to vote each share at the elections of directors, who sit on the Board of Directors. The exhibit further discloses that the articles were amended to authorize the issuance of two million shares of stock with a certain par value, and that fifty percent of the stock had been subscribed, creating a surplus of $1,040,000. In subsequent amended orders entered by the commissioner of insurance, additional stock is authorized. In the amended orders, the insurer is generally referred to by the commissioner as a "domestic stock property and casualty insurance company," or a "domestic stock fire and casualty company." The record also contains Articles of Redomestication filed and approved by the state of Illinois, again reciting that the corporation has the authority to issue four million shares of common stock, each with a certain par value, and that the business of the insurer shall be managed by a Board of Directors elected by the shareholders. In our view, this documentary evidence compels the conclusion that ACIG is a "stock corporation" within the meaning of § 8-44-101(1)(b). Accordingly, the ALJ erred in imposing the fifty percent increase in compensation and benefits under § 8-43-408.
II.
The claimant also appealed the order, and argues that the ALJ erred in not finding the employer liable on the "independent grounds" that it violated the statutory proscription against deductibles over $5,000. Specifically, the claimant argues that § 8-44-111(1), C.R.S. 2006 precludes any employer from insuring under a policy that provides for a deductible exceeding $5,000. However, we conclude that this portion of the ALJ's order is not final and reviewable.
Section 8-43-301(2), C.R.S. 2006 provides that any dissatisfied party may file a petition to review "an order which requires any party to pay a penalty or benefits or denies a claimant any benefit or penalty." An order which does not satisfy one of the finality criteria of this statute is interlocutory and not subject to immediate review. Natkin Co. v. Eubanks, 775 P.2d 88 (Colo.App. 1989). Under this statute, the order must be one that finally disposes of the issues presented. Bestway Concrete v. Industrial Claim Appeals Office, 984 P.2d 680 (Colo.App. 1999). An order may be partially final and reviewable and partially interlocutory. Oxford Chemicals, Inc. v. Richardson, 782 P.2d 843 (Colo.App. 1989). Under these principles, our jurisdiction is purely statutory and may not be conferred by waiver, consent, or any other equitable principle. Gardner v. Friend, 849 P.2d 817 (Colo.App. 1992). The absence of a final, reviewable order is fatal to our jurisdiction. Buschmann v. Gallegos Masonry, Inc., 805 P.2d 1193 (Colo.App. 1991).
Here, we do not understand the ALJ to have entered a final order concerning the penalty under § 8-43-408 based upon the provision of the insurance contract providing for a large deductible. Although the ALJ entered findings of fact and conclusions of law regarding the claimant's argument that the employer was essentially "uninsured" because of the deductible in excess of the limit set in § 8-44-111(1), the ALJ's order did not expressly deny relief under that theory. Hence, there is no final order that is reviewable regarding that theory of relief. Although there is no order in this regard that may be affirmed, we note that we agree with the ALJ's conclusion that even if the large deductible here violated § 8-44-111(1), it did not render the employer "uninsured" for purposes of imposing the fifty percent penalty under § 8-43-408.
However, we express no opinion concerning the correctness of the ALJ's conclusion that the deductible provision of the insurance contract was void under § 8-44-102, C.R.S. 2006 (provisions of insurance contract that are inconsistent with the Act are void). We note that the Division of Insurance had approved the insurance contract here pursuant to its statutory and regulatory authority, and we also express no opinion concerning whether the ALJ would have had jurisdiction to enter a final order declaring void the deductible provision of the contract. See Consolidated Underwriters v. Industrial Commission, 117 Colo. 239, 185 P.2d 1013 (1947) (approval of insurance contracts is within the province of the Division of Insurance and not the Industrial Commission).
We have considered the claimant's remaining arguments and they are without merit.
IT IS THEREFORE ORDERED that the ALJ=s order dated July 10, 2006, is reversed.
INDUSTRIAL CLAIM APPEALS PANEL
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Dona Halsey
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Curt Kriksciun
Arthur Twiggs c/o Vivian Twiggs, 3149 Wyandot Street, Denver, CO 80211 Hoffman Construction, Sheri Sundstrom, P.O. Box 1300, Portland, OR 97207 American Contractors Insurance Group, Claim Consultant, Paul Becker, 12222 Merit Drive, Suite 1660, Dallas, TX 75251 Rothgerber, Johnson, Lyons, LLP, Stephen Csajaghy, Esq., One Tabor Center, Suite 3000, 1200 17th Street, Denver, CO 80202-5855 Irwin and Boesen, PC, Chris L. Ingold, Esq., 501 South Cherry Street, #500, Denver, CO 80246 (For Claimant) ACIG Insurance Company, c/o Treece, Alfrey, Musat Bosworth, PC, James B. Fairbanks, Esq., 999 18th Street, Suite 1600, Denver, CO 80202 (For Respondents) G.E. Young, Stacy Strickland Ross, 7600 E. Orchard Road, Suite 360N, Greenwood Village, CO 80111