| Matter of Long v Liberty Mut. Ins. Co. |
| 2008 NY Slip Op 08374 [56 AD3d 837] |
| November 6, 2008 |
| Appellate Division, Third Department |
| In the Matter of the Claim of Juan Long, Respondent, v LibertyMutual Insurance Company, Appellant, and Buffalo Destroyers, Respondent, et al., Respondents.Workers' Compensation Board, Respondent. |
—[*1] Phillips Lytle, L.L.P., Buffalo (Kevin J. English of counsel), for Buffalo Destroyers,respondent.
Kavanagh, J. Appeal from a decision of the Workers' Compensation Board, filed April 20,2007, which ruled, among other things, that Liberty Mutual Insurance Company was responsiblefor the payment of claimant's workers' compensation benefits.
Claimant was a member of the Buffalo Destroyers, an arena football team located in the Cityof Buffalo, Erie County. Source One Group is a professional employee organization that providesemployment related services to entities such as the Destroyers. In March 2003, the Destroyersand Source One entered into an agreement by which Source One was designated as the employerof all Destroyers personnel and, in that capacity, was obligated to obtain for its [*2]employees certain employment benefits, including workers'compensation insurance. Pursuant to this agreement, Source One obtained workers'compensation insurance for the Destroyers personnel, including claimant, through LibertyMutual Insurance Company, and a certificate of insurance to that effect was issued in March2003.[FN1]
On April 16, 2003, claimant was injured while participating in a football game for theDestroyers, and he subsequently filed a claim with Liberty Mutual for the payment of workers'compensation benefits. Liberty Mutual denied coverage stating, among other things, that, despiteSource One's agreement with the Destroyers, claimant was not an employee of Source One and,therefore, was not entitled to coverage under its policy. A Workers' Compensation Law Judge(hereinafter WCLJ) determined that claimant, at the time he was injured, was a dual employee ofSource One and the Destroyers and, as such, was entitled to coverage under the Liberty Mutualpolicy. The Workers' Compensation Board subsequently affirmed this determination, but foundthat, at the time of his injury, claimant was not a dual employee of both entities, but instead, aspecial employee of the Destroyers and a general employee of Source One. Liberty Mutual nowappeals.
Initially, Liberty Mutual argues that claimant was not an employee of itsinsured—Source One—and, therefore, he was not eligible for coverage under thispolicy. It also argues that the policy in question was issued under the Assigned-Risk Plan ofIllinois and, pursuant to the rules that govern that plan, coverage under the policy could not beextended to include a New York based entity such as the Destroyers. For reasons that follow, wefind that, on the facts presented, Liberty Mutual cannot now deny that claimant was entitled tocoverage under this policy and it is therefore responsible for the payment of his workers'compensation benefits.
As for Liberty Mutual's claim that Source One was not claimant's employer, whether such arelationship exists is "ordinarily a factual determination which will be upheld if the recordcontains substantial evidence to support it" (Matter of Cabrera v Two-Three-Nought-Four Assoc., 46 AD3d1255, 1257 [2007]; see Thompson v Grumman Aerospace Corp., 78 NY2d 553, 557[1991]). A key factor in such a determination is whether the entity claimed to be the employer"controls and directs the manner, details and ultimate result of an employee's work"(Thompson v Grumman Aerospace Corp., 78 NY2d at 558). Moreover, the existence ofan agreement that seeks to establish such a relationship will not displace a judicial assessment ofthe actual relationship designed "to ascertain the special employment status for workers'compensation purposes" (id. at 560).
Here, claimant had no involvement with Source One. While Source One, pursuant to [*3]its agreement with the Destroyers, technically had the right to hire,terminate and discipline Destroyers personnel, it, in reality, had no meaningful involvement inthe Destroyers' employment activities and it was merely a conduit through which the Destroyersobtained workers' compensation insurance for its personnel. Claimant not only had no contractualrelationship with Source One, but it played no role in controlling claimant's work or establishinghis compensation. Instead, the Destroyers provided all of claimant's equipment, supervised hiswork, and benefitted from his services (see Matter of Fisher v KJ Transp., 27 AD3d 934, 934 [2006];see also Thompson v Grumman Aerospace Corp., 78 NY2d at 557; Matter of Hasbrouck v International Bus.Machs. Corp., 38 AD3d 1146, 1147 [2007]; Perkins v Dryden Ambulance, Inc., 31 AD3d 859, 859-860 [2006];Schramm v Cold Spring HarborLab., 17 AD3d 661, 662 [2005]). Moreover, the Destroyers provided the funds thatSource One used to pay claimant's salary, as well as the premiums that Liberty Mutual chargedfor this workers' compensation policy.[FN2]Simply stated, this agreement between Source One and the Destroyers, other than listing SourceOne as claimant's employer on his paycheck and W-2 form, "did nothing to actually alter theemployer-employee relationship" that existed between claimant and the Destroyers (Matter ofFisher v KJ Transp., 27 AD3d at 935).[FN3]
However, while claimant was not a Source One employee at the time of his injury, weconclude that Liberty Mutual, on the facts presented, cannot now deny coverage to claimantunder the terms of this policy. As previously noted, the certificate of insurance that LibertyMutual now attempts to disavow was issued in March 2003—approximately one monthprior to claimant's injury naming the Destroyers as an additional insured on the Liberty Mutualpolicy. Four months later, representatives of Liberty Mutual met with the agency charged withthe administration of this policy, performed an audit on Source One's payroll lists, andspecifically discussed whether the Destroyers personnel were on Source One's lists. After itperformed a second audit of Source One's payroll, Liberty Mutual authorized the agent who hadissued the certificate of insurance naming the Destroyers as an additional insured under thepolicy to assume lead agent status on the policy. In addition, Liberty Mutual acknowledges thatthe policy was rewritten, making it retroactive to cover a period of time prior to when thecertificate of [*4]insurance had been issued.[FN4]
In addition, Liberty Mutual was well aware of Source One's status as an organizationproviding employment services to professional sports organizations, and it provided Source Onewith workers' compensation insurance for other professional football teams and their personnel.Given this background and its acceptance of payments for premiums on this policy, we concludethat Liberty Mutual cannot now deny its obligation to pay claimant workers' compensationbenefits under the terms of this policy (see Lenox Realty v Excelsior Ins. Co., 255 AD2d644, 645-646 [1998], lv denied 93 NY2d 807 [1999]; Zurich Ins. Co. v White,221 AD2d 700, 703 [1995], lv denied 88 NY2d 804 [1996]; Bucon, Inc. vPennsylvania Mfg. Assn. Ins. Co., 151 AD2d 207, 210-211 [1989]; see also Wainwrightv Charlew Constr. Co., 302 AD2d 784, 785 [2003]; compare Tribeca Broadway Assoc. v Mount Vernon Fire Ins. Co., 5AD3d 198 [2004]).
Finally, Liberty Mutual claims that since this policy was issued pursuant to theAssigned-Risk Plan of Illinois, it is governed by the rules of that plan—and these rules donot permit that a policy be expanded to include coverage for employees of a New York entity likethe Destroyers. However, as noted by a representative of Liberty Mutual during theseproceedings, these policy rules did not bar Liberty Mutual from writing "any policy for coverage[that Liberty Mutual] so choose[s]." Here, by its conduct, Liberty Mutual voluntarily assumed theobligation to provide workers' compensation benefits to Destroyers personnel and it is bound toprovide claimant coverage under this policy (see Bucon, Inc. v Pennsylvania Mfg. Assn. Ins.Co., 151 AD2d at 211).
Cardona, P.J., Peters, Rose and Stein, JJ., concur. Ordered that the decision is affirmed,without costs.
Footnote 1: Later, it was determined that theagency that issued the certificate of insurance could not be substituted for the original lead agenton the Liberty Mutual policy—and a similar policy providing such coverage was obtainedby Source One from Travelers Insurance Company. In May 2003, the National Council onCompensation Insurance determined that Source One had in effect two workers' compensationpolicies for its employees and determined that one should be cancelled. Pursuant to this finding,the Travelers policy was cancelled, and Source One retained coverage under the Liberty Mutualpolicy.
Footnote 2: Approximately $100,000 waspaid by the Destroyers for the premiums on the policy.
Footnote 3: The Destroyers argued that theNew York Professional Employer Act (see Labor Law § 915 et seq.)applies and, therefore, Source One was a professional employer organization as defined by thatAct. Tellingly, the Board did not find that the Act applied or that Source One was a professionalemployer organization as defined therein. While it is true that a professional employerorganization has the right to, among other things, assume responsibility to "secure and providerequired workers' compensation coverage for its worksite employees either in its own name or inits client's name" (Labor Law § 922 [3] [c]), there is nothing in the record establishing thatSource One is, in fact, a registered professional employer organization or exempt fromregistration (see Labor Law § 919) and, therefore, the Act does not apply herein.
Footnote 4: A representative of LibertyMutual testified that in September or October 2003, he informed the owner of the Destroyers thatthe Destroyers could not be covered under the policy. However, the representative alsoacknowledged that he never sent the Destroyers "a letter, an email, a telegram [or] any [other]writing to the Buffalo Destroyers telling them that they weren't covered."