Opinion ID: 2573084
Heading Depth: 2
Heading Rank: 4

Heading: mr. searle was a statutory employee of wadman

Text: ¶ 29 In response to motions for summary judgment in the district court, the plaintiffs contended that Argonaut and Wadman were Mr. Searle's statutory employers for purposes of workers' compensation coverage. The WCF reiterates those arguments here, urging us to find that under the OCIP common law employee/employer relationships are altered and the key element in determining a statutory relationship is the right to control. ¶ 30 Argonaut asserts that the statutory employer argument should be dismissed because the argument is a claim that could only be brought by Wadman and because Wadman failed to file an appellate brief. It is true that Wadman did not file an appellate brief; Wadman, however, assigned its rights to the WCF prior to the mediation and before a briefing schedule was set. Accordingly, the WCF had the right to bring a claim directly against Argonaut for coverage based on any claim that Wadman had. The WCF did so on February 7, 2008, when it filed its opening brief in which it asserted that Wadman was Mr. Searle's statutory employer and coverage should be provided by Argonaut. Argonaut also argues that the brief filed by the WCF does not raise any of Wadman's claims. Although the WCF's brief does not discuss the elements of the statutory employer doctrine in great detail, it does claim that Wadman was the statutory employer of Iverson, which was sufficient to put Argonaut on notice of the statutory employer argument. Since Wadman assigned its rights to the WCF and since the joint brief raised Wadman's claims, the WCF's statutory employer claim should not be dismissed. ¶ 31 Utah Code section 34A-2-103(2) defines the circumstances under which an employer/employee relationship is created as a matter of law. This section states that an employer is someone who regularly employs one or more workers or operatives in the same business, or in or about the same establishment. Utah Code Ann. § 34A-2-103(2) (Supp 2008) [2] . Section 34A-2-103(7)(a)(ii), the statutory employee section, also indicates that if an employer procures any work to be done wholly or in part for the employer by a contractor over whose work the employer retains supervision or control, and this work is a part or process in the trade or business of the employer, the contractor, all persons employed by the contractor, all subcontractors under the contractor, and all persons employed by any of these subcontractors, are considered employees of the original employer for the purposes of this chapter. Utah Code Ann. § 34A-2-103(7)(a)(ii) (emphasis added). In Bennett v. Industrial Commission, we clarified that the term supervision or control includes the general contractor's ultimate control over the project. 726 P.2d 427, 432 (Utah 1986); see also Pinnacle Homes, Inc. v. Labor Comm'n, 2007 UT App 368, ¶ 21, 173 P.3d 208. ¶ 32 In general, Argonaut cannot be described as a statutory employer merely because it participated in the OCIP. In order for a statutory employer relationship to exist, the employer must procure the work to be done, retain supervision and control, and the work must be part of the employer's trade or business. Utah Code Ann. § 34A-2-103(7)(a)(ii). Argonaut was not the statutory employer of Iverson in this case because Argonaut did not procure the services of Iverson, did not have ultimate control over Iverson's work, and was not in the trade or business of construction. ¶ 33 In contrast, the WCF correctly contended that Wadman was Iverson's statutory employer. Wadman hired Iverson to complete the steel work and therefore procured Iverson's services. Wadman also exercised control over the project by supervising Iverson's work. Finally, Wadman's line of trade and business was construction, and thus erecting the steel part of the building was part of its trade and business. Because Wadman satisfies all the elements in section 34A-2-103(7)(a)(ii), it is the statutory employer of Mr. Searle. ¶ 34 Even if the level of supervision exercised by Wadman was uncertain, an inference of supervision would still automatically arise because the work being performed was part of the employer's business. Bennett, 726 P.2d at 432. In Bennett, we determined that even though general contractors frequently delegate a substantial amount of work to subcontractors, the general contractor remains responsible so long as the subcontractor's work is a part or process of the general contractor's business. Id. In this case, the steel construction performed by Iverson was part of Wadman's general business of construction and an inference of control arose because Wadman was the general contractor. ¶ 35 Argonaut claims that Iverson already had coverage through the WCF and therefore the statutory employer doctrine did not apply. Argonaut also contends that the WCF, having paid Mr. Searle's claim, had the right to seek reimbursement of unpaid premiums from Iverson, and therefore Iverson had coverage through the WCF. The WCF counters these arguments, stating that the insurance coverage Iverson received from the WCF did not cover the Middle School project and that Argonaut, not the WCF, received premiums for the Middle School project. ¶ 36 Typically, an employee cannot reach through the layers of employers any further than the first-insured contractor. Jacobsen v. Indus. Comm'n, 738 P.2d 658, 661 (Utah Ct.App.1987). Section 34A-2-103(7)(e) states that the statutory employer doctrine is applicable to contractors and subcontractors unless the employer who procures work to be done by the contractor or subcontractor obtains and relies on ... a valid certification of the contractor's or subcontractor's compliance with Section 34A-2-201. Section 34A-2-201 provides, An employer shall secure the payment of workers' compensation benefits for its employees by: (1) insuring, and keeping insured, the payment of this compensation with the Workers' Compensation Fund; (2) insuring, and keeping insured, the payment of this compensation with any stock corporation or mutual association authorized to transact the business of workers' compensation insurance in this state; or (3) obtaining approval from the division in accordance with Section 34A-2-201.5 to pay direct compensation as a self-insured employer in amount, in the manner, and when due as provided for [by statute]. ¶ 37 Iverson did not provide Wadman with a certificate of compliance with section 34A-2-201 for the Middle School project. It could not have because it informed the WCF that Iverson's employees working on the Middle School project would not need to be covered by the WCF while they were working on the project. ¶ 38 Iverson did, however, provide some documentation of the WCF coverage to Wadman. Under the OCIP, all subcontractors and contractors were required to provide proof of 34A-2-201 compliance for off-site activities in order to enroll in the OCIP. Iverson had to demonstrate compliance with the off-site insurance requirement by showing that it had coverage through the WCF for off-site jobs, which it did. This coverage did not preclude Iverson from being a statutory employee for the Middle School project since Wadman never received information that Iverson had other insurance for the project. Utah Code Ann. § 34A-2-103(7)(e). To the contrary, Wadman requested that Iverson reduce its bid in anticipation of the OCIP, not Iverson's usual insurance covering all work-related incidents on-site, and paid the premium for Iverson to be covered under the OCIP. Wadman informed Iverson that insurance would be provided, and Iverson acted upon this belief. In this case, Wadman did not rely on a certificate of insurance from Iverson, and therefore the statutory employer doctrine applies. ¶ 39 As for Argonaut's argument that Iverson actually had coverage through the WCF because the WCF chose to pay Mr. Searle's claim and could then seek reimbursement from Iverson for unpaid premiums, we find that it is without merit. If Argonaut's position was the law, employers that failed to enroll subcontractors in the OCIP could presumably escape statutory employer liability if the WCF chose to voluntarily pay injured workers. Wadman should not be allowed to avoid responsibility as the statutory employer of Iverson. Because Wadman procured Iverson's services and retained supervision and control over Iverson's work and because Iverson's work was part of the business of Wadman, we hold that Wadman was the statutory employer of Iverson and therefore the statutory employer of Mr. Searle. ¶ 40 In addition to finding Wadman to be the statutory employer of Iverson, we must determine if Argonaut, as Wadman's insurance provider, was required to pay workers' compensation benefits to Mr. Searle. Neither party contests that Wadman was properly enrolled in the OCIP. The renewed policy between Argonaut and Wadman became effective September 8, 2001, several months before the accident. In the absence of the policy later becoming invalid, the policy requires that Argonaut pay workers' compensation insurance benefits for all of Wadman's employees. The Supplemental General Conditions for OCIP does state that failure to follow procedure, such as verifying a subcontractor is enrolled, may result in the termination of coverage. The effect of this document on the policy, however, is unclear. In any case, Argonaut is required by law to give notice to Wadman of any policy cancellation. Section 34A-2-205(1)(b) states that a workers' compensation insurance policy is in effect from inception until canceled by filing with the division or its designee a notification of cancellation in the form prescribed by the division within ten days after the cancellation of a policy. Since no notice was given to Wadman by Argonaut of the insurance policy being cancelled, the policy is still valid. Because Wadman's policy with Argonaut was still valid and Mr. Searle was the statutory employee of Wadman, Argonaut must pay Mr. Searle's compensation benefits.