CHRISTOPHER A ALLEN, Applicant
METRO HANGAR PARTNERS, LLC, Employer
SKY BUILDERS, LLC, Employer
AMERICAN FAMILY MUTUAL INS CO, Insurer
WIS WC UEF, Insurer
The Wisconsin Uninsured Employers Fund submitted a petition for commission review alleging error in the administrative law judge's Findings and Interlocutory Order issued in this matter on June 16, 2006. The applicant submitted an answer to the petition and briefs were submitted by the parties. On December 8, 2006, the commission ordered the taking of additional evidence pursuant to its authority under Wis. Stat. § 102.18(3). Additional hearing was held on May 15, 2008, and thereafter the record was returned to the commission for its decision. Additional briefing was also allowed.
Several issues arise from the conceded fact that on August 29, 2002, the applicant fell and fractured his left heel while hanging drywall at an airport hangar owned by Metro Hangar Partners, LLC. Those issues are: (1) whether at the time of his injury the applicant was performing services as an employee under the Act, or as an independent contractor not subject to the Act; (2) if the applicant was performing his services as a covered employee, whether Metro Hangar Partners, LLC or Sky Builders, LLC, was his employer; (3) whether or not either of these alleged employers had worker's compensation insurance coverage on the date of injury, thus implicating the issue of liability for the Uninsured Employers Fund; (4) the applicant's average weekly wage; and (5) nature and extent of disability including liability for vocational retraining benefits.
The commission has carefully reviewed the entire record in this matter and hereby affirms in part and reverses in part the administrative law judge's Findings and Interlocutory Order. The commission makes the following:
On August 29, 2002, the applicant fell off scaffolding and fractured his left heel while hanging drywall at an airport hangar owned by Metro Hangar Partners, LLC (MHP). His services had been secured by verbal employment contract offered through the person of Michael Sereich.
Wis. Stat. § 102.07(4)(a), provides that an "employee" under the Act includes:
(a) Every person in the service of another under any contract of hire, express or implied...
The only evidence submitted concerning the organization of MHP was the testimony of Sereich, the self-described "manager" of MHP. Sereich had no capital investment in MHP. That investment was provided by Donald Shine and Maureen Sereich (Sereich's ex-wife). MHP was created "...to invest in airplane hangars and to rent and/or sell the hangar (sic)."(1) Sereich asserted that MHP never had any employees, but he failed to explain his own employment status with the company. MHP never had a worker's compensation insurance policy.
Sereich was the sole owner of another limited liability company, Sky Builders, that was created to perform construction work on the airport hangars owned by MHP,
and also to perform construction work on "totally separate projects."(2) Sky Builders employed four or five employees to construct the hangar in which the applicant was subsequently injured. This work was done early in the calendar year 2002, and by May 2002, it was completed and all the employees had been laid off. Subsequently, Sereich telephoned the applicant and offered him $700 to hang and finish 47 sheets of drywall in the airport hangar. The applicant accepted this employment offer.
Wis. Stat. § 102.04(1), includes the following as employers subject to the Act:
"102.04(1)(b) 1. Every person who usually employs 3 or more employees whether in one or more trades, businesses, professions or occupations, and whether in one or more locations.
2. Every person who usually employs less than 3 employees, provided the person has paid wages of $500 or more in any calendar quarter for services performed in this state. Such employer shall become subject on the 10th day of the month next succeeding such quarter."
Wis. Stat. § 102.07(8), provides in pertinent part:
"(8) (a) Except as provided in par. (b), every independent contractor is, for the purpose of this chapter, an employe of any employer under this chapter for whom he or she is performing service in the course of the trade, business, profession or occupation of such employer at the time of the injury.
"(b) An independent contractor is not an employe of an employer for whom the independent contractor performs work or services if the independent contractor meets all of the following conditions:
"1. Maintains a separate business with his or her own office, equipment, materials and other facilities.
"2. Holds or has applied for a federal employer identification number with the federal internal revenue service or has filed business or self-employment income tax returns with the federal internal revenue service based on that work or service in the previous year.
"3. Operates under contracts to perform specific services or work for specific amounts of money and under which the independent contractor controls the means of performing the services or work.
"4. Incurs the main expenses related to the service or work that he or she performs under contract.
"5. Is responsible for the satisfactory completion of work or services that he or she contracts to perform and is liable for a failure to complete the work or service.
"6. Receives compensation for work or service performed under a contract on a commission or per job or competitive bid basis and not on any other basis.
"7. May realize a profit or suffer a loss under contracts to perform work or service.
"8. Has continuing or recurring business liabilities or obligations.
"9. The success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures."
As to condition (1) noted above, there is no indication that the applicant maintains a separate business with his own office, equipment, materials, and other facilities. Regarding condition (2), the applicant does not hold nor has he applied for a federal employer identification number, nor has he filed business or self-employment income tax returns with the federal internal revenue service based on work or service in the previous year. Regarding condition (3), there was a verbal contract for the applicant to hang drywall for $700.00. However, the evidence indicates that the applicant did not provide the scaffolding, drywall, tape, or mud used for the job. Accordingly, he did not fully control the means of performing the work. Regarding condition (4), it must again be noted that the drywall, mud, tape, and scaffolding were not purchased by the applicant, and therefore he did not incur the main expenses related to the work. Regarding condition (5), the applicant was not legally responsible for the completion of the work. Regarding condition (6), the applicant did receive his compensation on a per-job basis, which satisfies this particular condition. Regarding condition (7), the applicant was not subject to profit-or-loss concerns for his services. Regarding condition (8), the applicant had no continuing business liabilities or obligations. Regarding condition (9), the applicant did not maintain a business dependent upon the relationship of receipts to expenditures.
There is no credible evidence that the applicant intended to work as an independent contractor while performing his drywall services, or that he ever achieved independent contractor status. The applicant credibly testified that he considered himself to have always worked as an employee when performing drywall services, and he did not maintain a drywall business.
It is evident that the applicant has been shown to have satisfied only one of the nine required conditions that must be satisfied in order for an individual to be considered an independent contractor under the statute. The applicant was performing his services as a covered employee when he was injured on August 29, 2002, leading to the questions of who was his employer, and was that employer covered under the Act.
LIABLE EMPLOYER AND INSURANCE COVERAGE
The administrative law judge found that MHP was the applicant's employer on August 29, 2002. However, the commission finds that Sky Builders hired the applicant as an employee to perform the drywall work that he was performing when injured on August 29, 2002. The commission further finds that Sky Builders was a covered employer under the Act.
When he was hired to perform the drywall work in the summer of 2002, the applicant reasonably believed Sereich to be acting as the representative of Sky Builders for such hiring. Sereich had hired him to perform construction services on the same hangar several months earlier, and it is undisputed that this employment was with Sky Builders. Sky Builders' primary business was the performance of construction work on hangars owned by MHP, and hanging drywall is construction work. Sereich acknowledged that Sky Builders paid for the drywall and other supplies needed for the job. He asserted that MHP purchased the scaffolding needed for the job from Sky Builders, but that assertion is incredible given MHP's professed business purpose of renting and selling airport hangars, and Sky Builders' professed business purpose of performing construction work. Even were it true that for some reason MHP purchased the scaffolding from Sky Builders, given the other facts of record, this would not constitute sufficient reason to find that MHP was the applicant's employer.
Sereich acknowledged in testimony that he was an employee of Sky Builders and that Sky Builders had "numerous other employees from time to time." He also acknowledged that Sky Builders employed at least four employees early in the year 2002, continuing until May of that year, and that over the course of its existence Sky Builders wrote 500 to 1,000 checks. This testimony leads to the inference that Sky Builders usually employed three or more employees in its business (see Wis. Stat. § 102.04(1)(b)1.); or in the alternative, that Sky Builders paid at least $500 in wages in the calendar quarter ending in March of 2002 (See Wis. Stat. § 102.04(1)(b)2.). In either case, Sky Builders was a covered employer on August 29, 2002.
Sky Builders purchased a worker's compensation insurance policy from American Family Insurance effective September 7, 2001, but allowed that policy to lapse due to nonpayment of premium on July 31, 2002. Accordingly, on August 29, 2002, Sky Builders was uninsured and the Uninsured Employers Fund must assume liability for the applicant's injury pursuant to Wis. Stat. § 102.81.
AVERAGE WEEKLY WAGE
The testimony concerning when the applicant was paid for the drywall work he performed, and how much he was paid, is inconsistent. However, both Sereich and the applicant ultimately agreed that the applicant was paid $700.00 in cash for the job. The applicant indicated that it was a three-day job, and while his testimony is not entirely clear concerning the number of hours of work required from him in each of those three days, it is inferred from what he did state that he would have had to work 10-hour days to complete the job. When $700.00 is divided by 30 hours, the result is $23.33 per hour, which the commission infers was the applicant's hourly wage when injured. This amounts to an average weekly wage of $933.20,(3) and a temporary total disability rate of $622.13 per week.
VOCATIONAL RETRAINING
It is undisputed that the applicant sustained 15 percent permanent partial disability at the left ankle as a result of the work injury. The applicant applied to the Department of Vocational Retraining (DVR) for retraining on October 16, 2002, and the DVR counselor received an assessment of temporary restrictions from the applicant's physician, Dr. Zhu, on November 7, 2002. Dr. Zhu did not assess permanent disability until completing a WKC-16-B on January 8, 2004. The DVR placed the applicant on an eligibility waiting list on December 11, 2002, due to lack of DVR funds. On August 25, 2003, the applicant enrolled on his own in an associate degree program in mechanical and computer drafting at Milwaukee Area Technical College. On December 12, 2003, the DVR found him eligible for retraining benefits in that program. He was scheduled to complete the program in December of 2005. The Uninsured Employers Fund argues that the DVR's approval of this program on December 12, 2003, is invalid, because at the time of the approval the applicant only had temporary restrictions.
The applicable federal law for vocational rehabilitation purposes, 29 USC 705(9), defines "disability" as follows:
(A) except as otherwise provided in subparagraph (B), any physical or mental impairment that constitutes or results in a substantial impediment to employment; or
(B) . . . a physical or mental impairment that substantially limits one or more major life activities."
There is ambiguity in these definitions as to whether or not an injury must have permanent residuals in order to constitute a disability for vocational retraining purposes. However, even assuming the law requires a permanent disability in order to be eligible for vocational retraining, the applicant did sustain a permanent disability that clearly has affected his ability to work as a drywaller. Even though the DVR made its eligibility decision approximately one month prior to the Dr. Zhu's assessment of permanent restrictions, the medical facts bear out the appropriateness of that decision, and it would constitute an absurd result to deny vocational retraining benefits on the basis that the DVR's approval took place one month before formal assessment of permanent restrictions. At the time the DVR gave its approval for retraining the applicant was indeed permanently disabled.
COMPENSATION DUE
There is no dispute before the commission regarding the periods of temporary total disability, which in accordance with Dr. Zhu's opinion, was from August 29, 2002 until March 17, 2003. This was a period of 37 weeks and 2 days, which at the applicable rate of $622.13 per week, amounts to a total of $23,226.19.
Dr. Zhu's credible permanent partial disability assessment of 15 percent at the left ankle results in 37.5 weeks of compensation at the applicable rate of $212.00 per week for a total of $7,950.00, all accrued.
The applicant is also entitled to compensation for vocational retraining pursuant to Wis. Stat. § § 102.43(5) and 102.61(1), beginning on December 12, 2003, and continuing for the subsequent period(s) up to a total of 80 weeks, during which he received training for the associate degree program at Milwaukee Area Technical College.(4) The record before the commission does not contain an updated summary of the relevant dates of retraining. The applicant will be given 30 days from the date of this decision to submit to the Uninsured Employers Fund a detailed summary of such dates, and any compensable expenses. Within 30 days after receipt of such summary the Fund shall make immediate payment, unless there is a legitimate basis for disputing the summary. In case of such dispute there shall be opportunity for additional hearing to resolve it.
The applicant's attorney is entitled to a 20 percent fee against the amounts paid for temporary total disability, permanent partial disability, and vocational retraining expense. The fee against the temporary total disability, not including that due pursuant to Wis. Stat. § 102.43(5), and permanent partial disability totals $6,235.24.
The medical expense claim has been poorly summarized by the applicant and his attorney, with evidence of unpaid medical bills from St. Francis Performance Center (St. Francis Hospital of Milwaukee), Medical Associates of Menomonee Falls, Ortho Associates of Waukesha, and Waukesha Memorial Hospital. There are conflicting WKC-3's with regard to whether or not the latter three providers have outstanding claims. It is clear that St. Francis Performance Center is due payment in the amount of $3,770.00. With the exception of this payment, the applicant shall resubmit a final WKC-3, covering all medical expenses through the date of the hearing held on February 7, 2006. The Uninsured Employers Fund shall make payment of any outstanding medical expense submitted in this WKC-3, subject to disputes over its accuracy. This order shall remain interlocutory with respect to the issue of unpaid medical expense. The administrative law judge's order references the possibility of medical mileage expense of unspecified amount, but no documentation of any mileage expense was submitted. Accordingly, no such expense is due through the date of the hearing held on February 7, 2006.
Dr. Zhu credibly opined that additional medical treatment may be required, and this could result in additional medical expense and disability. Accordingly, jurisdiction will be reserved.
NOW, THEREFORE, this
The Findings and Interlocutory Order of the administrative law judge are affirmed in part and reversed in part. Within 30 days from this date, the Uninsured Employer's Fund shall pay to the applicant as compensation for temporary total disability and permanent partial disability the total sum of Twenty-four thousand nine hundred forty dollars and ninety-five cents ($24,940.95); to the applicant's attorney, Thomas Domer, fees in the amount of Six thousand two hundred thirty-five dollars and twenty-four cents ($6,235.24); and to St. Francis Performance Center the sum of Three thousand seven hundred seventy dollars ($3,770.00).
Also within 30 days from this date, the applicant shall submit to the Uninsured Employers Fund a revised summary of compensation due for vocational retraining in accordance with the commission's findings, and the Fund shall be allowed 30 days after receipt of such summary to make payment in accordance with it. Jurisdiction is reserved with respect to any dispute concerning the accuracy of the summary.
Also within 30 days from this date, the applicant shall submit to the Uninsured Employers Fund a revised WKC-3 in accordance with the above findings. Within 30 days thereafter, the Uninsured Employers Fund shall make payment in accordance with this revised WKC-3, unless there is legitimate basis for dispute over the reasonableness or necessity of the claims made therein. Jurisdiction is reserved to resolve any such dispute.
There is no indication in the record that prior payments of compensation have been made by any party. However, if prior payments were made, the Uninsured Employers Fund shall receive credit for any payments it made; and the Fund shall deduct any prior payments made by another party from the amounts ordered paid to the applicant and his attorney, and make such payments as reimbursement to the appropriate party.
The claims against Metro Hangar Partners, LLC and against American Family Mutual Insurance Company are dismissed with prejudice.
Sky Builders, LLC remains liable for reimbursement to the Uninsured Employers Fund pursuant to Wis. Stat. § 102.82.
Jurisdiction is reserved for such further findings and orders as may be warranted.
Dated and mailed July 24, 2008
allench2.wpr : 185 : 8 ND §§ 2.2; 2.13;
4.4; 5.46
/s/ James T. Flynn, Chairperson
/s/ Robert Glaser, Commissioner
/s/ Ann L. Crump, Commissioner
NOTE: The partial reversal of the administrative law judge's decision did not involve any disagreement with his credibility determinations.
cc:
Attorney James Ratzel
Attorney William Sachse
Attorney Michael C. Frohman
Attorney Thomas Domer
Appealed to Circuit Court. Affirmed March 6, 2009.
[ Search Decisions ] - [ WC Legal Resources ] - [ LIRC Home Page ]