2008-092. Ivan Moore d/b/a Ivan Moore Research Appellant vs. State of Alaska Division of Workers' Compensation Appellee.

• Case Date: November 17, 2008
• Court: Alaska

Alaska Workers Compensation Decisions 2008. Workers' Compensation Appeals Commission 2008-092. Ivan Moore d/b/a Ivan Moore Research Appellant vs. State of Alaska Division of Workers' Compensation Appellee Alaska Workers' Compensation Appeals Commission Ivan Moore d/b/a Ivan Moore Research, Appellant, vs. State of Alaska, Division of Workers' Compensation, Appellee.Decision No. 092 November 17, 2008AWCAC Appeal No. 07-044AWCB Decision Nos. 07-0307 and 07-0330AWCB Case No. 700002045Final Decision Appeal from Alaska Workers' Compensation Board Decision No. 07-0307, issued October 3, 2007, by southcentral panel members Janel Wright, Chair, Janet Waldron, Member for Industry, and Mark Crutchfield, Member for Labor, and from Decision No. 07-0330, issued on reconsideration November 1, 2007, by southcentral panel members Janel Wright, Chair, Janet Waldron, Member for Industry, and Mark Crutchfield, Member for Labor. Appearances: Ivan Moore, pro se, for appellant Ivan Moore d/b/a Ivan Moore Research. Talis J. Colberg, Attorney General, and Rachel Witty, Assistant Attorney General, for appellee State of Alaska, Division of Workers' Compensation. Commission proceedings: Appeal filed November 30, 2007. Appellant's request for extension of time to file opening brief granted March 13, 2008. Appellant's second request for extension of time granted April 11, 2008. Oral argument presented August 28, 2008.Commissioners: Jim Robison, Philip Ulmer,Kristin Knudsen.This decision has been edited to conform to technical standards for publication. By: Kristin Knudsen, Chair. Ivan Moore Research was found to have been an uninsured employer by the Alaska Workers' Compensation Board for about two weeks in August 2005 and from April 7, 2006 to April 6, 2007.(fn1) The board assessed a penalty under AS 23.30.080(f) of $66,745.00, with $38,140.00 suspended and the remaining $28,605.00 due in seven days.(fn2) He requested reconsideration and the board modified its order to require Moore to make an initial payment of $4,000, monthly payments of $500 for 12 months, monthly payments of $388 for four years thereafter, with the final payment due in November 2012; the suspended fine of $38,140.00 to become immediately due if he fails to make any monthly payment as ordered or otherwise "fails to fully comply with AS 23.30.075 or other provisions of the [Alaska Workers' Compensation] Act."(fn3) Moore appeals the penalty as excessive and unfair. He argues the penalty, based on a rate of $35 per employee per uninsured day, is inconsistent with the median established by board panels of $14.67 per employee per uninsured day. He argues it is unfair because the hearing officer who presided at his hearing "hands down penalties significantly higher than average" and the language of the decision reflects hostility toward him, notably a characterization of him as an "atrocious businessman." He argues that the penalty order is arbitrary because, unlike the penalties in the cases cited by the board as similar cases, the penalty in his case is 55 times the financial gain he had by not paying his insurance premium, but in the cases cited the penalties were 7, 3, and about 8 times the avoided premium. Finally, he argues that the board erred as a matter of fact in comparing his practice of leaving mail for employees to open to the act of willfully refusing certified mail. The Division opposes and argues that a record of a hearing officer imposing higher penalties than average is not a legal basis for finding the hearing panel abused its discretion in a particular case. The Division argues that an "imprecise word choice" does not demonstrate bias. The Division argues that the penalty of $35 per uninsured employee workday is within the range of similar cases; and, although the Division concedes that Moore did not refuse certified mail, he failed to cooperate with the Division by not responding to the requests for information for 100 days. The board had, the Division argues, substantial evidence on which to base the penalty, so the board's decision should be affirmed. The parties' contentions require the commission to decide if a pattern of disparity in penalty decisions, based on the assigned hearing officer, is evidence of arbitrary or capricious decision-making marked by an improper predisposition to severity. The parties' contentions require the commission to decide whether unsuspended penalties assessed under AS 23.30.080(f) should be subject to a presumptive cap based on the uninsured employer's financial gain as represented by the unpaid insurance premium. The commission must decide if the board had substantial evidence to support its findings on aggravating factors and that the penalty imposed was reasonable. The commission concludes that the argument that a disparity among hearing officers is indicative of board bias in assessing penalties is flawed. Nonetheless, a lack of penalty guidelines may lead to a lack of consistency and fairness in assessing penalties. Therefore, the commission, in absence of department regulation, establishes a presumptive cap on unsuspended penalties assessed for first violations against uninsured employers where no aggravating factors have been found by the board. The commission concludes that the board does not have authority to impose, as it did in this case, a lifetime suspended penalty without a final discharge date. The commission reverses the board in part because the board lacked substantial evidence to support some findings on aggravating factors in this case, but affirms its findings on others. The commission modifies the board's order assessing a penalty. 1. Factual background and board proceedings. Ivan Moore operates a market research business, Ivan Moore Research. He employs part-time telephone interviewers, a phone center manager, and a research analyst. He also has an accountant. In December 2005, the person who handled insurance for the business, his research analyst, left. Moore, who does not handle the payroll and associated tasks of managing his business personally, did not renew his workers' compensation insurance in April 2006. During the relevant period, he had only one year-round, full-time employee, the phone center manager; another employee worked as a weekend phone center manager plus two week days of substitute time. The rest of his employees were part-time, called in as needed for surveys. His interviewers are paid by the completed interview, plus "admin time" at $10 per hour for cleaning or wait time. The other employees were paid on an hourly basis. a. The initiation of proceedings. On January 23, 2007, the Division served Moore with a Petition for Finding of Failure to Insure Under AS 23.30.075 and Assessment of Civil Penalty Under AS 23.30.080(f) and a Discovery Demand. The Petition recited that "the below employer may be an uninsured employer as defined in AS 23.30.075(a) on or between the date(s) of 4/07/2006."(fn4) The discovery demand asked for wage records for any employee between April 7, 2006 and January 23, 2007.(fn5) The petition and discovery demand were delivered by certified mail on January 25, 2007.(fn6) On March 2, 2007, the Division sent a second discovery demand, by certified mail, with a letter explaining further that the Division would ask for a subpoena if the requested discovery was not delivered by March 9, 2007.(fn7) The Division filed a Petition to Compel and Request for Pre-hearing conference on April 10, 2007, and served it by certified mail.(fn8) On April 13, 2007, Moore contacted the Division Investigator by e-mail and stated insurance had been reinstated, and his office manager was gathering the "information you need."(fn9) On May 3, 2007, Moore sent a letter to the Division Investigator, explaining why the division's first request had not been acted upon and how the lapse in coverage occurred, and supplying a payroll audit.(fn10) No pre-hearing conference was held. Although originally set on for July 11, 2007, the hearing was continued to August 15, 2007, and finally heard on September 4, 2007. b. The board hearing. Moore appeared telephonically. He was not represented. Investigator Degenhardt appeared for the Division. Investigator Degenhardt testified to the discovery of the lapse of insurance coverage for workers' compensation liability. He also testified that Moore's coverage lapsed for non-payment of premium in August 2005. He testified to the service of the Petition in January 2007, and the contact from Moore in April 2007. He testified that the total employee workdays the Division recognized as being uninsured was 1,907.(fn11) Moore testified that Degenhardt had provided a "very fair summary."(fn12) He testified that when the person formerly responsible for workers' compensation insurance left, he assigned the responsibility to the call center manager. He testified she paid the audit premium,(fn13) and, as he understood it, thought that was the renewal premium.(fn14) He did not contest that he was an uninsured employer from April 7, 2006, until April 6, 2007. When Moore received the first Petition in January, he put it unopened in the mailbox for his call center manager who works in the business location in downtown Anchorage(fn15) or for his bookkeeper.(fn16) It was not acted on. The March discovery demand was put in the mailbox for his bookkeeper.(fn17) The bookkeeper brought the matter to his attention and, when he talked to his employee, her first reaction was that there was...