State, Division of Workers' Compensation v. Titan Enterprises, LLC

338 P.3d 316, 2014 Alas. LEXIS 225, 2014 WL 6713118
CourtAlaska Supreme Court
DecidedNovember 28, 2014
Docket6972 S-15166
StatusPublished
Cited by18 cases

This text of 338 P.3d 316 (State, Division of Workers' Compensation v. Titan Enterprises, LLC) 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
State, Division of Workers' Compensation v. Titan Enterprises, LLC, 338 P.3d 316, 2014 Alas. LEXIS 225, 2014 WL 6713118 (Ala. 2014).

Opinion

OPINION

FABE, Chief Justice.

I. INTRODUCTION

The Alaska Workers' Compensation Board fined an uninsured employer a substantial amount because the employer had since 2005 operated for a significant period of time without carrying statutorily required workers' compensation insurance. This was not the employer's first failure to carry the required insurance. On appeal, the Alaska Workers' Compensation Appeals Commission affirmed part of the Board's decision, but it reversed the Board on the amount of the fine and remanded the case to the Board for further proceedings. The employer then asked the Commission for an award of attorney's fees as a successful party on appeal. The State, Division of Workers' Compensation, which had initiated the Board proceedings, opposed the award on the basis that it, too, had been successful on a significant issue. The Commission awarded the employer full fees of approximately $50,000. The Division petitioned for review of the fee award, and we granted review. Because the Commission failed to consider the Division's partial sue-cess in the appeal, we reverse the Commission's decision and remand for further proceedings.

II. FACTS AND PROCEEDINGS

Todd Christianson is the sole owner of several businesses, including the three involved in this proceeding: Titan Enterprises, LLC; 1 Titan Topsoil, Inc.; and CCO Enterprises, LLC At various times Titan has failed to carry workers' compensation insurance, in violation of Alaska law. According to the Board's decision in this case, Titan had *318 at least one employee injury when it was uncovered, and Christianson paid out of pocket for that injury. The Board found that Christianson and his businesses had "a long history" of work-related injuries, with 13 reported injuries; the most serious was a leg amputation, which happened when the business was insured.

Alaska Statute 23.30.075(a) requires an employer to either buy workers' compensation insurance or provide proof that it is capable of self-insurance for workers' compensation claims. Failure to maintain workers' compensation insurance may subject an employer to criminal penalties. 2 In addition, beginning in 3 the legislature gave the Division of Workers' Compensation the authority to investigate employers without the required coverage and to initiate proceedings before the Board to fine these employers 4 Alaska Statute 28.30.080(f) permits the Board "to assess a civil penalty of up to $1,000 for each employee for each day an employee is employed" while an employer is uninsured. The money generated by any fines is deposited in the Workers' Compensation Benefits Guaranty Fund, 5 created in 2005; 6 when money is available, the Fund pays the claims of injured workers whose employers do not have compensation coverage. 7

The Division began proceedings against Titan in 2008 for failing to carry workers' compensation insurance and failing to provide proof of workers' compensation liability coverage. Titan came to the Division's attention when "a routine records check" showed that Christianson's companies' insurance policies had been cancelled in March 2006, "for nonpayment of premium." The records also showed Titan had not obtained a new policy until October 2007; that policy was cancelled in early January 2008. Christianson paid out of pocket for an uncovered injury to a worker in 2006. The Division investigated Titan at that time but closed its file without requesting a Board hearing.

The Board held two hearings on the Division's petition. Neither party was represented by counsel before the Board: Christian-son represented himself and his companies, and Christine Christensen, an investigator, represented the Division. The parties presented conflicting evidence about the length of Titan's lapses in coverage and the reasons for them. They also disputed the extent to which Christianson observed corporate formalities and kept the corporations separate. The Division contended that a number of aggravating factors in its regulation applied to the case. 8

The Board found that Titan was an uninsured employer for 563 calendar days after 2005. The Board looked at Titan's history of workers' compensation coverage problems and Christianson's appearance before the Board in 2002 for failing to insure when he was doing business as another corporation. The Board found that Christianson's businesses had been involved in 13 injuries, including "a leg amputation, upper and lower extremity injuries, and back injuries." The Board also noted the uninsured injury in 2006. Using data from the Employment Security Division, the Board found Christian-son had "utilized 6,399 uninsured employee workdays after November 7, 2005" and had "purchased a single workers' compensation insurance policy for several different business entities." It summarized facts related to the use and purchase of CCO, an employee leasing company, including the fact that CCO's only client was Titan. The Board pierced the corporate veil and found Chris- *319 tianson individually liable, jointly and severally, with his companies.

Noting that Christianson had previously been before the Board for. failing to have insurance, the Board found that he had a "blatant disregard for the law" and had "gamed the workers' compensation system in attempts to avoid paying fully for coverage." The Board acknowledged that its regulation about uninsured employers did not apply because the regulation became effective only after the coverage lapses, but the Board nonetheless used the factors as a guide in assessing a penalty. The Board decided that had the regulation applied, Titan's conduct would have justified nine aggravating factors and no mitigating factors, 9 resulting in a minimum penalty of $500 per uninsured employee workday and a maximum of $999 per uninsured employee workday. The Board fined Titan $999 per employee workday for the period it was uninsured, resulting in a fine of more than $6 million.

Titan appealed to the Commission, appealing both the size of the fine and the Board's decision to pierce the corporate veil. Titan also argued that the Board violated Titan's due process rights by "refusing to allow [it] additional time to hire representative legal counsel prior to the Board hearing." The Division responded that the fine was not excessive given the facts of the case and that piercing the corporate veil was appropriate in the case.

The Commission affirmed the Board's decision to pierce the corporate veil and hold Christianson liable individually. But the Commission decided that the Board had abused its discretion when setting the penalty, calling the fine "a shocking amount." The Commission reversed part of the basis for the Board's fine, including its finding on the time periods when Christianson's businesses were uncovered, and remanded to the Board for additional findings about the liability of Christianson's various < corporate entities.

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Cite This Page — Counsel Stack

Bluebook (online)
338 P.3d 316, 2014 Alas. LEXIS 225, 2014 WL 6713118, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-division-of-workers-compensation-v-titan-enterprises-llc-alaska-2014.