W.C. No. 4-274-746Industrial Claim Appeals Office.
September 13, 1996
FINAL ORDER
Gene Taylor’s Sportmen’s Supply (the employer) seeks review of an order of Administrative Law Judge Martinez (ALJ) which determined that Commercial Union Insurance Co., (Commercial Union) did not insure the employer for the work-related injuries suffered by the claimant, and therefore, concluded that the employer is solely liable for the claimant’s injuries. We affirm.
The ALJ’s pertinent findings of fact may be summarized as follows. In September 1994, the claimant was hired by Gene Taylor (Taylor) to perform domestic services for Taylor’s mother. Taylor is an officer and shareholder of the employer. The claimant only performed services at the home of Taylor’s mother, and that home was neither owned nor operated by the employer. Furthermore, the employer is not in the business of providing domestic services. However, for administrative convenience the claimant was added to the employer’s payroll.
The employer was insured by Commercial Union for workers’ compensation. However, the insurance only afforded coverage to employees working under the classifications of “machine shop” (gunsmith), “store” (retail store personnel), “salespersons” and “clerical.” The policy also limited coverage to the employer’s four retail business locations. Therefore, the ALJ determined that Commercial Union did not provide coverage for the claimant’s injuries which arose out of and in during the course of her employment as a domestic worker. Consequently, the ALJ denied and dismissed the claim against Commercial Union and ordered the employer to pay the temporary disability and medical benefits awarded to the claimant.
On review, the employer does not contend that the Commercial Union policy expressly covered the claimant. Instead, the employer contends that the ALJ erred in failing to find that Commercial Union is equitably estopped from denying liability for the claimant’s injuries. We disagree.
As argued by the employer, the doctrine of equitable estoppel has been applied under certain circumstances to preclude an insurer from denying coverage. State Compensation INsurance [Insurance] Fund v. Wangerin, 736 P.2d 1246 (Colo.App. 1986) (estoppel to deny coverage by acceptance of premium after knowledge of loss); Leland v. Travelers Indemnity Co., 712 P.2d 1060 (Colo.App. 1985). In order to obtain relief under an estoppel theory, the employer was required to prove that: 1) the insurer knew the relevant facts; 2) the insurer intended that its conduct be acted on or must so act that the employer had a right to believe that the insurer’s conduct was so intended; 3) the employer was ignorant of the true facts; and 4) the employer detrimentally relied on the insurer’s conduct. See Johnson v. Industrial Commission, 761 P.2d 1140 (Colo. 1988).
The determination of whether the employer sustained this burden of proof was a question of fact for resolution by the ALJ. See Eisnach v. Industrial Commission, 633 P.2d 502 (Colo.App. 1981); General Cable Co. v. Industrial Claim Appeals Office, 878 P.2d 118 (Colo.App. 1994 ). Consequently, we are bound by the ALJ’s determination if supported by substantial evidence and plausible inferences drawn from the record. Section 8-43-301(8), C.R.S. (1996 Cum. Supp.); F.R. Orr Construction v. Rinta, 717 P.2d 965 (Colo.App. 1985). Furthermore, application of the substantial evidence test requires that we defer to the ALJ’s credibility determinations, his resolution of conflicts in the evidence and his assessment of the sufficiency and probative weight of the evidence Monfort Inc. v. Rangel, 867 P.2d 122 (Colo.App. 1993).
Here, the ALJ determined that the employer failed to sustain its burden of proof. In part, the ALJ found that the employer failed to prove that Commercial Union knew the relevant facts. Specifically, the ALJ found no credible evidence that, prior to the claimant’s accident, the employer notified Commercial Union that it employed domestic workers or that it expected workers’ compensation coverage for domestic workers. (Findings of Fact 11, 12, 15, 16; Conclusions of Law 6, 7).
The employer contends that the “uncontroverted” evidence shows that Commercial Union had actual notice of the claimant’s employment and that the employer sought workers’ compensation coverage for the claimant. In support, the employer cites the testimony of the employer’s chief financial officer, Russell Bergquist (Bergquist), who was “positive” that he discussed the claimant’s employment with the auditor hired by Commercial Union to review the employer’s payroll records in 1995. (Tr. p. 39).
However, the ALJ did not find this testimony credible, particularly in view of Bergquist’s testimony that he could not remember the name of the auditor, or the date the audit was performed. (Tr. pp. 41, 46, 47; Finding of Fact 13). Contrary, to the employer’s contention this finding adequately articulates the basis for the ALJ’s decision to reject Bergquist’s testimony.
The ALJ also determined that Bergquist did not recall the specifics of the audit or his conversation with the auditor. This finding is a plausible inference from Bergquist’s testimony that:
“To the best of my recollection . . . . I had related to the auditor that we had some ladies that were taking care of Mr. Taylor’s mother. And I can’t positively say I did this, but I’m thinking I went and showed them one of the pages of these ladies and showed them how that was coded.” (Tr. p. 38).
The ALJ’s findings are also supported by the 1995 “Audit Worksheet.” As stated by the underwriting manager for Commercial Union, the Worksheet does not expressly reference the claimant, any classification for domestic workers, or covered locations except the employer’s retail sites. (Lorenson depo. pp. 23, 25; Lorenson depo. Exhibit 1). Therefore, we may not interfere with the ALJ’s determination that the employer failed to establish the first element of equittable estoppel.
The employer also contests the ALJ’s failure to address the agency relationship between the adjuster and Commercial Union, and the employer’s theory that Commercial Union was bound by the notice given to its agent. However, in view of the ALJ’s finding that the employer did not notify the auditor of the claimant’s employment, it is immaterial whether the auditor was an “agent” of Commercial Union.
Similarly, we recognize that the record contains some evidence that a payroll audit normally includes questions concerning changes in the insured’s operation. (Lorenson depo. pp. 11-12). However, the ALJ determined as a matter of fact that such a discussion concerning the claimant’s employment did not occur during the 1995 audit. Therefore, the ALJ’s error, if any, in finding that the auditor’s “sole” task was to review payroll information was harmless and will be disregarded. Section 8-43-310 C.R.S. (1996 Cum. Supp.); A R Concrete Construction v. Lightner, 759 P.2d 831 (Colo.App. 1988) (error which is not prejudicial will be disregarded).
Next, the ALJ determined that the employer failed to prove that it was ignorant of the true facts. Notwithstanding the employer’s argument, there is substantial evidence in Bergquist’s testimony to support the ALJ’s finding. Bergquist admitted that he knew the claimant did not fall within any of the employee classifications listed on the Commercial Union policy. (Tr. pp. 51, 55). In fact, Bergquist admitted that he expected Commercial Union to list a new employee classification and make a premium adjustment to reflect coverage for the claimant. (Tr. pp. 53, 54).
Moreover the ALJ determined that the employer failed to demonstrate that it “reasonably relied” to its “detriment” on Commercial Union’s “conduct.” In support, the ALJ cited evidence that Commercial Union did not engage in any “conduct” concerning workers’ compensation coverage for the claimant. (Conclusion of Law 9). This finding is consistent with the evidence that the employer’s 1995 workers’ compensation premium notice did not include an adjustment for coverage of domestic workers. (Lorenson depo. p. 21). Similarly, Bergquist admitted that the insurance premium notice after the 1995 payroll audit showed no changes from the premium notice which was issued before the claimant became an employee. (Tr. pp. 55).
However, citing the rule of “reasonable expectation,” the employer asserts that it had a right reasonably to expect that its workers’ compensation insurance, after the 1995 audit, included coverage for the claimant. We disagree.
The “reasonable expectation” rule provides that an insurer who wishes to avoid or limit liability must not only use clear and unequivocal language evidencing its intent to do so, but must also call limiting conditions to the attention of the insured. Leland v. Travelers Indemnity Company of Illinois, 712 P.2d 1060 (Colo.App. 1985); Sanchez v. Connecticut General Life Ins. Co., 681 P.2d 974 (Colo.App. 1984). Furthermore, the claimant recognizes that application of the “reasonable expectation” rule must be based upon consideration of the “totality of the circumstances involved in the transaction from the point of view of an ordinary person.”
Here, there is no finding or assertion that the Commercial Union insurance policy contains any ambiguous or equivocal language concerning coverage of domestic workers. To the contrary, the ALJ expressly found that the category of domestic worker did not fall within any of the expressly covered categories, or in any category materially related thereto. See Grand Mesa Trucking, Inc., v. Industrial Commission, 705 P.2d 1038 (Colo.App. 1985). Furthermore, we may not interfere with the ALJ’s determination that the employer did not inform Commercial Union of its intent to purchase workers’ compensation coverage for the claimant. Under these circumstances, we cannot say that the totality of the circumstances compels a conclusion that the ordinary layperson would think he had purchased coverage for a domestic worker.
The failure to prove any one element required to establish equitable estoppel, is fatal to claim for equitable relief. Therefore, the ALJ’s findings support his conclusion that Commercial Union was not equitably estopped from denying coverage.
IT IS THEREFORE ORDERED that the ALJ’s order dated March 18, 1996, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Kathy E. Dean
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, with service of a copy of the petition upon the Industrial Claim Appeals Office and all other parties, within twenty (20) days after the date this Order is mailed, pursuant to section 8-43-301(10) and 307, C.R.S. (1996 Cum. Supp.).
Copies of this decision were mailed September 13, 1996 to the following parties:
Ruby Keith, 1125 Rood Ave., Grand Junction, CO 81501
Gene Taylor’s Sportsmen Supply, 445 W. Gunnison Ave., Grand Junction, CO 81505
Commercial Union Ins. Co., Attn.: Michael Metzger, 12855 Flushing Meadow Dr., #200, St. Louis, MO 63131-1814
Gudrun J. Rice, Esq., P.O. Box 3207, Grand Junction, CO 81502 (For the Claimant)
William D. Prakken, Esq., P.O. Box 338, Grand Junction, CO 81502 (For the Employer)
Scott M. Busser, Esq., 300 S. Jackson St., Ste. 570, Denver, CO 80209 (For Commercial Union)
BY: _______________________