Opinion
CLAIM NO. F014264
OPINION FILED FEBRUARY 22, 2006
Upon review before the FULL COMMISSION, Little Rock, Pulaski County, Arkansas.
Claimant represented by Honorable Eddie Walker, Jr., Attorney at Law, Fort Smith, Arkansas.
Respondent represented by Honorable Mark Freeman, Attorney at Law, Fayetteville, Arkansas.
Decision of Administrative Law Judge: Affirmed in part; Reversed in part.
OPINION AND ORDER
The claimant appeals a decision of the Administrative Law Judge filed on March 28, 2005. In said order, the Administrative Law Judge made the following findings of fact and conclusions of law:
1. The Arkansas Workers' Compensation Commission has jurisdiction of this claim.
2. On all relevant dates, including January 31, 2000, the relationship of employee-uninsured employer existed between the parties.
3. The claimant has failed to present sufficient evidence to justify "piecing (sic) the corporate veil" and finding that Dr. Robert Ziegler is the true uninsured employer and is personally liable to the claimant for any benefits awarded in this claim.
4. On January 31, 2000, the claimant earned wages sufficient to entitle her to weekly compensation benefits of $267.00 for total disability and $200.00 for permanent partial disability.
5. On January 31, 2000, the claimant sustained a compensable injury to her low back, in the form of a right sided herniated disc at L4-5.
6. The medical services rendered to the claimant for her compensable back injury by and at the direction of Dr. Thomas Atkinson, Dr. Kelly Danks, and Dr. Robert Ziegler represent "reasonably necessary medical services" for the claimant's compensable injury. Pursuant to Ark. Code Ann. § 11-9-508, the respondent herein is liable for the expense of such services, subject to the medical fee schedule established by this Commission.
7. The claimant was rendered temporarily totally disabled as a result of the effects of her compensable injury from February 2, 2000 until July 1, 2000.
8. The respondent has failed to pay the installments of compensation awarded to the claimant for temporary total disability benefits within 15 days after they became due. Thus, the claimant could have been found entitled to the 20% penalty on such installments provided by Ark. Code Ann. § 11-9-802(c).
9. The respondent has willfully and intentionally failed to pay any of the benefits awarded by the prior Opinion of April 26, 2001. Thus, the penalty provided by Ark. Code Ann. § 11-9-802(e) is applicable to the present claim. The appropriate amount of this penalty is the maximum provided by this subdivision (i.e. 36%) on all "benefits" awarded by this Opinion. This shall include the installments of temporary total disability benefits and the medical benefits awarded, with the exception of any expense for any services provided to the claimant directly by Ziegler Chiropractic, Inc.
10. As the penalties provided by Ark. Code Ann. § 11-9-802(c) and (e) are not cumulative, the claimant is only entitled to the higher penalty provided under subdivision (e).
11. The respondent has controverted the claimant's entitlement to any penalty provided by Ark. Code Ann. § 11-9-802.
12. A reasonable fee for the claimant's attorney is the maximum statutory attorney's fee on the controverted penalties herein awarded. This fee shall be in addition to the controverted attorney's fees previously awarded.
Based upon our de novo review of the record, we affirm the Administrative Law Judge's findings of fact and conclusions of law listed above, but we reverse his failure to find Dr. Ziegler personally in contempt for his failure to satisfy the award previously granted to the claimant.
In an Opinion dated April 26, 2001, the claimant was found to have sustained a compensable injury while acting in the course and scope of her employment with an uninsured employer on January 31, 2000. The respondent, Ziegler Chiropractic Clinic, was ordered to pay the claimant temporary total disability benefits, was found liable for medical treatment the claimant had received, and was also ordered to pay attorney's fees to the claimant's attorney. The Opinion became a final Order on October 31, 2001, when the respondent's appeal was dismissed.
The respondent did not pay any of the awarded benefits and, as a consequence, the claimant filed a Motion with the Commission requesting that the maximum statutory penalty be applied; that Dr. Robert Ziegler, the sole owner and stockholder of Ziegler Chiropractic Clinic, Inc. be found to be personally liable for providing the benefits to the claimant; and that Dr. Ziegler be found to be in contempt for his failure to comply with the Commission's prior Order and that appropriate monetary sanctions be imposed to compel his compliance with the prior award.
An Administrative Law Judge conducted a hearing regarding this request and heard testimony from the claimant and Dr. Ziegler. In an Opinion handed down March 28, 2005, the Administrative Law Judge found that the respondent had willfully and intentionally failed to pay the benefits awarded in his original Opinion and that pursuant to Ark. Code Ann. § 11-9-802(e), the respondent was ordered to pay to the claimant a penalty of 36% on all medical and disability benefits awarded. However, the Judge further found that Dr. Robert Ziegler was not personally liable for the awarded benefits and withheld any findings as to whether he was in contempt for his failure to pay the awarded benefits. The claimant filed the present appeal based upon the Administrative Law Judge's refusal to set aside the corporate entity or to find Dr. Ziegler in contempt.
As stated above, we agree that the Administrative Law Judge is correct in not setting aside the corporate entity but we find that he was in error in not finding Dr. Ziegler to be personally in contempt for his failure to satisfy the award previously granted to the claimant.
In finding that Ziegler Chiropractic, Inc., the respondent's corporate entity, could not be set aside, the Judge relied upon the case of Quinn-Matchet Partners, Inc. v. Parker Corporation, 85 Ark. App. 143, 147 S.W.3d 703 (2004). While that case did not directly involve workers' compensation, I note that it is in accord with, and relied upon, Humphries v. Bray, 271 Ark. 962, 611 S.W.2d 791 (1981) a case which did involve a workers' compensation claim. In both of those decisions, as in the present case, the respondent was a corporation with one stockholder. The Court of Appeals held in both Opinions that, in order to "pierce the corporate veil," and find the sole stockholder liable, it must be found that the corporate entity was being abused so as to reach an improper or illegal result. In Humphries, where the corporate entity was set aside, the individual stockholder had created three separate corporations, each of which had one employee. The respondent then argued that since none of his businesses had the requisite number of employees, he was not required to have workers' compensation insurance. However, it was found that all of the businesses were co-mingled and that the employees all worked together for essentially the same employment purposes. Consequently, the respondent's corporate entity was found to be a subterfuge and it was properly set aside. InQuinn-Matchet, the opposite result was reached because, while the sole stockholder was in complete control of the business, he had not fraudulently abused the corporate form.
In the present case, while it is apparent that Dr. Ziegler was in complete control of the corporation, it does not appear that the respondent's corporate identity was maintained as a subterfuge or fraud. There is no evidence that he had improperly co-mingled personal and corporate funds, nor that he used his corporate identity to avoid the application of the laws of this state or for any other illegal purpose. Therefore, we find that the Administrative Law Judge's decision to not set aside the respondent's corporate identity should be affirmed.
However, we disagree with the Administrative Law Judge's decision not to find Dr. Ziegler in contempt and we reverse his decision to hold the claimant's motion for contempt in abeyance. We believe that the record makes it abundantly clear that Dr. Ziegler was in control of the respondent employer and that he made no effort whatsoever to satisfy the award previously made by the Administrative Law Judge. Accordingly, we believe that Dr. Ziegler is in contempt and this Commission should take appropriate action to compel him to honor the claimant's previous award of benefits.
In reviewing the testimony of the claimant and Dr. Ziegler, we note that Dr. Ziegler has made no attempt to pay either the disability or the medical benefits he was ordered to pay in April 2001. We also note that the respondent was provided with a statement by the claimant's attorney indicating that the unpaid medical bills totaled $2,045.25. Further, the original award in this case included approximately five months of temporary disability benefits at a weekly disability rate of $267.00. As was pointed out by the Administrative Law Judge, had the respondent begun making even small, incremental payments toward satisfaction of this award, it would have been paid off by now. However, respondent's only action in this matter was to negotiate settlements he did not live up to, while making no attempt to satisfy the award.
While we agree that the corporate entity should not be set aside in this case, there is no question that Dr. Ziegler is personally responsible for the respondent's failure to comply. He was the sole stockholder, and, his ability as a practicing chiropractor is the respondent's only asset. Dr. Ziegler has also personally appeared before this Commission and represented himself as being in control of the respondent, giving us personal jurisdiction over him. Further, Dr. Ziegler testified that his annual profits from his business was in the range of $55,000 to $60,000 per year. While this is not an enormous sum, and I realize that he may have had other obligations as well, it certainly seems to be an amount sufficient to have allowed him to have made some attempt to satisfy his obligations to pay the workers' compensation benefits.
The Administrative Law Judge refused to find Dr. Ziegler in contempt because of his conclusion that there had not been a willful refusal to pay the award as required by Ark. Code Ann. § 11-9-706. However, we are somewhat mystified by that conclusion since the Administrative Law Judge had also held that the respondent was responsible for paying a penalty pursuant to Ark. Code Ann. § 11-9-802(e). That section states that the penalty shall be assessed if there is a willful and intentional failure to pay the required benefits. However, Ark. Code Ann. § 11-9-706 states that the Commission may find someone in contempt if they willfully refuse to comply with an order. The Administrative Law Judge stated in his Opinion that a willful failure and a willful refusal were not the same thing. However, it appears to us that this is a distinction without a difference. In regard to both of these statutory sections, Dr. Ziegler, as the individual in full control of the respondent corporation, made a conscious decision to not pay the benefits the respondent was previously ordered to pay. Whether his conduct was characterized as a "failure" or a "refusal" is of no particular significance.
We find that Dr. Ziegler's failure to make any attempt to satisfy the prior award, is a willful refusal sufficient to find him in contempt pursuant to Ark. Code Ann. § 11-9-706. We therefore assess a fine upon him personally of $10,000.00. However, we also find that the respondent can purge himself of this contempt by paying the benefits due to the claimant and her medical providers, including the penalty, within 30 days of the date of the Commission's Opinion.
For the foregoing reasons, we affirm the Administrative Law Judge's findings of fact and conclusions of law, but we reverse his failure to find Dr. Ziegler personally in contempt for his failure to satisfy the award previously granted to the claimant.
All accrued benefits shall be paid in a lump sum without discount and with interest thereon at the lawful rate from the date of the Administrative Law Judge's decision in accordance with Ark. Code Ann. § 11-9-809 (Repl. 2002).
Since the claimant's injury occurred prior to July 1, 2001, the claimant's attorney's fee is governed by the provisions of Ark. Code Ann. § 11-9-715 as it existed prior to the amendments of Act 1281 of 2001. Compare Ark. Code Ann. § 11-9-715(Repl. 1996) with Ark. Code Ann. § 11-9-715 (Repl. 2002). For prevailing in part on this appeal before the Full Commission, claimant's attorney is hereby awarded an additional attorney's fee in the amount of $250.00 in accordance with Ark. Code Ann. § 11-9-715(b) (Repl. 1996).
IT IS SO ORDERED.
_______________________________ OLAN W. REEVES, Chairman
_______________________________ SHELBY W. TURNER, Commissioner
Commissioner McKinney concurs.