Harter v. Hawaii County, 6627

• Decision Date: 22 May 1981
• Docket Number: No. 6627,6627
• Citation: 628 P.2d 629,63 Haw. 374
• Parties: Charles G. HARTER, Claimant-Appellee, v. COUNTY OF HAWAII, Employer-Appellant, Self-Insured, and Garden Island Helicopters, Inc., dba: Hawaii Helicopters Int'l., and Fireman's Fund American Insurance Co., Employer, Insurance Carrier-Appellee.
• Court: Hawaii Supreme Court

Page 629

628 P.2d 629

63 Haw. 374

Charles G. HARTER, Claimant-Appellee, v. COUNTY OF HAWAII, Employer-Appellant, Self-Insured and Garden Island Helicopters, Inc., dba: Hawaii Helicopters Int'l., and Fireman's Fund American Insurance Co. Employer, Insurance Carrier-Appellee.

No. 6627.

Supreme Court of Hawai'i.

May 22, 1981.

Syllabus by the Court

1. HRS § 386-1 provides that the borrowing employer's potential liability for workers' compensation payments to a lent employee commences with the transfer of control over the lent employee and continues until such control is returned to the lending employer.

2. The decisions of this court have reinforced the legislative design evident from the plain wording of HRS § 386-1 that "control" is the principal determinant of compensation liability in a "lent employee" situation.

3. The paramount consideration in determining whether the alleged borrowing employer is liable for workers' compensation benefits payable to a lent employee is whether the alleged borrowing employer exercised control over the details of the work of the lent employee and such control strongly supports the inference that a special employment exists.

4. HRS § 386-1 makes "control" of the employee the predominant consideration in fixing compensation liability between a lending and a borrowing employer.

5. The legal rights of an injured worker should not turn on employment relationships that could vary from moment to moment depending upon which employer controls the instrumentalities or circumstances that cause the injury.

6. Where lending employers furnish equipment and operators to borrowing employers, courts have ruled, more often than not, that compensation liability remains with the former.

Stephen Menezes, Deputy Corporation Counsel, Hilo (Earl T. Nakasato, Deputy Corporation Counsel, Hilo, on the brief), for employer-appellant, self-insured.

Jeffrey S. Portnoy, Honolulu (Cades, Schutte, Fleming & Wright, Honolulu, of counsel), for employer, insurance carrier-appellee.

Before RICHARDSON, C. J., and OGATA, MENOR, LUM and NAKAMURA, JJ.

NAKAMURA, Justice.

The County of Hawaii (hereafter the County) has requested a judicial review of a Labor and Industrial Relations Appeals Board Decision applying the "lent employee" provisions of the Hawaii Workers' Compensation Law. ¹ As the record sustains the Board's finding that the County had assumed control over Charles G. Harter when his work injury occurred, we affirm the decision that he was an "employee" of the County within the meaning of HRS § 386-1.

I.

During times relevant to the case, Garden Island Helicopters, Inc. dba Hawaii Helicopters International (hereafter Hawaii Helicopters), was an employer engaged primarily in the business of furnishing helicopter services to others for industrial and sightseeing purposes and Charles G. Harter (hereafter Harter or the Claimant) was a pilot in its employ. On July 1, 1972 Hawaii Helicopters and the County of Hawaii entered into an agreement whereby Hawaii Helicopters agreed to furnish the County a helicopter "with pilot" for a two-year period. The "lease" agreement provided, inter alia, that the aircraft would be based at the Waiakea Fire Station in Hilo, Hawaii to be used exclusively by the County to support firefighting and other County functions. ² Pursuant to the foregoing agreement, Hawaii Helicopters placed a helicopter at the County's disposal and assigned one of its employees as the regular pilot. The aircraft was operated under the direction of a battalion chief of the Hawaii County Fire Department, and the pilot was not permitted to operate the aircraft for any other purpose, except to conduct daily pre-flight checks. Hawaii Helicopters continued to be responsible for the craft's maintenance and provided mechanics and tools as required.

On March 12, 1973, while on a four-day assignment as a temporary replacement for the regular pilot of the "leased" helicopter, Harter was directed to fly the craft to Waimea to support efforts by the fire department to extinguish a brush fire. The specific task he was ordered to perform was to transport firefighters into and out of the affected area. When the mishap causing serious injury to Harter occurred, he was on a mission to remove a battalion chief of the department from the scene of the blaze.

Harter subsequently claimed workers' compensation benefits for the work injury. While the fact that he had suffered an injury arising out of and in the course of employment was acknowledged by all parties concerned, a question was raised on whether Hawaii Helicopters or the County was the employer responsible for the payment of compensation. The Director of Labor and Industrial Relations, who is responsible for initial determinations under the compensation law, held Hawaii Helicopters liable for the payment of benefits to the Claimant. This determination, however, was reversed by the Labor and Industrial Relations Appeals Board on an appeal filed by Hawaii Helicopters. The County's appeal to this court followed.

II.

The responsibility for the payment of workers' compensation benefits to a "lent employee" is at issue. The question posed is neither complex nor novel, for it is governed by an express statutory provision that previously has been subject to interpretation.

When an employee is "loaned or hired out to another for the purpose of furthering the other person's trade, business, occupation, or profession," HRS § 386-1 provides that the borrowing employer's potential liability for compensation payments commences with the transfer of control over the employee and continues until such control is returned to the original employer. Our decisions have reinforced the legislative design evident from the plain wording of HRS § 386-1 that "control" is the principal determinant of compensation liability in a "lent employee" situation.

In Kepa v. Hawaii Welding Co., 56 Haw. 544, 545 P.2d 687 (1976), where the issue was first encountered, we affirmed a holding of the Labor and Industrial Relations Appeals Board that the lending employer remained liable for compensation despite the loan of an employee because sufficient control over the employee had not been transferred to the borrowing employer. We said:

The question of law is whether or not the Appeals Board used the proper standard in its determination that Hawaii Welding had not transferred control of Kepa to Thompson for purposes of the lent employee paragraph of HRS § 386-1.

We agree with the reasoning of the Appeals Board in holding the appellant liable herein. The paramount consideration in determining whether the alleged special employer is in fact a special employer of the worker in workmen's compensation lent employee cases in (sic) whether the alleged special employer exercised control over the details of the work of the loaned employee and such control strongly supports the inference that a special employment exists.

56 Haw. at 548, 545 P.2d at 691. Although the request from the borrowing employer was for a welder "to work as directed," we nevertheless affirmed the administrative ruling that an employment relationship governed by HRS § 386-1 had not been established. The presence of factors indicating a retention of control led us to concur with the Appeals Board. For example, the borrowing employer's need for a welder was sporadic and of short duration, and the lending employer furnished the welder's equipment and ostensibly reserved such control over the employee as necessary to ensure its proper use and maintenance. And, significantly, there was no showing that an employment relationship had been established with the knowing consent of the employee. ³

The lending employer in Kepa also asserted it should not be liable for compensation under principles enunciated in Nakagawa v. Apana, 52 Haw. 379, 477 P.2d 611 (1970), a negligence action where a lending employer's vicarious tort liability was determined in accord with common law principles governing master-servant relationships and the doctrine of respondeat superior. However, we considered Nakagawa inappropriate precedent for the resolution of a worker's right to benefits under a beneficent statute where negligence or a lack thereof is irrelevant.

Yoshino v. Saga Food Service, 59 Haw. 139, 577 P.2d 787 (1978), again presented the issue posed in Kepa, and once more we "made clear that the control test is the primary guideline for determining whether an employer is a special employer for workers' compensation purposes." 59 Haw. at 143, 577 P.2d at 790. But unlike the situation in Kepa, the record in Yoshino clearly manifested that the "lent employee" was furthering the business of the borrowing employer and was under its control when injured. We affirmed the decision of the Labor and Industrial Relations Appeals Board on the basis of the record and criticized the Board's primary reliance on a "relative nature of the work test" in reaching its conclusion. For HRS § 386-1, in our opinion, made "control" of the employee the predominant consideration in fixing compensation liability between a lending and a borrowing employer.

III.

The County contends the circumstances here are like those in Kepa. It argues Harter was primarily engaged in furthering Hawaii Helicopters' business when injured, and as "captain of his ship" he had "control over the manner and specific details of flying the helicopter." That he was a temporary relief pilot is emphasized. In the County's view the foregoing factors compelled a ruling that Hawaii Helicopters is the employer responsible for the payment of Harter's compensation benefits. We disagree.

The Appeals Board was affirmed in Kepa because there...