W.C. No. 4-270-668Industrial Claim Appeals Office.
September 25, 1996
ORDER OF REMAND
Quadri Construction Company (Quadri) and its insurer, Hawkeye-Security Insurance Company/United Security Insurance Company (Hawkeye respondents), seek review of that portion of an order of Administrative Law Judge Martinez (ALJ) which denied their claim for penalties under § 8-43-304(1), C.R.S. (1996 Cum. Supp.). We set aside the contested portion of the order and remand for further proceedings.
Insofar as pertinent, the ALJ found that the claimant was a stonemason employed by respondent George Williams d/b/a Williams Masonry (Williams). Quadri, a general contractor, engaged Williams to perform subcontracted stone work at a private residence.
On September 1, 1995, the claimant was performing the contracted stone work and sustained a compensable injury. It was discovered that Williams did not have workers’ compensation insurance at the time of the injury because Mr. Williams had “missed some [premium] payments” and the policy had been canceled.
Under these circumstances, the ALJ concluded that the Hawkeye respondents are liable for the claimant’s workers’ compensation benefits because Quadri was the claimant’s statutory employer. However, the ALJ rejected the Hawkeye respondents’ argument that penalties should be imposed against Williams on account of Williams’ failure to maintain workers’ compensation insurance. The ALJ reasoned that penalties are inappropriate because, under § 8-43-408(1), C.R.S. (1996 Cum. Supp.), the penalty for non-insurance “is limited to an increase of compensation and benefits by fifty percent.”
On review, the Hawkeye respondents contend that the ALJ erred in failing to assess penalties under § 8-43-304(1) because Williams violated § 8-44-101(1), C.R.S. (1996 Cum. Supp.), by failing to maintain workers’ compensation insurance. The Hawkeye respondents reason that this failure constitutes a violation of the Act within the meaning of § 8-43-304(1), and that they are “aggrieved” by this failure. Because we conclude that the ALJ misapplied the law, we remand for further proceedings and entry of a new order.
In Archibeque v. Colorado Family Physicians, W.C. No. 4-022-270, August 17, 1992, we held that a non-insured employer was subject to paying increased “compensation” under § 8-43-408(1), but was also subject to a penalty under § 8-43-304(1) for failure to maintain insurance. Relying on Eachus v. Cooper, 738 P.2d 383 (Colo.App. 1986), we held that the fifty percent increase in “compensation” under § 8-43-408(1) “is not penal in nature but rather is simply a provision for additional compensation.” Thus, we concluded that § 8-43-304(1) permits imposition of a penalty because there is no other penalty “specifically provided” for failure to insure. See also, Merchants Oil, Inc. v. Anderson, 897 P.2d 895 (Colo.App. 1995).
We are not persuaded to depart from out conclusion in Archibeque,
and therefore, agree with the Hawkeye respondents that the ALJ erred in holding that § 8-43-408(1) necessarily precludes the imposition of a penalty for Williams’ failure to maintain workers’ compensation insurance. On remand, the ALJ should make specific findings of fact and conclusions of law determining whether Williams is subject to a penalty under the provisions of § 8-43-304(1), the length and the amount of the penalty, if any, and to whom such penalty should be paid.
In view of this disposition, it is premature to consider the parties’ remaining arguments, including the claim for attorney fees. The ALJ may, in the exercise of his discretion, hold additional hearings if necessary.
IT IS THEREFORE ORDERED that the contested portion of the ALJ’s order dated April 8, 1996, is set aside, and the matter is remanded for further proceedings consistent with the views expressed herein.
INDUSTRIAL CLAIM APPEALS PANEL
___________________________________ David Cain
___________________________________ Bill Whitacre
Copies of this decision were mailed September 25, 1996 to the following parties:
Paul D. Beach, P.O. Box 1407, Montrose, CO 81401
George Williams d/b/a Williams Masonry, P.O. Box 713, Olathe, CO 81425
Quadri Construction Co., 70605 Buckhorn Rd., Montrose, CO 81401-8706
Al Koeneke, United Security Ins., Hawkeye Security Ins., P.O. Box 5150, Denver, CO 80217
James H. Delman, Esq., P.O. Box 196, Montrose, CO 81402 (For George Williams)
Douglas Briggs, Esq., 743 Horizon Court, Ste. 200, Grand Junction, CO 81506, (For Hawkeye/United Security Respondents)
Timoteo Gallegos, Esq., P.O. Box 847, Delta, CO 81416 (For the Claimant)
By: ______________________