ARCTEC Services v. Cummings

295 P.3d 916, 2013 WL 860081, 2013 Alas. LEXIS 22
CourtAlaska Supreme Court
DecidedMarch 8, 2013
Docket6754 S-14457
StatusPublished
Cited by18 cases

This text of 295 P.3d 916 (ARCTEC Services v. Cummings) is published on Counsel Stack Legal Research, covering Alaska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
ARCTEC Services v. Cummings, 295 P.3d 916, 2013 WL 860081, 2013 Alas. LEXIS 22 (Ala. 2013).

Opinion

OPINION

MAASSEN, Justice.

I. INTRODUCTION

While receiving workers' compensation benefits for an injury, an employee periodically endorsed benefit checks that included a certification that she had "not worked in any employment or self-employment gainful or otherwise." Her employer. obtained surveillance videos of her activities at an herb store owned by her boyfriend and filed a petition with the Workers' Compensation Board alleging that she had fraudulently misrepresented her employment status for the purpose of obtaining benefits. The Board denied the petition, finding credible the employee's testimony that she did not consider her activities to be work that needed to be reported. On appeal, the Alaska Workers' Compensation Appeals Commission concluded that the Board erred in determining that the employee had not "knowingly" misrepresented her work status, but it affirmed the Board's denial of the petition on the alternative ground that the employer had not shown the requisite causal link between the allegedly fraudulent check endorsements and the payment of benefits.

We hold that the Commission erred in its interpretation of the "knowingly" element of the test for fraud. We nonetheless affirm the Commission's decision because, based on the Board's binding credibility determination, the employee's statements were not knowingly false and therefore not fraudulent.

II. FACTS AND PROCEEDINGS

Gayle Cummings lived in Fairbanks and worked as a cook for ARCTEC Services at Clear Air Force Station from 1998 until 2006. In August 2006 she hurt her neck, back, and hip while lifting a grill cover. She went to see the medic at Clear, then received treatment from a chiropractor in Fairbanks. ARCTEC accepted that the claim was com-pensable and began paying workers' compensation benefits. Cummings continued to receive chiropractic treatment.

In January 2007, Cummings underwent an employer's medical examination (EME) with Barry Matthisen, a chiropractor. Dr. Matth-isen opined that her treatment to that point had been reasonable and necessary but that she was not yet medically stable. Cummings's treating chiropractor referred her to Advanced Pain Centers, where she saw several medical doctors. One of them rated *918 Cummings in July 2007 as having a five percent permanent partial impairment as a result of the injury.

Cummings applied for reemployment benefits, waiving her right to receive job dislocation benefits instead. 1 She developed a reemployment plan with Dan LaBrosse, a rehabilitation counselor with Compensation Risk Consultants (CRC). She told him that her long-term goal was to open a store that sold herbal remedies. They were unable to develop this option in Cummings's reemployment plan, however, due to the lack of labor market information about it; LaBrosse did not think the reemployment benefits administrator (RBA) would approve the plan without such information. Given Cummings's interests they also considered the occupations of naturopathic doctor and nutritionist, ultimately excluding these options due to the length of training, 2 need to relocate, and cost. 3 The reemployment plan submitted to the RBA was limited to training as a food services manager. According to LaBrosse, the plan would give Cummings some background in business management, which she could later use in her preferred occupation of selling herbal remedies.

Cummings's reemployment plan required that she attend classes at the University of Alaska, Fairbanks. She went to one day of class in early 2008, but her doctor excused her from further attendance after she experienced a flare-up of her neck pain while riding the campus shuttle-bus. Her reemployment plan was medically suspended, and she again began receiving benefits for temporary total disability.

In November 2006, several months after her injury but about a year before she began the reemployment process, Cummings had received a business license as a sole proprietor in the name of Alaska Herb USA. She allowed the license to expire a month later. Cummings's boyfriend, Larry Schander, used the same business name in November 2007 to obtain a business license as a sole proprietor. Schander testified later that he had planned to wait until retirement to open a business with Cummings selling herbs, but after she was injured he felt that he "had to get her out of the house before she committed suicide." The two of them rented a storefront in the Regeney Court Mall in Fairbanks.

Cummings spent a considerable amount of time at the store, assisting customers and selling herbs. She did not keep time records and was not paid for her work, and the store was not profitable. Both Cummings and Schander testified that the store did not always keep regular hours and that Cummings could choose not to work if she did not feel like it. Cummings and Schander shared responsibility for the store: she kept track of inventory and sales, and he took the information to an accountant or bookkeeper. Both Schander and Cummings had access to the store's bank account.

Cummings also bought and sold herbs online through a website with the same name as the store. She testified that she purchased herbs for the store through the website, used herbs from the store to fill on-line orders, and used money from on-line sales to buy items for the store.

Cummings testified that she considered her work at the store to be a hobby. She testified that she spent much of her time at the store in activities that were not business-related, such as assembling care packages for troops in Iraq and Afghanistan and sending letters and emails to soldiers to boost their morale. She also testified that she was not the only person who staffed the store: her son, who was then in his late teens, worked there periodically, as did a friend. Schander testified that he sometimes worked there too.

ARCTEC hired a private investigator for Cummings's case in August 2007, several *919 months before Schander opened the store. The private investigator looked into Cummings's background and conducted surveillance several times over the next year. He observed Cummings working at Alaska Herb USA in June and July 2008. He provided ARCTEC with several surveillance video clips of the store's interior, looking into the store from the common area of the mall and showing his own in-store purchase. His videos also showed Cummings assisting one other customer and using a computer in an office area; they otherwise recorded minimal activity in the store. Much of the video footage was taken outside the mall, where Cummings occasionally emerged to smoke or drink coffee.

In July 2008, ARCTEC filed a petition for a finding of fraud; it alleged that Cummings had misrepresented her work status as well as "her condition and her physical capabilities to several doctors" and sought reimbursement of past benefits, costs, and attorney's fees. ARCTEC filed a controversion notice the same day, alleging that Cummings was "working on a full time basis and thus( lis no longer entitled to time loss benefits or reemployment benefits" ARCTEC filed with the Board copies of six cancelled benefits checks Cummings had signed.

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Cite This Page — Counsel Stack

Bluebook (online)
295 P.3d 916, 2013 WL 860081, 2013 Alas. LEXIS 22, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arctec-services-v-cummings-alaska-2013.