Opinion
W.C. No. 4-782-175.
March 23, 2011.
ORDER
The claimant and the employer seek review of the corrected order of Administrative Law Judge Cannici (ALJ) dated November 10, 2010. The ALJ determined that the claimant was the employee of the employer, Metro Taxi (Metro) and that Metro was uninsured. The ALJ awarded the claimant temporary total disability benefits based on an average weekly wage of $550 and increased benefits by 50 percent because Metro was uninsured and ordered Metro to either deposit $57,180.08 with the Division of Workers' Compensation (Division) or file a corresponding bond. The ALJ also awarded the claimant specific medical benefits and $2,000 for disfigurement. The ALJ's corrected order merely specified the employer, instead of the respondents, where appropriate, and otherwise incorporated his earlier order dated October 29, 2010. We remand this matter to the ALJ for consideration of the claimant's remaining claims for penalties and a new calculation of the amount deposited or bonded and, otherwise, affirm.
Metro appeals the ALJ's determination of the claimant's average weekly wage, interest, and penalties for being uninsured, as well as his resolution of the claimant's employment status and Metro's status as an uninsured employer.
The claimant appeals the ALJ's failure to address his request for penalties based on the conduct of Metro in handling the claim, the amount of the deposit or bond, and the ALJ's determination that Metro was uninsured for the purposes of this claim.
Proceedings before the ALJ
The claimant sustained injuries while operating a taxi cab and applied for a hearing to determine the compensability of his claim, medical benefits, including whether certain medical benefits were reasonable and necessary, authorized provider, average weekly wage, disfigurement, temporary disability benefits, interest, right of selection of providers, change of physician, a bond or deposit, and insurance coverage. The claimant also sought penalties for failing to timely report the claim, failing to timely admit or deny the claim, and failing to provide coverage.
The insurer, Pinnacol Assurance (Pinnacol), and Metro identified insurance coverage as an issue for hearing. Accordingly, Metro and Pinnacol had separate counsel. In addition, Metro raised the issue of the claimant's status as an independent contractor. Pinnacol moved for summary judgment on the issue of coverage; however, another ALJ denied the motion on the basis that taxi driving "is an operation or a naturally connected business that is not separate from a taxi service." See Evergreen Investment and Realty Co. v. Baca, 666 P.2d 166, 167 (Colo. App. 1983) (policy only covered employer's liability for its real estate business "or some naturally connected business," but not its construction operation). The matter therefore proceeded to hearing.
Metro argued it was exempt from any liability under § 8-40-301(5) C.R.S., which excludes from the definition of "employee" any person who is working as a driver under a lease agreement pursuant to § 40-11.5-102(5), C.R.S. (dealing with leases between motor carriers or contract carriers and independent contractors). In the event the ALJ found the claimant to be its employee, Metro argued that Pinnacol was liable as its insurer under the unambiguous terms of the workers' compensation insurance policy that Pinnacol issued to Metro. Pinnacol agreed that the policy terms were unambiguous, but asserted in response that the policy clearly excluded cab drivers from coverage. Relying on the reasoning applied by another ALJ to deny Pinnacol's motion for summary judgment, the claimant argued that Pinnacol's policy covered the claimant because he was performing operations either covered by the policy or some naturally connected business. The claimant further asserted that the claimant was Metro's employee at the time he sustained his injuries.
After conducting a full-day hearing and considering the parties' position statements, the ALJ entered his decision. Several of the ALJ's findings of fact are summarized as follows. The claimant worked for Metro as a cab driver. On May 30, 2007, an assailant entered the claimant's cab and shot the claimant, who survived the attack and underwent multiple surgeries. The claimant sustained a gunshot wound to his neck, thereby injuring his arterial and venous structures. The claimant's injury caused serious and permanent disfigurement that is normally exposed to public view. Unable to care for himself, the claimant has lived in various care centers and receives nursing care, therapy, and medications around the clock. The claimant has not worked since sustaining his injuries. The claimant is unable to return to work and has not reached maximum medical improvement. The claimant's income consisted of fares paid by passengers from driving a cab. He earned about $550 to $600 a week after paying expenses, as indicated by the claimant's testimony. The claimant's average weekly wage was $550. The employer knew of the claimant's injury on the date it occurred, but did not report it to the Division.
Metro and the claimant executed an agreement whereby the claimant leased a vehicle from Metro and paid Metro $590 in weekly fees. The claimant was considered an independent contractor under the agreement and was required to obtain insurance coverage at his own expense, which the claimant purchased from AIG. The claimant exhausted the benefits available under the AIG policy, which provided, among other things, a maximum of $200 in weekly benefits for one year and an aggregate limit on benefits in the amount of $250,000. The policy did not provide any benefits for permanent impairment or disability. The AIG policy does not provide coverage comparable to what is required under the Workers' Compensation Act (Act). The claimant worked as Metro's employee at the time he sustained his injuries.
According to the unambiguous terms of the policy issued by Pinnacol to Metro, Metro's taxi drivers were not covered. In addition, evidence before the ALJ established that the parties did not intend for drivers to be covered by the policy. Metro has not paid premiums to cover its drivers. Instead, Metro paid premiums to cover its office employees, outside salesperson, and garage employees. The policy reflected the coverage codes for these classes of employees, but not for drivers. If the policy had covered drivers Metro would have paid over seven and one-half million dollars more in premiums over the years. Moreover, the employer was aware of prior litigation involving Metro and another claimant in which the claimant was a driver and determined to be its employee. In that case Metro was determined to be uninsured. Metro is uninsured in the present case, as well.
The ALJ therefore awarded the claimant ongoing temporary total disability benefits based on an average weekly wage of $550, subject to a 50 percent increase because Metro was uninsured. The ALJ also awarded the claimant reasonable and necessary medical benefits and identified the claimant's authorized treating physician. Metro was ordered to either pay $57,180.08 into a trust account or file a bond in that amount to secure payment of benefits and to pay $2,000 as a disfigurement award.
The claimant's employment status
The ALJ determined that the claimant worked as Metro's employee and not as an independent contractor as provided by the agreement between the claimant and Metro. The ALJ based his decision on his determination that the insurance coverage available to the claimant was not similar to workers' compensation coverage.
We initially note that to recover workers' compensation benefits, the claimant must be an "employee" at the time of the injury. Section 8-41-301, C.R.S. Section 8-40-301(5), C.R.S. excludes from the term "employee" any person who is working as a driver under a lease agreement with a common carrier or contract carrier pursuant to § 40-11.5-102, C.R.S. Section 8-40-301(6), C.R.S. further requires that any person working as a driver with a contract carrier shall be offered workers' compensation insurance coverage consistent with the requirements set forth in § 40-11.5-102(5). See USF Distribution Services, Inc. v. Industrial Claim Appeals Office 111 P.3d 529 (Colo. App. 2004). Under § 40-11.5-102(4), a lease agreement containing the provisions set forth in § 40-11.5-102(1) shall be presumed to be prima facie evidence of an independent contractor relationship between the parties. Section 40-11.5-102(5)(a), C.R.S., also requires that a lease agreement must provide for coverage under workers' compensation or a private insurance policy that provides similar coverage. Section 40-11.5-102(5)(b), defines the term "similar coverage" as disability insurance for on and off-the-job injuries, health insurance and life insurance.
The ALJ found that the AIG policy obtained by the claimant in lieu of workers' compensation coverage was not similar to such coverage. For example, the policy limited overall benefits to $250,000 and had no benefits for permanent impairment or disability.
Metro argues that USF Distribution Services, Inc. was wrongly decided. In USF Distribution Services, Inc. v. Industrial Claim Appeals Office 111 P.3d 529, (Colo. App. 2004), the issue arose whether the claimant's failure to secure complying coverage changed his status from that of an independent contractor to that of an employee. The court noted that § 8-40-301(5) was enacted simultaneously with § 8-40-301(6) and § 40-11.5-102(5). See Colo. Sess. Laws 1992, ch. 224 at 1798-801. The court determined that the purpose of these amendments was to clarify that drivers working for contract carriers under qualifying lease agreements are to be treated as "independent contractors" for purposes of workers' compensation benefits liability. The court recognized that § 8-40-301(5) evidences a clear legislative intent to exclude leased drivers from the definition of "employee." However, the court also noted that when the statute is viewed in combination with both § 8-40-301(6) and § 40-11.5-102(5) it becomes clear that the exclusion takes effect only when the lease agreement includes complying coverage. The scheme created by these statutes shares the same purpose underlying the statutory employer provision, see § 8-41-401(1)(a), C.R.S, which is to prevent an employer from evading compensation coverage by contracting out work instead of directly hiring the workers. The court ruled that since the claimant established that the policy negotiated through respondent did not comply with the requirements set forth in § 40-11.5-102(5), the claimant was an employee at the time of his industrial injury.
We have examined the policy and we do not disagree with the ALJ's conclusion that because the policy limits compensation and benefits and has no benefits for permanent impairment or disability, it was not in compliance with § 40-11.5-102(5)(b), which requires that the benefits offered by the policy "shall be at least comparable to the benefits offered under the workers' compensation system." USF Distribution Services, Inc., 111 P.3d at 531. Exhibit 8. Although Metro asserts that USF Distribution Services, Inc. was wrongly decided, we consider the court of appeals' published decision to be binding. See C.A.R. 35(f) (published opinions of court of appeals to be followed as precedent by trial judges).
Metro's coverage under Pinnacol policy
The ALJ determined that the workers' compensation policy issued to Metro by Pinnacol did not cover taxi drivers. The ALJ concluded that the policy was unambiguous concerning the extent of coverage. Both Metro and Pinnacol assert that the policy is unambiguous, but to different ends with Metro arguing that the policy plainly covers taxi drivers and Pinnacol countering that the policy plainly excludes them. We agree with those two parties that the policy is not ambiguous. We further agree with the ALJ that the policy excludes from coverage drivers like the claimant.
The interpretation of an insurance agreement presents a question of law, which we review de novo. Cary v. United Omaha Life Ins. Co., 108 P.3d 288, 290 (Colo. 2005). An insurance policy is ambiguous if it is susceptible of more than one reasonable interpretation, but a mere disagreement between parties as to its meaning does not constitute an ambiguity. Instead, the policy must be reviewed as a whole. Id. Moreover, an ambiguity is construed in favor of coverage. Id.
The policy issued by Pinnacol includes a policy information page covering the time of the claimant's injury. Exhibits F, H at 92-93; Tr. at 229 (underwriter at Pinnacol testified that policy information page part of policy). See, e.g., Mullen v. Allstate Ins. Co., 232 P.3d 168, 172 (Colo. App. 2009) (construing total premium section regarding classes of insureds and declaration page as parts of insurance policy). Under "Coverage Information" the policy information page lists payroll and premium information for three classes of insureds: garage employees, outsides sales persons, and office workers. Exhibit H at 93; Tr. at 176. Moreover, part five of the underlying policy discusses premiums and explains that the aforementioned classifications reflect the employer's estimated exposure during the policy period and that remuneration for the classifications provide the basis for calculating premiums. Exhibit F at 83. We agree with the ALJ that the policy clearly limits coverage to classes other than taxi drivers such as the claimant.
Both Metro and the claimant argue that the ALJ erred in considering extrinsic evidence in considering the scope of coverage under the policy issued by Pinnacol. When the provisions of an insurance policy are clear and unambiguous the intent of the parties is determined from the plain language of the document and extrinsic evidence is not admissible to show what the parties intended. If, on the other hand, the policy is ambiguous, then extrinsic evidence is admissible. Fire Ins. Exchange v. Rael, 895 P.2d 1139, 1142 (Colo. App. 1995). In light of our conclusion that the policy clearly excludes taxi drivers from coverage, we consider the ALJ's findings as to the circumstances surrounding the development of the policy to be effectively immaterial to the outcome of this matter.
However, in view of the parties' competing assertions that the policy clearly supports either coverage or no coverage, the ALJ understandably proceeded to make findings in support of his determination that Metro was uninsured for the claimant's injuries. Thus, in the alternative, we approve of the ALJ's implicit conclusion that if the policy were ambiguous as to coverage for taxi drivers like the claimant, the record supports the determination that Metro and Pinnacol intended to exclude taxi drivers from coverage. For example, as found by the ALJ, when Metro initially sought coverage it had 421 cabs leased under independent contractor agreements and Metro never paid premiums to cover its drivers. The difference in the amounts of premiums paid by Metro as opposed to what Metro would need to have paid to cover drivers numbered in the millions of dollars. Moreover, after having drivers found to be its employees in previous litigation, the employer failed to seek coverage for them. The parties do not assert that the ALJ's findings are not supported by substantial evidence, but in any event we conclude that ALJ's findings are binding on review. Section 8-43-301(8), C.R.S. Those findings are sufficient to support the ALJ's alternative determination that Metro and Pinnacol did not intend to cover taxi drivers under the workers' compensation policy issued by Pinnacol.
Metro refers to the case of Evergreen Investment and Realty Co. v. Baca, 666 P.2d 166 (Colo. App. 1983) in support of its further assertion that taxi driving is an activity "naturally connected" to its business as a taxi cab company and the policy should therefore be construed to cover its drivers. We are not persuaded. In Evergreen Investment, the court reviewed the Industrial Commission's determination that the policy issued to Evergreen Investment by Pinnacol's predecessor did not provide coverage for the claimant's injuries. The court upheld the commission's decision. The court noted testimony to the effect that the employer's business was "real estate sales or brokerage, not construction" and that the claimant was injured while working as a carpenter for a contractor hired by the employer to build residential homes. Evergreen Investment and Realty Co., 666 P.2d at 166. The court recognized the commission's finding that the employer's two businesses (construction and real estate sales or brokerage) were unrelated and opined that "[t]he sole fact that the company may have profited from the combined operations does not, in itself, make the businesses naturally connected." Id. at 167.
The court of appeals later upheld the determination that a workers' compensation policy did not cover the claimant, who operated a rock crusher and hauled gravel. Grand Mesa Trucking Inc. v. Industrial Comm'n, 705 P.2d 1038 (Colo. App. 1985). A predecessor to Pinnacol issued a policy to the employer to cover the employer's trucking operations. The employer was in the business of hauling coal at the time it obtained coverage, but later on when coal hauling became unprofitable, the employer opened a sand and gravel operation that employed the claimant. Recognizing that the policy could cover some "naturally connected business," the court determined that "[t]he Commission's conclusion that Grand Mesa's insurance policy with the Fund did not extend to afford coverage to claimant is supported by the evidence and the reasonable inferences that may be drawn therefrom and, therefore, is binding on review." Id. at 1040. The court also determined that the policy, read as a whole, unambiguously covered only trucking operations. In this regard, the court stated that "[t]he interpretation urged by Grand Mesa would result in coverage for employees engaged in any conceivable operation in which Grand Mesa should choose to employ them, and would compel the Fund to fulfill a duty for which it did not contract." Id. at 1041. The court's observations in Grand Mesa Trucking support the ALJ's determination that the policy issued by Pinnacol did not cover the injuries sustained by a taxi driver, who was involved in an activity clearly not covered by the terms of the policy.
The claimant's average weekly wage
Metro disputes the ALJ's determination that the claimant is entitled to an average weekly wage of $550. The ALJ noted that according to the claimant's testimony the claimant earned $550 to $600 a week after paying his business expenses and worked about seven days each week. Metro asserts that a better measure of the claimant's earnings is his bank records, from which it can be inferred that the claimant's average weekly wage should be in the neighborhood of about $213 to $267. However, the ALJ was persuaded that an average weekly wage of $550 constituted "a fair approximation of the Claimant's wage loss and diminished earning capacity." Corrected Findings of Fact, Conclusions of Law, and Order at 13, ¶ 20. As indicated by Metro's assertions, there was conflicting evidence that would support different inferences regarding the claimant's earnings and average weekly wage. However, the existence in the record of conflicting evidence that would support a contrary result does not provide a basis for setting aside the ALJ's order in this regard. See Mountain Meadows Nursing Center v. Industrial Claim Appeals Office, 990 P.2d 1090 (Colo. App. 1999) (the existence of conflicting evidence does not lessen the import of substantial evidence in support of a finding).
The overall purpose of the statutory scheme for determining a claimant's average weekly wage is to calculate "a fair approximation of the claimant's wage loss and diminished earning capacity." Campbell v. IBM Corp., 867 P.2d 77 (Colo. App. 1993). Here, the ALJ citing Campbell v. IBM Corp., specifically noted the discretionary exception allowed him to compute the AWW in such a manner that would fairly determine the claimant's AWW. It is well established that the ALJ has discretionary authority under § 8-42-102(3), C.R.S. to calculate the average weekly wage by any method that will render a fair computation of the claimant's wages. We may not disturb the ALJ's determination of the average weekly wage unless an abuse of discretion is shown. Coates, Reid Waldron v. Vigil, 856 P.2d. 850 (Colo. 1993). An abuse of discretion exists where the order "exceeds the bounds of reason," such as where it is not in accordance with applicable law, or not supported by substantial evidence in the record. Rosenberg v. Board of Education of School District #1, 710 P.2d 1095 (Colo. 1985); Coates Reid Waldron v. Vigil, supra. We find no abuse of discretion by the ALJ in determining the claimant's average weekly wage.
Penalty for being uninsured
Metro argues that the ALJ erred by imposing a 50 percent penalty against it on the basis that Metro was uninsured. Section 8-43-408(1), C.R.S. provides that in any case where the employer is subject to the provisions of the Act and at the time of an injury has not complied with the insurance provisions of the Act, the amounts of compensation or benefits provided in said articles shall be increased 50 percent. In support of its assertion Metro contends that it had in place alternate insurance as provided by § 40-11.5-105, C.R.S. and, furthermore, that Metro had obtained workers' compensation insurance through Pinnacol. However, as found by the ALJ, the policy that the claimant paid for through AIG was not similar to coverage required under the Act. The ALJ also determined that Metro's policy through Pinnacol did not cover the claimant. We uphold those findings and determinations. Thus, we find no basis for disturbing the ALJ's imposition of the 50 percent penalty pursuant to § 8-43-408(1).
Waiver of interest
Metro asserts that the ALJ abused his discretion by not waiving the imposition of interest on unpaid benefits. Section 8-43-410(2), C.R.S. provides as follows:
Every employer or insurance carrier of an employer shall pay interest at the rate of eight percent per annum upon all sums not paid upon the date fixed by the award of the director or administrative law judge for the payment thereof or the date the employer or insurance carrier became aware of an injury, whichever date is later.
The court of appeals has noted that "[a]s a general proposition it is mandatory that the employer or insurer pay interest on all sums not paid on the date fixed by the award. . . . However, upon application and satisfactory showing, the Director has discretionary authority to relieve the employer or insurer from such interest payments." Harrison Western Corporation v. Claimants in the Matter of the Death of Hicks, 185 Colo. 142, 522 P.2d 722, 725 (1974) ( citations omitted). Thus, unless the respondents are relieved from payment of interest, it is a matter of statutory right and applies automatically to an award. Bourn v. T T Loveland Chinchilla Ranch, 514 P.2d 787 (Colo. App. 1973). Because the statute affords the ALJ broad discretion to relieve the respondents from the duty to pay interest, we may only set aside his order on the ground that he clearly abused that discretion. The standard on review of an alleged abuse of discretion is whether, under the totality of the circumstances, the ALJ's ruling exceeds the bounds of reason. Rosenberg v. Board of Education of School District #1, supra.
The ALJ was not persuaded that Metro should be relieved of paying interest. Metro was found to be aware of the claimant's injury on the date it occurred. The employer was also found to be aware of prior litigation that resulted in similar liability for another person's injuries. Furthermore, the ALJ found that the claimant eventually exhausted his benefits under the AIG policy he had obtained pursuant to his agreement with Metro under which he was considered to be an independent contractor. Metro argues that the claimant delayed in prosecuting his claim, thereby entitling it to relief from paying interest. However, given the ALJ's findings, the ALJ could reasonably infer that the claimant did not delay in pursuing workers' compensation benefits and we find no abuse of discretion by the ALJ in denying Metro a waiver of interest on unpaid benefits.
Additional penalties
The claimant asserts that the ALJ failed to fully consider the various bases for his penalty requests. In addition to the 50 percent penalty under § 8-43-408(1), C.R.S. for being uninsured, the claimant sought penalties under § 8-43-203(2)(a), C.R.S (failure to timely admit or deny liability) and § 8-43-304(1), C.R.S. (violation of Act) for failing to timely report the claim as required by § 8-43-103(1), C.R.S. The claimant also sought penalties based on alleged violations of § 40-11.5-102, C.R.S. (concerning leaves between motor carriers and independent contractors). The ALJ did not address these penalty requests in his order and Metro does not dispute that the ALJ failed to make sufficient findings to permit appellate review. See § 8-43-301(8), C.R.S. (Panel may remand if findings of fact not sufficient to permit appellate review). We agree that this matter must be remanded to the ALJ to consider the claimant's various claims for penalties.
Amount of deposit or bond
The claimant further asserts that the amount ordered to be either deposited in trust or posted by bond does not correlate to the amount of compensation awarded to the claimant. As provided by § 8-43-408(2), C.R.S., the ALJ ordered Metro to deposit money or file a bond in the amount of $57,180.08.
The claimant asserts that, at a minimum, based only on his average weekly wage and without considering the 50 percent increase due as a penalty, the sum should be $65,318.59. Metro responds that the amount of $65,318.59 should be sufficient or take into account a social security offset. We cannot ascertain the basis for the ALJ's calculation of the amount of money to be either deposited or filed by bond, which does not appear to reflect the amount of unpaid compensation awarded to the claimant.
We note that an appeal does not stay or otherwise relieve Metro of its obligation to pay the deposit or file the bond as ordered by the ALJ. Section 8-43-108(2), C.R.S. We therefore presume that Metro has either made the proper deposit or filed an adequate bond. Rather than setting aside the amount the ALJ ordered, we remand this matter for a redetermination of the amount of the deposit or bond in light of the parties' various assertions concerning the proper amount and offsets. The ALJ shall articulate the precise basis for whatever amount he designates to be placed in deposit or filed by bond.
IT IS THEREFORE ORDERED that the ALJ's corrected order dated November 10, 2010 is remanded for consideration of the claimant's remaining claims for penalties and for further consideration and potential modification of the amount deposited or filed by bond pursuant to § 8-43-408(2), C.R.S. The corrected order is otherwise affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________ John D. Baird
____________________ Robert M. Socolofsky
JANUSZ KONDRACKI, Attn: BETHANY CARE CENTER, LAKEWOOD, CO, (Claimant).
MKBS LLC AND TLPQC SERVICES LLC, Attn: JAN L. HAMMERMAN, ESQ., C/O: D/B/A METRO TAXI, DENVER, CO, (Employer).
PINNACOL ASSURANCE, Attn: HARVEY D. FLEWELLING, ESQ., DENVER, CO, (Insurer).
THE BABCOCK LAW FIRM, LLC, Attn: R. MACK BABCOCK, ESQ., LITTLETON, CO, (For Claimant).
CLISHAM, SATRIANA BISCAN, LLC, Attn: PATRICIA JEAN CLISHAM, ESQ., DENVER, CO, (For Respondents).
RUEGSEGGER SIMONS SMITH STERN, LLC, Attn: DOUGLAS P. RUEGSEGGER, ESQ./THOMAS M. STERN, ESQ., DENVER, CO, (Other Party).
MKBS LLC, Attn: KYLE BROWN, C/O: D/B/A METRO TAXI, DENVER, CO, (Other Party 2).