Penn Nat'l. Security Ins. Co. v. D. Henline (WCAB)

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Penn National Security :
Insurance Company, :
:
Petitioner :
:
v. : No. 839 C.D. 2020
: Submitted: June 25, 2021
Darrel Henline (Workers’ :
Compensation Appeal Board), :
:
Respondent :
BEFORE: HONORABLE MARY HANNAH LEAVITT, Judge1
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE ELLEN CEISLER, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE WOJCIK FILED: April 11, 2022
Penn National Security Insurance Company (Penn National), workers’
compensation carrier for Lingenfelter Yard Work (Lingenfelter), petitions this Court
for review of the August 11, 2020 order of the Workers’ Compensation Appeal
Board (Board), which affirmed the December 18, 2018 order and decision of the
Workers’ Compensation Judge (WCJ). The WCJ granted Darrel Henline’s
(Claimant) claim petition against Lingenfelter for work injuries Claimant sustained
on August 11, 2016, when he was working as a laborer for Lingenfelter. The WCJ
dismissed Claimant’s penalty petition, and dismissed as moot Lingenfelter’s and
another company’s, Tree Monkey Company’s (Tree Monkey), joinder petitions
1
This matter was assigned to the panel before January 3, 2022, when President Judge
Emerita Leavitt became a senior judge on the Court.
against each other. Penn National argues that the WCJ erred in granting Claimant’s
claim petition against Lingenfelter because it contends that, at the time of injury,
Claimant was not working for Lingenfelter and was not insured by Penn National.
Penn National also argues that the WCJ erred in finding that Penn National’s
insurance policy covered the work being performed by Claimant on the date of
injury. After careful review, we affirm.
The relevant facts as found by the WCJ are as follows. Claimant filed
a claim petition against Lingenfelter and Penn National alleging that he sustained an
electric shock injury on August 11, 2016, while working as a laborer for
Lingenfelter. Certified Record (C.R.) at 68. Claimant alleged that he suffered
electrical burns affecting his right hand and both feet when he was trimming trees
while standing on the ground, and the arc of the pole saw he was using hit a tree
branch, and then hit Claimant. Reproduced Record (R.R.) at 2a. Lingenfelter denied
the material averments in the claim petition. C.R. at 68. Claimant filed a second
claim petition against Tree Monkey and its workers’ compensation carrier, State
Workers’ Insurance Fund (SWIF), for the same injury, which Tree Monkey denied.
Id. Lingenfelter and Tree Monkey then filed joinder petitions, naming each other as
additional defendants. The WCJ consolidated the petitions for purposes of litigation.
Id.
As the parties did not dispute Claimant’s injury, the WCJ bifurcated the
proceedings to first determine the issue of whether Lingenfelter or Tree Monkey was
Claimant’s employer on the date of injury. The WCJ held several hearings at which
Claimant, Lingenfelter, and Tree Monkey had the opportunity to present witnesses
and documentary evidence regarding the incident and Claimant’s employment.
Claimant presented his own testimony. Tree Monkey presented testimony from the
2
owner of both Lingenfelter and Tree Monkey, Kathy Lingenfelter (Owner).
Lingenfelter presented testimony from Penn National’s underwriting manager,
Christopher Neff (Underwriting Manager). Lingenfelter also presented deposition
testimony of insurance broker Heather McClafferty (Broker), who submitted
applications from Lingenfelter to Penn National for all its commercial insurance
coverage including workers’ compensation. Lingenfelter also presented an affidavit
and deposition testimony of a Penn National underwriter, Patricia O’Reilly
(Underwriter).
Regarding the employer-employee relationship, Claimant testified that
he worked for Lingenfelter as a “ground man, laborer,” was paid by Lingenfelter,
was given Tree Monkey shirts to wear on the job, sometimes used equipment
supplied by Tree Monkey, where his job duties consisted of landscaping, but did not
involve climbing trees. R.R. at 152a-54a, 161a-63a. Claimant further testified that
Tree Monkey employees were involved in climbing trees, but he was not. Id. at
164a, 173a. Claimant further testified that although he often worked with Tree
Monkey employees, he never worked directly for Tree Monkey. Id. at 174a.
Claimant further testified that his day-to-day work was supervised by a Lingenfelter
employee, Jesse Van Horne, and Tree Monkey employees were supervised by a Tree
Monkey employee named Dan. Id. at 177a-79a.
Owner also testified regarding the employer-employee relationship,
explaining that she and her late husband owned both Lingenfelter and Tree Monkey,
which are separate entities with separate bank accounts, with Lingenfelter doing
landscaping and Tree Monkey doing tree removal. Id. at 237a-39a, 247a. Consistent
with Claimant, Owner testified that Claimant was employed and paid by
Lingenfelter, and Claimant was supervised by Lingenfelter employee Mr. Van
3
Horne. Id. at 239a-40a, 244a, 254a. Owner testified that she gave Claimant shirts
with Tree Monkey on them, which were given as gifts, were not part of any required
uniform, and she did not provide any shirts with Lingenfelter on them due to cost
constraints. Id. at 249a, 272a. When asked to explain employees’ duties at each
company, Owner explained that Lingenfelter employees rake leaves, and trim small
bushes and trees from the ground, compared to Tree Monkey employees who take
down trees by climbing them, using climbing gear and other equipment, and that
Lingenfelter employees do not use climbers or bucket trucks. Id. at 240a-41a.
Owner further testified that on the day Claimant was injured, Claimant was working
for Lingenfelter, as subcontractor on the job in which Tree Monkey was the general
contractor. Id. at 253a-54a.
As to the issue of Penn National’s coverage, Owner testified that Broker
prepared Lingenfelter’s workers’ compensation insurance application, and that she
relied on Broker to assign the proper code to Lingenfelter’s work. R.R. at 255a-
256a. Broker testified that although she was not sure if she, or someone else in her
office, prepared Lingenfelter’s workers’ compensation application, she agreed that
the information in the application was accurate to the best of her belief. Id. at 344a,
347a-48a, 378a. Broker testified that the business codes contained in Lingenfelter’s
workers’ compensation insurance application “come[] from the state” and that she
“cannot change these codes.” Id. at 351a-52a. Broker testified that she believed
Penn National should not have denied Claimant’s claim on coverage grounds, so
long as Lingenfelter employees performed landscaping duties on the ground, their
work should be covered by Penn National, and she sent several emails to Penn
National and to the Workers’ Compensation Rating Bureau, which assigns codes to
businesses, to try and resolve the coverage issue. Id. at 353a, 364a, 369a-70a, 379a.
4
Underwriting Manager testified that Penn National provided workers’
compensation to Lingenfelter but not to Tree Monkey, because of the “high hazard
nature” of Tree Monkey’s business, “working at heights and climbing through
trees.” R.R. at 287a. Underwriting Manager confirmed that Penn National’s
information regarding Lingenfelter employees’ job duties came from Broker, acting
as Penn National’s agent, through Broker’s agency, the Jack Bonus agency. Id. at
289a, 312a-13a. Underwriting Manager agreed that Lingenfelter employees were
permitted to trim hedges and bushes under the landscaping code 012 on its
application, but he declined to state whether Penn National would deny coverage for
a Lingenfelter employee injured while trimming a tree. Id. at 302a-03a. Underwriter
testified that she approved Lingenfelter’s workers’ compensation insurance
application based on the description of its work as “lawn maintenance, mowing,
cleaning of yard debris,” and “no snow plowing.” Id. at 432a, 440a. Underwriter
also testified that Lingenfelter’s application for workers’ compensation insurance
does not say whether it prunes trees or does not prune trees, but that she approved it
anyway. Id. at 439a-40a.
Pursuant to Section 410 of the Workers’ Compensation Act (Act),2 77
P.S. §751, the WCJ issued an interlocutory order which ordered both Lingenfelter
and Tree Monkey, and their insurers, to equally pay Claimant’s indemnity and
medical benefits. C.R. at 68. The WCJ issued another interlocutory order in which
he determined that the “credible testimony and documentary evidence of record in
2
Workers’ Compensation Act, Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-
1041.4, 2501-2710. Section 410 of the Act provides in relevant part that “[w]henever any claim
for compensation is presented and the only issue involved is the liability as between” two or more
employers or their carriers, the WCJ shall order payments to be made immediately by employers
or their carriers. After a final decision, payments made by the employer or carrier not liable shall
be assessed against the liable employer or carrier.
5
this matter demonstrates that Claimant was an employee of Lingenfelter [], and not
an employee of Tree Monkey [], at the time of his alleged August 11, 2016 work
injury.” Id. at 84. The WCJ also concluded that, on the date of the injury,
“Lingenfelter [] and its employees were covered by a policy of workers’
compensation insurance issued by Penn National [].” Id. The WCJ also concluded
that the insurance application submitted by Lingenfelter to Penn National “contains
no material misrepresentation of fact, such that rescission of the policy is in order.”3
Id. After providing Penn National the opportunity to file a late brief, the WCJ
reissued the same interlocutory order, concluding that Claimant was employed by
Lingenfelter and covered by Penn National.
On December 18, 2018, the WCJ issued a final order, which
incorporated his prior interlocutory orders, and in which he made the same findings
and conclusions as in his prior orders. C.R. at 65-89. Penn National appealed the
final order to the Board, which affirmed. Penn National then requested a rehearing
before the Board, and, at the same time, Penn National filed a protective appeal to
this Court.4 The Board then issued an order remanding the case to the WCJ to review
and supplement the record with any exhibits missing from the record. C.R. at 123-
26. The WCJ held hearings and supplemented the record, with the parties’
agreement, and he reaffirmed his prior final order. Id. at 141-44.
With the record completed after remand, the Board took no additional
evidence, considered the merits of Penn National’s appeal, and issued an order and
3
Penn National did not appeal the rescission issue to this Court, therefore, we will not
address it further. See Penn National’s brief, p. 19, and its petition for review, filed with this Court.
4
This Court dismissed Penn National’s protective appeal at 91 C.D. 2020, as inoperative,
in an Order dated June 30, 2020.
6
decision dated August 11, 2020, which affirmed the WCJ’s December 18, 2020 final
order and decision. C.R. at 157-79. The Board reviewed the relevant factors in
determining the existence of an employer-employee relationship, reviewed the
testimony presented, and found substantial evidence supported the WCJ’s findings
as to Claimant’s employer and Penn National’s coverage. Id. Penn National then
petitioned this Court for review.5 On January 25, 2021, Claimant filed a notice of
nonparticipation with this Court, indicating that his claim with Penn National had
been settled by a full compromise and release.
As we review the questions presented by Penn National, we are mindful
that, in workers’ compensation cases, “the WCJ is the ultimate fact-finder who must
determine credibility and evidentiary weight. In this role, the WCJ freely evaluates
the evidence offered and can accept or reject any witness’[s] testimony, in whole or
in part, including that of medical witnesses.” Davis v. Workers’ Compensation
Appeal Board (City of Philadelphia), 753 A.2d 905, 909 (Pa. Cmwlth. 2000). As
this Court further stated, “[w]hile this Court can and should consider the competency
and sufficiency of evidence presented before a WCJ, the WCJ’s assessment of
witness credibility is not subject to our review on appeal.” Id. Furthermore, in a
substantial evidence analysis where, as here, both parties presented evidence, “it
does not matter that there is evidence in the record which supports a factual finding
contrary to that made by the WCJ, rather, the pertinent inquiry is whether there is
5
Our scope of review in a workers’ compensation appeal is limited to determining whether
an error of law was committed, whether constitutional rights were violated, or whether necessary
findings of fact are supported by substantial evidence. Bloom v. Workmen’s Compensation Appeal
Board (Keystone Pretzel Bakery), 677 A.2d 1314, 1318 n.4 (Pa. Cmwlth. 1996). Substantial
evidence means such relevant evidence as a reasonable mind might accept as adequate to support
a conclusion. Bethenergy Mines, Inc. v. Workmen’s Compensation Appeal Board (Skirpan), 612
A.2d 434, 436 (Pa. 1992).
7
any evidence which supports the WCJ’s factual finding.” Hoffmaster v. Workers’
Compensation Appeal Board (Senco Products), 721 A.2d 1152, 1155 (Pa. Cmwlth.
1998).
Our standard of review for questions regarding the employer-employee
relationship is as follows:
The existence of an employer-employee relationship is a
question of law based upon findings of fact. The existence
of an employer-employee relationship must be determined
on a case-by-case basis with reference to four basic
elements: (1) the right to select the employee; (2) the right
and power to remove the employee; (3) the power to direct
the manner of performance; and (4) the potential power to
direct the manner of performance.
Sunset Golf Course v. Workmen’s Compensation Appeal Board (Department of
Public Welfare), 595 A.2d 213, 216 (Pa. Cmwlth. 1991). As our Supreme Court
explained, the payment of wages may be considered, but is not determinative in
establishing an employer-employee relationship. JFC Temps, Inc. v. Workmen’s
Compensation Appeal Board (Lindsay and G&B Packing), 680 A.2d 862, 864 (Pa.
1996). After analyzing the relevant factors, our Supreme Court explained that
“[n]otwithstanding the fact that some factors weigh against finding [employer] the
responsible employer, the right to control the performance of the work is the
overriding factor.” Id. at 865.
With these standards in mind, we turn to the WCJ’s critical findings of
fact from his December 18, 2018 decision, as follows:
11) Claimant was an employee of Lingenfelter [] at the
time of his alleged work injury, and was not an employee
of Tree Monkey. In so finding, I find the testimony of
Claimant and [Owner] to be credible. Their
uncontradicted testimony was consistent that Claimant
was an employee of Lingenfelter, and not an employee of
8
Tree Monkey, at all relevant times. Their testimony was
corroborated by the wage records submitted in this matter,
none of which show that Claimant was employed by, or
received wages from, Tree Monkey.
12) At the time of the alleged injury, Lingenfelter had a
policy of workers’ compensation insurance in effect with
Penn National [] which covered its employees, including
Claimant. In so finding, I rely upon the credible testimony
of [Underwriter], who caused the insurance policy to be
issued. I also rely in part upon the credible testimony of
[Broker], who was acting as Penn National []’s Agent in
completing the insurance application for Lingenfelter.
[Broker] confirmed that the documents submitted to Penn
National were accurate to the best of her belief. Finally, I
rely in part upon the credible testimony of [Underwriting
Manager] for Penn National []. [Underwriting Manager’s]
testimony establishes that although the Lingenfelter
application made have been “coded” improperly, all of the
information concerning the types of job duties performed
by employees of Lingenfelter came from its Agent, the
Jack Bonus Agency [Broker’s agency]. [Underwriting
Manager declined to state whether Penn National would
deny coverage for injuries which occur beyond the strict
definition of an insured’s business as described in an
application.
13) The insurance application submitted to Penn National
by Lingenfelter contains no material misrepresentations of
fact, such that rescission of the policy is in order. In so
finding, I rely upon the testimony of [Broker], Penn
National’s Agent, who agreed that all the information
contained in the application was accurate to the best of her
belief. I also rely upon the testimony of [Owner], who
credibly testified that she did not prepare the application,
and was relying upon [Broker’s] expertise with regard to
the codes and classifications set forth on the document.
Penn National nevertheless argues that the application was
incomplete, and therefore is misleading, regarding tree
trimming and pruning. The error, if any, is entirely
attributable to Penn National. [Underwriter] agreed that
the application does not say whether Lingenfelter prunes
trees or does not prune trees. [Underwriter] approved the
9
application anyway, and caused a policy of insurance
covering Lingenfelter’s employees, including Claimant, to
be issued.
C.R. at 83-84.
Penn National presents two questions for our review, whether the WCJ
and the Board erred in determining that Claimant was Lingenfelter’s employee at
the time of injury, and whether the WCJ and the Board erred in determining that
Penn National provided coverage for the work Claimant performed at the time of
injury. Penn National first argues that the WCJ’s finding of fact 11 did not provide
findings of fact specific enough to support a conclusion that Claimant was employed
by Lingenfelter. Penn National argues that because the work performed by Claimant
on August 11, 2016 was done pursuant to a proposal between the customer and Tree
Monkey, Claimant wore Tree Monkey shirts on the job, and Claimant received
training from Owner’s late husband, who was one of Tree Monkey’s owners, the
WCJ erred in finding Claimant was employed by Lingenfelter.
Penn National also argues that the work Claimant performed on August
11, 2016, namely, working on the ground and using a pole saw to cut tree branches,
was not “landscaping” as defined by Penn National’s workers’ compensation policy.
Penn National focuses on Lingenfelter’s workers’ compensation insurance
application to Penn National, where Lingenfelter’s work was categorized under the
landscaping code 012, when it should have been categorized under the tree pruning
code 005. R.R. at 97a-103a, 407a-08a. Penn National argues that because Claimant
was pruning trees when he was injured, and that tree pruning is excluded from
activities under landscaping code 012, that Penn National should not be responsible
for Claimant’s injury. Penn National cites to no case law or other authority in
support of its argument that Claimant should not be covered for injury because
Lingenfelter’s work was incorrectly coded on its insurance application.
10
Tree Monkey responds that the WCJ did not err when he found that
Claimant was employed by Lingenfelter, based on the WCJ’s determination that
both Owner and Claimant testified credibly about the employer-employee
relationship. Tree Monkey notes that both Owner and Claimant testified that
Claimant was supervised by, and his work was directed on a day-to-day basis by,
Lingenfelter’s crew leader, Jesse Van Horne. R.R. at 177a, 254a. Tree Monkey
responds that Claimant’s and Owner’s testimony regarding employment was
corroborated by Claimant’s payroll records, which show Claimant was paid by
Lingenfelter, and not Tree Monkey, while he was employed. Tree Monkey responds
that Owner’s testimony, as credited by the WCJ, shows that Lingenfelter and Tree
Monkey are two distinct entities, Owner and her late husband were the owners of
both companies, the two companies sometimes worked separately and sometimes
worked together on jobs, and Lingenfelter employees always “stayed on the
ground.” Id. at 241a.
Tree Monkey further responds that this Court should ignore as
irrelevant Penn National’s argument that because its agents may have miscoded
Lingenfelter’s application for workers’ compensation coverage, the alleged error
should operate to deny coverage for Claimant’s injury. Tree Monkey argues that
Penn National cannot change Claimant’s employer to Tree Monkey because
Claimant’s job duties allegedly correlate more to the tree pruning code 005 than to
the landscaping code 012. Tree Monkey further responds that, contrary to Penn
National’s suggestion, the record contains no evidence to support that Claimant was
a borrowed employee.
As to Penn National’s first issue, we discern no error in the WCJ’s
finding that Claimant was employed by Lingenfelter, and not Tree Monkey, on the
11
date of injury. The WCJ found Claimant credible when he testified that he was hired
by Lingenfelter to perform landscaping work, was paid by Lingenfelter, and a
Lingenfelter employee, Mr. Van Horne, was his day-to-day supervisor who directed
Claimant’s job performance. The WCJ also found Owner credible when she testified
that Lingenfelter and Tree Monkey are two separate business entities, Lingenfelter
hired Claimant, Lingenfelter employee Mr. Van Horne supervised Claimant, and
Lingenfelter paid Claimant. This testimony, credited by the WCJ, provides
substantial evidence for the WCJ’s finding that Claimant was employed by
Lingenfelter. We may not substitute our findings for the WCJ’s findings, and the
WCJ’s credibility determinations are not subject to our review. Davis, 753 A.2d at
909. Further, here, where both parties presented evidence regarding the employer-
employee relationship, “it does not matter that there is evidence in the record which
supports a factual finding contrary to that made by the WCJ, rather, the pertinent
inquiry is whether there is any evidence which supports the WCJ’s factual finding.”
Hoffmaster, 721 A.2d at 1155.
Further, we discern no legal error in the WCJ’s conclusion of law that
the “credible testimony and documentary evidence of record” demonstrates that
Claimant was employed by Lingenfelter, and not Tree Monkey, on the date of injury.
C.R. at 84. The WCJ concluded that Claimant was employed by Lingenfelter,
supported by the uncontradicted testimony of Owner and Claimant. The law
governing employer-employee relationships requires that we determine, based on
the factual findings, whether Lingenfelter had the right to select Claimant, to remove
Claimant, to direct “the manner” of Claimant’s performance, and whether
Lingenfelter had the potential power to direct Claimant’s performance. Sunset Golf
Course, 595 A.2d at 216. The WCJ did not err in considering Claimant’s payroll
12
records, which corroborated Claimant’s and Owner’s credited testimony. JFC
Temps, Inc., 680 A.2d at 864. The WCJ did not err in concluding that Claimant was
employed by Lingenfelter, when Owner and Claimant testified that Lingenfelter, and
not Tree Monkey, had the right to control, and did control, Claimant’s work
performance, which, is “the overriding factor.” Id. at 865.
As to Penn National’s second issue, we discern no error in the WCJ’s
finding and conclusion that Penn National provided coverage for the work Claimant
performed at the time of injury. There is no dispute that Lingenfelter applied for,
and Penn National issued, a workers’ compensation policy to Lingenfelter, which
was in effect on August 11, 2016, the date of injury. R.R. at 97a-134a. The WCJ
found Broker’s testimony credible, when she confirmed that the application
submitted to Penn National was “accurate to the best of her belief.” C.R. at 83. The
WCJ also credited Underwriter’s testimony, when she testified that she caused the
policy to be issued. The WCJ also credited Underwriter’s Manager’s testimony,
when he testified that, although Lingenfelter’s application may have been coded
improperly, all information concerning Lingenfelter’s work came from its Broker,
who served as Penn National’s agent, and not from Owner. Penn National provides
no legal support for its position that an incorrect code attributed to Lingenfelter’s
work should provide grounds for denial of coverage, when the application contained
no material misrepresentation of fact. We discern no error in the WCJ’s finding that
the coding error, “if any, is entirely attributable to Penn National.” C.R. at 84. The
policy issued by Penn National provided for premium adjustments if Lingenfelter’s
work was “not properly described” by the code currently assigned to it. R.R. at 111a.
However, Penn National’s alleged coding error does not provide a basis for it to deny
13
coverage to Lingenfelter for Claimant’s injury, when Lingenfelter’s application
contained no material misrepresentations.
MICHAEL H. WOJCIK, Judge
14
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Penn National Security :
Insurance Company, :
:
Petitioner :
:
v. : No. 839 C.D. 2020
:
Darrel Henline (Workers’ :
Compensation Appeal Board), :
:
Respondent :
ORDER
AND NOW, this 11th day of April, 2022, the order of the Workers’
Compensation Appeal Board dated August 11, 2020, is AFFIRMED.
__________________________________
MICHAEL H. WOJCIK, Judge