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CASE NO. 4342 CRB-5-01-1
COMPENSATION REVIEW BOARD
WORKERS’ COMPENSATION COMMISSION
JANUARY 3, 2002
NO RECORD OF INSURANCE
SECOND INJURY FUND
The claimant was represented by Jack Senich, Esq., Ouellette & Senich, LLC, 390 Middlebury Road, Middlebury, CT 06762.
The respondent was represented by Lawrence R. Pellett, Esq., Feeley, Nichols, Chase, McDermott & Pellett, P.C., 37 Leavenworth Street, P.O. Box 2300, Waterbury, CT 06722-2300.
The Second Injury Fund was represented by Mee Wong, Esq., Assistant Attorney General, 55 Elm Street, P. O. Box 120, Hartford, CT 06141-0120.
This Petition for Review from the January 9, 2001 Finding and Award of the Commissioner acting for the Fifth District was heard August 24, 2001 before a Compensation Review Board panel consisting of the Commission Chairman John A. Mastropietro and Commissioners George A. Waldron and Ernie R. Walker.
JOHN A. MASTROPIETRO, CHAIRMAN. The respondents have petitioned for review from the January 9, 2001 Finding and Award of the Commissioner acting for the Fifth District.1 The respondents argue on appeal that the trier erred by assessing “no insurance” fines without properly holding a hearing on the issue, and without notifying one of the principals of Nutmeg Express, Inc., that he was at risk for being fined in his individual capacity as a sole proprietor. The respondents also contend that errors occurred regarding the trier’s correction of the claimant’s average weekly wage, and in his granting of a motion for attorney’s fees. We affirm the trier’s award with respect to the latter two issues, but remand this matter so that another hearing may be held on the matter of fines pursuant to § 31-288(b).
The parties stipulated that the claimant was employed by Nutmeg Express on June 15, 2000, when he sustained a compensable injury to his left knee due to a motor vehicle accident on a New Jersey highway. The parties also stipulated that Nutmeg Express was not insured for workers’ compensation liability on that date, and admitted that said employer had paid the claimant no benefits. The trial commissioner initially found that the claimant’s average weekly wage was $278.20 per week, and calculated his temporary total disability compensation rate at $176.26 per week accordingly, based on a single filing status with one exemption. An employee of Nutmeg Express had testified that she had calculated this to be the claimant’s average weekly wage. October 3, 2000 Transcript, p. 25. When the claimant subsequently moved to correct the award to reflect an average wage of $400 per week (with a corresponding compensation rate), the trier granted that correction.
With regard to the issue of sanctions against the uninsured employer, notice for the October 3, 2000 hearing stated that “Employer or its representative must appear. Fine up to $50,000 may be imposed for failure to carry WCC insurance.” That notice was sent to the claimant’s attorney, to Nutmeg Express via their attorney, and to the Second Injury Fund. At the hearing, the employer’s attorney identified his client as Nutmeg Express. The claimant testified that he had worked for Nutmeg Express since the end of 1999, and that his paycheck initially consisted of a “long green check [that had] the company name on it with Tim [Disabella’s] name and address and everything. Transcript, p. 14. Though he began receiving a different type of check late in that winter, no withholding taxes were ever taken out of his pay. Id., 15. He stated that “maybe half a dozen” employees were working for Nutmeg Express on the date of his injury. Id., 20.
The trier took administrative notice of a pre-hearing investigative report that had been prepared by a special investigator for the State of Connecticut. The report showed that Nutmeg Express had been incorporated on May 3, 2000, with two principals: Timothy A. Disabella as the President and Director, and Cheryl L. Disabella as the Secretary. Cheryl Disabella2 was present at the formal hearing, and testified that Nutmeg Express was her husband’s business, in which she acted as a secretary. She explained that Nutmeg Express was a corporation on the date of the claimant’s accident, but had previously been a sole proprietorship owned and operated by her husband, who was doing business under the name “Nutmeg Express.” Transcript, pp. 25-26. She testified that, on the date of the claimant’s injury, Nutmeg Express, Inc. had fewer than six employees, though she was unsure how many there were. She did not have the company’s personnel records with her at the hearing. Id., 33. She agreed that at least four individuals could be considered employees of the company, though she and her husband were also officers who drew salaries from Nutmeg Express, Inc. Id., 34. She also identified another individual who was working as a driver on the date of the accident, whom the commissioner took to be a fifth employee. Id., 36. The name of the third driver was mentioned as well. Id., 35. The respondents’ counsel then asked the commissioner if he could have another hearing in order to obtain testimony from the insurance agent and the Disabellas as to what they thought was necessary in the way of workers’ compensation insurance, to which the trier assented that they would “need another day.” Id., 43.
A follow-up hearing was held on December 7, 2000, but no testimony was apparently taken. Instead, the parties submitted their joint stipulation of facts and their proposed findings, and the record was closed. The commissioner then entered an award in which he found that Nutmeg Express was incorporated on May 3, 2000, prior to which it was a sole proprietorship owned by Timothy Disabella. “Neither Nutmeg Express or its successor entity, Nutmeg Express Incorporated, was insured by a policy of workers’ compensation liability insurance.” Findings, ¶ J. He also found that the claimant had been employed by Nutmeg Express since January 1, 2000, through and beyond the date of its incorporation. He then found that both incarnations of Nutmeg Express had employed at least six individuals, and fined them accordingly pursuant to § 31-288(c) and (d), at the rate of $500 for each employee and $100 per day for each day of non-coverage (through the date of the formal hearing). He calculated the fine against Nutmeg Express and Timothy Disabella as its sole proprietor to be $15,300, and the fine against Nutmeg Express, Inc. to be $18,400. Both entities were ordered to pay these fines, though only Nutmeg Express, Inc. was legally responsible for the claimant’s benefits. Orders, ¶¶ 5-7.
The respondents filed a petition for review as soon as they received that decision, and moved to correct the rulings that concerned the pre-incorporation version of Nutmeg Express, the number of employees that worked for the company, and the fines for failure to carry workers’ compensation insurance. This motion was denied. The respondents also filed a contemporaneous Motion to Submit Additional Evidence seeking to present additional evidence to the trier, and explaining that they “cooperated with the Claimant in executing a Stipulation of Facts in order to expedite his receipt of benefits; however, it was understood that the record would not be closed and additional hearings would be held concerning the issue of whether fines or penalties are appropriate in this case.” The trier, meanwhile, granted the claimant’s requested corrections concerning his wage rate, and also granted his motion for a $2,500 attorney’s fee, as compensation had not been paid as of January 31, 2001. The respondents have also appealed those rulings to this board.
First, with regard to the trier’s corrected findings regarding the claimant’s average weekly wage, we observe that § 31-310(a) requires the parties to ascertain an average weekly wage by dividing the injured employee’s total wages by the number of calendar weeks in which the claimant worked during the year prior to the injury. Temporary total disability benefits are then calculated under § 31-307 by taking 75% of these average weekly earnings, after they have been reduced by “any deduction for federal or state taxes, or both, and for the federal Insurance Contributions Act made from such employee’s total wages received during the period of calculation of the employee’s average weekly wage . . . .” At the formal hearing, the claimant had testified that he was paid $10 per hour while he was working at the warehouse, and that he generally worked between 10 and 14 hours per day, five or six days per week. He worked at the warehouse about 40% of the time; the rest of his duties involved deliveries and on-site assemblies, for which his salary was dependent on the number performed. Transcript, pp. 12-13, 19-20. He also stated that withholding taxes were never taken out of his checks. Id., 15. Cheryl Disabella, meanwhile, testified that the claimant had been paid $2,782.00 during the ten weeks he worked between April 1, 2000 and June 17, 2000, giving him an average weekly wage of $278.20. She had no pay records for earlier dates, and had brought with her only a summary of the claimant’s more recent pay records. When the claimant objected, the respondents claimed to have the original pay records available, and stated that they would make them available. Id, pp. 23-25; pp. 36-37.
These records were not subsequently offered into evidence, however, and by the time of the trier’s decision three months later, there had been no corroboration made of the claimant’s correct average weekly wage rate. When the stipulation of facts was submitted on November 20, 2000, the respondents agreed in a separate letter to the trial commissioner that the average weekly wage was at least $278.20, and that the claimant would file as single with one dependent. “The parties agree that an average weekly age and comp rate should be established, but on a without prejudice basis.” Presumably, they continued to contemplate the submission of further proof on the matter, but never actually took the step of offering anything concrete (such as cancelled checks or a statement from the company bank account) into evidence. After two more months went by, and the trier had issued his award, the claimant moved to have the award corrected so that the wage rate would comport with his testimony. The trier granted that request.
The amount of a claimant’s average weekly wage is a basic component of a workers’ compensation disability claim, as one cannot determine the correct benefit rate without knowing how much money the claimant earned before his injury. This sounds so elementary that one might think it hardly worth mentioning. However, the respondents allowed uncertainty about the claimant’s weekly wage to linger even though they had stipulated that the claimant had suffered a compensable knee injury for which he was now claiming entitlement to disability benefits. When the wage issue arose at the formal hearing, they had represented that bank records would be made available, but failed to obtain and offer those records even though they knew that the trier was going to rule on the issue of total disability. Though the claimant’s testimony estimating his weekly earnings might not be the most precise evidence imaginable on this issue, the trial commissioner was clearly within his rights in finding that testimony credible. Warren v. Federal Express Corp., 4163 CRB-2-99-12 (Feb. 27, 2001); Pallotto v. Blakeslee Prestress, Inc., 3651 CRB-3-97-7 (July 17, 1998). Given that the respondents were not forthcoming with any documentation of weekly earnings, the trier reasonably accepted the claimant’s statements as the best available evidence of an average weekly wage rate, and corrected his findings accordingly. Some foundation was needed upon which to base the claimant’s compensation rate, and the respondents did not take advantage of their opportunity to introduce relevant business records into evidence.
Next, with respect to the $2,500 attorney’s fee, the claimant’s attorney moved for such an award after the respondents failed to pay benefits due, and failed to follow up on other unspecified representations that they had made during the proceedings. Counsel attested that he had worked a total of 12.5 hours at a rate of $200 per hour. Section 31-300 allows the payment of a reasonable attorney’s fee in cases where a respondent unreasonably contests liability. By failing to offer evidence in support of their position on the claimant’s wage rate, or any medical evidence in opposition to the claimant’s allegation that he was temporarily totally disabled, the respondents essentially mounted a baseless contest to the claimant’s request for temporary total disability benefits. Thus, a finding of unreasonable contest and an award of attorney’s fees was warranted, and is implicit from the trier’s granting of the claimant’s motion. As for the $2,500 figure, the claimant’s attorney stated that he had worked 12.5 hours on the case at a rate of $200 per hour. The trier adopted this sum, which seems reasonable and well within our attorney’s fee guidelines. Vetre v. State, 3443 CRB-6-98-12 (Nov. 28, 2000); Coley v. Camden Associates, Inc., 3432 CRB-2-96-9 (April 6, 1998). The respondents have not challenged the legitimacy of this calculation itself, but rather the finding of unreasonable contest as a whole. We find no error, and affirm the attorney’s fee award.
Finally, we reach the central issue on this appeal: the propriety of the trier’s imposition of fines against the respondents under § 31-288(b) and (c). From the record, we know that a separate hearing notice regarding § 31-288 sanctions was not provided to Timothy Disabella as the unincorporated predecessor to Nutmeg Express, Inc., and Disabella was not present at the formal hearing. On the other hand, notice was provided to “Nutmeg Express,” which presumably referred to the corporation that came into existence on May 3, 2000, and admittedly had no workers’ compensation insurance on the June 15, 2000 date of the claimant’s injury. It would have been fair for the commissioner to expect that the named respondent would be prepared at the October 3, 2000 formal hearing to demonstrate its understanding of its insurance liability, its efforts to obtain workers’ compensation insurance, and the number of employees it maintained during the relevant time periods. The issue of sanctions under § 31-288 was clearly part of the agenda at that hearing, judging from the hearing notice. There is also weak testimonial evidence that supports the trier’s finding that Nutmeg Express had six employees, and there is no direct evidence that Nutmeg Express, Inc. had obtained workers’ compensation insurance by the date of the formal hearing, though both the trier and the Fund’s attorney made references to insurance now being in effect. Id., 41-42. The Fund also points out in its appellate brief that the respondents received notice that trial briefs were due at a pro forma hearing scheduled for December 7, 2000, but made no objection at that time to the trier’s failure to schedule further hearings at which testimony could be taken and other evidence presented.
Nevertheless, the trier stated on the record that he would give the respondents’ attorney a hearing on whether or not his client and its principals were aware that they needed insurance, and whether their insurance agent had advised them of the law’s requirements. It would have been reasonable for counsel to assume from the discussion that further proceedings on this matter were to be scheduled, while the issues surrounding the claimant’s disability and his need for medical treatment would be settled immediately. Though a party is not entitled to present its case piecemeal, one must be aware that a certain element of a case is at issue before it can be said that he has been granted due process under the law. Casertano v. Shelton, 3329 CRB-4-96-4 (Sept. 16, 1997). Similarly, if a party has reason to assume that it is being given another hearing on a particular issue such as sanctions, it would be unfair to fault that party for not objecting to the closing of the record on what it has been led to believe are unrelated matters, such as medical provider authorization and temporary total disability benefits.
As notice of these proceedings was not provided to Timothy Disabella in his capacity as a sole proprietor who did business as Nutmeg Express prior to its incorporation, we hold that the fines against Disabella must be vacated and the matter remanded to the trier with direction to provide another hearing at which Disabella will receive notice of his potential liability for “no insurance” sanctions against his now-superseded sole proprietorship. The financial burden of over $15,000 in fines is significant, and should not be imposed without due process. As this matter is already being sent back, it would be appropriate to hold another hearing on the issue of Timothy and Cheryl Disabella’s understanding of their obligation to purchase workers’ compensation coverage for their employees both before and after incorporation, given the trier’s statements to respondents’ counsel at the end of the October 3, 2000 formal hearing. Therefore, we reverse the trier’s award of sanctions under § 31-288, and remand the matter for further proceedings and for the issuance of notice to Timothy Disabella d/b/a Nutmeg Express in his capacity as a sole proprietor.
Commissioners George A. Waldron and Ernie R. Walker concur.
1 Though the respondent is listed as “Nutmeg Express,” the trier’s award included § 31-288 C.G.S. fines against both the corporate entity Nutmeg Express, Inc., and Timothy A. Disabella, an individual who owned a sole proprietorship that did business as “Nutmeg Express,” which was Nutmeg Express, Inc.’s predecessor entity prior to its incorporation on May 3, 2000. BACK TO TEXT
2 The transcript identifies her as “Shirley Disabella.” Though we are unable to confirm the accuracy of either name from the record, it is clear from the witness’ testimony that both refer to the same person. BACK TO TEXT
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