Abel Verdon Constr. v. Rivera

• Decision Date: 30 August 2011
• Docket Number: No. 2010–SC–000744–WC.,2010–SC–000744–WC.
• Parties: ABEL VERDON CONSTRUCTION and Acuity Insurance, Appellants,v.Miguel A. RIVERA; Honorable Otto Daniel Wolff, Administrative Law Judge; Workers' Compensation Board; and Cabinet for Health and Family Services, Appellees.
• Court: United States State Supreme Court — District of Kentucky

348 S.W.3d 749

ABEL VERDON CONSTRUCTION and Acuity Insurance, Appellants,

v.Miguel A. RIVERA; Honorable Otto Daniel Wolff, Administrative Law Judge; Workers' Compensation Board; and Cabinet for Health and Family Services, Appellees.

No. 2010–SC–000744–WC.

Supreme Court of Kentucky.

Aug. 25, 2011.As Corrected Aug. 30, 2011.

Michael Schulte, Michael J. Schulte, PLLC, Ft. Mitchell, KY, for Appellants, Abel Verdon Construction and Acuity Insurance.Robert L. Catlett, Jr., Louisville, KY, for Appellee, Miguel A. Rivera.Timothy J. Salansky, Cabinet for Health and Family Services, Frankfort, KY, for Appellee, Cabinet for Health and Family Services.

OPINION OF THE COURT

The Workers' Compensation Board affirmed findings that supported the claimant's partial disability award against his employer, Abel Verdon Construction, but remanded the claim with directions for the Administrative Law Judge (ALJ) to admit the testimony from the claimant's safety expert and to determine whether Verdon's intentional violation of a workplace safety regulation in any degree caused the claimant's accident.¹ A divided Court of Appeals reinstated the ALJ's refusal to admit the safety expert's testimony but affirmed otherwise. The court also rejected Verdon's argument that Chapter 342 violates federal immigration law by authorizing workers' compensation benefits without regard to the legality of the recipient's immigration status. Verdon appeals.

Verdon argues that the Court of Appeals erred because the Immigration Reform and Control Act of 1986 (IRCA) ² preempts the application of Chapter 342 to this claim based on the claimant's status as an “unauthorized alien.” ³ Verdon also argues that the Court of Appeals erred by affirming with respect to the existence of an employment relationship, the adequacy of proof concerning the claimant's average weekly wage, and the duration of TTD as well as the decision to remand for additional findings concerning a safety violation. We affirm for the reasons stated herein.

The claimant, a fifteen-year-old unauthorized alien, sought workers' compensation benefits from Verdon for injuries sustained on July 8, 2005, when he fell through a hole in the second floor of a home that Verdon was constructing. He landed in the basement, resulting in a severe head injury and other serious injuries. The claimant lapsed into a coma and was hospitalized for two months, after which he underwent physical, occupational, and speech therapy. He had returned to high school and was taking special education classes when his claim was heard, but he retained significant physical and mental impairments that were permanent. The Cabinet for Health and Family Services became a party because it paid the claimant's medical expenses after Verdon denied liability.

Having declined to address the constitutional issue,⁴ the ALJ found the claimant to be Verdon's employee; found his average weekly wage to be $150.00; awarded TTD benefits from July 9, 2005 through December 20, 2006; and awarded triple permanent partial disability benefits based on a permanent impairment rating of 44%. The ALJ refused to certify Ralph Wirth as an expert concerning Verdon's alleged safety violation; rejected his testimony; and concluded that no violation was applicable. Although the Court of Appeals determined subsequently that the Board erred by reversing the finding that Wirth was not an expert, the court determined that KRS 342.165(1) did not require expert testimony; found that the Board did not err by remanding for additional consideration under the statute; and affirmed in all other respects.

I. KRS 342.640.

KRS 342.640 provides workers' compensation coverage to “employees,” without regard to the legality of the employment relationship. It states, in pertinent part as follows:

The following shall constitute employees subject to the provisions of this chapter, except as exempted under KRS 342.650:

(1) Every person, including a minor, whether lawfully or unlawfully employed, in the service of an employer under any contract of hire or apprenticeship, express or implied, and all helpers and assistants of employees, whether paid by the employer or employee, if employed with the knowledge, actual or constructive, of the employer;

...

(4) Every person performing service in the course of the trade, business, profession, or occupation of an employer at the time of the injury; and....

No exemption listed in KRS 342.650 applies to this claim. The parties do not dispute that the claimant is an unauthorized alien and that Chapter 342 covers him without regard to the legality of his status as an employee. Mindful that courts avoid a constitutional question unless the merits of an appeal require an answer,⁵ we turn first to the finding that he was an employee.

A. EMPLOYMENT RELATIONSHIP.

Verdon continues to assert that the claimant failed to meet his burden of proving that they had an employment relationship. We disagree.

Testifying through an interpreter, the claimant admitted that he never spoke to Abel Verdon. He testified that a distant cousin, Margarito Villa Martinez, hired him as a part-time helper to pick up trash at Verdon's construction site for $50.00 per day during the summer break from school. An individual named Abelardo picked him up for work and told him what to do. The claimant stated that Martinez paid him and the other workers in cash and that he earned $250.00 during the two-week period before his accident occurred.

Martinez, the foreman of Verdon's framing crew, testified through the use of an interpreter in November 2006. When asked whether the claimant was an employee of Verdon Construction, he responded, “Not really.” He explained that the claimant worked part time during vacation and that there no intention for him to work full time because he was a teenager. The claimant was paid around $7.00 to $8.00 per hour and worked about eight hours per day for two or three days per week. Martinez stated that he did not tell Verdon that he hired the claimant because his duties included hiring workers and paying them. He stated that he told Verdon how much money he needed to pay the workers, then Verdon gave him cash and he distributed it to them.

When deposed again in March 2008, Martinez testified that the claimant picked up garbage and scrap materials at the construction site and sometimes carried supplies and tools to the carpenters. The work was necessary and would have been performed by Martinez or the carpenters had the claimant not been hired. His hourly rate was lower than the carpenters' and made it more economical to use him for the work.

Verdon's brief to the ALJ denied the existence of an employment relationship with the claimant. Noting that they had never met or spoken, Verdon claimed to have had no knowledge of the claimant's presence at the worksite. Verdon denied paying him for any services performed, pointing to the absence of any documentation to that effect as well as to the evidence that Martinez was the claimant's cousin, paid him in cash, and stated that he was not really an employee.

The ALJ analyzed the evidence of an employment relationship emphasizing the four primary Ratliff v. Redmon⁶ factors as set forth in Chambers v. Wooten's IGA Foodliner.⁷ The ALJ determined that an employment relationship existed based on findings that the claimant's work as a site maintenance person was within the scope of Verdon's business constructing homes; that Verdon controlled the work being performed; and that the work did not require any particular skill. Noting that the three objective factors favored an employment relationship and that objective factors should prevail when the intent of the parties could not be ascertained, the ALJ determined that the claimant was Verdon's employee.

KRS 342.285 designates the ALJ as the finder of fact in workers' compensation cases. It permits an appeal to the Board but provides that the ALJ's decision is “conclusive and binding as to all questions of fact” and, together with KRS 342.290, prohibits the Board or a reviewing court from substituting its judgment for the ALJ's “as to the weight of evidence on questions of fact.”

KRS 342.285 gives the ALJ the sole discretion to determine the quality, character, and substance of evidence.⁸ As fact-finder, an ALJ may reject any testimony and believe or disbelieve various parts of the evidence, regardless of whether it comes from the same witness or the same party's total proof.⁹ KRS 342.285(2) and KRS 342.290 limit administrative and judicial review of an ALJ's decision to determining whether the ALJ “acted without or in excess of his powers;” ¹⁰ whether the decision “was procured by fraud;” ¹¹ or whether the decision was erroneous as a matter of law.¹² Legal errors would include whether the ALJ misapplied Chapter 342 to the facts; made a clearly erroneous finding of fact; rendered an arbitrary or capricious decision; or committed an abuse of discretion.

A party who appeals a finding that favors the party with the burden of proof must show that no substantial evidence supported the finding, i.e., that the finding was unreasonable under the evidence.¹³ Evidence that would have supported but not compelled a different decision is an inadequate basis for reversal on appeal.¹⁴

The finding that an employment relationship existed between the claimant and Verdon was properly affirmed. It was reasonable and supported by substantial evidence.

B. PREEMPTION.

Having affirmed the existence of an employment relationship, we turn to the constitutional issue. Federal legislation preempts a state law if it contains an explicit preemption clause; if it implies Congressional intent to occupy the field; or if it conflicts with a state law.¹⁵ The IRCA expressly preempts states from imposing civil or criminal sanctions on those who employ unauthorized aliens other than through licensing or similar laws. ¹⁶ Verdon concedes that the IRCA's preemption clause does not...