Court Opinion

ID: 2790951
Source: CourtListenerOpinion
Date Created: 2015-04-02 14:03:40.806916+00
Date Added: 2024-06-11T11:27:07.683102
License: Public Domain

IMPORTANT NOTICE
        NOT TO BE PUBLISHED OPINION

THIS OPINION IS DESIGNATED "NOT TO BE PUBLISHED."
PURSUANT TO THE RULES OF CIVIL PROCEDURE
PROMULGATED BY THE SUPREME COURT, CR 76.28(4)(C),
THIS OPINION IS NOT TO BE PUBLISHED AND SHALL NOT BE
CITED OR USED AS BINDING PRECEDENT IN ANY OTHER
CASE IN ANY COURT OF THIS STATE; HOWEVER,
UNPUBLISHED KENTUCKY APPELLATE DECISIONS,
RENDERED AFTER JANUARY 1, 2003, MAY BE CITED FOR
CONSIDERATION BY THE COURT IF THERE IS NO PUBLISHED
OPINION THAT WOULD ADEQUATELY ADDRESS THE ISSUE
BEFORE THE COURT. OPINIONS CITED FOR CONSIDERATION
BY THE COURT SHALL BE SET OUT AS AN UNPUBLISHED
DECISIO,N IN THE FILED DOCUMENT AND A COPY OF THE
ENTIRE DECISION SHALL BE TENDERED ALONG WITH THE
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ACTION.
                                                    RENDERED: APRIL 2, 2015
                                                      NOT TO BE PUBLISHED

              Suprrint Gurf of 71,firttfuritv
                             2014-SC-000273-WC

TERRY ASHLEY                                                          APPELLANT

                   ON APPEAL FROM COURT OF APPEALS
V.                    CASE NO. 2013-CA-001768-WC
                  WORKERS' COMPENSATION NO. 06-00294

MICHAEL MERCER; OVA CARMEN;
UNINSURED EMPLOYERS' FUND;
HONORABLE MARCEL SMITH,
ADMINISTRATIVE LAW JUDGE;
HONORABLE 0'170 D. WOLFF, IV,
ADMINISTRATIVE LAW JUDGE; AND
WORKERS' COMPENSATION BOARD                                           APPELLEES

                  MEMORANDUM OPINION OF THE COURT

                                  AFFIRMING

      Appellant, Terry Ashley, has filed this appeal to contest several parts of a

workers' compensation award entered in favor of Appellee, Michael Mercer.

Ashley argues: 1) that the Administrative Law Judge ("ALJ") erred by finding

that Mercer was his employee; 2) that Mercer was instead an independent

contractor or an employee of Appellee, Ova Carmen, who was the owner of the

house under construction where Mercer was injured; 3) that the Workers'

Compensation Board ("Board") misinterpreted the effect of a settlement

between Mercer and the Uninsured Employers' Fund ("UEF"); and 4) that the
ALLJ erred by refusing to order vocational rehabilitation benefits for Mercer. For

the below stated reasons, we affirm the Court of Appeals.

      After being laid off from a factory, Ashley entered the home construction

business. In Spring 2005, Ashley was hired by Carmen to oversee the

construction of a house. Mercer was hired to help build the house. Prior to

Carmen's house project, Mercer assisted Ashley with the construction of seven

or eight houses. Mercer testified that he first performed construction work for

Ashley in September 2004, and worked with him until the work-related injury

occurred. Mercer only has a ninth grade education and has no specialized

vocational training, except for the carpentry skills he learned while building

various structures.

      At the Carmen jobsite, Ashley instructed Mercer what tasks to perform

and arranged Mercer's hourly wage. Carmen testified that he never met Mercer

before construction began, and that he did not hire Mercer as an employee or

independent contractor. Carmen stated that he did not supervise Mercer, did

not provide any tools to Mercer, and did not believe he had the authority to

direct, hire, or fire Mercer. However, Carmen directly paid Mercer for his work,

purportedly at Ashley's request.'

       Construction of Carmen's house progressed smoothly until Mercer

suffered a severe fall at the work site on November 7, 2005. The fall caused

 I While he was working in home construction, Ashley received unemployment benefits.
   Ashley admitted through his testimony that any money which he was owed by
    Carmen was given to his wife to conceal the fact he was working from the
   unemployment compensation system.

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injuries to Mercer's left leg and arm, lower back, chest, abdomen, and right foot

and ankle. The injuries required surgical repair. Ashley allegedly promised to

pay Mercer's medical bills, but did not maintain workers' compensation

insurance. Carmen also did not have workers' compensation insurance.

Mercer filed a Form 101 alleging work-related injuries.

      Mercer's claim was assigned to ALJ Marcel Smith. The claim was

bifurcated to first determine whether an employer-employee relationship

existed between Ashley, Carmen, and Mercer. In an opinion, award, and order

entered on October 17, 2007, she found that Mercer was Ashley's employee at

the time of the accident, that Mercer was not an employee or independent

contractor of Carmen, and that Mercer was entitled to temporary total

disability benefits. Specifically, ALO Smith stated:

      [t]he first issue for consideration is whether or not there was
      employee-employer relationship between [Mercer] and either Terry
      Ashley or Ova Carmen. The test set out in Ratliff v. Redmon, 396
S.W.2d 320, 325-326 (Ky. 1965) and specifically the four tests from
      Uninsured Employers' Fund v. Garland, 805 S.W.2d 116, 118 119  -

      (Ky. 1991) will be applied. First looking at the four tests that
      appear in both cases, and applying the facts herein:
      1. The nature of the work as related to the business generally
      carried on by the alleged employer, indicates to me that [Mercer]
      was an employee of Terry Ashley but not an employee of Ova
      Carmen. [Mercer] did carpentry and construction work for Terry
      Ashley in the process of building homes. Mr. Ashley was in the
      business of building homes. Mr. Carmen was not in the business
      of building homes.
      2. The next test is the extent of control exercised by the alleged
      employer. Terry Ashley made bids on all jobs, made all the
      contacts and contracts with home owners, made all the decisions
      regarding what houses to build, did all the pricing, made all the
      deals and then directed [Mercer] and the other workers with regard
      to which project to work on, what days to work, and what to do.
      He directed [Mercer] what work needed to be accomplished with
      regard to building homes for. Mr. Ashley. I'm not persuaded by any

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     evidence that Mr. Carmen exerted any control over [Mercer]. I'm
     persuaded by his testimony that he did not consider himself
     authorized to direct [Mercer] or any of the other workers.
     3. One next considers the professional skills of the alleged
     employee. [Mercer] has a ninth grade education with no GED. He
     has learned carpentry work on the job. He has no professional or
     formal training; he has no license or certificate to be a carpenter;
     he is not an engineer; he is not a certified home builder.
     4. The intent of the parties is the next consideration. [Mercer] has
     testified that he considered himself an employee of Terry Ashley.
     Although Terry Ashley denied that [Mercer] was his employee, he
     did state that [Mercer] came to work for him in September 2004. I
     am not persuaded by Terry Ashley's testimony that [Mercer] was
     not his employee. I am persuaded by Ova Carmen's testimony that
     [Mercer] was not his employee. Ratliff v. Redman has three other
     tests.
     5. The fact that the alleged employer provides tools and a place to
     work indicates an employer/employee relationship. The place to
     work was provided by Mr. Ashley who bid out the jobs and sent
     [Mercer] to work on those jobs. Although [Mercer] provided his
     own belt and hammer, Terry Ashley provided all the other tools
     including saws, drills, ladders, cords, air guns, air compressors,
     scaffolding, and ladders. Terry Ashley had originally gotten a bid
     for the materials, then Mr. Carmen received a bid which was lower.
     Mr. Carmen paid the bill for the materials and the materials were
     delivered.
     6. The next test that appears only in Ratliff v. Redmon is the lack
     of a fixed termination date for employment. There was no fixed
     termination date according to the testimony.
      7. The next test would be payment by the hour. [Mercer] was paid
      by the hour for this work. Although it was paid directly by Mr.
      Carmen, the evidence persuades me that this arrangement was at
      the request of Terry Ashley.
      Considering all of these factors and applying the evidence to them,
      I am persuaded that [Mercer] was an employee of Terry Ashley at
      the time of [Mercer's] injury. I am persuaded that [Mercer] was not
      an employee of Ova Carmen at the time of this injury.

     Carmen was dismissed as a party and the UEF was directed to pay

medical benefits. The claim was placed in abeyance until Mercer reached

maximum medical improvement. Ashley filed a petition for reconsideration,

which was denied, and he appealed to the Board. The Board dismissed the

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appeal because ALJ's Smith's opinion, order, and award was not final and

appealable.

      Mercer entered into a settlement with the UEF. As part of the

settlement, Mercer agreed to accept from the UEF $255.04 per week for 425

weeks beginning on July 21, 2009. This amount represented a 17.5% whole

body impairment. Ashley was not a party to the settlement other than as a

signatory to a statement that he retained the right to appeal. He appealed from

the settlement and ALJ Smith's prior orders. However, the Board again

dismissed the appeal finding that the prior orders were interlocutory. The

Board remanded the matter to ALJ Otto Wolff to determine whether he would

adopt ALJ Smith's findings regarding the employer-employee relationship

between Ashley and Mercer.

      After a hearing, ALJ Wolff rendered an opinion adopting ALJ Smith's

evidentiary findings and conclusions of law. He found that Mercer was

Ashley's employee, that Carmen was properly dismissed as a party, that Mercer

suffered a work-related injury, that Mercer had a 17% impairment rating, and

that Mercer was entitled to permanent total disability benefits at the rate of

 463.23 per week. Mercer's request for vocational rehabilitation benefits was

denied because ALJ Wolff found he was permanently totally occupationally

disabled. Petitions for reconsideration were filed by Ashley, Mercer, and the

UEF resulting in an order stating that Ashley would take credit for all

payments the UEF has made, and continues to make, pursuant to its
settlement with Mercer. The Board and Court of Appeals affirmed, and this

appeal followed.

      The AUJ, as fact finder, has "the sole discretion to determine the quality,

character, and substance of evidence and to draw reasonable inferences from

the evidence." Magic Coal Co. v. Fox, 19 S.W.3d 88, 96 (Ky. 2000). A finding

that favors the party who had the burden of proof must be affirmed if

supported by substantial evidence. Special Fund v. Francis, 708 S.W.2d 641

643 (Ky. 1986). In other words, the finding must be reasonable under the

evidence presented. Id. When the burden of proof is not satisfied by a party, it

must show that the unfavorable finding was clearly erroneous, and that

overwhelming favorable evidence compelled a different result, before that

finding may be reversed. Id.

      In reviewing Ashley's arguments, the Court of Appeals only needed to

correct the Board "if it overlooked or misconstrued controlling statutes or

precedent, or committed an error in assessing the evidence so flagrant as to

cause gross injustice. The function of review in our Court is to address new or

novel questions of statutory construction, or to reconsider precedent when

such appears necessary, or to review a question of constitutional magnitude."

Western Baptist Hospital v. Kelly, 827 S.W.2d 685, 687-688 (Ky. 1992).

       I. THE FINDING THAT MERCER WAS ASHLEY'S EMPLOYEE IS
                 SUPPORTED BY SUBSTANTIAL EVIDENCE

      Ashley's first argument is that Mercer was not his employee because

there was no contract for hire. He analogizes this matter to Smith Concrete,

                                         6
Inc. v. Mountain Enterprises, Inc., 833 S.W.2d 808, 812 (Ky. 1992), which held

that before an employer-employee relationship can be found, there must be a

contract of hire, express or implied. Ashley argues that if there was a contract

of hire it was between Carmen and Mercer. He notes that Mercer was paid

directly by Carmen and alleges that Carmen controlled Mercer's work at the

project to argue a contract for hire existed not between himself and Mercer, but

between Carmen and Mercer. We disagree.

      Ratliff, 396 S.W.2d at 324-325, provides nine factors to apply when

determining whether a worker is an employee:

      (a) the extent of control which, by the agreement, the master may
      exercise over the details of the work;

      (b) whether or not the one employed is engaged in a distinct
      occupation or business;

      (c) the kind of occupation, with reference to whether, in the
      locality, the work is usually done under the direction of the
      employer or 'by a specialist without supervision;

      (d) the skill required in the particular occupation;

      (e) whether the employer or the workman supplies the
      instrumentalities, tools, and the place of work for the person doing
      the work;

       (f) the length of time for which the person is employed;

       (g) the method of payment, whether by the time or by the job;

       (h) whether or not the work is a part of the regular business of the
       employer; and

       (i) whether or not the parties believe they are creating the
       relationship of master and servant.

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Of these factors, Chambers v. Wooten's IGA Foodliner, 436 S.W.2d 265 (Ky.

1969) stated that, "[w]hile many tests are appropriately considered, we think

the predominant ones encompass the nature of the work as related to the

business generally carried on by the alleged employer, the extent of control

exercised by the alleged employer, the professional skill of the alleged

employee, and the true intentions of the parties."

      ALJ Smith found that Ashley hired Mercer to help build Carmen's house.

She found that Ashley told Mercer how to perform his job, what jobs he needed

to complete, and provided the majority of tools Mercer used. Ashley also

negotiated with Carmen for Mercer's hourly wage. These facts indicate that

Ashley was Mercer's employer. While it is true that Mercer was paid directly by

Carmen, this was done at Ashley's request. Further, there is no evidence that

Carmen intended to hire Mercer or directed his work in any manner. While

there is not a written "contract of hire" between Ashley and Mercer, such a

contract may be "express or implied." Ratliff, 396 S.W.2d at 324. There is

sufficient evidence to support ALJ Smith's conclusion that an implied contract

of hire existed between Mercer and Ashley, and ALJ Wolff did not abuse his

discretion in adopting her findings.

       Despite Ashley's argument to the contrary, the facts in this matter are

distinguishable from those found in Smith Concrete, Inc., 833 S.W.2d at 812.

In that case, the claimant was assigned to work for Mountain Enterprises by

his usual employer, Smith Concrete, via a leasing scheme. The Court noted in
finding that Mountain Enterprises was the claimant's employer: "[t]he contract

on which the work was being done was held by Mountain Enterprises; the

actual work being done was that which Mountain Enterprises had contracted

to do; the general superintendent of Mountain Enterprises was on the job and

had control over the entire project; [claimant] had signed employment

documents for Mountain Enterprises; and [claimant] was being paid by

Mountain Enterprises." Id.

      While Mercer was paid directly by Carmen like the claimant in Smith

Concrete was paid by Mountain Enterprises, outside of that one similarity, the

facts between the two matters differ. Carmen did not serve as superintendent

of the construction job or direct Mercer to perform certain jobs. Those tasks

were performed by Ashley and Mercer was helping Ashley at his direction.

Carmen did not take a role in the construction of his house like Mountain

Enterprises did in the construction of its project. ALJ Wolff's findings are

supported by substantial evidence, and the finding that Mercer was Ashley's

employee may not be reversed on appeal.

      Ashley alternatively argues that Mercer was an independent contractor of

Carmen. However, ALJ Wolff found that Carmen did not hire Mercer or have

control over him at the job site. The vast amount of evidence supports the

conclusion that Carmen hired Ashley to oversee the construction of the house

and that Ashley subsequently hired Mercer to assist. Ashley then directed

Mercer to complete certain tasks and provided the tools to complete those

                                         9
tasks. The record does not support Ashley's allegation that Mercer was an

independent contractor of Carmen.    See Ratliff; 396 S.W.2d at 325-326.

II. THE WORKERS' COMPENSATION BOARD DID NOT MISINTERPRET THE
     EFFECT OF THE SETTLEMENT BETWEEN MERCER AND THE UEF

      Ashley next argues that the Board misinterpreted the effect of a

settlement entered into between Mercer and the UEF by not giving him the

benefit of the agreement made between the parties. Ashley contends that he

was a party to the settlement agreement because the UEF took on the liability

to pay Mercer's benefits since he did not maintain workers' compensation

insurance. Therefore, Ashley argues if he is Mercer's employer and he is liable

to the UEF for the payments made to Mercer, his liability should be limited to

the weekly settlement amount. We disagree.

      Ashley was not a party to the settlement agreement even though the UEF

has taken on the liability to pay Mercer's benefits. In fact, the settlement

specifically states that Ashley was not a party to the agreement. Ashley's only

participation in the settlement was to indicate he retained the right to appeal.

Thus, we conclude that the settlement was not misinterpreted to Ashley's

detriment.

III. THE ALJ WAS WITHIN HIS DISCRETION TO NOT ORDER VOCATIONAL
                     REHABILITATION BENEFITS

      Ashley's last argument is that the AU erred by refusing to refer Mercer

for vocational rehabilitation benefits. AU Wolff did not order vocational

rehabilitation benefits because he found Mercer to be permanently and totally

                                         10
occupationally disabled. Ashley contends that this was an abuse of discretion

because AI.,J Wolff did not inquire whether vocational rehabilitation benefits

were voluntarily offered. However, KRS 342.710(3) provides an ALJ discretion

to refer a claimant for vocational rehabilitation. AL,J Wolff, finding that Mercer

was permanently and totally disabled, did not believe that ordering Mercer to

receive rehabilitation assessment was necessary. He was within his discretion

to so order.

      For the above stated reasons, the decision of the Court of Appeals is

affirmed.

      All sitting. All concur.

COUNSEL FOR APPELLANT,
TERRY ASHLEY:

Norman E. Harned
Ashley Dawn Gerughty

COUNSEL FOR APPELLEE,
MICHAEL MERCER:

Elizabeth Anne Schott
Jessica Jarboe Logsdon
Jessica Meyer Marcum

COUNSEL FOR APPELLEE,
OVA CARMEN:

Calvin Ray Fulkerson

COUNSEL FOR APPELLEE,
UNINSURED EMPLOYERS' FUND:

James Robert Carpenter
Jack Conway, Attorney General

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