W.C. No. 4-312-835Industrial Claim Appeals Office.
September 28, 2001
ORDER OF REMAND
The claimant seeks review of an order of Administrative Law Judge Wheelock (ALJ) which granted the respondents’ motion for summary judgment and denied and dismissed the claim against respondents U.S. Home Corporation (U.S. Home), and its insurer Old Republic Insurance Company. The claimant argues the ALJ applied an incorrect legal standard in determining that U.S. Home was not the claimant’s statutory employer for purposes of § 8-41-401(1)(a), C.R.S. 2001. We set the order aside and remand for further proceedings.
As the parties and ALJ are aware, this case has a long procedural history. That history is summarized in our prior orders dated December 19, 1997, September 14, 1998, and June 28, 2000. Those orders are incorporated herein as if fully set forth.
Following our June 28 order, the ALJ entered an order dated August 29, 2000. In the August 29 order, the ALJ found that Red Oak Carpet Center (Red Oak) was not the claimant’s statutory employer. The ALJ found the claimant was a direct employee of Integrity Business Services, Inc. (IBS), which was an employee leasing business. The ALJ also found Red Oak was in the “business of carpet sales and supply.” Under these circumstances, the ALJ concluded the claimant was not a statutory employee of Red Oak because under the “regular business test” Red Oak could not argue it was “in the same employment leasing business as IBS.”
On November 24, 2000, the respondents filed a “Motion for Summary Judgment” contending, inter alia, the claimant could not be a statutory employee of U.S. Home because it was not in the same business (employee leasing) as IBS. The Old Republic respondents argued the ALJ should apply the same logic employed in the August 29 order.
On January 11, 2001, the ALJ granted the respondents’ motion for summary judgment. In support, the ALJ found the undisputed evidence establishes that U.S. Home was “not in the business of loaning employees to other businesses for employment,” as was IBS. Further, the ALJ found IBS was not in the “business of building residential housing, nor supplying or installing carpeting.” Under these circumstances, the ALJ concluded the claimant can’t be considered a statutory employee of U.S. Home.
On review the claimant contends the ALJ erred as a matter of law in granting the motion for summary judgment because she misapplied the “regular business test.” We agree.
Section 8-41-401(1)(a) provides that a person, company, or corporation engaged in conducting “any business by leasing or contracting out any part or all of the work thereof to any lessee, sublessee, contractor, or subcontractor,” is “construed to be an employer as defined in articles 40 to 47 of this title.” The purpose of this statute is to prevent “employers from avoiding responsibility under the workers’ compensation act by contracting out their regular work to uninsured independent contractors rather than hiring the worker directly.” M M Management Co. v. Industrial Claim Appeals Office, 979 P.2d 574, 577
(Colo.App. 1998) (emphasis added). Consistent with this interpretation, it has been held that the proper focus is on the “constructive employer’s total business operation, including the elements of routineness, regularity, and the importance of the contracted service to the regular business of the employer.” Finlay v. Storage Technology Corp., 764 P.2d 62 (Colo. 1988) (emphasis added). The question of whether the contracted work is part of the “regular business of the employer” is not affected by the fact that the “subcontractor is an independent entity who has a business of his own.” Melody Homes, Inc. v. Lay, 610 P.2d 1081
(Colo.App. 1980).
It follows the ALJ erred as a matter of law in granting the respondents’ motion for summary judgment on the grounds that the regular business operations of U.S. Home are different than the regular business operations of IBS. The dispositive question is whether the contracted work is part of the regular business of U.S. Home without regard to the regular business operations of IBS. Finlay v. Storage Technology Corp., supra; Melody Homes, Inc. v. Lay, supra.
Further, there appears to be a material issue of fact concerning whether or not laying carpet was a part of U.S. Home’s regular business operation. Although Mr. Geiger denied this in his affidavit, the claimant offered to testify to the contrary at the hearing. Moreover, the fact that U.S. Home contracted with Red Oak for carpeting is some evidence from which it could be inferred that U.S. Home’s residential construction business incorporates the installation of carpet as part of its regular business operation. Because there is a disputed issue of fact, summary judgment is an inappropriate remedy and a hearing is required. See Hendricks v. Industrial Claim Appeals Office, 809 P.2d 1076 (Colo.App. 1990). For the same reason we reject the claimant’s contention that we may determine that U.S. Home is a statutory employer as a matter of law.
We also reject the respondents’ contention that the ALJ’s order is not final for purposes of review. The effect of the ALJ’s order is to deny the entire claim for benefits against these respondents. Section 8-43-301(2), C.R.S. 2001.
We previously rejected the respondents’ arguments that the claim is barred by collateral estoppel, that the claimant is illegally seeking double benefits, and that the claimant did not timely respond to the respondents’ motion to dismiss filed in January 1997. For the reasons set forth in our prior orders, we again reject these arguments. We decline to consider the respondents’ remaining arguments because those arguments were not the basis of the ALJ’s order. However, we note that we previously rejected the argument that U.S. Home may not be considered the claimant’s statutory employer because there was no direct contractual relationship between U.S. Home and IBS. See Order of Remand, September 14, 1998.
IT IS THEREFORE ORDERED that the ALJ’s order dated January 11, 2001, is set aside, and the matter is remanded for further proceedings consistent with the views expressed herein.
INDUSTRIAL CLAIM APPEALS PANEL
________________________________ David Cain
________________________________ Kathy E. Dean
Copies of this decision were mailed September 28, 2001 to the following parties:
William Wright, 4440 Cobbleskill Dr., Colorado Springs, CO 80903
Old Republic Insurance Co., Gallagher Bassett Services, Inc., 7935 E. Prentice Ave., #305, Englewood, CO 80111
U.S. Home Corp., 6000 S. Greenwood Plaza Blvd., #200, Englewood, CO 80011
Mike Fallowfield, U.S. Home Corp., P. O. Box 2863, Houston, TX 77252-2863
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)
Red Oak Carpet Center, Kevin O’Neill, 3809 Cresta Loma Pl., Whitefield, CO 80911
James Lenyo, Adjuster, Allied Mutual Insurance Co., P. O. Box 5190, Denver, CO 80217
Ted A. Krumreich, Esq., 950 17th St., 21st floor, Denver, CO 80202 (For Allied Mutual Insurance Co.)
BY: A. Pendroy