IN THE MATTER OF THE PETITION FOR A FINDING OF THE FAILURE TO INSURE WORKERS’ COMPENSATION LIABILITY, AND ASSESSMENT OF A CIVIL PENALTY AGAINST, TLC HOME CARE, LLC, Respondent.
AWCB Decision No. 21-0014
AWCB No. 700007830
Alaska Workers Compensation Board
February 23, 2021
FINAL
DECISION AND ORDER
Jung
M. Yeo, Designated Chair.
The
Division of Workers’ Compensation, Special
Investigations Unit’s (division) September 30, 2020
petition for failure to insure workers’ compensation
liability, and for a civil penalty, was heard in Anchorage,
Alaska on January 26, 2021, a date selected on December 16,
2020. A November 23, 2020 hearing request gave rise to this
hearing. Investigator Christine Christensen appeared
telephonically, represented the division, and testified.
Non-attorneys Juan Reed and James Barber appeared
telephonically and represented TLC Home Care, LLC (TLC).
Tracy McGuffin, an LLC member, appeared telephonically on
TLC’s behalf and testified. The record closed at the
hearing’s conclusion on January 26, 2021.
ISSUE
The
division contends TLC operated uninsured for workplace
injuries from December 15, 2018, to May 25, 2019, and from
December 31, 2019, to July 24, 2020 and should be assessed a
civil penalty. It contends TLC had two aggravating factors,
which this decision must consider in assessing a penalty.
TLC
does not dispute the division’s evidence or arguments
for its failure to insure from December 15, 2018, to May 25,
2019, but it contends it should not be assessed a penalty for
the lapse from December 31, 2019, to July 24, 2020, because
it did not have “mens rea.”
Should
TLC be assessed a civil penalty?
FINDINGS
OF FACT
A
preponderance of the evidence establishes the following facts
and factual conclusions:
1) On
January 27, 2015, Esau Fualema, Rosalina Mavaega, and Tracy
McGuffin incorporated TLC Home Care, LLC, as a limited
liability company with Mavaega as the registered agent and
member-manager with 34 percent ownership, Fualema as a member
with 33 percent ownership, and McGuffin with 33 percent.
(Notice of Evidence to be Introduced at Hearing, December 30,
2020, Exhibit 1).
2) On
September 30, 2020, the division sought a civil penalty
against TLC in AWCB Case Number 700007830. On October 1,
2020, the division served the petition and discovery demand
to TLC at its address of record. (Petition, Discovery Demand,
September 30, 2020).
3) On
December 4, 2020, TLC filed (1) a motion to dismiss based on
lack of “mens rea” and (2) a cross-claim
against BiBerk insurance agency (BiBerk) based on
BiBerk’s alleged failure to give TLC workers’
compensation policy lapse notice. (Motion to Dismiss and
Cross Claim, December 4, 2020). Cases under the
Workers’ Compensation Act does not require proving
“mens rea.” Also, this decision lacks
jurisdiction to hear a cross-claim for insurance policy
renewal or cancellation issues. (Knowledge; judgment).
4) On
July 24, 2020, TLC obtained workers’ compensation
insurance from American Interstate Insurance Company. Its
current annual workers’ compensation insurance premium
is $13,549. (Notice of Evidence to be Introduced at Hearing,
December 30, 2020, Exhibit 25).
5) TLC
did not have workers’ compensation coverage from
December 15, 2018, to May 25, 2019, and from December 31,
2019, to July 24, 2020, totaling 367 uninsured calendar days.
The prorated premium for TLC’s policy is $37.12 per day
($13,549 / 365 days), which totals $13,623 for 367 uninsured
calendar days. Two times the prorated amount is $27,246
($13,623 x 2 = $27,246). (Observation; judgment; inferences
from the above). TLC’s payroll records show 135
employees worked a total of 9,675 uninsured employee work
days. (Notice of Evidence to be Introduced at Hearing,
December 30, 2020, Exhibits 26, 27 and 28).
6) The
division contends two aggravating factors apply to TLC: (1)
failure to maintain workers’ compensation insurance
after previous notification by the division of a lack of
coverage; and (2) a violation of AS 23.30.075 that exceeds
180 calendar days. With two aggravating factors, the division
contends the penalty range is between $10 and $50 per
uninsured employee workday or $96,750 and $483,750 for 9,675
uninsured employee workdays pursuant to 8 AAC 45.176(a)(3)
and at least twice the premiums TLC avoided paying by failing
to secure workers’ compensation insurance. (Hearing
Brief of the Special investigative Unit, January 13, 2021;
record).
7) TLC
admitted its two lapses that the division contended and
agreed to pay a civil penalty for the first lapse, a
“forget thing,” but disagreed as to the second
lapse. It contended it “was never notified by official
certified mail of the lapse in coverage due to a failure in
premium payments.” TLC contended BiBerk sent notices to
its “old address,” and “not the new
address,” which was provided on the policy renewal
application; also, BiBerk emailed notices to TLC’s
inactive email account. Thus, it contended it should not be
penalized for the second lapse of which it was unaware.
(Record).
8)
McGuffin admitted: (1) TLC’s average annual payroll for
2018, 2019 and 2020 was $813,770; (2) TLC’s gross
annual earnings were $1,430,879 for 2017, $1,405,884 for
2018, and $1,170,874 for 2019; (3) TLC’s...
