W.C. No. 4-498-475Industrial Claim Appeals Office.
October 9, 2002
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Stuber (ALJ) which denied and dismissed his claim against Youth Ventures LLC (YV) for workers’ compensation benefits. We affirm.
The ALJ found that YV is a child placement agency which arranges residential placements for children. The claimant was employed as a group home counselor for Star, a licensed residential placement facility. County social services paid YV a fee for child placement services, and YV paid a portion of the fee to Star to provide residential care for children placed through YV. On appeal, it is undisputed that Star was the claimant’s direct employer.
On May 28, 1999, the claimant suffered injuries in a motor vehicle accident while transporting residents of Star to a recreational activity. The co-worker who owned the vehicle the claimant was driving at the time of the accident had no motor vehicle insurance, and Star was uninsured for workers’ compensation benefits. Consequently, the claimant filed a claim against YV and alleged that YV was his statutory employer.
The ALJ found the claimant failed to sustain his burden to prove YV was the statutory employer. In so doing, the ALJ found YV was not a licensed placement agency and could not have provided residential services. Therefore, the ALJ determined that YV did not contract out its regular business to Star.
On review, the claimant contends the ALJ misapplied the law in determining YV was not the statutory employer. In particular, the claimant contends the ALJ failed to consider evidence that YV intervened in Star’s transportation duties by leasing a van for Star’s use. Under these circumstances, the claimant contends the ALJ was compelled to find YV’s business activities included transporting children and, therefore, YV contracted out part of its regular business to Star. We reject this argument.
Under § 8-41-401(1)(a), C.R.S. 2002, a company that contracts out part or all of its work to any subcontractor is the statutory employer of the subcontractor and the subcontractor’s employees. The purpose of the statute is prevent employers from “avoiding responsibility under the workers’ compensation act by contracting out their regular work to uninsured independent contractors.” Finlay v. Storage Technology Corp., 764 P.2d 62 (Colo. 1988).
Contrary to the claimant’s contentions, the ALJ explicitly recognized that the test for determining whether a contractor has subcontracted out its “regular business” is set forth in Finlay v. Storage Technology Corp., supra. (See Conclusions of Law 3). The “regular business test” is satisfied if the contracted services are part of the employer’s regular business as defined by its “total business operation,” considering the elements of routineness, regularity, and the importance of the contracted services to the contractor’s business operations. M M Management Company v. Industrial Claim Appeals Office, 979 P.2d 574
(Colo.App. 1998); Shumiloff v. Frey, W.C. No. 4-005-377 (April 24, 1992), aff’d, Trinity Lutheran Church v. Shumiloff (Colo.App. No. 92CA0794, April 29, 1993) (not selected for publication).
There is no particular formula which defines “regularity” and “routineness” in terms of frequency. Trinity Lutheran Church v. Shumiloff, supra. Rather, a service is regular and routine if it is an integral part of the contractor’s total business operation. As argued by the claimant, the importance of the contracted services can be demonstrated by showing that, in the absence of the subcontractor’s services, the contractor would find it necessary to accomplish the work by other means including, if need be, hiring, training, and utilizing its own employees to accomplish the services. Finlay v. Storage Technology Corp., supra; Campbell v. Black Mountain Spruce, Inc., 677 P.2d 379, 381
(Colo.App. 1983). Further, the exercise of control by the contractor is not required, but may be probative of whether the activities are part of the contractor’s regular business. Virginia Heritage Square Co. v. Smith, 808 P.2d 366 (Colo.App. 1991).
Application of the “regular business test” is dependent on the facts of each individual case. See Virginia Heritage Square Co. v. Smith, supra.
Moreover, we are obliged to uphold the ALJ’s factual findings if supported by substantial evidence. Section 8-43-301(8), C.R.S. 2002.
Here, the ALJ explicitly recognized evidence that YV leased a van in its own name for Star’s use. (Finding of Fact 18). However, the ALJ was not persuaded that evidence was alone sufficient to support a finding that the activities of residential child care were part of YV’s total business activities. Indeed the ALJ found YV was not a licensed residential agency and could not have performed the activities required of a residential facility even if it hired employees to do so. Furthermore, evidence that YV intervened to help Star acquire appropriate transportation, does not compel the conclusion that YV would have engaged in residential services, including the transportation of children to recreational activities, if Star did not exist. Instead, the ALJ found that YV’s business activities were limited to its role as an intermediary between the county social services department and group homes specializing in providing residential child care. Thus, the ALJ could infer that YV would cease doing any business, rather than become a residential facility, if no licensed residential facilities existed. (See Finding of Fact 19).
Moreover, the ALJ reasonably inferred that the “control” exercised by YV over Star’s operation and procedures was mandated by state regulations for licensing authorities, and did not demonstrate YV’s attempt to control Star’s operation. (See Finding of Fact 13, 14; Conclusions of Law 3). Rather, the record supports the ALJ’s finding that YV could stop referring children to Star, but YV could not force Star to make administrative changes and could not remove children placed at Star. Only county caseworkers could remove children already placed at Star.
The evidence could have been interpreted differently. However, there is substantial evidence in the record to support the ALJ’s finding that YV did not contract out part of its regular business to Star, and this determination supports the denial of benefits. Therefore, the existence of evidence, which if credited might support a contrary result, does not afford us grounds for granting appellate relief. F.R. Orr Construction v. Rinta, 717 P.2d 965 (Colo.App. 1985).
IT IS THEREFORE ORDERED that the order dated April 24, 2002, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
________________________________ Kathy E. Dean
________________________________ Dona Halsey
NOTICE
This Order is final unless an action to modify or vacate this Order is commenced in the Colorado Court of Appeals, 2 East 14th Avenue, Denver, CO 80203, by filing a petition for review with the Court, within twenty (20) days after the date this Order is mailed, pursuant to § 8-43-301(10) and § 8-43-307, C.R.S. 2001. The appealing party must serve a copy of the petition upon all other parties, including the Industrial Claim Appeals Office, which may be served by mail at 1515 Arapahoe, Tower 3, Suite 350, Denver, CO 80202.
Copies of this decision were mailed October 9, 2002 to the following parties:
Duke A. Ferreira, 4650 Blue Stem Ln., Colorado Springs, CO 80917
Youth Ventures, L.L.C., 4785 Granby Cir., Colorado Springs, CO 80919
Michael J. Steiner, Esq., Pinnacol Assurance — Interagency Mail (For Respondents)
Kimball Gardner, Esq., 115 E. Vermijo, #101, Colorado Springs, CO 80903 (For Claimant)
Derek Frickey, Esq., 111 S. Tejon, #700, Colorado Springs, CO 80903
BY: ___A. Hurtado___