VIRGINIA: IN THE WORKERS’ COMPENSATION COMMISSION JAMES LUCATORTO, Claimant
09/11/2000
Opinion by the COMMISSION v. VWC File No. 195-83-08
CAPITOL PAINTING AND CLEANING, INC., Employer -No Record of Insuranceand LOUIS LEPROUX JR. t/a PAUL LEPROUX & SONS, Employer -No record of InsuranceGeoffrey R. McDonald, Esquire 3805 Cutshaw Ave., Suite 414 Richmond, VA 23230 for the Claimant. John B. Mann, Esquire 1301 North Hamilton St., Suite 100 Richmond, VA 23230 for Capitol Painting and Cleaning, Inc. Louis LeProux, Jr. 8107 Rasper Court Richmond, VA 23235 t/a Paul LeProux & Sons Appeared pro se. Christopher D. Eib, Esquire Assistant Attorney General 900 East Main Street Richmond, VA 23219 for the Uninsured Employer’s Fund.
REVIEW on the record before Commissioner Dudley, Commissioner Tarr, and Commissioner Diamond in Richmond, Virginia. This matter is before the Commission on the April 6, 2000, Request for Review filed by Capitol Painting & Cleaning, Inc. (Capitol) of the Deputy Commissioner’s March 22, 2000,
VWC File No. 195-83-08 Opinion awarding compensation benefits to the claimant, James Lucatorto. The Deputy Commissioner determined that Capitol is an “employer” as defined by the Virginia Worker’s Compensation Act (the Act), that the claimant experienced a compensable injury by accident while employed by Capitol, and that the claimant gave appropriate notice of his injury to Capitol. For the reasons set forth below, we AFFIRM the Opinion of the Deputy Commissioner. This case was before the Deputy Commissioner on the application of the claimant, James Lucatorto, filed on May 24, 1999, alleging an injury by accident to his left foot on November 6, 1998. The claimant sought temporary total and temporary partial disability compensation for various periods of time from the date of injury through the date of hearing, and continuing. The claimant also sought payment of medical bills related to his left foot injury, and an award of costs and attorney fees against Capitol for an unreasonable defense of this claim. Numerous defenses were raised by Capitol, LeProux & Sons (LeProux), and the Uninsured Employer's Fund (the Fund), the most relevant of which were that the claimant did not experience a compensable injury by accident arising out of or in the course of his employment with any party, that the claimant was not an employee of any party, that neither Capitol nor LeProux regularly employed three or more persons, and that the claimant was not eligible for benefits during various periods of incarceration. Both Capitol and LeProux are uninsured. The evidence has been thoroughly and accurately summarized by the Deputy Commissioner, and is repeated here only to the extent necessary to address the issues on appeal. The claimant was injured on November 6, 1998, when he fell from a ladder while power washing a home owned by an individual named Carrie Austin. Ms. Austin signed a service
agreement dated October 14, 1998, whereby she agreed to pay Capitol $1995.00 to power wash and then paint her home. The claimant testified that he worked for Capitol for two years prior to
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VWC File No. 195-83-08 his injury, and that he had worked with Louis Paul LeProux (LeProux) for approximately one year prior to his injury. The claimant testified regarding his understanding that Capitol
contracted with various individuals to do paint jobs, and then subcontracted the jobs to various subcontractors, including LeProux. The claimant testified that Capitol supplied the paint, paint guns, and ladders, and actively marketed and advertised in order to obtain leads for jobs. The claimant testified that LeProux would call him when he had a job, and that LeProux would supervise the claimant and tell him what to do. The claimant testified that LeProux paid him approximately $600.00 a week, in cash. The claimant testified that LeProux did not supervise anyone other than the claimant. LeProux testified that he had worked for Capitol for about a year when the claimant was injured on November 6, 1998. LeProux testified that the relationship with Capitol was that Capitol would obtain job leads and refer them to the various subcontractors. The subcontractors would do the work using Capitol’s equipment and get a percentage of the pay depending on who "signed up" the customer. LeProux testified that the job at the Austin home was a lead he received from Capitol. He testified that he was given Capitol's form service agreement, and offered to do the Austin job pursuant to the form agreement. LeProux testified that Ms. Austin made a check payable to him for the amount of the job, and that he paid Capitol its share of the proceeds. LeProux testified that he was on the job at the Austin residence when the claimant was hurt. LeProux took the claimant to his house, and LeProux's wife took the claimant to the hospital. LeProux testified that he telephoned Mark Holpe (Capitol's president) and said
something to the effect that "we were washing the house and Jimmy fell, please tell me you have workers’ compensation insurance." According to LeProux, Holpe responded that he did not.
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VWC File No. 195-83-08 LeProux testified that he did not have workers’ compensation insurance, but assumed Capitol did based on a notation at the bottom of Capitol's form service agreement which indicated the company was licensed and insured. LeProux admitted signing a letter dated June 15, 1999, addressed to Holpe indicating that the claimant told him he hurt his leg at night, not on the job, and that the November 6, 1998, injury was not work-related. LeProux testified that he felt threatened by Holpe, and that he signed the letter because he feared Holpe would not pay him money he was owed. LeProux also testified that he did not sign a subcontractor agreement dated June 25, 1998, until June 15, 1999, and only signed it because Holpe threatened him. The claimant sought his initial medical treatment at Chippenham Hospital, and came under the treatment of Dr. DeBlois, who, according to the claimant, took him out of work. The claimant testified that he was “picked up" by the police six days later for a parole violation. The claimant was incarcerated in the Richmond City jail from November 11, 1998, through November 18, 1998, and was then transferred to New York where he was incarcerated in both medical and correctional facilities from November 18, 1998, through June 27, 1999. The claimant testified concerning his belief that he was totally disabled and unable to work in any capacity while he was incarcerated. The claimant was released from prison on June 27, 1999, and did not work between that date and September 1, 1999, although he looked for work. He did work as a painter for his Uncle Tony from early September, 1999 through mid-November, 1999 earning $320.00 per week. The claimant returned to Virginia around December 5, 1999, and testified that he began working at Gibson Tire and Auto as a manager on January 4, 2000, earning $200.00 a week.
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VWC File No. 195-83-08 Mark Holpe, Capitol's president, testified that Capitol is in the business of repainting residential homes. The company was organized in the fall of 1995, and Holpe admitted that in 1995 and 1996 LeProux “might” have been an employee of Capitol. Holpe testified that
LeProux and an individual named Wayne Shoemaker were his principal subcontractors, and that Shoemaker's crew, which was comprised of between two and seven workers, performed twothirds of Capitol's work. Holpe testified that Capitol advertised in “ad pac” coupon booklets for jobs and job leads, and that quotes for the work were made either by Holpe or by one of the subcontractors. Holpe testified that his subcontractors were required to sign a subcontractor agreement and have workers’ compensation insurance. Holpe testified that LeProux told him he had workers’ compensation insurance. Holpe recalled having been called in October 1998 by Ms. Austin, who requested a quote for somebody to paint her home. Holpe never provided a quote, and never went to the job site. He testified he was unaware that LeProux had bid for the job and had actually start working. Holpe testified that LeProux solicited the bid and used Capitol’s form service agreement without his knowledge. Holpe testified that he had no actual knowledge of the claimant's injury, that LeProux never told him who was injured on the job, but that “someone" called him and said "someone" got hurt and needed to go to the hospital. Holpe testified that he did not have workers’ compensation insurance because he assumed his subcontractors had insurance. Holpe denied pressuring LeProux to sign the June 15, 1999, letter, and he also denied threatening not to pay LeProux the money he was owed unless he signed the statement. Holpe admitted calling LeProux the evening before the hearing. The Deputy Commissioner concluded that Capitol is an employer under the Act based on the number of its subcontractors and their employees, and that Capitol was the statutory
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VWC File No. 195-83-08 employer of the claimant. The Deputy Commissioner next concluded that although LeProux employed the claimant, he is not an employer under the Act because he did not regularly employ three or more employees. The Deputy Commissioner then concluded, based on the testimony, that Capitol had notice of the claimant's injury based on the claimant's report of the injury to LeProux, and LeProux's testimony that he contacted Mark Holpe to inform him of the claimant's injury. The Deputy Commissioner concluded, based on the claimant's unrebutted testimony, that he experienced a compensable injury by accident on November 6, 1998, when he fell off a ladder and injured his left foot. Finding that the claimant remained in a light-duty capacity from the date of accident, November 6, 1998, through the date of hearing, and that he did not look for any work between the date of accident and November 10, 1998, and that he was incarcerated from November 11, 1998, through June 27, 1999, the Deputy Commissioner denied the claim for any compensation benefits for those dates. The Deputy Commissioner also denied the claim for compensation benefits from June 27, 1999, through September 2, 1999, and from November 19, 1999, through January 2, 2000, based on her conclusion that the claimant did not adequately market his wage earning capacity during those periods. Temporary partial disability
compensation for the period between September 3, 1999, through November 18, 1999, was awarded based on the difference between the claimant's pre-injury average weekly wage and his earnings with his Uncle Tony during that period. Finally, the Deputy Commissioner awarded temporary partial disability compensation from January 3, 2000, and continuing based on the difference between the claimant's pre-injury wages and his employment at Gibson Tire and Auto. Only Capitol requested review of the Deputy Commissioner's opinion. In its April 6, 2000, Request for Review, Capital assigns error to six separate findings of fact and conclusions of law, but in its Written Statement only briefed the issues of whether the claimant was an
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VWC File No. 195-83-08 employee or statutory employee of Capitol and whether the claimant gave timely notice of his accident as required by Section 65.2-600 of the Act. Capitol's initial argument is that it was not carrying on its trade or business through LeProux because Capitol was never a party to the agreement between Austin and LeProux to perform work at the Austin residence. Capitol argues that the claimant was LeProux's employee on the Austin job, that although Capitol gave LeProux the lead for the Austin job, Capitol never received any payment for the job, and that the claimant and LeProux failed to establish any contract of hire between either of them and Capitol to do the Austin job. Capitol alleges that LeProux intended to cheat and defraud Capitol by accepting the referral of the Austin job without making any payment to Capitol, and by attempting to shift the liability for worker's compensation benefits to it, an innocent party. Our analysis of Capitol's argument begins with Code Sec. 65.2-302, which states as follows: A. When any person (referred to in this section as "owner") undertakes to perform or execute any work which is a part of his trade, business or occupation and contracts with any other person (referred to in this section as "subcontractor") for the execution or performance by or under such subcontractor of the whole or any part of the work undertaken by such owner, the owner shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if the worker had been immediately employed by him. B. When any person (referred to in this section as "contractor") contracts to perform or execute any work for another person which work or undertaking is not a part of the trade, business or occupation of such other person and contracts with any other person (referred to in this section as "subcontractor") for the execution or performance by or under the subcontractor of the whole or any part of the work undertaken by such contractor, then the contractor shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if that worker had been immediately employed by him.
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VWC File No. 195-83-08 C. When the subcontractor in turn contracts with still another person (also referred to as "subcontractor") for the performance or execution by or under such last subcontractor of the whole or any part of the work undertaken by the first subcontractor, then the liability of the owner or contractor shall be the same as the liability imposed by subsections A and B of this section. The purpose of Code Sec. 65.2-302 is to "'protect the employees of subcontractors who are not financially responsible and to prevent employers from relieving themselves of liability (for compensation) by doing through independent contractors what they would otherwise do through direct employees."' Bassett Furn. Indus., Inc. v. McReynolds, 216 Va. 897, 902, 224 S.E.2d 323, 326 (1976) (quoting Sears, Roebuck & Co. v. Wallace, 172 F.2d 802, 810 (4th Cir. 1949)). "'The issue whether a person is a statutory employee presents a mixed question of law and fact."' Cinnamon v. International Business Machines Corp., 238 Va. 471, 474, 384 S.E.2d 618, 619 (1989) (quoting Cooke v. Skyline Swannanoa, Inc., 226 Va. 154, 156, 307 S.E.2d 246, 247 (1983)). The Supreme Court of Virginia has used the analysis set forth in Shell Oil Co. v. Leftwich, 212 Va. 715, 187 S.E.2d 162 (1972), to determine statutory employer status: [T]he test is not one of whether the subcontractor's activity is useful, necessary, or even absolutely indispensable to the statutory employer's business, since, after all, this could be said of practically any repair, construction or transportation service. The test (except in cases where the work is obviously a subcontracted fraction of a main contract) is whether this indispensable activity is, in that business, normally carried on through employees rather than independent contractors. Cinnamon, 238 Va. at 475, 384 S.E.2d at 620 (quoting Shell Oil, 212 Va. at 722, 187 S.E.2d at 167). In Cinnamon, the Supreme Court discussed the two prongs of the Shell Oil test--the "normal-work test" and the "subcontracted-fraction test." 238 Va. at 476, 384 S.E.2d at 620. The Supreme Court explained that the normal-work prong is used in determining statutory employer status under Code Sec. 65.2-302(A) (former Code Sec. 65.1-29) and "relates to an owner who
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VWC File No. 195-83-08 engages an independent contractor to perform certain work." Id. The Supreme Court also explained that the subcontracted-fraction test is used to analyze statutory employer status under Code Sec. 65.2-302(B) (former Code Sec. 65.1-30) and defined the test as follows: In the context of the construction business, [the subcontracted-fraction prong] relates to a general contractor, the party obligated by the main contract with the owner to complete the whole project. If the work out of which the accident arose was, in the language of Shell Oil, "obviously a subcontracted fraction of [that] contract" and, in the language of the statute, "not a part of the trade, business or occupation of" the owner, the general contractor who engaged the subcontractor to perform that fraction is the statutory employer of the injured worker, whether directly employed by the primary subcontractor or by a secondary subcontractor. Id. "The subcontractor similarly becomes the statutory employer of a sub-subcontractor's employees. Thus, employees of an uninsured sub-subcontractor may look to the subcontractor, and to the general contractor, for coverage, although recovery is not permitted from both." States Roofing Corp. v. Bush Constr. Corp., 15 Va. App. 613, 616-17, 426 S.E.2d 124, 126 (1993) (citation omitted). The record evidence establishes that the claimant was an employee of Paul LeProux at the time of his injury. LeProux contacted the claimant when he had work available. LeProux paid the claimant in cash, and supervised the claimant’s work and told him what to do. The evidence also establishes that LeProux was a subcontractor of Capitol. Holpe testified that both LeProux and Wayne Shoemaker were subcontractors for Capitol, and performed the bulk of Capitol’s painting business. Holpe also testified that LeProux executed a subcontractor’s agreement with Capitol, that LeProux used certain items of equipment owned by Capitol, and that LeProux used Capitol's account to make various purchases. The evidence also establishes that the work performed by LeProux was part of the trade, business and occupation of Capitol. The evidence establishes that Capitol is a residential painting
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VWC File No. 195-83-08 business and that LeProux power washed and also painted houses. In this case, because Capitol is in the same trade, business or occupation (e.g., painting) as LeProux, and because the work Capitol subcontracted to LeProux would ordinarily be performed by Capitol's employees, Capitol is a statutory employer. Slusher v. Paramount Warrior, Inc., 336 F. Supp. 1381 (W.D. Va. 1971). Although the evidence and testimony is in conflict, we are satisfied that LeProux was acting as Capitol's subcontractor on the Austin job. In reaching this conclusion, we rely primarily upon the October 14, 1998, service agreement for the Austin job which was prepared on Capitol's form, and which contained Capitol's name, address and telephone number. We also note Holpe’s testimony that in October of 1998, Ms. Austin called Capitol and requested a quote for a paint job at her home. LeProux acknowledged that the Austin job was Capitol's lead, but that he “signed up” Ms. Austin. LeProux and the claimant did the work, and that Austin wrote a check to LeProux from which he paid Capitol its standard 25 percent fee. We recognize Holpe’s contrary testimony that LeProux solicited the job and used Capitol's service agreement without authorization. Holpe testified that he never went to the job site and never gave Austin a quote for the work ultimately performed by LeProux. Holpe also testified that he was never paid any money from LeProux for the Austin job. Notwithstanding this testimony, the record clearly establishes a business relationship of at least one year’s duration between Capitol and LeProux whereby Capitol would refer leads for painting jobs to LeProux in exchange for a percentage of the fee. The evidence establishes that
Capitol advertised for the work, referred jobs and leads to its various subcontractors, including LeProux, and allowed LeProux to use Capitol’s equipment and account with a local paint supplier. The evidence also establishes that Holpe did not exclusively present the bids and estimates to the prospective customers, but that, on occasion, the subcontractors also presented bids. We conclude that this was one of those occasions. Under these circumstances, we are not persuaded by Holpe's
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VWC File No. 195-83-08 testimony that LeProux was acting exclusively on his own behalf when he used Capitol's form contract and later commenced work on the Austin job. We are satisfied that LeProux was acting on behalf of Capitol when he prepared the bid for and ultimately commenced the Austin job. In reaching this conclusion, we are particularly impressed with the fact that Ms. Austin initially approached Capitol, not LeProux, to do the work. Accordingly, we find that Capitol is the statutory employer of the claimant with respect to the injury he experienced on the Austin job. We now turn to the question of whether the claimant gave proper notice of his injury to both his employer and the statutory employer pursuant to Section 65.2-600 of the Act. In considering this question, we note that an employee is required to give notice of an accident to a statutory employer within thirty days of its occurrence, unless the employee can prove that he was unaware of the employment relationship, could not reasonably have known of it within the prescribed period, and that the delay in reporting did not result in prejudice to the statutory employer. Race Fork Coal Co., et al. v. Turner, 237 Va. 639, 379 S.E.2d 341 (1989). We agree with the Deputy Commissioner that Capitol had actual notice of the claimant’s injury on the day it occurred. Although the claimant admitted he never reported his injury to anyone from Capitol, LeProux testified that he called Holpe on November 6, 1998, and told him of the claimant’s injury. Holpe acknowledged receiving the call from LeProux and that LeProux told him someone was injured. We are not impressed with Holpe’s testimony that LeProux did not give Holpe any details as to who was injured or when the accident occurred. As we have previously held, an employer cannot be blind to reports of alleged injuries that should be investigated. Perkins v. Family Health Care Assoc., 76 O.W.C. 84 (1997). Holpe was clearly provided sufficient
information that should have led him to investigate the injury reported by LeProux. Even if we credited Holpe's testimony that LeProux did not provide him any details concerning the November
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VWC File No. 195-83-08 6, 1998, accident, Holpe’s failure to at least inquire about the accident or perform even a minimal investigation estops him from now arguing that he had no notice of the claimant’s injury. We therefore conclude that Capitol, by way of its president, Holpe, had actual knowledge of the claimant’s injury on the day it occurred, that Capital demonstrated no prejudice resulting from the lack of written notice, and that the notice provisions of Code Sec 65.2-600 were established. See Department of Game & Inland Fisheries v. Joyce, 147 Va. 89, 136 S.E. 651 (1927) and Davis v. Dan River, Inc. 58 O.I.C. 82 (1979). Although not briefed by Capitol in its Written Statement, we will briefly address the issues of whether Capitol is an employer subject to the jurisdiction of the Virginia Workers’ Compensation Act and whether the claimant was injured at work. The record evidence establishes that Capitol either directly employed or subcontracted with the claimant, LeProux, Shoemaker, and between two and seven of Shoemaker's employees. We therefore conclude that Capitol regularly employs three or more persons to carry out its painting business, and that Capitol is an employer subject to the provisions of the Act. Cotman v. Green, 4 Va. App. 256, 259, 356 S.E.2d 447, 449 (1987). Finally, we turn to the issue of whether the claimant experienced an injury by accident arising out of and in the course of his employment on November 6, 1998. We give very little weight to LeProux's June 15, 1999, statement to Holpe that the claimant was not injured at work. We will not speculate as to why LeProux made this statement and then recanted it at the hearing. We rely, however, on the claimant's unrebutted testimony that he fell from the latter, and the corroborating testimony of LeProux, Alice Roscoe and Angela Miller. Although the claimant admitted giving a false name and Social Security number when admitted to the emergency room at Chippenham Hospital, we find no evidence that he gave a false name and false Social Security
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VWC File No. 195-83-08 number at the time he was hired. We therefore reject the argument made by Capitol at the hearing that no contract of employment existed among the parties. Accordingly, the Opinion of the Deputy Commissioner is AFFIRMED in its entirety. The attorney's fee awarded Geoffrey R. McDonald, Esquire, for legal services rendered to the claimant, is increased to a total of $1,500.00 to be paid from accrued compensation. This matter is hereby removed from the Review docket. APPEAL This Opinion shall be final unless appealed to the Virginia Court of Appeals within 30 days of receipt.
cc:
James Lucatorto 6 Hubbard Bay Hampton Bays, NY 11946 Trigon Administrators P.O. Box 85641 Richmond, VA 23285
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