Opinion ID: 886211
Heading Depth: 1
Heading Rank: 7

Heading: Was the correct burden of proof applied to the parties in this case?

Text: ¶ 26 The first issue we address is which party had the burden of proof before the hearing officer. Dynamics contends that the UEF had the exclusive burden to prove that Dynamics was not insured and that the hearing officer correctly found that the UEF had failed to do so. Dynamics further maintains that the WCC erred in imposing any burden of proving its case on Dynamics. We have held that the UEF shoulders the burden of proving whether an entity is a statutory employer and, if it is, whether the employer is uninsured for workers' compensation coverage. Auto Parts v. Employment Relations Div., 2001 MT 72, 305 Mont. 40, 23 P.3d 193. ¶ 27 The initial burden on the UEF, therefore, was to establish whether Dynamics was the employer as defined by the statute. The definition of employer presumes that the individual Client Companies are the statutory employers but allows that presumption to be rebutted. Section 39-71-117(3)(a) and (b), MCA (1993). To rebut the presumption and find an employee leasing company, such as Dynamics, to be the employer, there must be a showing that the employee leasing company met certain conditions, one of which is that the leasing company provided workers' compensation coverage to its clients from the inception of its Montana operation. Section 39-71-117(3)(a) and (b), MCA (1993). Dynamics professed to be the employer; therefore, it had the burden to satisfactorily rebut the statutory presumption. ¶ 28 It is undisputed that when Dynamics began operating in Montana, it did not have state-approved workers' compensation coverage. Therefore, to effectively rebut the § 39-71-117(3), MCA (1993), presumption, it had to establish through substantial credible evidence that it obtained acceptable retroactive coverage effective January 1, 1994. It attempted to do so by producing insurance policies purporting to provide such coverage. Upon reviewing the produced documents, however, the UEF reasonably concluded that, due to numerous policy deficiencies, retroactive coverage was not established. As a result, the UEF concluded that workers' compensation insurance was not provided from the inception of Dynamics' Montana operations. To confirm that no other coverage existed, the UEF reviewed the National Council of Compensation Insurance (NCCI) and State DLI databases and was unable to establish that Dynamics was insured for workers' compensation under Plans 1, 2 or 3 of the Montana Workers' Compensation Act. We have held that the UEF meets its burden by proving that the NCCI and State Fund databases contain no record of insurance for the employer. Auto Parts of Bozeman, ¶ 23. ¶ 29 Upon a finding that no coverage was provided, had Dynamics not been an employee leasing company, the UEF would have met its burden of establishing that it was an uninsured employer. However, because Dynamics was an employee leasing company, the UEF's determination that it was uninsured removed Dynamics from the definition of employer altogether, and rendered the individual Client Companies the employers. ¶ 30 We conclude that the WCC did not impose an improper burden of proof in this proceeding. In this case, both in accordance with the presumption and the statutory definition of employer in § 39-71-117, MCA (1993), the UEF established that the Client Companies and not Dynamics were the legal employers, and as such were legally responsible for providing workers' compensation coverage for their employees at all times.