12-0068. IN THE MATTER OF THE PETITION FOR FINDING OF FAILURE TO INSURE FOR WORKERS' COMPENSATION LIABILITY AND FOR ASSESSMENT OF A CIVIL PENALTY Against PUFFIN HEIGHTS LLC and LESLIE BARRERA Employer.

Court:Alaska
 
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Alaska Workers Compensation Decisions 2012. Workers' Compensation Board 12-0068. IN THE MATTER OF THE PETITION FOR FINDING OF FAILURE TO INSURE FOR WORKERS' COMPENSATION LIABILITY AND FOR ASSESSMENT OF A CIVIL PENALTY Against PUFFIN HEIGHTS LLC and LESLIE BARRERA Employer Alaska Workers' Compensation Appeals Commission P.O. Box 115512 Juneau, Alaska 99811-5512 IN THE MATTER OF THE PETITION FOR FINDING OF FAILURE TO INSURE FOR WORKERS' COMPENSATION LIABILITY AND FOR ASSESSMENT OF A CIVIL PENALTY Against PUFFIN HEIGHTS, LLC, and LESLIE BARRERA Employer,AWCB Decision No. 12-0068Filed with AWCB Anchorage, Alaska on April 9, 2012AWCB Case No. 700003503FINAL DECISION AND ORDERThis matter was heard in Anchorage, Alaska on March 21, 2012. Leslie Barrera appeared and testified on behalf of Puffin Heights, LLC (Puffin Heights). Mark Lutz, 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) and testified. The record closed on March 21, 2012. ISSUES The Division contends Puffin Heights operated a business utilizing employee labor without filing proof of workers' compensation insurance and without workers' compensation insurance. The Division also contends Leslie Barrera should be personally liable for benefits should any employees have been injured while Puffin Heights was uninsured. The Division further contends a civil penalty should be assessed against Puffin Heights. Ms. Barrera contends that as a member of a limited liability company (LLC) she is not personally liable for benefits should an employee have been injured while Puffin Heights was uninsured. Puffin Heights does not dispute that it utilized employee labor while uninsured but asks that mitigating factors be considered in any civil penalty assessed.
1. Did Puffin Heights fail to file proof of workers' compensation liability?
2. Did Puffin Heights fail to provide workers' compensation insurance?
3. Is Ms. Barrera, as a member of an LLC, personally liable for benefits to any employees that may have been injured while Puffin Heights was uninsured?
4. Should Puffin Heights be assessed a civil penalty for its failure to insure?
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) The records of the State of Alaska Department of Commerce, Division of Corporations, Business and Professional Licensing, indicate Puffin Heights is an LLC that was created October 15, 1999. (State of Alaska Business, Corporations and Professional Licensing printout). Ms. Barrera is the only member of the LLC. (Barrera).
2) Puffin Heights operates a Montessori preschool in Anchorage, Alaska. In doing so, it uses employee labor. (Barrera).
3) Puffin Heights provides services to 42 children. Four of the children are from low income families, are on "scholarships," and pay no fees. On occasion, Puffin Heights even provides clothing for some scholarship students. (Barrera).
4) Through a routine records check in March 2011, the Division discovered Puffin Heights' workers compensation coverage had lapsed. (Lutz).
5) The Division served a Petition for Finding of Failure to Insure, and for Assessment of Civil Penalty, as well as a discovery demand, on Puffin Heights on March 22, 2011. (Affidavit of Service). The Petition named Ms. Barrera individually as well as Puffin Heights. (Petition, March 18, 2011).
6) Puffin Heights promptly responded to the Division's discovery demand. (Lutz).
7) The petition alleges, and Ms. Barrera acknowledged, that Puffin Heights was uninsured from November 29, 2008 to September 24, 2009 and from March 2, 2010 to November 4, 2010. (Petition, March 18, 2011, Barrera).
8) The period from November 29, 2008 to September 24, 2009 is 299 days and the period from March 2, 2010 to November 4, 2010 is 247 days for a total lapse of 546 calendar days. (Lutz, Observation)
9) In the 546 days it was uninsured, Puffin Heights employed 10 employees who worked a total of 1,799 uninsured employee workdays. (Lutz, Uninsured Employer Worksheet).
10) Four Puffin Heights employees reported work injuries, all at times when Puffin Heights was insured. (Lutz).
11) The estimated annual premium for Puffin Heights' November 4, 2010 policy was $2,449.00. (Alaska National Ins. Co. policy). That equates to a prorated daily cost to insure of $6.71, or $3,663.44 for the 546 days Puffin Heights was uninsured. (Observation).
12) Puffin Heights was previously found to have failed to insure and a penalty was assessed in In re Puffin Heights, AWCB Decision No. 08-01117 (June 20, 2008) (Puffin Heights I). In Puffin Heights I, Puffin Heights was found to have failed to insure from January 24, 2006 to June 20, 2007 and from November 29, 2007 to May 8, 2008, a total of 671 calendar days during which its employees accrued 1,507 uninsured workdays.
13) Puffin Heights I included the following orders:
1. Pursuant to AS 23.30.135, the Board directs the Fraud Unit of the Workers' Compensation Division to investigate this employer quarterly, for a period of three years to ensure the employer's continuing compliance with AS 23.30.075 and AS 23.30.085.
1.Pursuant to AS 23.30.080(f), the Board assesses a civil penalty of $30.00 for each employee for 1,507 days the employees were employed while the employer failed to insure or provide the security required by AS 23.30.075, for a total civil penalty of $45,210.00.
2.The Board suspends $22,605.00 of the civil penalty, and orders Puffin Heights, LLC to pay the unsuspended portion of the civil penalty in the sum of $22,605.00, upon the condition that if the employer fails to timely pay the unsuspended portion of the civil penalty assessed, fails to make timely payments under any payment plan approved by the Board, or fails to fully comply with AS 23.30.075 or other provisions of the Act within five years, the entire suspended amount shall be due and owing.
4. [sic 6] Pursuant to AS 23.30.080(g), payment of the unsuspended portion of the civil penalty of $22,605.00 shall be made by Puffin Heights, LLC pursuant to a five year payment plan. The first payment of $480.00 is due within seven days after the date of service of this order upon the employer. The remaining 59 payments of $375.00 are due on or before the 15th day of each month, beginning in July 2008. The final payment is due on or before the 15th day of May, 2012.
14) Puffin Heights made none of the payments ordered in Puffin Heights I. (Lutz). Ms. Barrera credibly explained that she had been confused by the fact that the amounts of the suspended and unsuspended portions of the penalty were the same, and believed the entire penalty had been suspended. (Barrera).
15) Due to an oversight, the Special Investigations Unit (formerly known as the Fraud Unit) did not institute the quarterly monitoring ordered in Puffin Heights I. (Lutz).
16) Ms. Barrera recognized the importance of workers' compensation coverage and the potentially devastating consequences
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