Opinion
NO. 2013-CA-001768-WC
05-02-2014
TERRY ASHLEY APPELLANT v. MICHAEL MERCER; OVA CARMEN; UNINSURED EMPLOYERS' FUND; HON. MARCEL SMITH, ADMINISTRATIVE LAW JUDGE; HON. OTTO D. WOLFF, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD APPELLEES
BRIEF FOR APPELLANT: Norman E. Harned Ashley D. Belcher Bowling Green, Kentucky BRIEF FOR APPELLEE, UNINSURED EMPLOYERS' FUND: Jack Conway Attorney General James R. Carpenter Uninsured Employers' Fund Frankfort, Kentucky BRIEF FOR APPELLEE, OVA CARMEN: Calvin R. Fulkerson Lexington, Kentucky BRIEF FOR APPELLEE, MICHAEL MERCER: Elizabeth Ann Schott Jessica Jarboe Logsdon Louisville, Kentucky
NOT TO BE PUBLISHED
PETITION FOR REVIEW OF A DECISION
OF THE WORKERS' COMPENSATION BOARD
ACTION NO. WC-06-00294
OPINION
AFFIRMING
BEFORE: ACREE, CHIEF JUDGE; MAZE AND STUMBO, JUDGES. STUMBO, JUDGE: Terry Ashley appeals from an Opinion of the Workers' Compensation Board affirming an Opinion, Order and Award of the Administrative Law Judge ("ALJ"). Ashley argues that the ALJ improperly concluded that Michael Mercer was Ashley's employee; that the ALJ should have determined that Mercer was an independent contractor or employee of a third party; that the Board misinterpreted a Settlement Agreement between the parties; and, that the ALJ improperly found that Mercer was permanently and totally occupationally disabled and therefore not entitled to vocational rehabilitation benefits. We find no error, and Affirm the Opinion of the Workers' Compensation Board.
On March 3, 2006, Mercer filed a Form 101 claiming that during the course of his employment with Ashley, he had fallen off a ladder or scaffold on November 7, 2005, during the construction of a house and suffered serious injuries to his left leg and arm, low back, chest, abdomen and right foot and ankle. Mercer was working on a scaffold when he fell approximately 25 feet and struck the ground primarily with his left leg. The injuries required surgical repair and other medical intervention.
Mercer would later testify that he had a 9th grade education with no specialized vocational training, and had worked in various fields including carpentry, remodeling, masonry and farming. According to Mercer, he began working as Ashley's employee in September, 2004, and continued working for Ashley until the time of injury. Mercer stated that during the course of his employment with Ashley, he worked on the construction of seven or eight houses, and that Ashley provided the tools, bid on the jobs, directed the work and communicated with the homeowners.
The record indicates that in the spring of 2005, Ashley agreed to construct a house for Ova Carmen. There was no written contract between Ashley and Carmen, and Carmen provided the blueprints. Carmen had not met Mercer prior to the commencement of construction on the house. Carmen would later testify that he was never involved in the building of houses, did not supervise Mercer or tell him what to do, did not provide any tools to Mercer and did not believe that he had the authority to direct, hire or fire anyone working on the project. Carmen made direct payments to Ashley and Mercer.
Ashley testified on August 19, 2007, and again on December 18, 2012. He stated that he was a master electrician who was formerly employed at a factory in Leitchfield, Kentucky, until it closed. He began building houses as a sideline while receiving unemployment benefits. He acknowledged that he defrauded the unemployment compensation system by asking Carmen to pay Ashley's wife in order to hide the income from the construction job. Ashley testified that he agreed to provide labor and supervision to Carmen for a fee of $12,000 to $15,000, and that he did not maintain any workers' compensation insurance coverage because he did not know if he was going to continue in the home construction business on a long-term basis.
On August 29, 2007, a hearing was conducted before ALJ Hon. Marcel Smith, and the claim was submitted for a decision on the issues of: coverage, whether Mercer sustained a work-related injury, medical bills, whether their existed an employer-employee relationship, temporary total disability ("TTD") and average weekly wage ("AWW"). On October 17, 2007, ALJ Smith rendered a decision finding that Mercer was Ashley's employee at the time of the accident and was not an independent contractor. She determined that Mercer's AWW was $694.85, and awarded TTD benefits at the rate of $463.23 per week. She also directed the Uninsured Employers Fund ("UEF") to pay medical benefits, dismissed Carmen as a party and held in abeyance whether Mercer had reached maximum medical improvement ("MMI").
Ashley filed a Petition for Reconsideration, which was denied by way of an Order rendered on November 20, 2007. He appealed the interlocutory decision to the Board, which dismissed the appeal in an Order rendered on January 9, 2008. A little more than a year later on February 10, 2009, ALJ Hon. Otto D. Wolff rendered an Order retaining the claim in abeyance, requesting status reports and again dismissing Carmen as a party.
A benefits review conference ("BRC") was conducted on May 12, 2011, resulting in a hearing order dated May 26, 2011, reflecting that the claim was settled as between Mercer and the UEF. As part of the settlement, Mercer agreed to accept from the UEF the sum of $255.04 per week for 425 weeks beginning July 21, 2009, which represented a 17.5% whole body impairment. Mercer also agreed to waive and dismiss any right to income or medical benefits for any psychological claim, and waiver of his rights to vocational rehabilitation. Ashley was not a participant in the settlement other than as a signatory to a statement that he retained the right to appeal.
On August 10, 2011, Ashley filed a notice of appeal of the settlement agreement, the October 17, 2007 decision and the November 20, 2007 order on reconsideration. The Board dismissed the appeal on December 16, 2011, holding in relevant part that ALJ Smith's Opinion, Award and Order were interlocutory in nature and not final. The Board remanded the matter to ALJ Wolff for a determination of whether he would adopt the findings of ALJ Smith regarding the employer-employee relationship. It directed ALJ Wolff to dismiss Mercer's claim against Ashley if he found that no employer-employee relationship existed, or to award income and medical benefits if it were determined that such a relationship did exist.
The matter was remanded to ALJ Wolff, who conducted a hearing on December 18, 2012. On February 18, 2013, ALJ Wolff rendered an Opinion in which he accepted and adopted verbatim ALJ Smith's recitation of the evidence, conclusions of law and determination that Ashley was Mercer's employer at the time of the accident. ALJ Wolff determined that ALJ Smith correctly dismissed Carmen as a party, that Mercer sustained injuries to his left upper and lower extremities, and accepted the 17% impairment rating as assessed by Dr. Gregory Gleis. ALJ Wolff determined Mercer's average weekly wage to be $694.85 and found that he was entitled to permanent total disability ("PTD") benefits at the rate of $463.23 per week payable by Ashley for which the UEF was obligated to pay in the event of a default. Finally, Mercer's request for an award of vocational rehabilitation benefits was denied upon ALJ Wolff finding that Mercer was permanently totally occupationally disabled.
Mercer, Ashley and the UEF filed petitions for reconsideration resulting in an order reflecting that Ashley would take credit for all payments the UEF has made and continues to make pursuant to its July 14, 2011 settlement with Mercer. The matter was again appealed to the Board, which rendered an Opinion on September 16, 2013, affirming ALJ Wolff's disposition of the claim. The Board held in relevant part that ALJ Wolff properly concluded that Mercer was an employee of Ashley and was not, as Ashley contended, an independent contractor or employee of homeowner Carmen. This appeal followed.
Ashley now argues that the Board erred in sustaining ALJ Wolff's determination that Mercer was his employee and not an independent contractor or an employee of Carmen. The corpus of his claim of error on this issue is that there was no contract of hire between himself and Mercer; therefore, Mercer's claim for benefits should be dismissed. Ashley goes on to argue that Mercer was an independent contractor or an employee of Carmen, and directs our attention to the fact that it was Carmen, rather than Ashley, who paid Mercer. Ashley also argues that the Board misinterpreted the effect of the Settlement Agreement in its Opinion and Order dated December 16, 2011, and also contends that ALJ Wolff improperly denied Mercer's referral for vocational rehabilitation benefits. In sum, Ashley maintains that because there was no contract of hire, there can be no workers' compensation liability. Also, that Ashley did not profit from Mercer's work and never intended Mercer to be his employee.
Resolution of the matter before us centers on whether ALJ Wolff and the Board properly applied Ratliff v. Redmon, 396 S.W.2d 320 (Ky. 1965), and Uninsured Employers' Fund v. Garland, 805 S.W.2d 116 (Ky. 1991), to find that Mercer was Ashley's employee. In Ratliff, the Kentucky Supreme Court recognized the liberal inclination of Kentucky's Workers' Compensation Act, which favors a finding of an employer-employee relationship. The Court stated in Ratliff that,
Before attempting to apply the rules of law applicable to the facts of the present case, we should keep in mind the well recognized rule of law in this jurisdiction, that in determining the relationship of employer and employee under the Workmen's Compensation Act a broader and more liberal construction is used favoring employee. See Brewer v. Millich, Ky., 276 S.W.2d 12, 15 (1955), wherein this Court said:Ratliff at 323.
In answering this question, the approach to be used is that of determining the relation of employer-employee under the Workmen's Compensation Act rather than of master and servant or principal and agent in tort actions. The workmen's compensation approach is broader and uses a more liberal construction favoring the employee. This is in harmony with the purpose of the Act in affording protection to the employee because of his inability to withstand the burdens of injury occasioned by his employment and the resultant loss of work.
The Court went on to note that,
The term 'employee' is defined by most statutes to include every person in the service of another under any contract of hire, express or implied. Judicial application of this definition to workmen's compensation status problems generally follows the tests worked out by common law distinguishing servants from independent contractors for vicarious liability questions. However, a recognition of the difference between compensation law and vicarious liability in the purpose and function of the employment concept has been reflected both in statutory extensions of the term 'employee' beyond the common-law concept and in a gradual broadening of the interpretation of the term to bring within compensation coverage borderline classes for whom compensation protection is appropriate and practical.Id. at 324, citing Larson's Workmen's Compensation Law, Volume I at p. 623.
Finally, Ratliff set forth nine factors to apply to the question of whether a worker is properly characterized as an employee:
(a) the extent of control which, by the agreement, the master may exercise over the details of the work;Id. at 324 - 325.
(b) whether or not the one employed is engaged in a distinct occupation or business;
(c) The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
(f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether or not the work is a part of the regular business of the employer; and
(i) whether or not the parties believe they are creating the relationship of master and servant.
Subsequent case law refined the nine-factor test by setting out four factors which are the most predominant. As stated in Chambers v. Wooten's IGA Foodliner, 436 S.W.2d 265 (Ky. 1969),
[w]hile many tests are appropriately considered, we think the predominant ones encompass the nature of the work as related to the business generally carried on by the alleged employer, the extent of control exercised by the alleged employer, the professional skill of the alleged employee, and the true intentions of the parties.
We find no error in the Board's determination that ALJ Wolff reasonably concluded that Mercer was Ashley's employee at all relevant times. Ashley provided the job to Mercer and directed him to the job site. Ashley directed Mercer when and where to work, and what to do. He provided Mercer's tools, and made all contacts with both Carmen and the prior customers. Carmen was not in the business of constructing homes, and had never met Mercer before he entered into an agreement with Ashley to build the house. Carmen also testified that he did not have the authority to tell Mercer when or where to work, what to do, or to dismiss him from the job site.
The sole factor supportive of Ashley's contention that Mercer was an independent contractor or Carmen's employee is the testimony that Carmen directly paid Mercer. However, these payments appear to be a mere accommodation to Ashley, who acknowledged his attempts to hide his own income from unemployment insurance authorities by asking Carmen to pay Ashley's wife rather than Ashley.
As to Mercer's contention that there was no "contract of hire" and thus no employer-employee relationship and resultant workers' compensation liability, the Kentucky Supreme Court has held that a contract of hire may be "express or implied." Ratliff at 324. While there was no evidence below of a written employment contract between Ashley and Mercer, the totality of the record supports ALJ Wolff's conclusion that an implied contract of hire existed.
We also find no error in the Board's determination that ALJ Wolff properly denied Mercer's claim for vocational rehabilitation benefits. ALJ Wolff determined that Mercer suffered a permanent total disability. The Legislature's usage of the word "may" in KRS 342.710(3) indicates that the application of vocational rehabilitation benefits is entirely within the discretion of the ALJ. Alexander v. S&M Motors, Inc., 28 S.W.3d 303 (Ky. 2000). We agree with the Board's conclusion that ALJ Wolff explained his reasoning for not awarding vocational rehabilitation benefits, and his findings will not be disturbed.
Finally, Ashley contends that the Board misinterpreted the effect of the settlement agreement between Mercer and the UEF. Ashley maintains that he participated in the settlement to the extent that he agreed with the settlement amount. We do not agree. Nothing in the settlement agreement demonstrates that Ashley participated in the settlement. Rather, the agreement expressly states that Ashley was not a participant and merely retained the right to appeal. We find no error.
Our duty on appeal is to correct the Board where it has "overlooked or misconstrued controlling statutes or precedent, or committed an error in assessing the evidence so flagrant as to cause gross injustice." Western Baptist Hospital v. Kelly, 827 S.W.2d 685, 687-688 (Ky.1992). In the matter before us, we find no basis for concluding that the Board has misconstrued the law or committed an error in assessing the evidence so flagrant as to cause gross injustice. To the contrary, the Board properly applied Ratliff and its progeny in concluding that ALJ Wolff correctly found Mercer to be Ashley's employee. The Board also properly construed the settlement agreement, and correctly determined that the ALJ's denial of vocational rehabilitation benefits was supported by the record and the law. For the foregoing reasons, we Affirm the Opinion of the Worker's Compensation Board.
ALL CONCUR. BRIEF FOR APPELLANT: Norman E. Harned
Ashley D. Belcher
Bowling Green, Kentucky
BRIEF FOR APPELLEE,
UNINSURED EMPLOYERS' FUND:
Jack Conway
Attorney General
James R. Carpenter
Uninsured Employers' Fund
Frankfort, Kentucky
BRIEF FOR APPELLEE, OVA
CARMEN:
Calvin R. Fulkerson
Lexington, Kentucky
BRIEF FOR APPELLEE, MICHAEL
MERCER:
Elizabeth Ann Schott
Jessica Jarboe Logsdon
Louisville, Kentucky