Argued February 10, 2015.
The decision of the Workers' Compensation Board Appellate Division is (1) affirmed to the extent that it vacated the Board's imposition of penalties on Holyoke, and (2) vacated insofar as it determined that Holyoke violated the WCA's coverage requirements.
On the briefs: Paul H. Sighinolfi, Esq., John C. Rohde, Esq., and Seanna L. Crasnick, Esq., Workers Compensation Board, Augusta, for appellant Workers' Compensation Board Abuse Investigation Unit.
James D. Poliquin, Esq., Norman, Hanson & DeTroy, LLC, Portland, for appellees Nate Holyoke Builders, Inc., et al.
At oral argument: Paul H. Sighinolfi, Esq., for appellant Workers' Compensation Board Abuse Investigation Unit.
James D. Poliquin, Esq., for appellee Nate Holyoke Builders, Inc., et al.
Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, and HJELM, JJ. Concurrence: SAUFLEY, C.J.
[¶1] The Workers' Compensation Board Abuse Investigation Unit (AIU) appeals from a decision of the Workers' Compensation Board Appellate Division vacating the Workers' Compensation Board's ( Dunn, HO ) imposition of a $30,000 penalty on Nate Holyoke and his construction company, Nate Holyoke Builders, Inc. (collectively Holyoke), for violating the insurance coverage requirements of the Workers' Compensation Act (WCA). The AIU contends that the Appellate Division erred in construing 39-A M.R.S § 105-A(3) (2014) as a limitation on the Board's authority to sanction construction contractors that misclassify employees as independent contractors. Holyoke cross-appeals, arguing that the Board erred in finding that Holyoke misclassified nine employees as independent construction subcontractors, and that the Board and Appellate Division both erred in determining that Holyoke failed to " secure . . . compensation" for all of its employees, in violation of 39-A M.R.S. § § 401 and 403 (2011). Holyoke additionally contends that its reliance on the Board's predeterminations should estop the Board from imposing sanctions.
[¶2] We conclude that Holyoke complied with sections 401 and 403 by maintaining workers' compensation insurance policies that would have provided compensation to any worker who was determined to be an employee entitled to benefits. Because Holyoke complied with the WCA's coverage requirements, we do not address Holyoke's estoppel contention, the proper classification of Holyoke's workers, or the correct construction of section 105-A(3). We therefore affirm the Appellate Division's decision vacating the Board's imposition of penalties on Holyoke, albeit for a different reason than that expressed by the Appellate Division.
[¶3] Nate Holyoke Builders, Inc. has historically had some workers whom it classified as employees and other workers whom it classified as independent contractors. In 2009, after being assessed a workers' compensation insurance premium adjustment of $50,000 and learning that its insurer required predeterminations of independent contractor status in order to calculate premiums, Holyoke began requiring the workers whom it classified as independent contractors to obtain predeterminations from the Board. In 2010 and 2011, the Board granted predeterminations of independent contractor or construction subcontractor status to the workers whom Holyoke classified as independent contractors. Those workers then presented Holyoke with certificates of that status.
[¶4] During this two-year period, the company maintained workers' compensation insurance policies and paid premiums that were based in part on payroll to workers classified as employees. The premiums that Holyoke paid did not reflect remuneration remitted to workers classified as independent contractors. However, Holyoke's workers' compensation policies provided for the payment of benefits to any worker who was entitled to them pursuant to the WCA, even if that worker was initially classified as an independent contractor for payroll and premium purposes. The policies specified that their premium basis included payroll and remuneration paid to any person engaged in work that could give rise to an entitlement to the payment of benefits. The policies further specified that their final premiums would be calculated after an audit to determine the premium basis and " the proper classifications" applicable to the covered work. In the event that Holyoke's estimated premiums were less than its final premium, the company would be liable for the difference.
[¶5] In October 2010, the Board selected Holyoke for an audit to verify its compliance with the insurance coverage requirements of the WCA. After finding that some of the workers whom Holyoke classified as independent contractors had not secured individual workers' compensation policies, the Board's auditor recommended that the Board verify the predetermined status of those workers. After the audit, the Board's Predeterminations Unit for a second time issued predeterminations to the workers in question.
II. PROCEDURAL BACKGROUND
[¶6] In September 2011, the AIU filed a complaint alleging that Holyoke had violated 39-A M.R.S. § § 401 and 403 " by failing to obtain or maintain approved workers' compensation insurance coverage for its employees." At a prehearing conference and throughout a series of evidentiary hearings, Holyoke argued that no violation of the WCA's insurance coverage requirements could occur as a matter of law when an employer maintained a workers' compensation insurance policy that would pay benefits to any worker determined to be an employee entitled to benefits, regardless of whether the worker was initially classified as an employee or an independent contractor for payroll and premium purposes. In an order dated November 14, 2011, the hearing officer rejected Holyoke's argument, concluding, " It is not sufficient to have a policy on some . . . workers and to assume that others would be covered should they later make a claim and prevail."
[¶7] The hearing officer issued a similar order in November 2012, reasoning that section 401(1)'s mandate that an employer " secure the payment ...