Opinion ID: 2617609
Heading Depth: 2
Heading Rank: 1

Heading: Owner-officer rejection of coverage

Text: The Act is a comprehensive insurance scheme created to assure the quick and efficient delivery of disability and medical benefits to injured workers at a reasonable cost to employers, without the necessity of any litigation, recognizing that the workers' compensation system in Colorado is based on a mutual renunciation of common law rights and defenses by employers and employees alike. § 8-40-102(1), 3B C.R.S. (1994 Supp.). Recovery under the Act is meant to be the exclusive remedy for workers covered by its provisions. E.g., Popovich v. Irlando, 811 P.2d 379 (Colo.1991); Bailey v. C.P. Constr. Inc., 837 P.2d 277, 279-80 (Colo.App. 1992) (Workers' compensation is employee's exclusive remedy against employer for work-related injury, and thus employer who has complied with insurance provisions of the Act, as well as injured worker's co-employees are immune from any common-law liability for such injuries.) We have explained that to give full import to the purposes of the Act, all portions thereof should be read together and harmonized. McBride v. Industrial Comm'n, 97 Colo. 166, 169, 49 P.2d 386, 388 (1935). Because the Act has been substantially amended since its enactment in 1919, giving effect to all sections often requires the reconciliation of potentially conflicting provisions. Here, we consider the Act's exclusivity provisions as they affect a corporate owner-officer's election to reject coverage. Though the Act is intended to provide exclusive remedies for all employees injured on the job, the General Assembly has authorized corporate officers who also own at least ten percent of the corporate stock the option to reject workers' compensation coverage. This exception, recognized in 1983, was introduced in response to small business owners' complaints that the self-coverage requirement under the Act unduly burdened their operations. See Hearings on S.B. 236 Before the Senate Committee on Business Affairs and Labor, 54th Gen.Ass., 1st Reg.Sess. (hearing tape 83-11, Feb. 28, 1983 at 16:49-17:00); Hearings on S.B. 236 Before the House Committee on Business Affairs and Labor, 54th Gen.Ass., 1st Reg.Sess. (hearing tape 83-21, Apr. 12, 1983 at 10:47-11:00). Prior to adopting the amendment, the House and Senate Business Committees heard testimony from several business owners who explained that the Act denied them the autonomy to make insurance coverage choices tailored to their individual needs. Further, these owners were liable for additional premiums to cover corporate officers who performed only limited corporate functions, and often received no salary. [3] The 1983 amendment provided two primary benefits for small business owners; the right to reject compensation coverage and to avoid its premiums, and the corresponding right to choose their coverage without unnecessary duplication from the compensation scheme. Throughout the legislative hearings, the bill's proponents were mindful that individuals who were both owners and employees would be reluctant to sue themselves to recover compensation benefits.