ALJDEC

99F-1204-ROC · Registrar of Contractors · 1999-07-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

On May 5, 1999, a disciplinary hearing was held for the purpose of determining if the Respondent had violated provisions of A.R.S. §32- 1154(A). Attorney Karen P. Merritt-Hunsaker represented the Complainant. Attorney Craig L. Keller represented the Respondent. This hearing adjourned prior to its conclusion on May 5, 1999. The hearing in the matter reconvened on July 22, 1999. Evidence and testimony were presented on both days of this hearing. Prior to the conclusion of this hearing, the Respondent requested that this matter be dismissed. The undersigned Administrative Law Judge granted the Respondent’s request. FINDINGS OF FACT

1. Larry Paul Counts is the underwriting manager for the State Compensation Fund (the “Fund”). Mr. Counts testified that the Fund is required to provide a ready market for Arizona companies to purchase workers’ compensation insurance.

2. Mr. Counts testified that the Respondent is covered under a worker’s compensation insurance policy issued by the Fund. Mr. Counts testified that there has never been a period of time when the Respondent’s workers’ compensation insurance policy has lapsed or been discontinued.

3. Mr. Counts testified that a significant number of the Respondent’s employees have opted out of (or rejected) the Respondent’s workers’ compensation insurance policy (issued by the Fund). Mr. Counts testified that the Fund sent a letter to each employee that opted out of the worker’s compensation insurance policy. Mr. Counts testified that the letter informed the rejecting employee that he or she would be waiving certain rights to receive compensation and medical benefits by opting out of the workers’ compensation insurance policy.

4. William Sassaman worked for the Respondent in 1996 as an ironworker for a job at Cortez High School. He is not currently working for the Respondent. Mr. Sassaman testified that (when he was working for the Respondent) his foreman told him that there would be meeting at Cortez High School regarding health insurance. Mr. Sassaman testified that he was not required to go to the meeting. Mr. Sassaman testified that he went to the meeting and heard a presentation about an insurance policy by an insurance agent named Mr. Ed Cohen. Mr. Sassaman testified that he was never told that this alternative insurance policy was better than the Respondent’s workers’ compensation insurance policy (issued by the Fund).

5. Mr. Sassaman testified that he understood that the Respondent’s workers’ compensation insurance policy (issued by the Fund) would cover a percentage of his lost wages and medical expenses if he was hurt on the job. Mr. Sassaman further testified that he understood that he would have to forego this coverage if he opted out of the workers’ compensation insurance policy. Mr. Sassaman testified that he opted out of the workers’ compensation insurance policy and signed with an alternative insurance policy. Mr. Sassaman testified that he was never threatened or coerced by the Respondent to choose the alternative insurance policy. Mr. Sassaman testified that he asked Mr. Cohen several questions about the alternative insurance policy. Mr. Sassaman testified that he wanted the alternative insurance policy because it provided coverage on and off the job 24 hours per day.

6. Mr. Sassaman testified that he was injured on the job while he was working for the Respondent. Mr. Sassaman testified that he submitted a claim to Mr. Cohen. Mr. Sassaman testified that Mr. Cohen took care of everything. Mr. Sassaman testified that his medical expenses and lost wages were covered to his satisfaction. Mr. Sassaman testified that he felt that the alternative insurance policy was better than the Respondent’s workers’ compensation insurance policy issued by the Fund. Mr. Sassaman testified that today he would still choose the alternative insurance policy over the workers’ compensation insurance policy.

7. Francis Patrick Area worked for the Respondent in 1996 as an ironworker foreman on a job at Sunnyslope High School. He is not currently working for the Respondent. Mr. Area testified that he also attended a meeting at Cortez High School with Ed Cohen. Mr. Area testified that he was not pressured to attend Mr. Cohen’s presentation. Mr. Area testified that Mr. Cohen explained the differences (including the difference in caps on liability) between the Fund’s workers’ compensation policy and the aforementioned alternative insurance policy. Mr. Area testified that Mr. Cohen never stated that the alternative insurance policy was better than the Respondent’s workers’ compensation insurance policy (issued by the Fund).

8. Mr. Area testified that he understood that the Fund’s workers’ compensation insurance policy would cover a percentage of his lost wages and medical expenses if he was hurt on the job. Mr. Area further testified that he understood that he would have to forego this coverage if he opted out of the workers’ compensation insurance policy. Mr. Area testified that he opted out of the Respondent’s workers’ compensation policy (issued by the Fund) and signed with the alternative insurance policy. Mr. Area testified that he was never threatened, pressured or coerced by the Respondent to choose the alternative insurance policy.

9. Mr. Area testified that he freely chose the alternative insurance policy because it provided coverage on and off the job 24 hours per day and it included a life insurance policy. Mr. Area further testified that he could also add his family members under the alternative insurance policy.

10. Mr. Area testified that he was injured while waterskiing. Mr. Area testified that he submitted a claim to Mr. Cohen. Mr. Area testified that he was very satisfied with the alternative insurance policy. Mr. Area testified that today he would still choose the alternative insurance policy over the Respondent’s workers’ compensation insurance policy (issued by the Fund).

11. Joe Lichman worked for the Respondent in 1996 as an ironworker foreman on a job at Temple Beth Israel. He is not currently working for the Respondent. Mr. Lichman testified that he also attended an insurance meeting with Ed Cohen. Mr. Lichman testified that he was not pressured to attend Mr. Cohen’s presentation. Mr. Lichman testified that Mr. Cohen also came to his house to discuss the aforementioned alternative insurance policy. Mr. Lichman testified that he discussed the alternative insurance with Mr. Cohen on at least three different occasions.

12. Mr. Lichman testified that he understood that the Respondent’s workers’ compensation insurance policy (issued by the Fund) would cover a percentage of his lost wages and medical expenses if he was hurt on the job. Mr. Lichman further testified that he understood that he would have to forego this coverage if he opted out of the workers’ compensation insurance policy. Mr. Lichman testified that he ultimately opted out of the Respondent’s workers’ compensation insurance policy (issued by the Fund) and signed with the alternative insurance policy. Mr. Lichman testified that he was never threatened, pressured or coerced by the Respondent to choose the alternative insurance policy.

13. Mr. Lichman testified that Mr. Cohen explained all of the details regarding the alternative insurance policy. Mr. Lichman testified that Mr. Cohen never stated that the alternative insurance policy was better than the Respondent’s workers’ compensation insurance policy (issued by the Fund). Mr. Lichman testified that he freely chose the alternative insurance policy because it provided coverage on and off the job 24 hours per day. Mr. Lichman testified that he thought that the alternative insurance policy “was a great deal.” Mr. Lichman testified that today he would still choose the alternative insurance policy over the Respondent’s workers’ compensation insurance policy.

14. Harley McClasand worked for the Respondent in 1996 as an ironworker foreman. He is not currently working for the Respondent. Mr. McClasand testified that he met face to face with Mr. Ed Cohen. Mr. McClasand testified that he chose the aforementioned alternative insurance policy because it provided coverage on and off the job 24 hours per day. Mr. McClasand testified that he thought that the alternative insurance policy “was a good thing.” Mr. McClasand testified that he felt that there was a “definite advantage” with the alternative insurance policy.

15. Mr. McClasand testified that he was never threatened or pressured by the Respondent to sign up for the alternative insurance policy. Mr. McClasand testified that today he would still choose the alternative insurance policy over the Respondent’s workers’ compensation insurance policy.

16. The undersigned Administrative Law Judge finds that the Respondent was covered under a worker’s compensation insurance policy issued by the Fund for all of the time relevant to this matter. The undersigned Administrative Law Judge further finds that the four former employees who testified in this matter were not coerced or pressured into rejecting the Respondent’s workers’ compensation insurance policy (issued by the Fund).

CONCLUSIONS OF LAW

1. The Complainant has the burden of proof, and the standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (App. 1996). A "preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not." Morris K. Udall, Arizona Law of Evidence, §5 (1960). It "is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not." Black's Law Dictionary, 1182 (6th ed. 1990).

2. The undersigned Administrative Law Judge concludes that that the Complainant has failed to prove by a preponderance of the evidence that the Respondent has violated A.R.S. §32-1154(A)(4) & (7) for the reasons set forth in Findings of Fact #16. The undersigned Administrative Law Judge further concludes that insufficient evidence was presented to find a violation of A.R.S. §32-1154(A)(5). The undersigned Administrative Law Judge concludes that grounds do not exist to discipline the Respondent’s Class A-11 license pursuant to A.R.S. §32-1154.

RECOMMENDED DECISION

Based upon the foregoing, the undersigned Administrative Law Judge recommends that the entire Citation and Complaint in Case Number 99-1204 be dismissed.

Done this day, August 4, 1999.

______________________________________ Casey J. Newcomb Administrative Law Judge

Original transmitted by mail this ____ day of August, 1999, to:

Michael P. Goldwater Registrar of Contractors 800 West Washington, 6th Floor Phoenix, AZ 85007

ATTN: Joyce Armijo

By ___________________________

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826