Opinion
W.C. No. 4-312-835
September 14, 1998
ORDER OF REMAND
The claimant seeks review of a Corrected Order of Administrative Law Judge Wheelock (ALJ), which denied and dismissed his claim for worker's compensation benefits against U.S. Home Corporation (U.S. Home), and its insurer, Old Republic Insurance Company (collectively respondents). The claimant contends that the ALJ erred in finding that he was not U.S. Home's statutory employee. The claimant also contends the ALJ erred in finding he was collaterally estopped from bringing a claim against U.S. Home, that recovery of benefits against U.S. Home would constitute an impermissible "double recovery," and that his failure to reply to the respondents' Motion to Dismiss warranted dismissal of the claim. We set the order aside and remand for entry of a new order.
This matter is before us for the second time. Our Order of Remand dated December 19, 1997, contains a statement of the procedural history of the case. That statement is incorporated in this order.
On remand, the ALJ entered a Corrected Order dated February 5, 1998. The parties agree that the effect of the ALJ's order is to transmit the file to us for the purpose of reviewing the ALJ's prior order dated January 31, 1997.
Prior to the ALJ's January 31 order, the respondents filed a Motion to Dismiss Claim. In this motion, the respondents alleged that, prior to filing this claim against U.S. Home, the claimant filed another claim (W.C. No. 4-261-540) alleging that, at the time of the injury, he was employed by Red Oak Carpet Center (Red Oak). However, in March 1995, the ALJ found that the claimant was not employed by Red Oak, but by Integrity Business Services (IBS), a non-insured employer. In the Motion to Dismiss this claim, the respondents alleged that U.S. Home was the "general contractor on the project where the claimant was injured," and that U.S. Home could not be held liable because it "did not contract any work to" IBS and had "no contractual relationship with" IBS.
The respondents' Motion to Dismiss also alleged that the claim against U.S. Home is barred by the doctrine of collateral estoppel. They reasoned that the ALJ's order in W.C. No. 4-261-540 determined that the claimant was the employee of IBS.
No hearing was held prior to entry of the ALJ's January 31, 1997, order. The January order states that, on review of the respondents' "motion to dismiss and reply, if any, by claimant, it is hereby ordered that claimant's claim for workers' compensation benefits" against the respondents is "hereby denied and dismissed with prejudice." The order is stamped "No Objection Filed Motion Deemed Confessed Rule VIII (D)."
On February 5, 1997, the claimant filed a "Response to Motion to Dismiss Claim." This response alleges that the claimant erroneously believed he was an employee of Red Oak, but was in fact an employee of IBS under an agreement by which IBS "leased" employees to Red Oak. Therefore, the claimant alleged that he was a statutory employee of U.S. Home because U.S. Home was the "general contractor" on the project where he was injured. The claimant also argued that collateral estoppel does not apply to bar his claim against U.S. Home because IBS could be his employer and U.S. Home could be a statutory employer. The claimant requested a hearing to resolve these factual issues.
I.
On review, the claimant contends that to the extent the ALJ dismissed the claim because his February 5 pleading did not constitute a timely response to the Motion to Dismiss Claim, the ALJ erred. We agree, although for reasons slightly different than those stated by the claimant.
One possible interpretation of the ALJ's January 31 order is that the claim for benefits was dismissed under Rule of Procedure VIII (D) (2), 7 Code Colo. Reg. 1101-3 at 23, because the claimant did not file a response to the Motion to Dismiss Claim within ten days of the date on the certificate of mailing of the motion. If the ALJ based the dismissal on this rule, she erred.
Rule of Procedure VIII (D)(1), 7 Code Colo. Reg. 1101-3 at 23, provides that a "motion for entry of a procedural order must be submitted with a separate, properly captioned, proposed order." (Emphasis added.) Rule of Procedure VIII (D)(4), 7 Code Colo. Reg. 1101-3 at 23, provides that the "requirements of this section shall not apply when a motion for entry of a procedural order is made during a formal hearing or during a prehearing conference." (Emphasis added.) It is apparent from subsections (1) and (4) of Rule of Procedure VIII (D), that the rule applies to procedural orders, not substantive orders. For this reason, we have previously held that a claimant's failure to file a timely response to a motion requesting substantive relief does not, under Rule VIII (D), constitute a waiver of the claimant's right to a hearing to resolve a substantive issue. See Burks v. Rainbo Bread, W.C. No. 4-121-222 (June 22, 1993).
We have no difficulty ruling that a dismissal with prejudice based on statutory employer law and collateral estoppel constitutes a substantive ruling. Therefore, the claimant's failure to file a timely written response to the respondents' Motion to Dismiss Claim does not constitute waiver of the claimant's right to a hearing.
II.
We next consider the possibility that the ALJ's January 31 order is, in effect, an order granting summary judgment in favor of the respondents. We have approved orders for summary judgment where the record shows there is no disputed issue of material fact and that one of the parties is entitled to judgment as a matter of law. See Service Supply Co. v. Vallejos, 169 Colo. 14, 452 P.2d 387 (1969); Finely v. Halliburton Services, W.C. No. 4-151-063 (April 4, 1997).
The claimant contends that there is a material issue of fact concerning whether or not U.S. Home was his statutory employer under § 8-41-401(1), C.R.S. 1998, because it was the "general contractor" on the project where he was injured. The respondents argue that U.S. Home could not be liable under § 8-41-401(1) because U.S. Home did not have any contract with IBS. Further, the respondents contend that U.S. Home's contract was with Red Oak, and Red Oak was an insured sub-contractor. Therefore, the respondents argue that U.S. Home is shielded from liability under § 8-41-401(2), C.R.S. 1998. We conclude there is an unresolved issue of material fact, and therefore, summary judgment is inappropriate.
Section 8-41-401(1) provides that any company or corporation "operating or engaged in or conducting any business by leasing or contracting out any part or all of the work thereof to any lessee, sublessee, contractor, or subcontractor" shall be treated as the employer of the "lessees, sublessees, contractors, and subcontractors and their employees." Section 8-41-401(2) provides that if the lessee, contractor, or subcontractor "is also an employer in the doing of such work and, . . . insures and keeps insured its liability for compensation," then the "lessee, contractor, or subcontractor, its employees, or its insurer" shall have no right of action against the company or corporation contracting out its business.
The purpose of these provisions is to prevent an employer from evading liability for workers' compensation by contracting out work instead of directly hiring workers. Curtiss v. GSX Corp., 774 P.2d 873 (Colo. 1989). The General Assembly intended that worker's compensation "be the remedy for all contractors `down stream' from the one contracting out work regardless of how many intermediate contractors there might be." Buzard v. Super Walls, Inc., 681 P.2d 520 (Colo. 1984).
Here, there appear to be disputed issues of material fact concerning the relationship between U.S. Home, Red Oak, and IBS. Certainly, as the claimant argues, the mere fact that the relationship between U.S. Home and IBS was indirect would not preclude the possibility that U.S. Home was the claimant's statutory employer. However, if Red Oak carried workers' compensation insurance, and that insurance covered the claimant's activities at the time of injury, it is possible that U.S. Home would be immune from liability under § 8-41-401(2). However, this record does not demonstrate that any of these allegations or contentions have been proven or admitted as a matter of fact. Therefore, a hearing is necessary.
III.
The claimant next contends that the ALJ erred in holding that the doctrine of collateral estoppel precluded him from establishing that U.S. Home is liable as his statutory employer. We agree with this argument.
Collateral estoppel, or issue preclusion, bars relitigation of an issue determined in a prior preceding if: 1) the issue precluded is identical to an issue actually determined in the prior proceeding; 2) the party against whom estoppel is asserted was a party to or in privity with a party in the prior proceeding; 3) there is a final judgment on the merits in the prior proceeding; and 4) the party against whom estoppel is asserted has had a full and fair opportunity to litigate the issue in the prior proceeding. Lindner Chevrolet v. Industrial Claim Appeals Office, 914 P.2d 496 (Colo.App. 1995).
The issue litigated in W.C. No. 4-261-540 is not identical to the issue pending in this case. In their Motion to Dismiss, the respondents allege that the prior proceeding determined that the claimant's employer was IBS. Though this may be true (and the record does not contain the ALJ's order or orders from W.C. No. 4-261-540), the mere fact that IBS was the claimant's actual employer does not preclude a finding that U.S. Home was the claimant's statutory employer. Section 8-41-401(1); Curtiss v. GSX Corp., supra; Manzanares v. Advanced Building Movers Rigging, W.C. No. 3-837-674 (July 15, 1992).
Moreover, the question of whether U.S. Home was the claimant's statutory employer was not "actually litigated" in W.C. No. 4-261-540. To the contrary, the respondents concede that the claimant filed a motion to join them in W.C. No. 4-261-540, but the respondents successfully opposed the motion for joinder. Consequently, it was impossible for the claimant to "actually litigate" U.S. Home's status. For the same reason, the claimant did not have a full and fair opportunity to litigate U.S. Home's liability in W.C. No. 4-261-540.
IV.
The respondents argue that they are entitled to judgment as a matter of law because the claimant could receive a "double recovery" if both IBS and U.S. Home are found liable for the injury. We are not persuaded.
Initially, we note that the "double recovery" argument was not raised in the respondents' Motion to Dismiss. Therefore, this argument was not the basis of the ALJ's order, and it is too late to raise the argument on appeal. See Pacheco v. Roaring Fork Aggregates, 897 P.2d 872 (Colo.App. 1995).
In any event, the possibility of a "double recovery" did not prevent the ALJ from adjudicating the respondents' liability. In most cases involving general contractors and subcontractors there is but one liable employer. See Herriott v. Stevenson, 172 Colo. 379, 473 P.2d 720 (1970). In this case, the claimant sought to avoid the possibility of inconsistent decisions by joining U.S. Home as a party to the claim against IBS and Red Oak. However, the respondents successfully fought joinder, and themselves created the possibility of inconsistent decisions. Under such circumstances, the mere possibility of a "double recovery" did not prevent the claimant from having an opportunity to establish U.S. Home's liability. Cf. Manzanares v. Advanced Building Movers and Rigging, supra.
Moreover, the problem of "double recovery" could be avoided if the ALJ were to find that U.S. Home is liable as the claimant's statutory employer. The ALJ could simply order U.S. Home and its insurer to reimburse IBS to the extent IBS paid any benefits to the claimant. Cf. Oxford Chemicals, Inc. v. Richardson, 782 P.2d 843 (Colo.App. 1989); § 8-43-215, C.R.S. 1998 (ALJ may determine by whom and to whom benefits are paid).
V.
The respondents final argument is that the ALJ's order is not final and reviewable. We previously rejected this argument, and adhere to our prior conclusion.
Under these circumstances, the ALJ's order of January 31, 1997, must be set aside, and the matter remanded for further proceedings consistent with the views expressed here.
IT IS THEREFORE ORDERED that the ALJ's order dated January 31, 1997, is set aside, and the matter is remanded for further proceedings consistent with the views expressed herein.
INDUSTRIAL CLAIM APPEALS PANEL
______________________________ David Cain
______________________________ Kathy E. Dean
Copies of this decision were mailed September 14, 1998 to the following parties:
William C. Wright, 4260 Bobby Kay Pl., Colorado Springs, CO 80908
Mike Fallowfield, U.S. Home Corporation, P.O. Box 2863, Houston, TX 77252-2863
Larry D. Geiger, U.S. Home Corporation, 6000 S. Greenwood Plaza Blvd., #200, Englewood, CO 80111
Kimberly S. Bills, CPCU, Gallagher Bassett Services, Inc., 7935 E. Prentice Ave., #305, Englewood, CO 80111
Old Republic Insurance Company, P.O. Box 2200, Greensburg, PA 15601
W. Thomas Beltz, Esq. and Daniel A. West, Esq., 729 S. Cascade Ave., Colorado Springs, CO 80903 (For Claimant)
James R. Clifton, Esq. and Harvey D. Flewelling, Esq., 5353 W. Dartmouth Ave., #400, Denver, CO 80227 (For Respondents)
BY: _______________________