12-0055. IN THE MATTER OF THE PETITION FOR FINDING OF FAILURE TO INSURE FOR WORKERS' COMPENSATION LIABILITY AND FOR ASSESSMENT OF A CIVIL PENALTY AGAINST HOMER SAW and CYCLE ROBERT E. SCHMUTZLER and CLAIRE WAXMAN Uninsured Employer Respondents.
Alaska Workers Compensation Decisions 2012. Workers' Compensation Board 12-0055. IN THE MATTER OF THE PETITION FOR FINDING OF FAILURE TO INSURE FOR WORKERS' COMPENSATION LIABILITY AND FOR ASSESSMENT OF A CIVIL PENALTY AGAINST HOMER SAW and CYCLE ROBERT E. SCHMUTZLER and CLAIRE WAXMAN Uninsured Employer Respondents ALASKA WORKERS' COMPENSATION BOARD IN THE MATTER OF THE PETITION FOR FINDING OF FAILURE TO INSURE FOR WORKERS' COMPENSATION LIABILITY AND FOR ASSESSMENT OF A CIVIL PENALTY AGAINST HOMER SAW and CYCLE, ROBERT E. SCHMUTZLER, and CLAIRE WAXMAN, Uninsured Employer Respondents FINAL DECISION AND ORDERAWCB Decision No. 12-0055Filed with AWCB Anchorage, Alaska on March 14, 2012AWCB Case No. 700003342This petition for a finding of failure to insure for workers' compensation liability and for civil penalty was heard in Anchorage, Alaska on February 15, 2012. Christine Christensen, Investigator for the Special Investigations Unit of the Alaska Department of Labor and Workforce Development, Division of Workers' Compensation, represented the State of Alaska (Division), appeared, and testified. Claire Waxman appeared on behalf of Homer Saw and Cycle and testified. The record closed at the hearing's conclusion on February 15, 2012. ISSUES The Division contends Homer Saw and Cycle operated a business utilizing employee labor without filing proof of compliance with workers' compensation laws and without providing workers' compensation insurance. The Division also contends that Robert E. Schmutzler and Ms. Waxman, as partners in Homer Saw and Cycle, should be personally liable for benefits to any employees injured while Homer Saw and Cycle was uninsured as well as any penalties that may be assessed against Homer Saw and Cycle. The Division further contends a civil penalty should be assessed against Homer Saw and Cycle. Homer Saw and Cycle does not dispute these contentions but asks that mitigating factors be considered in assessing a penalty. 1. Did Homer Saw and Cycle fail to file proof of compliance with workers' compensation laws? 2. Did Homer Saw and Cycle fail to provide workers' compensation insurance? 3. Should Homer Saw and Cycle be assessed a civil penalty for its failure to insure? 4. Should Mr. Schmutzler and Ms. Waxman, as partners in Homer Saw and Cycle be held personally liable for benefits for injuries sustained while Homer Saw and Cycle was uninsured, and for any penalty assessed? FINDINGS OF FACT Based on the record as a whole, the following facts and factual conclusions are established by a preponderance of the evidence: 1) Homer Saw and Cycle is a partnership between Mr. Schmutzler and Ms. Waxman, who are husband and wife. It has been in business since 1987. (Waxman). 2) Homer Saw and Cycle operates in Homer, Alaska, selling snowmobiles, ATVs, outdoor power equipment and apparel. (Waxman). 3) Homer Saw and Cycle came to the Division's attention in May 2010 when a routine records check suggested it might not have worker's compensation coverage. (Christensen). Insurance company records indicated that Homer Saw and Cycle's had been cancelled on July 7, 2009 for failing to report information for a test audit. (Notice of Cancellation, May 5, 2009). 4) On June 2010, an investigator for the Division made an onsite visit and spoke to Mr. Schmutzler. Mr. Schmutzler told the investigator that Ms. Waxman, who maintained the books, had been diagnosed with cancer and was undergoing treatment. (Christensen). Ms. Waxman credibly testified that the lapse was unintentional and occurred because of her illness led to a lack of attention to the business. (Waxman). 5) On May 26, 2011, the Division mailed Homer Saw and Cycle a petition for failure to insure and for assessment of civil penalties and a discovery demand. (Affidavit of Service, May 26, 2011). The petition alleges Homer Saw and Cycle became uninsured on July 7, 2009. (Petition, May 26, 2011). Homer Saw and Cycle received the petition and discovery demand on May 27, 2011. (USPS Track and Confirm print-out). 6) Homer Saw and Cycle reacquired workers' compensation coverage on June 11, 2011. The estimated annual premium for the policy is $2,146.00 (Christensen; Liberty Northwest Insurance policy). 7) When no response to either the petition or discovery demand was received, the Division sent Homer Saw and Cycle a follow-up letter on July 19, 2011. (Christensen). 8) The Division received Homer Saw and Cycle's discovery responses on July 25, 2011. (Christensen). 9) Homer Saw and Cycle's payroll information showed that from July 7, 2009 through June 10, 2011 it had four employees who accrued a total of 554 uninsured workdays. (Employer Worksheet, payroll information, Christensen). One of the employees is a permanent long-term employee, another is Mr. Schmutzler's and Ms. Waxman's son. The other two employees were friends that helped while Ms. Waxman was ill. (Waxman). 10) Subsequent investigation revealed that Homer Saw and Cycle's insurance had lapsed on four occasions prior to July 7, 2009. The lapses were relatively short, and the Division is not seeking penalties for those lapses. (Christensen). 11) Homer Saw and Cycle has had one reported injury, which occurred while it was insured. (Christensen). Ms. Waxman explained that while the injury was reported as a work injury, Homer Saw and Cycle later learned that the individual had actually been injured while fishing. 12) This is the first case against Homer Saw and Cycle for failure to insure. (Christensen, Record). 13) The estimated annual premium for the June 11, 2011 policy of $2,146.00 equates to an approximate daily cost to insure of $5.88, or $4,139.13 for the 704 calendar days Homer Saw and Cycle was uninsured. (Observation). 14) Homer Saw and Cycle's average ordinary business income for 2009 and 2010 was $2,494.50. (Form 1065, 2009 and 2010; observation). 15) As a result of her illness, Ms. Waxman incurred nearly $200,000.00 in medical bills, most of which have...
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