IN THE MATTER OF THE PETITION FOR A FINDING OF THE FAILURE TO INSURE WORKERS’ COMPENSATION LIABILITY, AND ASSESSMENT OF A CIVIL PENALTY AGAINST, SIMPLY BLUE, ALH, LLC, Respondent.
AWCB Decision No. 21-0005
AWCB No. 700007527
Alaska Workers Compensation Board
January 19, 2021
FINAL
DECISION AND ORDER
Judith
A DeMarsh, Designated Chair
The
Division of Workers’ Compensation, Special
Investigations Unit’s (SIU) July 22, 2019 Petition for
Failure to Insure Workers’ Compensation Liability, and
Assessment of a Civil Penalty, was heard in Anchorage, Alaska
on September 16, 2020, a date selected on August 5, 2020. A
July 22, 2020 Affidavit of Readiness for Hearing (ARH) led to
this hearing. SIU’s September 8, 2020 amended petition
was also heard. Investigator Christine Christensen appeared
telephonically, represented the SIU, and testified. Both
Vernon Vallangca, the owner, and Marissa Vallangca, the
administrator, appeared telephonically, representing the
Employer. Marissa Vallangca testified. The record was
initially held open until September 21, 2020 for the receipt
of additional evidence as requested by SIU. The record was
subsequently reopened on December 10, 2020 for the receipt of
evidence on the issue of penalties, and closed again on
December 21, 2020.
ISSUES
The SIU
contends the Board should consider two additional lapses
alleged in SIU’s September 8, 2020 amended petition.
SIU states it understands the Employer must have a minimum of
30 days to answer the amended petition and provide discovery.
The SIU is requesting the record be held open at the
conclusion of today’s hearing to allow it to receive
Employer’s answer to the petition as well as additional
evidence.
Employer
stated it agreed it was uninsured for the time periods
alleged in the amended petition and stipulated to hearing the
issues in SIU’s amended petition at today’s
hearing.
1)
Was the oral ruling granting SIU’s request to consider
the amended petition at today’s hearing
correct?
The SIU
contends in its July 22, 2019 petition and its September 8,
2020 amended petition Employer failed to insure for
workers’ compensation liability for five periods of
time, altogether totaling 1,207 uninsured calendar days.
Employer
stated it did not have any employees for the period from May
7, 2015 to February 25, 2016. Employer also stated only the
employer worked during the lapse in coverage from November
13, 2019 to November 16, 2019. Employer agreed it was
uninsured for workers’ compensation liability for the
periods July 6, 2016 to September 3, 2016, June 25, 2017 to
July 2, 2019 and February 19, 2020 to June 12, 2020.
2)
Did the Employer fail to insure for workers’
compensation liability and if so, for what periods of
time?
The SIU
contends the Employer utilized employee labor while uninsured
for workers’ compensation liability and an appropriate
civil penalty should be assessed.
Employer
agreed it did fail to insure for workers’ compensation
liability while utilizing employee labor. Employer did not
offer an opinion on an appropriate civil penalty.
3)
Should Employer be assessed a civil penalty and if so, what
is an appropriate penalty?
FINDINGS
OF FACT
The
following facts and factual conclusions are established by a
preponderance of the evidence:
1) On
May 7, 2015, Simply Blue, ALH, LLC filed a “Creation
Filing” as a limited liability corporation with the
State of Alaska Division of Corporations, Business and
Professional Licensing (Exhibit #2.)
2) On
February 18, 2016, the State of Alaska issued a business
license to Simply Blue, ALH, LLC (Simply Blue or Employer).
The business’ mailing address was listed as 7035
Redhawk Circle, Anchorage, AK 99507. (Business license
1032482, February 18, 2016, Exhibit #1.)
3) On
the State of Alaska Corporations, Business and Professional
Licensing biennial report dated April 30, 2019, Vernon
Vallangca is listed as the member, sole owner and registered
agent of Simply Blue. (Corporation Biennial Report, Entity
#10029349, dated April 30, 2019, Exhibit #2.)
4) The
individual member during the lapse periods was: Vernon
Vallangca. (Exhibits #1 and #2.)
5)
Since Simply Blue ALH, LLC is a limited liability company,
Vernon Vallangca is exempt from the Alaska Workers’
Compensation Act and need not file an executive waiver.
(SIU’s hearing brief, 9/8/, 2020.)
6)
Division records show Employer has not had any prior failure
to insure investigations and no reports of injury since it
began business operations. (Id.)
7) On
or about June 4, 2019, the SIU, in response to a request
received for a compliance check from the Department of Health
and Social Services Senior and Disabilities Services, SIU
conducted record checks of current policies in the National
Council for Compensation Insurance (NCCI) database and in the
SIU’s own Proof of Coverage database. These searches
showed the Employer’s workers’ compensation
insurance coverage had lapsed between May 7, 2015 and
February 25, 2016, between July 6, 2016 and September 3,
2016, and then was cancelled on June 25, 2017. (Id.)
8) On
July 18, 2019, in collaboration with a Wage and Hour
Investigator, SIU completed an onsite investigation at Simply
Blue to confirm Employer was using employee labor. The
investigators spoke with a Mr. Roland Bonifacio, who stated
he and his wife worked five days a week, 24 hours a day, and
were relieved by two other employees. Both the investigators
also spoke on the telephone with Marissa Vallangca and left
business cards with Mr. Bonifacio so Marissa Vallangca could
follow up with the investigators. However, she did not
contact the investigators. (Id.)
9) On
July 22, 2019 the SIU filed a petition and discovery demand
against Simply Blue for a finding of employee status under 8
AAC 45.890, a finding of failure to insure under AS
23.30.075, and an assessment of civil penalty under AS
23.30.080(f) and 8AAC 45.176. The lapse dates are 05/07/2015
to 02/25/2016, 07/06/2016 to 09/03/2016, and 06/25/2017 to
07/02/2019. (SIU’s Petition dated July 22, 2019).
10) On
July 23, 2019 the petition and discovery demand were served
at 7035 Redhawk Cir., Anchorage, AK 99507 and signed for by
an individual. (Domestic Return Receipt, dated July 23, 2019,
Exhibit #3.)
11) No
respondent filed an answer to the SIU’s July 17, 2019
petition. (SIU’s hearing brief, 9/8/2020.)
12) On
August 9, 2019, the division served a prehearing conference
notice on Simply Blue at 7035 Redhawk Circle. The notice
scheduled a prehearing conference for September 18, 2019.
(Prehearing notice, 8/ 9/2019.)
13) On
September 18, 2019, the Alaska Workers’ Compensation
Board Designee held a prehearing on SIU’s July 22, 2019
petition, but Employer did not attend, although he was
properly noticed. In addition, the Board Designee attempted
to reach the Employer at three different phone numbers and
left a voicemail message. Investigator Christensen appeared
at the prehearing conference, but as the employer did not
attend, neither the designee nor the investigator was able to
obtain further information. (Prehearing conference summary
(PHCS) dated 09/18/2019, Exhibit #4).
14) On
September 18, 2019, the investigator sent an email to
Employer informing him again of the petition and discovery
demand, the prehearing conference and the importance of
contacting the investigator. (Notice of Evidence to be
Introduced at Hearing (NOEIH) dated 8/19/2020, Exhibit #5.)
15) On
both November 4, 2019 and November 27, 2019 the investigator
sent letters to Vernon Vallangca at both 7035 Redhawk Cir.,
and his personal address, reminding him of the petition and
discovery demand as well as the prehearing conference and
urging him to contact the investigator. Both letters included
notification that the failure to respond to SIU’s
discovery demand with 30 days of receiving the petition might
result in a significant increase in any civil penalty
assessed pursuant to 8 AAC 45.176. (NOEIH dated 8/19/2020,
Exhibits #6 and #7).
16) On
November 27, 2019, after Simply Blue did not respond to the
demand for discovery, SIU filed a petition to compel
discovery documentation on November 27, 2019. (SIU’s
11/27/ 2019 Petition to Compel.)
17) On
November 29, 2019, Notice of the Prehearing Conference was
mailed to Employer at its business address of 7035 Redhawk
Circle...
