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Matthew Lavallee v. Michael Straight (August 27, 2014)

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Matthew Lavallee v. Michael Straight (August 27, 2014)
R.L. Goodrich LLC
DEW Construction Corp and
Rynone Manufacturing Corp.
STATE OF VERMONT
DEPARTMENT OF LABOR
Matthew Lavallee Opinion No. 14-14WC
v. By: Phyllis Phillips, Esq.
Hearing Officer
Michael Straight,
R.L. Goodrich, LLC, For: Anne M. Noonan
DEW Construction Corp. and Commissioner
Rynone Manufacturing Corp.
State File No. FF-00310
RULING ON DEFENDANT DEW CONSTRUCTION CORPORATION’S MOTION FOR
SUMMARY JUDGMENT
APPEARANCES:
Frank Talbott, Esq., for Claimant
Corina Schafner-Fegard, Esq., for Defendant DEW Construction Corporation (“DEW”)
David Berman, Esq., for Defendant Rynone Manufacturing Corporation (“Rynone”)
ISSUE PRESENTED:
As a matter of law, is Defendant DEW shielded from liability as Claimant’s statutory employer
by virtue of Defendant Rynone’s status as an insured subcontractor?
EXHIBITS:
Defendant DEW’s Exhibit A: Rynone/DEW Purchase Order
Defendant DEW’s Exhibit B: Rynone Certificate of Insurance
Defendant DEW’s Exhibit C: R.L. Goodrich invoices
Defendant DEW’s Exhibit D: Interim order, May 14, 2014
Defendant DEW’s Exhibit E: Email correspondence between Rynone and R.L. Goodrich
Defendant DEW’s Exhibit F: Notarized letter from Kristin Fortin, May 20, 2014
Defendant DEW’s Exhibit G: Letter from Randy Goodrich, April 28, 2014
Defendant DEW’s Exhibit H: Employee’s Notice of Injury and Claim for Compensation
(Form 5), with attached affidavit of Matthew Lavallee
FINDINGS OF FACT:
2
Considering the evidence in the light most favorable to Defendant Rynone as the non-moving
party, see, e.g., State v. Delaney, 157 Vt. 247, 252 (1991), I find the following:1
1. At all times relevant to this claim, DEW was the general contractor for the Riverhouse
Lot 7B Apartments project in Winooski, Vermont. DEW’s Exhibit A. The project
encompassed 72 units in a four-story building. DEW’s Exhibit G.
2. For the policy period April 1, 2013 to April 1, 2014 DEW maintained workers’
compensation insurance covering its operations in Vermont.2
3. On or about April 29, 2013 DEW entered into a written contract with Rynone for the
purchase, delivery and installation of millwork, countertops, sinks and mirrors at the
Riverhouse project. The scope of the work included providing the manpower necessary
to accomplish the countertop installation portion of the contract. Excluding sales tax but
including installation charges, the stated consideration for the contract was $165,142.36.
DEW’s Exhibits A and F.
4. For the policy period January 1, 2013 to January 1, 2014 Rynone maintained workers’
compensation insurance covering its operations in Vermont. DEW’s Exhibit B.
5. Rynone subcontracted with Defendant R.L. Goodrich, LLC (“Goodrich”) to install the
countertops and sinks at the Riverhouse project. Between July 8, 2013 and September
24, 2013 Goodrich presented Rynone with invoices totaling $34,698.65 for its work on
the project. DEW’s Exhibit C. Goodrich did not maintain workers’ compensation
insurance coverage at any time during this period. DEW’s Exhibit D.
6. Rynone assigned a project manager to the job, who directed the course of Goodrich’s
installation work on the Riverhouse project. DEW’s Exhibits E and F. DEW
communicated with the project manager as to progress, defective materials and changes.
The project manager was responsible for conveying this information to Goodrich and
ensuring that its on-site installers appropriately addressed DEW’s concerns. DEW’s
Exhibit F. At various times, the project manager communicated via email with both
DEW and Goodrich as to inquiries that each had of the other. DEW’s Exhibit E.
7. Goodrich hired Defendant Michael Straight (“Straight”) to assist with the countertop
installations at the Riverhouse project. Straight did not maintain workers’ compensation
insurance coverage during the time he assisted on the project. DEW’s Exhibits D and G.
1 As a preliminary matter, DEW objects to Rynone’s failure to comply with the requirements of Vermont Rule of
Civil Procedure 56(c) with respect to its response to DEW’s Statement of Undisputed Facts. In particular, Rynone
failed to provide “specific citations to particular parts of materials in the record” as to the facts it refused to fully
admit, as is required by V.R.C.P. 56(c)(1)(A) and/or (B). It also failed to comply with the requirements of V.R.C.P.
56(d) as to the facts it purportedly lacked sufficient knowledge or information either to admit or deny. With these
omissions in mind, for the purposes of the pending Motion and to the extent they are supported by the materials now
on record, I consider the facts stated in DEW’s Statement of Undisputed Facts Nos. 5, 7, 8, 9, 12 and 14 to be
undisputed. See V.R.C.P. 56(e)(2).
2 This is according to information reflected in NCCI’s Proof of Coverage Inquiry, a copy of which is contained in
the Department’s file relating to the pending claim.
3
8. Straight brought Claimant to the Riverhouse project to assist with the countertop
installations. DEW’s Exhibit D.
4
9. On or about August 5, 2013 Claimant injured his left hand while lifting a countertop at
the Riverhouse project. DEW’s Exhibit H. Randy Goodrich, Defendant Goodrich’s
principal, drove Claimant to the hospital for treatment. Based on comments Claimant
made during the ride, Mr. Goodrich came to believe that Claimant was Mr. Straight’s
friend and was merely helping him out for the day. From his own observation of
Claimant, Mr. Goodrich determined that he had little skill in the construction trade, and
likely would command a starting salary of $10.00 per hour. DEW’s Exhibit G. However,
in his affidavit Claimant stated that Mr. Straight had hired him to work a 40-hour work
week, promised to pay him at the rate of $20.00 per hour, and expected that the work
would continue full time for at least a month. DEW’s Exhibit H. From the evidence
presented, I am unable to resolve the discrepancies between these two statements, or even
to determine which is the most credible.
10. In October 2013 Claimant filed a Notice of Injury and Claim for Compensation (Form 5)
against Straight, in which he sought both lost time and medical benefits. DEW’s Exhibit
H. Upon learning that Straight lacked insurance coverage, the Department’s workers’
compensation specialist subsequently notified Goodrich, DEW and Rynone of their
potential liability for benefits under 21 V.S.A. §601(3).
11. On May 14, 2014 the Department’s workers’ compensation specialist issued an interim
order against DEW, directing it to pay medical benefits causally related to Claimant’s
August 5, 2013 injury. In fashioning the order, the specialist found that Defendant
Straight had hired Claimant as an employee, and also that neither Straight nor Goodrich,
the next subcontractor up the chain, had maintained workers’ compensation insurance
coverage. The specialist eliminated Rynone as a statutory employer on the grounds that
it “was simply the manufacturer of the solid surfaces that were to be installed . . . and
[was] only in the business of fabricating solid surface countertops and sinks.” She thus
concluded that DEW was the statutory employer responsible to pay benefits to Claimant.
DEW’s Exhibit D.
12. On July 14, 2014 the hearing officer granted DEW’s motion to stay the specialist’s
interim order as to payment for medical charges already incurred, but denied it as to
payment for medically necessary ongoing treatment causally related to Claimant’s
August 5, 2013 injury.
13. No evidence has been presented to suggest that DEW had any contractual relationship
germane to the pending workers’ compensation claim with Claimant, Goodrich or
Straight.
5
CONCLUSIONS OF LAW:
1. In order to prevail on a motion for summary judgment, the moving party must show that
there exist no genuine issues of material fact, such that it is entitled to a judgment in its
favor as a matter of law. Samplid Enterprises, Inc. v. First Vermont Bank, 165 Vt. 22, 25
(1996). In ruling on such a motion, the non-moving party is entitled to the benefit of all
reasonable doubts and inferences. State v. Delaney, 157 Vt. 247, 252 (1991); Toys, Inc.
v. F.M. Burlington Co., 155 Vt. 44 (1990). Summary judgment is appropriate only when
the facts in question are clear, undisputed or unrefuted. State v. Realty of Vermont, 137
Vt. 425 (1979).
2. The legal issue posed by this claim arises under Vermont’s statutory employer provision,
21 V.S.A. §601(3). Where an injured worker’s direct employer is an uninsured
subcontractor, which of two insured contractors in the ascending order above it should be
tagged with responsibility for paying benefits in its stead? DEW asserts that as a matter
of law Rynone should, as it was the insured subcontractor closest in line to Goodrich, the
uninsured subcontractor whom it retained and who in turn retained Straight, the
uninsured direct employer.
3. Vermont’s workers’ compensation law defines the term “employer” to include so-called
“statutory” employers as well. Section 601(3) states as follows:
“Employer” includes . . . the owner or lessee of premises or other person
who is virtually the proprietor or operator of the business there carried on,
but who, by reason of there being an independent contractor or for any
other reason, is not the direct employer of the workers there employed.
4. The legislative purpose underlying this language is to impose liability upon an owner or
proprietor of a regular trade or business when it hires an uninsured independent
contractor to do what its direct employees otherwise would have done. Marcum v. State
of Vermont Agency of Human Services, 2012 VT 3, ¶8, citing King v. Snide, 144 Vt. 395,
400-01 (1984); see also Vella v. Hartford Vermont Acquisitions, Inc., 2003 VT 108, ¶7,
citing Edson v. State, 2003 VT 32, ¶6. Considered in its appropriate context, the
statutory employer concept provides essential support for the public policy compromise
embodied by the workers’ compensation law –employees relinquish their right to sue in
tort in the event of a work-related injury, in return for which employers secure insurance
to pay specified benefits regardless of fault. DeGray v. Miller Brothers Construction
Co., 106 Vt. 259, 276 (1934). Were the law otherwise, a business owner might avoid its
obligations by “purport[ing] to hire, as contractors, minions to carry out [its] own ‘regular
trade or business.’” Marcum, supra (citations omitted).
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5. Construction employment settings often involve an ascending chain of subcontractors and
contractors. In such situations, the statutory employer concept is most logically applied
by imposing upon each contractor in the chain the responsibility for ensuring that its
immediate subcontractor has procured the required workers’ compensation insurance
coverage for its own employees. See, e.g., Sites Construction Co. v. Harbeson, 434
S.E.2d 1, 3 (Va. App. 1993); see also Minnaugh v. Topper & Griggs, Inc., 416 N.Y.S.2d
348, 349 (1979). The direct contractor is best positioned to insist on proof of such
coverage as a condition precedent to employing the subcontractor, knowing that it risks
liability under its own insurance policy if it fails to do so. And the more remote
contractor, by fulfilling its responsibility to employ an insured subcontractor, has thereby
secured protection for all of the employees on the jobsite, both direct and indirect. There
is no basis for imposing upon it responsibility for protecting the insured subcontractor as
well. After all, the Workers’ Compensation Act “is what its name implies – a
compensation act for work[ers], and not an act for the protection of subcontractors.”
Byrne v. Henry A. Hitner’s Sons Co., 138 A. 826, 827 (Pa. 1927); see also In re Van
Bibber’s Case, 179 N.E.2d 253, 257 (Mass. 1962) (purpose of statutory employer
provision is to make general contractor liable only to employees of an uninsured
subcontractor).
6. In the pending claim, the evidence is undisputed that both DEW and Rynone were
properly insured for workers’ compensation at the time Claimant was injured.
Furthermore, nowhere in its opposition to DEW’s summary judgment motion does
Rynone dispute, on either factual or legal grounds, its position as the insured contractor
closest to Goodrich and Straight, the uninsured subcontractors directly beneath it in the
chain. Instead, Rynone argues that summary judgment should be denied because genuine
issues of material fact exist regarding whether Claimant was working as Straight’s
employee at the time of his injury or merely volunteering his services for the day. See
Finding of Fact No. 9 supra.
7. I agree that the evidence is as yet inconclusive on this issue, and also that Claimant’s
entitlement to workers’ compensation benefits ultimately will depend on its resolution.
This will occur in the context of the formal hearing on the merits of Claimant’s claim,
however. The purpose of the pending motion is to determine which of two insured
defendants properly should be held responsible for defending that claim, and if
unsuccessful, for paying benefits accordingly. As to that determination, no genuine
issues of material fact exist. Accordingly, I conclude that Rynone’s objection on these
grounds is an insufficient basis for denying summary judgment.
8. Rynone also argues that dismissing DEW from the claim at this point would contravene
the purpose of Vermont’s Workers’ Compensation Act, that is, to protect injured workers
by ensuring that they are appropriately compensated in the event of a work-related injury.
To accomplish this result, Rynone advocates for a system whereby potentially
responsible employers, and their insurers, are all held primarily liable to the injured
worker. Rynone cites to the Vermont Supreme Court’s holding in Morrisseau v. Legac,
123 Vt. 70 (1962), as support for this position.
7
9. The claimant in Morrisseau was the widow of a worker who was killed in the course of
his employment for a construction subcontractor. Both the subcontractor and the general
contractor were insured for workers’ compensation. Following a formal hearing, the
commissioner prioritized the order in which the two contractors, and their respective
insurance carriers, were liable for the benefits owed, as follows: first, the subcontractor’s
insurer, and in the event of its default, the subcontractor, and in the event of the
subcontractor’s default, then the general contractor’s insurer, and in the event of that
insurer’s default, the general contractor. Id. at 72.
10. On appeal, the Supreme Court held that it was error for the commissioner to establish an
order in which the four defendants were to be held alternatively liable. Instead, it deemed
all of them primarily liable to the claimant. Citing the language in 21 V.S.A. §601(3) by
which the term “employer” is defined to “include[] its insurer so far as applicable,” the
Court first characterized the insurer’s liability as “more than that of an indemnitor; it is a
primary liability to an injured employee.” Id. at 76, citing DeGray, supra at 279; see also
21 V.S.A. §693 (granting injured employee option of proceeding directly against
employer’s insurer in pursuing any claim for benefits). As between the two sets of
employers and carriers, furthermore, the Court found no indication in the statute “that the
liability of any party, if once found to exist, is secondary to any other party’s liability.”
Thus, the Court concluded, “While the Commissioner should pass upon the primary
liability of the parties defendant, he is not required or authorized under the act to pass
upon the ultimate rights or liability as between carriers.” Id. at 78.
11. Underlying the Court’s holding in Morrisseau was its concern that an injured worker who
is clearly entitled to benefits not be made “a football” in a contest among multiple
defendants as to which of them bears the ultimate payment responsibility. Id.; see Labrie
v. LBJ’s Grocery, Opinion No. 29-02WC (July 10, 2002). In the years since Morrisseau
was decided, the statute has been amended to address this concern, however.
Specifically, 21 V.S.A. §662(c), enacted in 1984, now empowers the commissioner, in
cases “where payment of a compensable claim is refused on the basis that another
employer or insurer is liable,” to issue an interim order that one employer or insurer pay
benefits pending a formal hearing.
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12. Here, the procedural history of the pending claim is somewhat confusing. As noted
above, Conclusion of Law No. 7 supra, given the factual issues surrounding Claimant’s
purported employee status, the compensability of his claim has not yet been finally
resolved. The workers’ compensation specialist concluded, albeit somewhat summarily,
that the evidence did not reasonably support a denial on those grounds, however. From
that point on, the posture of the dispute became one between the two insured employers.
The specialist’s decision to issue an interim order against DEW rather than Rynone is
appropriately before me now for a final administrative determination.3 I conclude as a
matter of law that it was error for her to do so. Rather, as the insured employer closest in
line to Claimant’s purported direct employer, who was uninsured, Rynone bears
responsibility for defending the claim and, if unsuccessful, paying benefits.
ORDER:
1. Summary judgment in favor of Defendant DEW Construction Corp. is hereby
GRANTED.
2. Claimant’s claim against Defendant DEW Construction Corp. is hereby DISMISSED
WITHOUT PREJUDICE. In the unlikely event that Defendant Rynone Manufacturing
Corp. ultimately is determined, by a court or tribunal with appropriate jurisdiction, to
have been an uninsured employer during the period relevant to Claimant’s claim,
Claimant shall have the right to renew his claim against Defendant DEW Construction
Corp.
3. Defendant Rynone Manufacturing Corp. is hereby ORDERED to reimburse Defendant
DEW Construction Corp. for any and all payments made pursuant to the Department’s
May 14, 2014 interim order, and pending a formal hearing on the merits of Claimant’s
claim for workers’ compensation benefits, to pay for medically necessary ongoing
treatment causally related to his August 5, 2013 injury.
DATED at Montpelier, Vermont this 27th day of August 2014.
_______________________
Anne M. Noonan
Commissioner
Appeal: Within 30 days after copies of this opinion have been mailed, either party may
appeal questions of fact or mixed questions of law and fact to a superior court or questions of law
to the Vermont Supreme Court. 21 V.S.A. §§670, 672.
3 Rynone asserts that DEW’s summary judgment motion amounts essentially to a renewed motion to stay the
specialist’s interim order against it, and that it should be required instead to defend at formal hearing. This argument
misses the mark. Contrary to Rynone’s assertions, the Commissioner is indeed empowered to consider the same
evidence upon which the specialist based her interim order and reach an opposite conclusion. Where, as here, the
specialist’s determination was grounded in an erroneous application of the law to the undisputed facts, summary
judgment is the appropriate vehicle for doing so.

Ronald Dwinell v. Merchants Bancshares, Inc. (October 14, 2009)

Categories: Workers' Compensation Hearing DecisionTags: , , Author:

Ronald Dwinell v. Merchants Bancshares, Inc. (October 14, 2009)
STATE OF VERMONT
DEPARTMENT OF LABOR
Ronald Dwinell Opinion No. 40-09WC
By: Phyllis Phillips, Esq.
v. Hearing Officer
Merchants Bancshares, Inc. For: Patricia Moulton Powden
Commissioner
State File No. AA-55159
RULING ON CROSS MOTIONS FOR SUMMARY JUDGMENT
APPEARANCES:
David Lynch, Esq., for Claimant
John Valente, Esq., for Defendant
ISSUE:
The parties assert cross motions for summary judgment on the issue whether Defendant was Claimant’s statutory employer at the time of his September 9, 2007 injury.
FINDINGS OF FACT:
With one exception, discussed below, the relevant facts are not disputed. Claimant and his wife were the principals of Dwinell Enterprises, LLC (“the LLC”). In November 2002 the LLC purchased the Fountain of Youth fitness center in White River Junction. Claimant and his wife operated the business, which at one time employed as many as forty people.
In 2004 Claimant approached Ed Childs, Defendant’s commercial loan officer, about refinancing the LLC’s property so that the indoor pool could be improved. Mr. Childs assisted the LLC in securing two loans to replace its original purchase financing – one for $425,000 issued directly from Defendant, and the second for $180,000 issued from Defendant and guaranteed by the Small Business Administration. Both loans were secured by mortgages on the LLC’s real property and equipment, and both were personally guaranteed by Claimant and his wife.
In early 2007 the LLC defaulted on both loans. In prior years Defendant had maintained a separate “work-out department” to negotiate in such situations with defaulting borrowers, liquidate collateral and manage properties while they were being sold. That department had been phased out as of the time of the LLC’s default. Typically those responsibilities now fall to the loan officer who originated the loan.
2
It was in that context that Mr. Childs met with Claimant and his wife after the LLC became delinquent on its loan to discuss how best to proceed. As a result of this meeting, Defendant, the LLC, Claimant and his wife negotiated a Plan and Agreement of Resolution (“the Agreement”), which all parties executed on July 2, 2007. Among the terms of the Agreement were:
• That Defendant would institute foreclosure proceedings;
• That the fitness center would be closed by June 30th or July 1st, 2007;
• That both the real property and equipment securing the mortgages would be liquidated, either by private sale or through auction; and
• That the LLC, Claimant and his wife would cooperate “to their fullest extent” with Defendant in order to expedite the process of liquidating the LLC’s assets and maximize any recovery from the sale of the collateral.
In addition, the Agreement provided as follows:
Personal Guarantees. So long as the LLC and Ronald and Lynn Dwinell cooperate in connection with the Plan set forth herein and with all other reasonable requests of the Lender in connection therewith, then, subject to SBA approval, Lender shall not seek to enforce either of the Commercial Guarantees given by Ronald Dwinell or Lynn Dwinell.
After executing the Agreement, at Mr. Childs’ request Claimant returned to the property one time to check on a possible water leak, and two times to mow the lawn. Claimant understood that these actions, which he characterized as “maintaining the building” and “keeping the property presentable for sale,” constituted part of his agreement to cooperate with Defendant in the liquidation process so that he and his wife would be released from their personal guarantees on the defaulted loans.
Also at Mr. Childs’ request, in August 2007 Claimant returned to the property to meet with Toby Hirchak, the auctioneer Mr. Childs had hired to appraise and auction off the fitness center’s equipment. Here the parties dispute the precise nature of Mr. Childs’ instructions. According to Mr. Childs, the only instruction he gave Claimant was to let Mr. Hirchak into the building, because “he [Claimant] basically controlled the keys.” Claimant’s understanding, however, was that in the context of his agreement to cooperate in the liquidation process, Mr. Childs had directed him to follow the auctioneer’s instructions, to “move what needed to be moved and [do] what needed to be done.”
Together, Claimant and Mr. Hirchak walked through the fitness center and designated the cardio room as the best place for the upcoming equipment auction. Subsequently, Claimant returned to the fitness center and began moving equipment. On September 9, 2007 he was removing a mirror from a wall in order to bring it to the cardio room. As he did so, the mirror broke and fell onto his left forearm, severing several tendons.
3
Immediately after the accident, Claimant ran next door to call an ambulance. He was hospitalized overnight and underwent physical therapy for many months thereafter. On January 30, 2008 he began a new job as general manager for a local hotel.
Claimant informed Mr. Childs of his injury within a week after it occurred. By letter dated November 3, 2008 his attorney notified Defendant of his claim for workers’ compensation benefits arising out of the incident on the grounds that it occurred in the course and scope of his statutory employment.
DISCUSSION:
In order to prevail on a motion for summary judgment, the moving party must show that there exist no genuine issues of material fact, such that it is entitled to judgment in its favor as a matter of law. Samlid Enterprises, Inc. v. First Vermont Bank, 165 Vt. 22, 25 (1996). In ruling on such a motion, the non-moving party is entitled to the benefit of all reasonable doubts and inferences. State v. Delaney, 157 Vt. 247, 252 (1991); Toys, Inc. v. F.M. Burlington Co., 155 Vt. 44 (1990). Summary judgment is appropriate only when the facts in question are clear, undisputed or unrefuted. State v. Heritage Realty of Vermont, 137 Vt. 425 (1979).
At issue in this claim is whether Defendant bears responsibility for Claimant’s injuries because it qualifies as his “statutory employer” under 21 V.S.A. §601(3). That statute defines an “employer” to include “the owner or lessee of premises or other person who is virtually the proprietor or operator of the business there carried on, but who, by reason of there being an independent contractor or for any other reason, is not the direct employer of the workers there employed.” With this definition, Vermont’s workers’ compensation law creates a statutory employer/employee relationship where no such relationship existed at common law. In re Chatham Woods Holdings, LLC, 2008 VT 70 ¶10 (May 16, 2008), citing King v. Snide, 144 Vt. 395 (1984).
The Vermont Supreme Court has embraced the “nature of the business” test in determining whether a statutory employment relationship exists. This test asks whether the work performed by the putative employee “is a part of, or process in, the trade, business or occupation” of the putative employer. In re Chatham Woods Holdings, LLC, supra at ¶11. The critical inquiry, therefore, is “whether the type of work being carried out by the independent contractor is the type of work that could have been carried out by the owner’s employees as part of the regular course of the business.” Frazier v. Preferred Operators, 177 Vt. 571, 573 (2004). The test is to be applied broadly, in keeping with the purposes of Vermont’s workers’ compensation laws. In re Chatham Woods, supra at ¶8. At the same time, due regard must be given to the facts of each particular situation. King, supra at 401.
Here, Claimant argues that after the LLC defaulted on its loans Defendant employed him to assist in the process of maintaining its collateral and making it presentable for sale. Claimant asserts that rendering such assistance is an integral part of Defendant’s business, which includes not just making loans but also at times liquidating collateral to collect on those that default. According to him, therefore, the duties he performed – checking for a water leak in the building, mowing the lawn and moving fitness equipment to prepare it for auction – were jobs that Defendant’s own employees could have carried out in the regular course of its business.
4
Claimant’s argument misses the mark. It is true that Defendant’s employees are sometimes engaged in the business of overseeing the process by which collateral is liquidated. It by no means follows, however, that Defendant itself is in either the property maintenance business, the lawn mowing business or the auction business. Overseeing the liquidation process may require contracting with those who perform these functions, and probably a multitude of others as well, in the regular course of their businesses. It does not make them all statutory employees.
I find, therefore, that Defendant contracted with Claimant to perform certain services in the context of preparing its collateral for liquidation. As consideration for the contract, Defendant agreed to release Claimant and his wife from their personal loan guarantees. No facts have been presented which would turn this contractual arrangement into a statutory employment relationship.
ORDER:
Claimant’s Motion for Summary Judgment is hereby DENIED. Defendant’s Motion for Summary Judgment is hereby GRANTED. Claimant’s claim for workers’ compensation benefits causally related to his September 9, 2007 injury is DISMISSED.
DATED at Montpelier, Vermont this 14th day of October 2009.
_______________________
Patricia Moulton Powden
Commissioner
Appeal:
Within 30 days after copies of this opinion have been mailed, either party may appeal questions of fact or mixed questions of law and fact to a superior court or questions of law to the Vermont Supreme Court. 21 V.S.A. §§670, 672.

A. M. v. Laraway Youth and Family Services (October 30, 2008)

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A. M. v. Laraway Youth and Family Services (October 30, 2008)
STATE OF VERMONT
DEPARTMENT OF LABOR
A. M. Opinion No. 43-08WC
v. By: Phyllis G. Phillips, Esq.
Hearing Officer
Laraway Youth and
Family Services For: Patricia Moulton Powden
Commissioner
State File No. Y-02248
RULING ON CROSS MOTIONS FOR SUMMARY JUDGMENT
APPEARANCES:
Beth Robinson, Esq., for Claimant
Kelly Smith, Esq., for Defendant
ISSUES PRESENTED:
1. Whether Defendant was Claimant’s statutory employer pursuant to 21 V.S.A. §601(3) at the time of her December 17, 2005 injury;
2. Whether Claimant’s claim for workers’ compensation benefits is time-barred under 21 V.S.A. §656(a).
FINDINGS OF FACT:
The following facts are undisputed:
1. Claimant suffered an injury at the hands of a foster child placed in her care pursuant to Defendant’s Substitute Care program on or about December 17, 2005.
2. Defendant has been providing therapeutic care for adolescents since the 1970’s. The nature of Defendant’s business has changed in the past forty years, including a change in the corporate nature of the business.
3. For a period of time, Defendant operated an in-house residential program for youth in its care. In 1995, Defendant closed this program, obtained a license as a child-placing agency and opened a therapeutic foster care program. In connection therewith, Defendant identifies, trains, approves and supports foster care providers while providing case-management services for the children it places. This child placement and therapeutic foster care program is known as Defendant’s “Substitute Care Program.”
2
4. In addition to its child placement and therapeutic foster care program, Defendant also operates a school. This school is a licensed educational institution distinct from Defendant’s Substitute Care Program; not all foster children placed by Defendant are enrolled in the school.
5. In connection with its Substitute Care Program, Defendant is licensed by the State of Vermont Department for Children and Families (DCF) as a child-placing agency. As Defendant states on its website, this license allows Defendant to “recruit, approve, train and support our own foster homes for children who are in the custody of the State of Vermont.”
6. The Vermont Agency of Human Services regulates child placement agencies. It defines such an agency as “an organization established for the purpose of providing or arranging placement” for children in foster homes. Vt. Code R. 13 162 005, Defendant’s Opposition to Claimant’s Motion for Partial Summary Judgment and Cross Motion for Summary Judgment at Exhibit 1. A licensed child placement agency must provide orientation and training to the foster parents with which it places children, must assign a member of its social work staff to visit the foster home at least monthly and must involve the foster parent in developing both initial placement plans and discharge/aftercare plans for the child. Id., Exhibit 3.
7. Once licensed by the State as a child placement agency, Defendant was authorized to approve homes to provide foster care for children in its Substitute Care Program, even if these homes were not licensed by the State.
8. There are approximately 25 children in the Substitute Care Program, ranging in age from 8 to 18. Most of these children have been victims of trauma and exhibit “acting out” behaviors. The children carry various diagnoses, and their histories are marked by inconsistent parenting, numerous short-term placements and even residential care facilities.
9. Defendant’s website states that its Substitute Care Program “is rooted in the belief that when children are surrounded by caring adults who ensure their safety and who seek to develop their hidden potential, those children can grow to trust and to once again hope for a future free from their abusive pasts.” To this end, the website continues, “[Defendant] provides case managers, mentors, foster parents, respite providers, individual and group and family therapists who work as a team to assist the youth in regaining a sense of self by developing strategies to address each youth’s specific treatment needs.”
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10. Since 2006 Defendant has operated a “staffed foster home” as another placement alternative it can offer for children in DCF custody. Defendant’s paid, in-house employees work in the home, in around-the-clock shifts. Although the home initially was created to accommodate the needs of a specific child who required placement at the time, Defendant has continued to operate it for subsequent child placements as well. The services provided by Defendant’s employees for the children placed in this home are the same as the services provided to children in other foster homes in the Substitute Care Program, though the children placed in the staffed home tend to be the more challenging cases.
11. In April 2004 Claimant applied to work for Defendant as a substitute care provider.
12. In connection with her application, Claimant underwent an extensive background check, including checks with the Department of Motor Vehicles, Office of Child Support, Department of Corrections, various abuse registries and other state agencies.
13. Claimant also underwent in-depth personal interviews and a thorough home study. The home study included detailed investigation of Claimant’s personal and family background, regularly-scheduled trainings conducted by Defendant, physical evaluation of her home and living space and interviews with Claimant.
14. In addition, Defendant typically conducts an evaluation of a prospective foster parent’s home, looking for things like cleaning products within reach, for example.
15. On May 20, 2004 Defendant approved Claimant for placement of one child. Defendant’s home study report notes that Claimant “does not feel she could supervise family visits without support from the LYFS team.”
16. Although thus approved by Defendant, Claimant was not a state-licensed foster parent. As noted above, as a licensed child placement agency Defendant is authorized by the State to place children either in foster homes it has approved or in state-licensed foster homes.
17. In addition to direct care, Defendant’s job description for a foster care provider included case planning, documenting pertinent information and supporting efforts to establish and maintain ties to primary family as appropriate.
18. Claimant was not a licensed foster care provider in 2005. This means that she was not entitled legally to accept foster placements directly from the State of Vermont. Instead, in placing children with Claimant Defendant was operating pursuant to its legal authority to approve a home to provide foster care for children who are part of its Substitute Care Program.
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19. Depending on the needs of a particular child, Defendant may require foster parents in its Substitute Care Program to meet additional safety standards, such as requiring more smoke alarms than the state requires. In general, Defendant has weekly meetings with the foster parents it has approved, greater access to team meetings and a higher level of case manager involvement than it does with state-licensed foster parents. The level of case manager involvement varies with the needs of a particular child.
20. Foster parents like Claimant, who are approved for placement by Defendant but are not licensed by the State Department for Children and Families, can only accept foster children from Defendant.
21. Claimant was not paid directly by the State of Vermont for her foster care services. Rather, she was paid by Defendant, on a per-day basis, from funds it received from the State of Vermont and/or Medicaid.
22. Claimant’s first placement after being approved as a foster parent in its Substitute Care Program was a 16-year old girl who resided with her for a year and a half. Defendant required Claimant to provide a standard bedroom with a closet, and to ensure that the child was appropriately dressed. Claimant was not required to provide the clothing herself, however.
23. Claimant was responsible for getting the child ready for school, which included providing a nourishing meal, and for transporting her to activities on the weekend.
24. Defendant provides a good deal of support to homes in which it places children.
25. As a foster care provider in Defendant’s Substitute Care Program, Claimant was provided an emergency pager so that she could summon assistance from Defendant on a 24-hour basis. Claimant was expected to and did use this pager as needed.
26. Defendant provided instructions to Claimant regarding whether to use and where to store aerosol products in her home, and regarding where to place her dog in her home during crises.
27. Defendant’s supervision of foster parents such as Claimant typically consists of weekly home visits by the case manager, involving the foster parent in treatment and IEP meetings and providing ongoing training.
28. Foster parents such as Claimant were expected to report information relating to a child’s health care to the case manager. In non-emergency situations the case manager, not the foster parent, typically coordinated a child’s medical care. Medical decisions were within the purview of the State of Vermont, as the foster child’s guardian.
29. Defendant’s case managers often check in with foster parents more frequently than weekly – sometimes daily. Foster parents can call case managers at any time, and can use the emergency pager if they don’t reach someone.
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30. During the course of her services as a substitute care provider for her first foster child, Claimant also provided respite care for other providers in Defendant’s Substitute Care Program during vacations and so these other providers could take breaks. Sometimes Defendant arranged for such respite care, and sometimes the providers made arrangements directly among themselves. Defendant paid Claimant on a daily basis for providing such respite care.
31. In 2004 and 2005 Claimant completed at least 10 trainings required by Defendant, on such topics as self-injury, eating disorders, sexual harassment, HIPAA, blood borne pathogens and non-discrimination.
32. After her first placement ended, Claimant had a second child in her care briefly, but that placement did not work out.
33. In December 2005, after Claimant’s first placement had ended, Ken Hammond, Defendant’s case manager, asked her to care for an approximately 10-year old boy, AS. AS had come to Defendant from Community House in Brattleboro. Two prior foster placements in central Vermont had not worked out, and AS was awaiting an opening in a residential facility in Montpelier in early January 2006. In the interim, Defendant placed AS in Claimant’s home.
34. Claimant did not sign any contract with Defendant when it placed AS in her home.
35. AS required constant supervision in the home and everywhere else. He was in crisis, insofar as his behaviors couldn’t be stabilized.
36. During the time AS was with her, Claimant was in daily contact with Defendant. She carried and used her emergency pager on multiple occasions.
37. During AS’ brief time with her, Claimant called Defendant’s crisis line a number of times, and the sheriff went to her house on numerous occasions. Defendant’s crisis coordinator also may have made at least one trip to Claimant’s house.
38. The support Claimant received from Defendant during AS’ placement included case management, a crisis pager with 24-hour access, access to an expert consultant and community support.
39. Someone else from Defendant came to Claimant’s home daily to pick up or drop off AS. Sometimes Ken Hammond, Defendant’s case manager, would come to take AS out.
40. AS was not part of Defendant’s schooling program.
41. When AS was with another Defendant employee, known as a “mentor” or “community support person,” that person was expected to supervise him as closely as Claimant was.
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42. On December 17, 2005 AS was very agitated and restless. Claimant called Defendant’s emergency pager on several occasions to request help. She did not receive any assistance. That night, the child had a major violent outburst. He threw the telephone at Claimant and punched her in the left side of her jaw. Claimant does not recall losing consciousness, but she was extremely dazed and disoriented.
43. Claimant contacted the police department and Defendant’s emergency pager. She was then taken to Copley Hospital, where she stayed for two nights.
44. Claimant reported her injuries immediately to Allen McCarthy, Defendant’s employee. Defendant’s executive director, Greg Stefanski, learned about the altercation between AS and Claimant within a day or two.
45. Following her injury, Claimant kept in close contact with Defendant’s case manager, Judy Brook, who called to make sure she was alright and to see if she needed anything.
46. After Claimant was feeling better, she brought bills in to Defendant for the damages AS had caused. She reported to Defendant that her health insurer had covered her medical bills. She also mentioned that what she thought originally might have been a broken jaw was just a chipped tooth.
47. On January 5, 2006 Defendant’s Director of Substitute Care, Rebecca Hemmer, wrote Claimant, referencing Claimant’s recovery from her injuries and acknowledging that Claimant had incurred medical bills in connection with them.
48. Defendant did not file a First Report of Injury relating to the December 17, 2005 incident. Instead Claimant herself completed a First Report of Injury and filed it with the Department of Labor on November 16, 2006.
CONCLUSIONS OF LAW:
1. In order to prevail on a motion for summary judgment, the moving party must show that there exist no genuine issues of material fact, such that it is entitled to judgment in its favor as a matter of law. Samlid Enterprises, Inc. v. First Vermont Bank, 165 Vt. 22, 25 (1996). In ruling on such a motion, the non-moving party is entitled to the benefit of all reasonable doubts and inferences. State v. Delaney, 157 Vt. 247, 252 (1991); Toys, Inc. v. F.M. Burlington Co., 155 Vt. 44 (1990). Summary judgment is appropriate only when the facts in question are clear, undisputed or unrefuted. State v. Heritage Realty of Vermont, 137 Vt. 425 (1979).
2. At issue in this claim is whether Defendant bears responsibility for Claimant’s injuries because it qualifies as her “statutory employer” under 21 V.S.A. §601(3). The facts relevant to this determination are not disputed, and therefore the question turns solely on the legal interpretation of the term.
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3. The concept of “statutory employer” is codified in 21 V.S.A. §601(3), which defines an “employer” to include “the owner or lessee of premises or other person who is virtually the proprietor or operator of the business there carried on, but who, by reason of there being an independent contractor or for any other reason, is not the direct employer of the workers there employed.” With this definition, Vermont’s workers’ compensation law creates a statutory employer/employee relationship where no such relationship existed at common law. In re Chatham Woods Holdings, LLC, 2008 VT 70 ¶10 (May 16, 2008), citing King v. Snide, 144 Vt. 395 (1984).
4. The Vermont Supreme Court has embraced the “nature of the business” test in determining whether a statutory employment relationship exists. This test asks whether the work performed by the putative employee “is a part of, or process in, the trade, business or occupation” of the putative employer. In re Chatham Woods Holdings, LLC, supra at ¶11. The critical inquiry, therefore, is “whether the type of work being carried out by the independent contractor is the type of work that could have been carried out by the owner’s employees as part of the regular course of the business.” Frazier v. Preferred Operators, 177 Vt. 571, 573 (2004). The test is to be applied broadly, in keeping with the purposes of Vermont’s workers’ compensation laws. In re Chatham Woods, supra at ¶8.
5. In the current claim, Defendant’s business consisted in “recruit[ing], approv[ing], train[ing] and support[ing] our own foster homes for children who are in the custody of the State of Vermont.” Claimant’s Statement of Uncontested Facts, Exhibit 2 (emphasis added). In order to accomplish its mission, Defendant “provides case managers, mentors, foster parents, respite providers, individual and group and family therapists who work as a team to assist the youth in regaining a sense of self by developing strategies to address each youth’s specific treatment needs.” Id. (emphasis added). Thus, Defendant’s Substitute Care Program offered a comprehensive package of services for at-risk youth, of which the foster parents it recruited, approved, trained and supported formed an integral part.
6. To ensure the success of its business endeavor, Defendant went far beyond the minimum requirements imposed by the State for identifying and supporting appropriate foster care placements. It provided more training to its approved foster parents. It imposed more stringent home safety requirements. It involved the foster parent in team meetings and initiated more case manager contact. Last, recognizing its responsibility both for the safety of the children it placed and the foster parents with whom it did so, it provided its parents with emergency pagers to be used whenever appropriate. With all of these acts, Defendant operated not merely as a broker of foster home placements. It did more than simply match at-risk children with willing foster parents. Rather, it took additional steps to ensure that its team of case workers, mentors, therapists and foster parents acted together to provide nurturing, therapeutic substitute care.
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7. Defendant cites the Department’s Declaratory Ruling in Howard Center for Human Services, Inc. v. Commerce and Industry Insurance Co. and AIG (undated opinion) as establishing a precedent against finding statutory employer status in situations similar to the current claim. In Howard Center, the Department concluded that a community mental health center was not the statutory employer of the developmental home providers with whom it arranged placements for developmentally disabled adults. Upon careful reading of the Commissioner’s Ruling, I find that the facts at play in the current claim differ significantly from those underlying the Howard Center ruling. To be sure, the community mental health center under scrutiny in that ruling took an interest in ensuring that the adults it placed were appropriately cared for at home. Beyond addressing basic safety issues, however, it did not dictate the home environment. Nor did it supervise the home providers directly or impose rigorous requirements as to exactly what was to be provided to each client. Simply put, it did not endeavor to provide the same range of coordinated therapeutic services, in the context of an extremely structured, closely monitored setting, that Defendant provided here. This is a critical difference.
8. In keeping with the Supreme Court’s guidance in Chatham Woods, therefore, and notwithstanding the Department’s prior ruling in Howard Center, I conclude that Defendant in this claim qualifies as Claimant’s statutory employer under 21 V.S.A. §601(3). The type of work Claimant performed was work that could have been carried on by Defendant’s own employees as part of the regular course of its business.1
9. Defendant’s contention that Claimant’s claim is time-barred under 21 V.S.A. §656(a) lacks merit. Section 660(a) clearly states: “Want of or delay in giving notice, or in making a claim, shall not be a bar to proceedings under the provisions of this chapter, if it is shown that the employer, the employer’s agent or representative, had knowledge of the accident or that the employer has not been prejudiced by the delay or want of notice.” (Emphasis added). The undisputed facts establish that Defendant had knowledge of Claimant’s accident within days of its occurrence. This fact alone triggers the operation of §660(a) and is enough to render Claimant’s claim timely.
1 Indeed, in 2006 Defendant did decide to operate a foster home staffed by its own employees rather than by approved foster parents like Claimant. Although this home did not become operational until some months after Claimant’s injury, the fact that it functioned in all respects essentially as the other foster homes in Defendant’s Substitute Care Program did is strong evidence that the type of work performed there occurred in the regular course of Defendant’s business.
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ORDER:
Claimant’s Motion for Summary Judgment is GRANTED. Defendant’s Motion for Summary Judgment is DENIED.
Dated at Montpelier, Vermont this 30th day of October 2008.
__________________________
Patricia Moulton Powden
Commissioner
Appeal:
Within 30 days after copies of this opinion have been mailed, either party may appeal questions of fact or mixed questions of law and fact to a superior court or questions of law to the Vermont Supreme Court. 21 V.S.A. §§670, 672.

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