W.C. No. 4-312-835Industrial Claim Appeals Office.
June 28, 2000
ORDER OF REMAND
The claimant seeks review of an order of Administrative Law Judge Wheelock (ALJ), dated August 16, 1999, which denied and dismissed the claim for benefits against U.S. Home Corporation (U.S. Home), and its insurer, Old Republic Insurance Company (Old Republic respondents). The claimant contends the ALJ erred in determining that U.S. Home was not his statutory employer because U.S. Home’s subcontractor, Red Oak Carpet Center (Red Oak), carried workers’ compensation insurance. The claimant further contends the ALJ erred in denying his motion to join Allied Mutual Insurance Company (Allied) as a respondent. We set the order aside and remand for entry of a new order.
This case has a long and complex procedural history. That history is summarized in our two prior orders of remand dated December 19, 1997, and September 14, 1998. The history of a related claim is summarized in Wright v. Integrity Business Services, Inc., (Colo.App. No. 97CA1976, Nov. 13, 1998) (not selected for publication) (copy in record). These histories are incorporated in this order.
In our order of September 14, 1998, we determined there are material issues of fact concerning whether or not U.S. Home was the claimant’s statutory employer within the meaning of §8-41-401(1)(a), C.R.S. 1999. We specifically held the ALJ erred in determining the claimant was not U.S. Home’s statutory employee simply because there was no direct contractual relationship between U.S. Home and the claimant’s immediate employer, Integrity Business Services, Inc. (IBS). We also stated that if the ALJ determined “Red Oak carried workers’ compensation insurance, and that insurance covered the claimant’s activities at the time of injury, it is possible that U.S. Home would be immune from liability under § 8-41-401(2).” We remanded for a hearing concerning these issues.
Following the remand, the parties submitted documentary evidence and depositions. Based on this evidence, the ALJ found that U.S. Home was a general contractor which contracted with Red Oak for the installation of carpet and flooring at U.S. Home projects. At the time of his injury on March 22, 1995, the claimant was a direct employee of IBS, and was leased to Red Oak for purposes of installing carpet on a U.S. Home project. U.S. Home was unaware of the contractual arrangement between Red Oak and IBS. The ALJ found Allied insured Red Oak for workers’ compensation and, therefore, concluded the Old Republic respondents are immune from statutory employer liability pursuant to § 8-41-401(2), C.R.S. 1999.
On review, the claimant contends that, as a matter of law, the Allied policy issued to Red Oak did not cover his “activities” at the time of injury because the policy covers only “employees” of Red Oak. The claimant points out the ALJ found he was not an employee of Red Oak. Because we conclude the findings are insufficient to afford appellate review, we remand for entry of a new order. Section 8-43-301(8), C.R.S. (1999).
As noted in our September 14, 1998 order, § 8-41-401(2) provides that if a lessee, contractor, or subcontractor “is also an employer in the doing of such work and,. . .insures and keeps insured its liability for compensation,” then the “lessee, contractor, or subcontractor, its employees, or its insurer” shall have no right of action against the putative statutory employer which is contracting out its business. Thus, if the subcontracting employer maintains insurance covering its “liability for compensation,” the party contracting out its business is immune from claims for workers’ compensation benefits by the subcontractor’s employees. See Buzard v. Super Walls, Inc., 681 P.2d 520 (Colo. 1984); Campbell v. Black Mountain Spruce, Inc., 677 P.2d 379 (Colo.App. 1983).
However, it is not the policy of workers’ compensation insurance which measures the liability of the insured. Rather, insurance coverage is “coextensive only with the employer’s liability in the operations covered by the policy or some naturally connected business.” Grand Mesa Trucking, Inc. v. Industrial Commission, 705 P.2d 1038 (Colo.App. 1985); State Compensation Insurance Fund v. Dean, 689 P.2d 1146 (Colo.App. 1984). Consequently, in order to obtain the immunity conferred by § 8-41-401(2), the Old Republic respondents were obligated to establish not only that Red Oak purchased a policy of workers’ compensation insurance, but that the policy covered the claimant’s activities at the time of the injury. Otherwise, Red Oak would not have insured its “liability for compensation” within the meaning of the statute. Thus, insofar as the ALJ concluded that the mere existence of a workers’ compensation policy covering Red Oak immunized the Old Republic respondents, she erred.
The issue then, is whether the Allied policy covered the claimant’s activities at the time of injury. The policy itself states that Allied “will promptly pay when due the benefits required of [Red Oak] by the workers compensation law.” (Policy, “Part One”). The policy also provides that Allied “will pay all sums [Red Oak] legally must pay as damages because of bodily injury to [Red Oak’s] employees.” (Policy, “Part Two”). Under the circumstances, we agree with the claimant that interpretation of the policy is a matter of law.
Under the Act, Red Oak is liable for compensation to its direct employees. Further, to the extent it contracted out its regular business, employees of uninsured subcontractors are deemed to be Red Oak’s employees for purposes of workers’ compensation. Section 8-41-401(1)(a); Buzard v. Super Walls, Inc., 681 P.2d at 522. Therefore, we conclude that the Allied policy would cover the claimant’s activities if the policy covers carpet installation, and the claimant was either a direct employee or statutory employee of Red Oak.
Although the ALJ seemingly concluded otherwise, we do not believe the adjudication of the prior claim precludes the Old Republic respondents from proving the claimant was Red Oak’s statutory employee and, therefore, covered by the Allied policy for purposes of establishing U.S. Home’s immunity under §8-41-401(2). The doctrine of collateral estoppel applies only if the party against whom collateral estoppel is asserted was a party to or in privity with a party to the prior proceeding. M M Management Co. v. Industrial Claim Appeals Office, 979 P.2d 574
(Colo.App. 1998). The Old Republic respondents were not parties to the prior claim (against IBS and Red Oak), and the Court of Appeals explicitly upheld the ALJ’s refusal to join them as parties in that case. Therefore, the Old Republic respondents are not precluded from establishing the claimant was Red Oak’s statutory employee, even though a contrary determination was reached in the previous case. Further, our review of the record indicates there is substantial evidence from which the ALJ could find that Red Oak was in the carpet installation business, and contracted out the work to IBS. (For example: Contractor Base Agreement; affidavit of Kevin O’Neil dated March 21, 1997).
We note the ALJ stated, on page 1 of the order, that the “respondents’ attorney stipulated that claimant at the time of his injury was not an employee of Red Oak Carpet Center and stipulated to the non-joinder of Red Oak Carpet Center and Allied Mutual Insurance Company.” To the extent there was such a “stipulation,” we understand it to have occurred in the context of the issue of whether Allied should be joined as a party, and without prejudice to the Old Republic respondents’ argument that they are immune from liability because of the Allied policy. (Tr. p. 26).
However, even if the claimant was Red Oak’s statutory employee, there is an additional issue concerning whether or not the policy itself covered carpet installation. A claims superintendent for Allied testified that when Red Oak applied for the workers’ compensation policy it listed its employees as performing “clerical, outside sales, and house furnishings” duties. Further, the same document describes Red Oak’s business as carpet sales not involving the direct or subcontracted installation of carpet. The witness also testified that Allied was taking the position that it is not “liable on behalf of Red Oak” to pay the claimant’s benefits because “Red Oak was not in the business of installing floor covering and carpet.” (Lenyo Depo. pp. 8-10). However, the same witness also testified that he had “no reason to believe” that Allied would deny coverage “on the basis of not insuring the classification of risk.” (Lenyo Depo. pp. 26).
The question of whether insurance coverage extends to a particular activity is generally one of fact for determination by the ALJ. Grand Mesa Trucking, Inc. v. Industrial Commission, supra. Here, the record appears subject to conflicting inferences concerning whether or not the Allied policy would cover the claimant’s activities as a carpet installer for Red Oak.
Under these circumstances, the matter is remanded to the ALJ with directions to determine whether the claimant was Red Oak’s statutory employee. If the ALJ determines the claimant was Red Oak’s statutory employee, she shall determine whether or not the insurance policy purchased by Red Oak covered the claimant’s activities at the time of the injury. If the ALJ determines the claimant was the statutory employee of Red Oak, and the policy covered his activities as a carpet installer, she may then enter an order determining that the Old Republic respondents are immune from liability pursuant to § 8-41-401(2). We have previously rejected the Old Republic respondents’ alternative arguments in defense of the ALJ’s order. We incorporate those previous determinations herein. In light of this holding, we need not reach the issue of whether the ALJ properly refused to join Allied as a party to this claim.
IT IS THEREFORE ORDERED that the ALJ’s order dated August 16, 1999, is set aside, and the matter is remanded for entry of a new order consistent with the views expressed herein.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Kathy E. Dean
Copies of this decision were mailed June 28, 2000
to the following parties:
William C. Wright, 4440 Cobbleskill Dr., Colorado Springs, CO 80920
U.S. Home Corporation, 6000 S. Greenwood Plaza Blvd., #200, Englewood, CO 80011
Mike Fallowfield, U.S. Home Corporation, P. O. Box 2863, Houston, TX 77252-2863
Old Republic Insurance Company, P. O. Box 2200, Greensburg, PA 15601
Jim Lenyo, Allied Mutual Insurance Company, P. O. Box 5190, Denver, CO 80217-5190
W. Thomas Beltz, Esq., and Daniel A. West, Esq., 729 S. Cascade Ave., Colorado Springs, CO 80903 (For Claimant)
James R. Clifton, Esq., and Harvey D. Flewelling, Esq., 5353 W. Dartmouth Ave., #400, Denver, CO 80227 (For Respondents)
Ted A. Krumreich, Esq., 950 17th St., 21st floor, Denver, CO 80202 (For Allied Mutual Insurance Company)
BY: A. Pendroy