12-0050. IN THE MATTER OF THE PETITION FOR A FINDING OF THE FAILURE TO INSURE WORKERS' COMPENSATION LIABILITY AND ASSESSMENT OF A CIVIL PENALTY AGAINST SWAYBACK INC. Uninsured Employer Respondent.
Alaska Workers Compensation Decisions 2012. Workers' Compensation Board 12-0050. IN THE MATTER OF THE PETITION FOR A FINDING OF THE FAILURE TO INSURE WORKERS' COMPENSATION LIABILITY AND ASSESSMENT OF A CIVIL PENALTY AGAINST SWAYBACK INC. Uninsured Employer Respondent ALASKA WORKERS' COMPENSATION BOARD IN THE MATTER OF THE PETITION FOR A FINDING OF THE FAILURE TO INSURE WORKERS' COMPENSATION LIABILITY AND ASSESSMENT OF A CIVIL PENALTY AGAINST SWAYBACK, INC. , Uninsured Employer, RespondentAWCB Decision No. 12-0050Filed with AWCB Anchorage, Alaska on March 9, 2012AWCB Case No. 700003268FINAL 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 14, 2011, in Anchorage, Alaska. David Rintala, Ken Manual, and Paul Gugliuzza, appeared telephonically and testified for Swayback, Inc. (Employer). Kyle Thompson, Investigator, Special Investigations Unit, Division of Workers' Compensation (Division), appeared and testified on behalf of the State of Alaska. The record closed on January 25, 2012 when materials requested from Employer were filed. 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 May 4, 2009 until April 3, 2010 when it became insured with Liberty Northwest Insurance. The Division asserts Employer should be assessed a penalty. Employer does not dispute it was without workers' compensation insurance during a period in which it had employees but avers there are extenuating circumstances. 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? 20 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) Swayback, Inc., was a foreign corporation doing business in Alaska as Alaska Backcountry Adventures (Rintala; Thompson; record). 2) Employer's business was an adventure ski operation in Thompson Pass, Alaska (Rintala; Thompson; record). 3) Employer had a lapse in workers' compensation coverage from March 1, 2005 to January 20, 2007, and a fine was levied which was timely paid (AWCB Decision No. 08-0048 (March 14, 2008)). 4) Effective October 1, 2010, all assets of Alaska Backcountry Adventures were sold to Howard Stoddard. Swayback retained responsibility and liability for a workers' compensation claim and any governmental fine (October 1, 2010, Transfer of Business Assets). 5) On April 9, 2010, 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 May 4, 2009 when its policy was cancelled due to non-payment of premium to April 3, 2010 (Thompson; record). 6) On May 4, 2010, Employer responded in a timely fashion to the Division's discovery demand (id.). 7) 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 May 4, 2009 to April 3, 2010 (Thompson; record). 8) Employer learned on or about March 30, 2010, it had no workers' compensation insurance and Employer promptly obtained such insurance from Liberty Northwest Insurance Company with an effective date of April 3, 2010 (id.; Rintala). 9) When the notice of cancellation for non-payment of premium was sent to the California address, the principle officers were in Alaska for seasonal skiing. The office manager picked up the mail but failed either to advise the principles or to forward the notice to them. He has since been terminated and procedures were put in place to prevent such an occurrence (Rintala). 10) According to Employer's biennial filing the corporate officers are Dave Rintala, President, Paul Gugliuzza, Vice-President, and Ken Manual, Secretary/Treasurer (April 5, 2011, Biennial Report, Ex. 3, Division's Notice of Evidence). 11) Ken Manual asserts he is only Secretary and not Treasurer (Manual). 12) Employer provided no evidence to rebut the presumption it failed to insure for May 4, 2009 to April 3, 2010 (record; observations). 13) Employer has been cooperative (Thompson). 14) On March 28, 2010, John J. Wauters, Employee, sustained an injury while skiing with Employer in Thompson Pass, Alaska (Wauters v. Swayback, Inc., AWCB Decision No. 11-0013 (February 1, 2011) (Wauters 1) ). 15) Mr. Wauters was found to have been in the course and scope of employment when he was injured and Employer was ordered to pay benefits (Id.). 16) On May 5, 2011, Employer was found to be in default on the order to pay benefits (Wauters v. Swayback, Inc., AWCB Decision No. 11-0057 (May 5, 2011) (Wauters II)). 17) Employer has not paid any of the benefits ordered in Wauters I (Rintala). 18) Employer is not now conducting business in Alaska, although it has not formally dissolved (Rintala). 19) Based on Investigator Thompson's credible hearing testimony, Wauters I and II, and Employer's testimony, Employer was an "employer" during the relevant time periods it failed to procure workers' compensation insurance (Thompson; Rintala; record). 20) Employer's payroll records indicate that it employed at least one employee and as many as six employees during the relevant time period it failed to provide workers' compensation insurance (id.). 21) Employer admits the business is a risky one for employees (Rintala). 22) Employer accrued 334 uninsured calendar days from May 4, 2009 to April 3, 2010 (Thompson; record). 23) Employer had 78 uninsured employee work days based on the total hours worked for seven (7) part-time hourly employees divided by eight hours (Thompson; record). 24) Employer's estimated annual premium was $5,986.00 for the most recent policy (effective April 3, 2010 expired April 3, 2011), which equated to $16.40 per day to insure (Thompson; record). 25) Employer would have paid $5,477.60 in insurance premiums ($16.40 times 334 uninsured days) had it been insured from May 4, 2009 to April 3, 2010. If this premium is doubled the cost would have been $10,955.20 (experience, judgment observation). 26) Employer did not dispute the division's annual premium estimates nor any of the division's calculations or evidence (record). 27) Employer could be assessed a maximum civil penalty of $78,000.00 ($1,000 per day x 78 uninsured employee work days) (record, experience, judgment observations, and inferences drawn from all of the above). 28) On February 28, 2010, the regulation at 8 AAC 45.176 setting the civil penalty guidelines in uninsured employer cases became effective (experience, observations). 29) The majority of Employer's uninsured period preceded the effective date of the regulation at 8 AAC 45.176. 30) The period from May 4, 2009 to April 3, 2010 exceeds 180 days, which is a benchmark in 8 AAC 45.176 (experience, judgment, and inferences drawn from all of the above). 31) There was one reported injury during the periods employer was uninsured for workers' compensation liability purposes (Thompson; Wauters I; record). 32) Employer's business was small in size and the principles of the corporation would suffer severe financial hardship if the maximum civil penalty were assessed (Rintala; experience, judgment, observations, and inferences drawn from all the above). 33) Once Employer learned it insurance had lapsed which was prior to Division's service of its petition, Employer immediately obtained new insurance (Thompson; Rintala; record). 34) Mr. Rintala 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 May 4, 2009 to April 3, 2010 (Rintala; experience, judgment, observations, and inferences drawn from all the above). 35) Mr. Rintala, Mr. Manual, and Mr. Gugliuzza are sports enthusiasts who started this business to facilitate their skiing activities and...
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