12-0025. IN THE MATTER OF THE PETITION FOR A FINDING OF THE FAILURE TO INSURE WORKERS' COMPENSATION LIABILITY AND ASSESSMENT OF A CIVIL PENALTYAGAINST A HAPPY DOG DAY CAMP LLC Uninsured Employer Respondent.

• Court: Alaska

Alaska Workers Compensation Decisions 2012. Workers' Compensation Board 12-0025. IN THE MATTER OF THE PETITION FOR A FINDING OF THE FAILURE TO INSURE WORKERS' COMPENSATION LIABILITY AND ASSESSMENT OF A CIVIL PENALTYAGAINST A HAPPY DOG DAY CAMP LLC Uninsured Employer Respondent Alaska Workers' Compensation Appeals Commission IN THE MATTER OF THE PETITION FOR A FINDING OF THE FAILURE TO INSURE WORKERS' COMPENSATION LIABILITY AND ASSESSMENT OF A CIVIL PENALTYAGAINST A HAPPY DOG DAY CAMP, LLC, Uninsured Employer, RespondentAWCB Decision No. 12-0025Filed with AWCB Anchorage, Alaskaon February 14, 2012AWCB Case No. 700003696FINAL DECISION AND ORDERThe petition for a finding of failure to insure for workers' compensation liability and for assessment of a civil penalty was heard on December 21, 2011, in Anchorage, Alaska. John Stanley and April Stanley, owners, appeared and testified for A Happy Dog Day Camp, LLC (Employer). Christine A. Christensen, Investigator, Special Investigations Section, Division of Workers' Compensation (Division), appeared and testified on behalf of the State of Alaska. The record closed at the conclusion of the hearing on December 21, 2011. ISSUES The Division contends Employer was operating a business using employee labor when not insured for workers' compensation liability and failed to provide proof of workers' compensation liability coverage from October 15, 2008 to June 10, 2011 when it became insured with Liberty Northwest Insurance Corporation. The Division asserts Employer should be assessed a penalty. Employer contends his lack of insurance was due to lack of knowledge and oversight caused by starting a new business. Therefore, he contends while he was without insurance he should not be penalized. He does not dispute he was without workers' compensation insurance during a period in which he had employees. 1) Was Employer subject to, and in violation of, the requirement to file evidence of compliance with the workers' compensation insurance provisions as mandated by AS 23.30.085? 2) Was Employer subject to, and in violation of, the requirements to insure against workplace injuries as mandated by AS 23.30.075, and is Employer subject to civil penalties under AS 23.30.080(f)? 3) Shall Employer be assessed a civil penalty for its failure to insure, and if so, in what amount? FINDINGS OF FACT Evaluation of the administrative record as a whole establishes the following facts and factual conclusions by a preponderance of the evidence: 1) John Stanley and April Stanley are the owners and officers of the limited liability corporation A Happy Dog Day Camp (J. Stanley; Christensen; record). 2) Employer's business is operating a day care for dogs (Stanley; record). 3) On June 8, 2011, the Division mailed a Petition and Discovery Demand concerning the lack of workers' compensation coverage to Employer. The Division alleged the lack of insurance coverage occurred from October 15, 2008 to June 10, 2011 (Christensen; record). 4) On June 10, 2011, Employer responded in a timely fashion to the Division's discovery demand (id.). 5) Employer has a current business license (Stanley). 6) Employer had an opportunity to file evidence of compliance, but there is no evidence of insurance; Employer failed to provide evidence of compliance with workers' compensation insurance requirements for October 15, 2008 to June 10, 2011 (Christensen; record). 7) Employer promptly obtained insurance from Liberty Northwest Insurance Company (id.). 8) Employer provided no evidence to rebut the presumption it failed to insure for October 15, 2008 to June 10, 2011 (record; observations). 9) Employer has been cooperative (Christensen). 10) Employer secured worker's compensation insurance effective June 10, 2011, immediately after receiving Division's petition (Stanley; record). 11) Based on Investigator Christensen's credible hearing testimony and Employer's testimony, Employer was an "employer" during the relevant time periods it failed to procure workers' compensation insurance (Christensen; Stanley; record). 12) Employer's payroll records indicate that it employed as many as 7 part-time hourly employees during the relevant time periods it failed to provide workers' compensation insurance (id.). 13) Employer's business is providing day care for dogs and is a risky business exposing employees to bites, falls, sprains, strains, etc. (Stanley; experience, judgment, observations, and inferences drawn from all the above). 14) Employer admitted the business is a risky one for employees and he scrutinizes dogs coming for day care to minimize the risks to his employees (Stanley). 15) Employer accrued 968 uninsured calendar days from October 15, 2008 through June 9, 2011 (Christensen; record). 16) Employer had 1,362 uninsured employee work days based on the total hours worked for seven (7) part-time hourly employees divided by eight hours (Christensen; record). 17) Employer's estimated annual premium is $1,267.00 for the current policy, which equates to $3.47 per day to insure (Christensen; record). 18) Employer did not dispute the division's annual premium estimates nor any of the division's calculations or evidence (record). 19) Employer could be assessed a maximum civil penalty of $1,362,000 ($1,000 per day x 1,362 uninsured employee work days) (record, experience, judgment observations, and inferences drawn from all of the above). 20) On February 28, 2010, the regulation at 8 AAC 45.176 setting the civil penalty guidelines in uninsured employer cases became effective (experience, observations). 21) The period from October 15, 2008 to June 10, 2011 exceeds 180 days, which is a benchmark in 8 AAC 45.176 (experience, judgment, and inferences drawn from all of the above). 22) The majority of Employer's uninsured period preceded the effective date of the regulation at 8 AAC 45.176. 23) There were no reported injuries during the periods employer was uninsured for workers' compensation liability purposes (Christensen; Stanley). 24) Employer's business is small in size and would suffer severe financial hardship if the maximum civil penalty were assessed; e.g. Employer might go out of business andpeople might lose their livelihood. Employer now has three (3) part-time employees (Stanley; experience, judgment, observations, and inferences drawn from all the above). 25) Mr. Stanley and Ms. Stanley have been putting all the profits and some of their personal resources into running the business which is beginning to make a profit (Stanley). 26) The business has had increasing revenues over the last three years and Employer is seeking to open a second site for the business on the south side of Anchorage (Stanley). 27) Employer is able to make monthly payments of between $200 and $400 per month (Ms. Stanley). 28) Mr. Stanley had authority to insure for workers' compensation liability pursuant to AS 23.30.075(b) (Stanley). 29) Mr. Stanley incorporated the businesses on July 31, 2007 (record). 30) Mr. Stanley knew about workers' compensation insurance from family, friends, and co-workers who had had workers' compensation injuries (Stanley). 31) Mr. Stanley delayed obtaining workers' compensation even after he learned from his broker in 2010 he was required to have workers' compensation insurance. At that time, he did obtain business liability insurance (Stanley). 32) Once the Division served the petition on him, Mr. Stanley did immediately act to procure workers' compensation insurance (Stanley). 33) Mr. Stanley was the person actively in charge of Employer's business and failed to insure or apply for a certificate of self-insurance for the period October 15, 2008 to June 10,2011 (Stanley; Ms. Stanley; experience, judgment, observations, and inferences drawn from all the above). 34) Mr. Stanley is a credible witness (experience, judgment, and observations). 35) Ms. Stanley is actively involved in the business through keeping the financial books and paying bills, and failed to insure or apply for a certificate of self-insurance for the period October 15, 2008 to June 10,2011 (Ms. Stanley; experience, judgment, observations, and inferences drawn from all the above). 36) Ms. Stanley is a credible witness (id.). 37) Mitigating factors for imposition of a penalty include the lack of injuries, immediate procurement of insurance upon service of the petition by Division, and timely response to Division's discovery requests (id.; record). 38) Aggravating factors include the length of time without insurance (more than 180 days) and lapse in...