W.C. No. 4-776-684.Industrial Claim Appeals Office.
December 10, 2009.
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Friend (ALJ) dated July 21, 2009, that determined the claimant had waived coverage from the insurer and therefore the insurer was not liable for benefits. We affirm.
The claimant is the president and owner of the employer. The claimant went to First Main Street Insurance to obtain workers’ compensation insurance quotes. The claimant was given multiple quotes for workers’ compensation coverage. The quote for coverage for the claimant and his employees was substantially higher then the quote for coverage excluding the claimant as an officer and president of the employer. The claimant chose to waive coverage for himself, executed a Rejection of Coverage by Corporate Officer, and was issued a policy by the insurer.
Preliminarily we note where the president of an employer has previously exercised his right to reject coverage under the Workers’ Compensation Act as a corporate officer; the president is not considered an employee under the Act. See Kelly v. Mile Hi Single Ply, Inc. 890 P.2d 1161 (Colo. 1995). Section 8-41-202(1) C.R.S. 2009 provides for rejection of coverage by corporate officers as follows:
(1) Notwithstanding any provisions of articles 40 to 47 of this title to the contrary, a corporate officer of a corporation or a member of a limited liability company may elect to reject the provisions of articles 40 to 47 of this title. If so elected, said corporate officer or member shall provide written notice on a form approved by the division through a rule
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promulgated by the director of such election to the worker’s compensation insurer of the employing corporation or company, if any, by certified mail.
In addition, regarding the continued effect of execution of a rejection of coverage by a corporate officer, § 8-41-202(2) provides that:
A corporate officer’s or member’s election to reject the provisions of articles 40 to 47 of this title shall continue in effect so long as the corporation’s or company’s insurance policy is in effect or until said officer or member, by written notice to the insurer, revokes the election to reject said provisions.
Here after executing a rejection of coverage, the claimant received policy premium invoices sent to him and paid them. The claimant never sent a written notice to the insurer revoking his election to reject coverage. The insurer noted the endorsement of exclusion from coverage on the initial policy documents. The insurer sent correspondence to the employer regarding “Rejected Corporate Officer from Coverage.”
However, the insurance policy came up for renewal in the spring of 2008. The claimant told the account manager at First Main Street Insurance that his work was decreasing and there would no longer be anyone but him working for the employer. Neither the claimant nor any one from First Main Street Insurance informed the insurer that the employer no longer had employees. The insurer sent correspondence to the claimant at the time of the renewal requesting payroll records in order to determine the premium. The claimant did not send the requested payroll documents to the insurer. Therefore, the insurer utilized estimated payroll figures to compute the policy premiums for the renewal of the policy. The insurer excluded the claimant’s wages when computing the policy premium. The claimant continued to make premium payments after the policy renewed. The ALJ determined that the premium payments the claimant made were for the policy that excluded coverage for the claimant. The claimant was injured in an industrial accident on September 11, 2008. The insurer denied coverage and a hearing was scheduled.
The claimant testified that because he told the account manager of First Main Street Insurance that he no longer had employees he thought he was covered under the policy. The ALJ concluded that the claimant was not covered by the employer’s workers’ compensation insurance on the date of the accident. The claimant brings this appeal.
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I.
The claimant contends that the ALJ erred in determining that there was no agency relationship between First Main Street Insurance and the insurer. It is not apparent that the ALJ made such a determination. In any event, as we understand the claimant’s argument, he contends because he told the account manager at First Main Street Insurance his work was decreasing and there would no longer be anyone but him working for the employer, that under principles of agency the insurer is bound by such knowledge. Therefore, the claimant argues that he acted in reliance upon his belief that the account manager of First Main Street Insurance was an agent of the insurer and that the insurer should be estopped from denying coverage because they accepted a premium after receipt of such knowledge. Under the circumstances here, we are not persuaded that the insurer is estopped from denying coverage.
An agency relationship involves the mutual consent of two parties whereby one indicates to the other his or her consent to act on the other’s behalf and subject to the other’s control. The existence of the relationship is ordinarily one of fact, but may become one of law if the evidence is undisputed. See, e.g., Filho v. Rodriguez, 36 P.3d 199 (Colo. App. 2001); Lopez-Najera v. Black Roofing, Inc., W. C. No. 4-565-863 (September 13, 2004).
Here the ALJ found that First Main Street Insurance is an insurance broker for multiple insurance companies and an agent for its policyholders. Findings of Fact, ¶ 1 at 2. This finding is supported by testimony from an account manager for First Main Street Insurance. Tr. 141-42, 146-47. In addition, the finding is supported by testimony from an underwriter of Pinnacol Assurance. Tr. at 160-61, 176.
The claimant cites other testimony from the account manager for First Main Street Insurance and the claimant. The account manager testified that she would write the policy with the insurer because it was the only company that would write a policy for a contractor. The account manager further testified that her agency had binding authority with other carriers and that they represented the insurer with regard to this case. Tr. at 146, 149. The claimant testified that he believed the account manager of First Main Street Insurance was an agent of the insurer. Therefore, the claimant contends that the ALJ’s finding of agency should be reversed.
To the extent the ALJ’s findings of fact are supported by substantial evidence, they must be upheld on review. Section 8-43-301(8), C.R.S. 2009. This standard of review requires us to view the evidence in a light most favorable to the prevailing party, and defer to the ALJ’s resolution of conflicts in the evidence, credibility determinations, and plausible inferences drawn from the record. The possibility that some evidence
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might support contrary findings affords no basis for relief on appeal. Wilson v. Industrial Claim Appeals Office, 81 P.3d 1117 (Colo. App. 2003). In our view, the ALJ’s determination is supported by substantial evidence in the form of testimony from the underwriter and account manager.
Moreover, to the extent the claimant’s contention relies on the argument that the insurer should be estopped from denying coverage because of knowledge possessed by First Main Street, we are not convinced that all of the necessary elements of estoppel are present here. The doctrine of equitable estoppel may apply to preclude an insurer from denying coverage. See State Compensation Insurance Fund v. Wangerin, 736 P.2d 1246 (Colo. App. 1986) (estoppel to deny coverage by acceptance of premium after knowledge of loss) see also Leland v. Travelers Indemnity Co., 712 P.2d 1060 (Colo. App. 1985). In order to obtain relief under an estoppel theory, the claimant is 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 claimant had a right to believe that the insurer’s conduct was so intended; 3) the claimant was ignorant of the true facts; and 4) the claimant detrimentally relied on the insurer’s conduct. See Johnson v. Industrial Commission, 761 P.2d 1140, 1146 (Colo. 1988).
We note that the unchallenged testimony was that when the claimant first went to First Main Street Insurance the quote he was given for coverage for himself and for all employees was $6,000. The claimant was also given a quote for coverage excluding himself, which was substantially lower, of $2,140. The claimant selected the lower rate of $2,140, which was $3,860 less than it would have cost to insure the claimant as the president. When renewal of the policy came up the employer did not provide the requested payroll records and therefore the insurer utilized estimated payroll figures to compute the policy premiums. The premium for the renewal policy was $1950 or approximately half of what it would take to include the claimant as an insured in the original policy. The premium for the renewal policy of $1950 was close to the original policy premium of $2140, which had excluded the claimant from coverage. Thus the premium the claimant paid upon renewal of the policy was slightly less than the amount he had paid the year before for insurance, which, at his own request, had specifically excluded him from coverage.
Although the evidence was conflicting, we note that the ALJ made the following additional findings. The claimant knew or should have known that he was not covered under the policy as the premium was not higher than it had been the year before. The claimant was not led to believe that he was covered under the policy. The claimant did not pay extra money in premiums to cover himself under the policy. When the policy renewed the claimant paid less money for the policy than the prior year. The claimant did not notify the insurer in writing that he revoked his election to waive coverage. We
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do not read the claimant’s brief as challenging these findings of fact. Based in part on these findings, the ALJ concluded that the claimant was not covered by the employer’s workers’ compensation insurance on the date of the accident. In our opinion, based on these findings, the factual prerequisites for equitable estoppel to apply are not present.
Here the claimant did not persuade the ALJ that he was ignorant of the true facts. As noted above the ALJ specifically found the claimant was not led to believe that he was covered under the policy; rather the claimant knew or should have known that he was not covered under the policy. We also note in this connection that the ALJ, at least on the issue of receiving documents from the insurer, found that the claimant was not credible. We may not interfere with the ALJ’s credibility determinations except in the extreme circumstance where the evidence credited is so overwhelmingly rebutted by hard, certain evidence that the ALJ would err as a matter of law in crediting it. Arenas v. Industrial Claim Appeals Office, 8 P.3d 558, 561 (Colo. App. 2000). Further, evidence and inferences not specifically discussed in the order are presumed to have been rejected as not persuasive. Magnetic Engineering, Inc. v. Industrial Claim Appeals Office, 5 P.3d 385 (Colo. App. 2000).
Further the ALJ found that the insurer did not use the claimant’s wages when computing the policy premium and that claimant did not notify the insurer in writing that he revoked his election to waive coverage. We cannot say that the record compels the conclusion that the insurer by accepting premiums after excluding the claimant’s pay from consideration in computing the premium knew that the claimant wanted to be personally covered. Nor can we say that the record compels the conclusion that the insurer intended by its conduct of accepting premiums based on a premium calculation excluding the claimant’s payroll that the claimant should believe he was covered.
Although not specifically argued by the claimant, it would be of great concern if the insurer had accepted a premium and then provided only illusory coverage for nonexistent employees. However, here the ALJ found that the insurer, in the absence of payroll information requested from the claimant as president of the employer, estimated payroll based on the only information available and excluded the claimant’s pay. Excluding the claimant’s payroll in the calculation of premium is consistent with the insurer’s position that the claimant was not covered under the policy it issued because he had elected not to be covered under the Act.
We cannot even say that the record compels the conclusion that the claimant detrimentally relied on the insurer’s conduct. Although he sustained a serious injury, the claimant following his September 11, 2008 injury did not file his workers’ claim for compensation nor fill out the employer’s first report of injury until November 11, 2008. Exhibits A-B. The employer is required to report lost-time injuries within ten days under
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§ 8-43-101(1) C.R.S. 2009. This delay of nearly two months in filing the notice of injury is consistent with the ALJ’s finding that the claimant was not led to believe that he was covered under the policy. To the extent that the claimant argues that the ALJ’s order must be reversed based on a failure to find that the insurer was estopped to deny coverage, we disagree.
II.
The claimant argues that the ALJ erred by not requiring strict compliance with § 8-41-202(1), which states that in rejecting coverage the corporate officer “shall provide written notice on a form approved by the Division” and send it to the insurer by certified mail. The claimant contends the ALJ erred in finding that there was substantial compliance with the statute. We are not persuaded that the ALJ committed any reversible error.
The ALJ found that the “Rejection of Coverage” form executed by the claimant was on a form previously approved and issued by the Division of Workers’ Compensation (Division), but was not the most recent form. The ALJ concluded that the Rejection of Coverage form used by the claimant was in substantial compliance with the requirements of § 8-41-202.
We first note that a strict reading of § 8-41-202(1), as suggested by the claimant, actually reveals that the statute places the onus on him as the corporate officer, not on the insurer, to submit his rejection of coverage on a form approved by the Division. Here the claimant caused or at least contributed to the failure to use the most current Division form for rejection of coverage. Yet the claimant, after enjoying the reduction in premium such rejection of coverage afforded him, after his injury now asserts the failure to use the most current Division form as a ground to vitiate such rejection of coverage. We also reject the claimant’s contention that his failure to send the notice of election to the insurer by certified mail effectively voids that election to reject coverage See Toll v. McKenzie, 299 P.14, 88 Colo. 582 (1931) (party cannot plead his own wrong as a ground of obtaining relief); see also EZ Bldg. Components Mfg., LLC v. Industrial Claim Appeals Office, 74 P.3d 516, 518 (Colo. App. 2003) (upholding cancellation of insurance by substantial compliance where insurer gave actual notice of cancellation to Division and agent even though not sent by certified mail as required by statute).
In our view, a comparison of the form for Rejection of Coverage form used by the claimant and the form currently used by the Division fails to reveal any relevant differences applicable to the present case. Exhibits 5, 13. We note that the claimant has not argued in his brief that there are any significant changes in the forms. The claimant’s argument appears to be one of form over substance. Therefore, we are not persuaded the
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ALJ erred in finding that the form used for rejection of coverage was in substantial compliance with the Act.
The claimant next argues that the ALJ erred in requiring strict compliance with § 8-41-202(2) which provides that the corporate officer’s rejection of coverage is in effect until the officer “by written notice to the insurer, revokes the election to reject said provisions.” Here the ALJ noted that the claimant did not notify the insurer in writing that he revoked his election to waive coverage. The claimant does not dispute this finding other than to contend that the ALJ erred in failing to address whether the claimant intended to or actually made a good faith or colorable effort to comply with the statutory requirements. The claimant contends that the matter must be remanded to the ALJ to determine if the claimant substantially complied with the statute when he orally advised the agent of the insurer that he was the sole employee of his company upon renewal of his workers’ compensation policy.
We are not persuaded that a remand is necessary. As noted above the ALJ made relevant findings on this issue as follows. The claimant knew or should have known that he was not covered under the policy and the claimant was not led to believe that he was covered under the policy. Neither the claimant nor the account manager for First Main Street Insurance informed the insurer that the employer no longer had employees. The insurer at the time for renewal requested payroll records from the employer. The claimant, as president of the employer, did not send the requested documents to the insurer. The insurer initiated an audit of the policy. The employer did not provide payroll records, therefore, the insurer utilized estimated payroll figures to compute policy premiums. The insurer did not use the claimant’s wages when computing the policy premium. In our view, given the ALJ’s findings, a remand would be pointless.
Section 8-41-202(2) provides that a corporate officer’s election to rejection coverage “shall” be in effect until said officer by “written notice to the insurer” revokes the election. Here the ALJ found and the claimant does not contest, that the insurer never received written notification from the claimant revoking the rejection of coverage. To effect the legislative intent words and phrases in a statute should be given their plain and ordinary meanings when possible. This is true because the legislature is presumed to have meant what it clearly said. Spracklin v. Industrial Claim appeals Office, 66 P.3d 176 (Colo. App. 2002). In our view the ALJ’s determination that the claimant did not have workers’ compensation coverage on the date of his accident is consistent with the plain meaning of § 8-41-202(2). Here the claimant did not notify the insurer in writing that he revoked his election to reject coverage and therefore his rejection of coverage continued in effect pursuant to § 8-41-202(2) .
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IT IS THEREFORE ORDERED that the ALJ’s order dated July 21, 2009 is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
______________________________ John D. Baird
______________________________ Thomas Schrant
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CARLOS M RODRIGUEZ, LONGMONT, CO, (Claimant).
CMR SIDING, INC., FREDERICK, CO, (Employer).
PINNACOL ASSURANCE, Attn: HARVEY D FLEWELLING, ESQ., DENVER, CO, (Insurer).
PEPE J MENDEZ ASSOCIATES, PC, Attn: ABEL ALVARADO, ESQ./PEPE MENDEZ, ESQ., DENVER, CO, (For Claimant).
RITSEMA LYON, PC, Attn: BRET J ROUNDY, ESQ., DENVER, CO, (For Respondents).
MEDICAID, TORT CASUALTY SPECIALIST, Attn: SANDRA DREWS, DENVER, CO, (Other Party).