Uninsured Employer's Fund v. Tracy Scott Nunn, etal

COURT OF APPEALS OF VIRGINIA
Present: Judges Bumgardner, Humphreys and Clements
Argued at Salem, Virginia
VIRGINIA UNINSURED
EMPLOYER'S FUND
MEMORANDUM OPINION * BY
v. Record No. 1958-02-3 JUDGE ROBERT J. HUMPHREYS
MARCH 25, 2003
TRACY SCOTT NUNN AND
THOMAS W. MOREHEAD, d/b/a
MOREHEAD TRUCKING
FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION
James W. Osborne, Special Counsel and
Assistant Attorney General (Jerry W. Kilgore,
Attorney General; John J. Beall, Jr., Senior
Assistant Attorney General, on brief), for
appellant.
No brief or argument for appellees.
The Virginia Uninsured Employer's Fund ("Fund") appeals a
decision of the Virginia Workers' Compensation Commission finding
that Thomas W. Morehead, d/b/a Morehead Trucking, was subject to
the commission's jurisdiction because he regularly had in service
three or more employees. The Fund further contends that, based on
this decision, the commission erred in awarding Tracy Scott Nunn
temporary total disability benefits and medical benefits, and
* Pursuant to Code § 17.1-413, this opinion is not
designated for publication. Further, because this opinion has
no precedential value, we recite only those facts essential to
our holding.
assessing against Morehead a $500 fine, pursuant to Code
§ 65.2-805, for failing to properly insure his workers'
compensation liability. For the reasons that follow, we affirm
the decision of the commission.
On January 12, 2001, Nunn was employed by Morehead's sole
proprietorship as a driver of a milk tanker truck. On that date,
Nunn lost control of his truck while driving and the truck
overturned. Nunn suffered an injury to his lower back and left
shoulder. Nunn filed a Claim for Benefits with the commission on
July 23, 2001. Morehead defended the claim on the grounds that
his partnership was not subject to the commission's jurisdiction
because he did not have in regular service three or more
employees. 1
The deputy commissioner found that Morehead was subject to
the commission's jurisdiction, finding that Nunn and James
Robertson were "employees regularly in service" and that a
"part-time" employee, Cecil Melvin, was also an employee
"regularly in service," as defined by the Act. Accordingly, after
determining that Nunn's injury arose out of employment, the deputy
commissioner awarded Nunn benefits and assessed a $500 fine
against Morehead, pursuant to Code §§ 65.2-804 and -805, for
1
Morehead testified that he was the owner of the business,
in partnership with his mother. Members of a partnership are
excluded from the definition of an "employee" under the Act,
unless they specifically elect to be included. See Code
§ 65.2-101 "Employee" (1)(n).
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failing to properly insure his workers' compensation liability. 2
The commission affirmed, finding that the testimony established
Morehead paid three employees per month, during the months of
September through December of 2000.
It is this decision that the Fund appeals. The Fund contends
that the commission erred in failing to properly consider
Morehead's "established mode of business," which was to employ
only two employees at any given time. The Fund argues that a "Net
Payroll Totals" chart established that Morehead employed only two
employees during the months of January through August of 2000 and
that he only employed one of the employees at issue, Cecil Melvin,
on a temporary basis. The Fund further contends that the
commission erred in affirming the decision of the deputy
commissioner because the deputy commissioner "failed in its duty
to make a fair and complete record." We disagree.
Under Code § 65.2-101, employers with fewer
than three employees are exempt from
coverage under the Workers' Compensation
Act. The employer has the burden of
producing evidence that it is exempt from
coverage. Craddock Moving & Storage Co. v.
Settles, 16 Va. App. 1, 2, 427 S.E.2d 428,
429 (1993), aff'd per curiam, 247 Va. 165,
440 S.E.2d 613 (1994). "What constitutes an
employee is a question of law, but whether
the facts bring a person within the law's
designation, is usually a question of fact."
Baker v. Nussman, 152 Va. 293, 298, 147 S.E.
2The Fund raises no issue on appeal concerning the
propriety of the commission's determination that Nunn's injury
arose out of employment and, thus, warranted the awarded
benefits.
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246, 247 (1929); see also Metropolitan
Cleaning Corp., Inc. v. Crawley, 14 Va. App.
261, 264, 416 S.E.2d 35, 37 (1992) (en
banc). We are bound by the commission's
findings of fact if those findings are
supported by credible evidence. Lynch v.
Lee, 19 Va. App. 230, 234, 450 S.E.2d 391,
393 (1994). On appeal, we construe the
evidence in the light most favorable to the
employer, the party prevailing below.
Whitlock v. Whitlock Mechanical/Check
Services, Inc., 25 Va. App. 470, 479, 489
S.E.2d 687, 692 (1997).
Osborne v. Forner, 36 Va. App. 91, 95, 548 S.E.2d 270, 272
(2001) (footnote omitted).
Whether a person is an "employee" and
whether an employer has three or more
employees "regularly in service" are pivotal
determinations in deciding if an employer is
subject to the Act. An "employee" is
defined by the Act as follows: "'[E]mployee'
includes every person . . . in the service
of another under any contract of hire or
apprenticeship, written or implied, except
one whose employment is not in the usual
course of the trade, business, occupation or
profession of the employer." Code § 65.1-4
[now Code § 65.2-101]. This statute has
been construed to mean that any person hired
by the employer to work in the usual course
of the employer's business is an "employee"
under the Act regardless of how often or for
how long he may be employed.
Cotman v. Green, 4 Va. App. 256, 258, 356 S.E.2d 447, 448
(1987). Thus, "part-time as well as full-time employees
'regularly in service' must be considered in determining whether
an employer has at least three employees." Id. at 259, 356
S.E.2d at 448.
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In determining whether an employer has three or more
employees "regularly in service," "the focus shifts to the
character of the business and away from the character of the
employment relationship. The number of persons used to carry
out the established mode of performing the work of the business
is determinative even though the work may be recurrent instead
of constant." Id. (citation omitted).
The term "regularly" implies a "practice,"
France v. Munson, 125 Conn. 22, 3 A.2d 78,
81 (Conn. 1938), or a "constant or periodic
custom," Mathers v. Sellers, 113 So.2d 443,
445 (Fla. Dist. Ct. App. 1959), of
employment. Therefore, we look for
"regularly-recurring periods" of employing
the requisite number of persons over some
reasonable period of time. [4 Arthur Larson
& Lex K. Larson, Larson's Workers'
Compensation Law § 74.02 (2000)]; see Lingo
v. Crews, 253 Ala. 227, 43 So.2d 815, 815-16
(Ala. 1950); LaPoint v. Barton, 57 Ala. App.
352, 328 So.2d 605, 607 (Ala. Civ. App.
1976); France, 3 A.2d at 81; Harding v.
Plumley, 329 S.C. 580, 496 S.E.2d 29, 32
(S.C. Ct. App. 1998). In order for the
employer to be subject to the Act, the
recurring periods of employing the requisite
number of employees should be the rule and
not the exception. See France, 3 A.2d at
83; Sudler v. Sun Oil Co., 227 So.2d 482,
484 (Fla. 1969). Stated differently, an
employer's status under the Workers'
Compensation Act should not fluctuate
between being subject to the Act and being
exempt from it. Cotman, 4 Va. App. at 259,
356 S.E.2d at 448-49; Larson, supra,
§ 74.02.
Osborne, 36 Va. App. at 96, 548 S.E.2d at 272. Thus, "where an
employer temporarily or occasionally employs a third person, the
employer will not be subject to the provisions of the Act." Id.- 5 -
at 97, 548 S.E.2d at 273. Indeed, the Act excludes "casual
employees" from coverage. Code § 65.2-101 "Employee" (2)(e).
The Supreme Court of Virginia has recognized that employment is
"casual when not permanent nor periodically regular, but
occasional, or by chance, and not in the usual course of the
employer's trade or business." Mims v. McCoy, 219 Va. 616, 619,
248 S.E.2d 817, 818 (1978).
Applying these principles to the instant case, we hold that
the record supports the commission's determination that Morehead
had regularly in service, three or more employees at the time of
Nunn's accident. Morehead testified that he owned three trucks.
Two regular employees would drive the trucks on the days they
worked, and he would fill in as a driver on their days off.
Indeed, Morehead does not contest the fact that he regularly
employed at least two employees during the twelve months of 2000,
and January of 2001.
Specifically, Morehead testified that Melvin and Robertson
worked as drivers during the months of January through May of
2000. At that time, Melvin became unable to work due to prostate
cancer. Thus, Robertson and a new hire, Phillip Ramsey, worked
from June of 2000 through November of 2000. Ramsey left the
company in November, so Robertson and another new hire, Nunn,
worked in December of 2000 and January of 2001.
However, although Melvin did not work for the months of June,
July and August due to his illness, Melvin returned to work for
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Morehead in September of 2000 on a "sporadic" basis. 3 Morehead
testified that his arrangement with Melvin was that Melvin would
work if he "[felt] like working . . . and if he [didn't] feel like
working, he [didn't] work." During the times when Melvin worked,
he performed the same work as the other drivers. Morehead
testified that he paid Melvin on a "10 day[] basis," in that he
would pay Melvin for ten days of work once he accumulated that
many days of work. The evidence demonstrated that Melvin received
a check for ten days of work in September, October, November and
December of 2000. 4 Morehead testified further that he intended to
hire Nunn as a replacement for both Ramsey and Melvin.
Nevertheless, the record demonstrates that after Nunn's accident
in January of 2001, Melvin continued to work for Morehead, as a
"fill-in" for Nunn.
The evidence demonstrated on this record clearly supported
the commission's factual determination that, as an "established
mode of performing the work of the business," Morehead regularly
3
Nunn testified that Morehead also employed a man by the
name of "Dave" to serve as a relief driver. Morehead denied
that anyone named "Dave" worked for him during the time at
issue. Accordingly, the commission did not include "Dave's"
employment, or lack thereof, in its determination. Moreover,
the commission made no factual finding as to whether "Dave" was
employed by Morehead, nor in what capacity he was employed.
Thus, we do not consider this evidence in our analysis.
4
Although he was issued a check in December, Morehead
testified that Melvin did not actually work ten days in December
due to his illness.
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employed three individuals. In particular, Morehead utilized
three individuals to maintain his business - driving his delivery
trucks – during the months of September, October, November and
December of 2000, as well as January of 2001. Although Melvin
worked only "sporadically," due to his health condition, the
record demonstrates that it was Morehead's "mode of business" to
utilize Melvin's services on a reoccurring or regular basis.
Indeed, the evidence established that Morehead hired Nunn in
December of 2000 with the specific intent of "replacing" Ramsey
and Melvin. Two men whose services were thus, by logical
implication, necessary to the operation of Morehead's business.
Furthermore, Morehead continued his practice of relying on
Melvin's services by contacting Melvin to work, as a fill-in,
after Nunn's accident.
Therefore, on the peculiar facts of this case, we find that
the commission properly considered the evidence submitted
concerning the 13-month time period leading up to the accident and
properly determined, based upon that evidence, that Morehead's use
of Melvin as a third employee was the "rule," rather than the
exception, at the time Nunn's injury occurred. Thus, we find no
error in the commission's determination that, at the time of
Nunn's injury, Morehead had in regular service three or more
employees, bringing his establishment within the jurisdiction of
the commission. We do not address the Fund's contention that the
deputy commissioner "failed in its duty to make a fair and
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complete record," because the Fund failed to raise this specific
claim as a basis for its appeal to the full commission.5 Thus,
this issue was not considered by the full commission.
Accordingly, we will not consider this argument on appeal. See
Berner v. Mills Ex Rel. Estate of Mills, 38 Va. App. 11, 18, 560
S.E.2d 925, 928 (2002); Rule 5A:18.
For the above stated reasons, we affirm the decision of the
commission.
Affirmed.
5
Instead, the Fund merely argued that the deputy
commissioner failed to properly consider and analyze the entire
body of evidence. Specifically, the Fund argued the deputy
commissioner erred in "scrutiniz[ing] only 3-4 unusual months,"
and failing to consider the 9-10 month period leading up to
those 3-4 months. Nevertheless, our review of the record
reveals that the Fund's argument in this regard is without
merit. Indeed, the record demonstrates that the deputy
commissioner and the full commission clearly considered
Morehead's business practices during the entire 13-month period
leading up to the injury, in finding that, at least as of
September of 2000, Morehead began an "established" practice of
relying on Melvin as a third employee.
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