Commonwealth of Kentucky 

Workers’ Compensation Board

 

 

 

OPINION ENTERED: June 22, 2018

 

 

CLAIM NO. 201400873

 

 

COMMONWEALTH OF KENTUCKY,

UNINSURED EMPLOYERS' FUND                      PETITIONER

 

 

 

VS.            APPEAL FROM HON. BRENT DYE,

                 ADMINISTRATIVE LAW JUDGE

 

 

 

RANDY MEDLIN

DAVID O. GRIFFITH

DAVID O. GRIFFITH

d/b/a/ DAVID GRIFFITH TRUCKING

DAVE E. GRIFFITH

d/b/a DAVID GRIFFITH TRUCKING

ORLA L. SMITH

d/b/a O.L. SMITH TRUCKING

TRYON TRUCKING, INC.

MIKRON INDUSTRIES, INC.

and HON. BRENT DYE,

ADMINISTRATIVE LAW JUDGE                      RESPONDENTS

 

 

OPINION

AFFIRMING IN PART, VACATING IN PART,

AND REMANDING

                       * * * * * *

 

 

BEFORE:  ALVEY, Chairman, STIVERS and RECHTER, Members. 

 

STIVERS, Member. The Uninsured Employers’ Fund (“UEF”) appeals from the October 30, 2017, Order and Award and the November 27, 2017, Order overruling the UEF’s petition for reconsideration rendered by Hon. Brent Dye, Administrative Law Judge (“ALJ Dye”). In the October 30, 2017, Order and Award, ALJ Dye made final the January 11, 2016, Interlocutory Opinion and Order and an undated Order overruling the UEF’s petition for reconsideration rendered by Hon. Otto Daniel Wolff, Administrative Law Judge (“ALJ Wolff”). ALJ Wolff determined, in relevant part, Tryon Trucking, Inc. (“Tryon”) and Mikron Industries, Inc. (“Mikron”) were not up-the-ladder contractors pursuant to KRS 342.610(2) and awarded Randy Medlin (“Medlin”) temporary total disability (“TTD”) benefits, permanent partial disability (“PPD”) benefits, and medical benefits to be paid by uninsured David O. Griffith D/B/A David Griffith Trucking.

On appeal, the UEF asserts Tryon and Mikron are both up-the-ladder contractors pursuant to KRS 342.610(2). Significantly, the UEF does not contend any other parties are up-the-ladder contractors. We affirm in part, vacate in part, and remand for additional findings.

 

 

          PROCEDURAL HISTORY

          The Form 101 alleges Medlin sustained the following work—related injuries on July 25, 2013, due to a motor vehicle accident (“MVA”) while driving a tractor-trailer: “Crush injury to left leg; Lacerations to right leg, right hand, right wrist, head, back, hips, right ear; hearing loss – left ear; fractured right cheekbone; severe blood loss; post-traumatic stress disorder.” The Form 101 alleges Medlin’s employers at the time of the MVA were: David O. Griffith d/b/a David Griffith Trucking, David O. Griffith d/b/a David Griffith Trucking, David E. Griffith d/b/a David Griffith Trucking, Orla L. Smith d/b/a O.L. Smith Trucking, and Tryon Trucking, Inc. Under the heading “Reason for Joinder,” the Form 101 contains the following explanation: “Plaintiff was operating a tractor owned by David E. Griffith and a semi-trailer owned by Orla L. Smith. Plaintiff was hauling a load pursuant to employer’s contract with Tryon Trucking. See KRS §§ 342.610(2) and 342.690.” The UEF was also named as a party.

 ALJ Wolff’s January 11, 2016, Interlocutory Opinion and Order, provides the following findings of fact:

"UP-THE-LADDER" STATORY [sic] EMPLOYER

KRS 342.690(1) provides,

     “If an employer secures payments of compensation as required by this chapter, the liability of such employer under this chapter shall be exclusive and in place of all other liability of such employer to the employee… For purposes of this section, the term “employer” shall include a “contractor” covered by KRS 342.610, whether or not the subcontractor has in fact, secured the payment of compensation.”

KRS 342.610(1) provides,

     “Every employer subject to this chapter shall be liable for compensation for injury, occupational disease, or death without regard to fault as a cause of the injury, occupational disease, or death.

(2) A contractor who subcontracts all or any part of a contract and his or her carrier shall be liable for the payment of compensation to employees of the subcontractor unless the subcontractor primarily liable for the payment of such compensation has secured the payment of compensation as provided for in this chapter… a person who contracts with another:

(a) To have work performed of kind which is a regular or recurrent part of the work of the trade, business, occupation, or profession of such person shall for the purposes of this section be deemed a contractor, and such other person a subcontractor.

     Together these two statutory provisions form the basis for what is known as “up-the-ladder” liability.

     To determine whether there is “up-the-ladder” liability at the time of Plaintiff’s MVA it must be shown the activity Plaintiff was performing when injured was a “regular or recurrent” part of the potential up-the-ladder employer’s business and that the potential employer, or a similar business, would use, or be expected to use, its own employees to perform the task Plaintiff was performing.

     Herein, the potential “up-the-ladder” employers are Tryon and/or Mikron.

     Determining whether a particular work activity is a ‘regular or recurrent’ part of a potential “up-the-ladder” employer’s business, and determining whether that activity is one the employer, or a similar employer, would be expected to use its employees to perform is a relative, not an absolute, determination. The issue is a mixed question of fact and law for the ALJ. General Electric Co. v. Cain, 236 S.W.3d 579 (Ky. 2007).

     “Recurrent” simply means occurring again or repeatedly. “Regular” generally means customary or normal, or happening at fixed intervals. However, neither term requires regularly or recurrence with the preciseness of a clock or calendar. General Electric v. Cain, supra.

     The facts and working relationships in this claim are almost identical to the facts and working relationships addressed in Commonwealth of Kentucky, Uninsured Employers Fund v. Howard Ritchie, et al, 2012-SC-000746-WC, March 20, 2004 [Unpublished]. This unpublished opinion is cited and reviewed for guidance not authority.

     Ritchie was employed as a cross-country, tractor-trailer truck driver for United, Inc. While hauling a load of goods cross country [sic], Ritchie was injured in an MVA. The goods Richie [sic] was transporting at the time of his MVA included a sign manufactured by Image Point, a manufacturer of signs.

     The proof showed Image Point contracted with Interchez to arrange for transportation of its signs. Interchez did not own trucks or other transportation modes. Instead [sic] it found independent shipping companies to haul loads on behalf of its clients. Image Point sent information to Interchez about what products it needed shipped and where they needed to go. After receiving such information, Interchez determined which of its carriers would carry the goods. Prior to contracting with Interchez, Image Point made arrangements for the shipment of its signs in-house. Image Point ever [sic] owned or operated delivery trucks or employed drivers to deliver its products.

     Ritchie filed for workers’ compensation benefits as an employee of United. United argued Ritchie was an independent contractor and therefore it did not, nor was it required to, provide workers’ compensation insurance for him.

     Finding United was Ritchie’s employer, that he was entitled to workers’ compensation benefits, and that United was uninsured at the time of his work-related MVA, ALJ Lawrence Smith wrote:

     “[t]he evidence of record shows that Image Point Inc. was in the business of making signs that had to be delivered to buyers. To do that it contracted with Interchez Logistics to provide transportation for the products that Image Point Inc. made. In turn, Interchez Logistics subcontracted with the defendant United, Inc. to haul the signs made by Image Point. As the UEF pointed out in its brief, both United Inc. and Interchez are in the business to ship products. Interchez made money by subcontracting work to United Inc. However, neither had workers’ compensation insurance. Singe Image Point Inc. did have insurance it comes within the definition of an up-the-ladder employer pursuant to KRS 342.610(2). Furthermore, from this ALJ’s review of the evidence, there is insufficient proof to find any other parties liable.”

     Image Point and Interchez appealed to the Workers’ Compensation Board. The Board affirmed Ritchie’s workers’ compensation award but reversed ALJ Smith’s determination Image Point and Interchez were up-the-ladder employers. The Board wrote:

     “We believe the ALJ erred in determining either Interchez or Image Point was subject to statutory liability pursuant to KRS 342.610(2). Interchez merely received electronic information from Image Point when it had product needed pick-up and deliver [sic]. Interchez provided no actual transportation service. Likewise, no evidence was introduced establishing Image Point was regularly involved in transportation services as a ‘regular and recurrent’ part of its business. In General Electric Company v. Cain, 236 S.W.3d 579, 586-587 (Ky. 2007), the Kentucky Supreme Court defined what is meant by the phrase “regular and recurring” as used in KRS 342.610(2)(b). The Court explained for purposes of KRS 342.610(2) governing workers’ compensation liability of contractors, “regular” means the type of work performed is a “customary, usual or normal” part of the trade, business, occupation, or profession of the contractor, including work assumed by contract or required by law, and “recurrent” means the work is repeated, though not with the preciseness of a clock.

     Image Point is a manufacture [sic] of goods. There is no evidence it was directly involved in shipping, other than to contact Interchez of (sic) the need for pick-up and delivery of a product it had manufactured. There is no evidence Image Point leased, owned, or operated any trucks for use in transportation or was physically responsible for the actual shipping and delivery of goods and merchandise other than through contracting a broker.”

     Interchez acted as an agent of Image Point, but was not engaged in the business of transporting products. Further, as is the case with Image Point, there is no evidence Interchez leased, owned or operated any trucks for use in transportation or was physically responsible for shipping and delivery of products. Similarly, there is no evidence establishing Interchez was subject to any guarantee, warranty, financial or legal liability, to or on behalf of, any of its patrons at any time concerning appointments arranged through its services. Rather, Interchez acted as an electronic and telephonic switchboard for posting, coordination, scheduling and exchange of information regarding the timetables for an availability of potential hauls by independent truckers and trucking, and, as in the case of Image Point companies needed goods and merchandise transported by truck to other businesses and localities. Interchez also acted as a conduit for price negotiation, payment processing, and money transfers between the seller of goods and trucks drivers and trucking companies who transport those goods.”

     The Board’s opinion was appealed to the Court of Appeals and was affirmed. The Court of Appeals’ opinion was appealed to the Supreme Court and the opinion was affirmed.

The Supreme Court wrote, in pertinent part,

“There is sufficient evidence in this matter that the shipment of signs manufactured by Image Point to its purchasers was a regular and recurring part of its business. Image Point informed Interchez of its shipping needs every 15 minutes each business day, indicating that Image Point frequently shipped its products. The shipment of products also was a part of contracts Image Point entered into with its customers. However, while shipping was regular and reoccurring, there is no evidence that Image Point, or a similar business, would use or be expected to use its own employees to perform that task. There is nothing in the record to indicate that Image Point ever owned a fleet of delivery trucks are [sic] employed individuals to transport its signs. While there is evidence that Image Point used to perform the same tasks in-house that Interchez now performs, no evidence exists to show that Image Point employees physically transported its goods to purchasers. Further, there is also no evidence that Interchez was ever equipped with the skilled manpower or tools to actually ship products. Interchez is only a conduit to connect manufacturers with shipping companies. We agree with the Court of Appeals that Interchez and Image Point are not Ritchie’s up-the-ladder employers.”

     No persuasive proof has been presented showing Mikron, or a similar business, would use, or be expected to use, its own employees to transport its manufactured product; nor has ample persuasive proof been presented showing Tryon, or a similar business, would use, or be expected to use, its employees to actually transport products.

     Based upon the above, it is determined neither Mikron nor Tryon can be deemed Plaintiff’s “up-the-ladder” statutory employer.

     There is a lack of evidence regarding Medallion’s relationship with David O., but based upon what evidence is available it can be assumed Medallion would be in much the same position and/or relationship with David O. as he was with Tryon. There is no justification to deem Medallion an employer or an “up-the-ladder” statutory employer of Plaintiff.

     It has been suggested Plaintiff could be considered an employee of Tryon, despite the applicable law otherwise, because the content of certain Tryon documents suggest Plaintiff was an employee of Tryon.

     It is noted there is no proof Plaintiff ever considered himself an employee of Tryon, nor is there any proof Tryon ever considered Plaintiff its employee, nor is there any proof any person or business entity ever relied on the content of any Tryon document to conclude Plaintiff was an employee of Tryon. Furthermore, for every one Tryon document which could be read to indicate Plaintiff was an employee of Tryon, there are probably more than ten Tryon documents which identify plaintiff as being a “Driver” rather than an employee.

     David O. prompted Plaintiff to apply to Tryon so as to qualify to drive David O’s trucks leased to Tryon. While going through this qualification process Tryon generated several documents Plaintiff was required to complete and which would seem to indicate Plaintiff was, or was seeking to be, a Tryon employee.

     Tyron’s [sic] VP Rother was asked about these Tryon documents, and, after indicating the particular document was unfortunately worded incorrectly, explained the forms were intended to confirm every drive who got behind the wheel of a truck leased to Tryon met all at DOT requirements.

     The few Tryon documents that could be read to indicate Plaintiff was an employee of Tryon are not of sufficient number or persuasiveness to out-weigh the many more documents, and the relevant testimony, indicating Plaintiff was a Driver who had been approved to drive trucks leased to it.

     The above determinations render all pending motions that have not been addressed, moot.

          The UEF filed a petition for reconsideration that was overruled by ALJ Wolff in an undated order issued in April 2016. 

          The June 12, 2017, Benefit Review Conference (“BRC”) Order and Memorandum specifies the following contested issues: benefits per KRS 342.730 (including three multiplier), average weekly wage (pre-injury and post-injury), unpaid or contested medical expenses, TTD (July 25, 2013 – March 31, 2014), vocational rehabilitation, jurisdiction, employer relationship, independent contractor, KRS 342.610 (up-the-ladder), and loaned servant doctrine. The BRC Order indicates $121,089.00 of medical expenses have been paid by the UEF. TTD benefits were not paid.

          In the October 30, 2017, Order and Award, ALJ Dye specifically found:

(1) Medlin was not an independent contractor; (2) David O. Griffith employed Medlin on the injury date; (3) Medlin did not have an ‘up-the-ladder’ employer; and (4) the loaned servant doctrine, as between David O. Griffith and Tryon, was inapplicable.

          ALJ Dye determined that, pursuant to Bowerman v. Black Equip. Co., 297 S.W.3d 859 (Ky. App. 2009), there is no new evidence, fraud, or mistake that would compel him to change ALJ Wolff’s findings regarding the alleged up-the-ladder liability of Tryon and Mikron.

          ALJ Dye further determined Medlin’s average weekly wage (“AWW”) and awarded TTD benefits. ALJ Dye found Medlin had a combined 30% permanent impairment rating as a result of the MVA. ALJ Dye concluded Medlin was now earning a post-AWW greater than his pre-AWW. However, ALJ Dye enhanced Medlin’s benefits by the three multiplier set forth in KRS 342.730(1)(c)1. ALJ Dye awarded medical benefits. He also found an insurance policy purchased by David O. Griffith (“David O.”) through Medallion did not provide workers’ compensation coverage as the policy stated it was not workers’ compensation insurance. ALJ Dye awarded TTD and PPD benefits to be paid by David O. Griffith Trucking Company. If David O. Griffith Trucking Company failed to initiate payments in accordance with the award, within thirty days following finality, Medlin was to file a motion requesting an order from the ALJ for payment of benefits by the UEF in accordance with KRS 342.760.   

          The UEF, David O., David E. Griffith (“David E.”), Tryon, and Medlin filed petitions for reconsideration. Significant to this appeal, in the November 27, 2017, Order ruling on the petitions for reconsideration, ALJ Dye granted the petitions for reconsideration of David O. and David E. to the extent he amended his decision to reflect David O. employed Medlin and is liable for the income and medical benefits. In doing so, ALJ Dye noted ALJ Wolff found David O. employed Medlin on the date of injury. Thus, the finding “David O. Griffith Trucking Company” was the employer at the time of the accident was a patent error.

          ALJ Dye denied the petitions for reconsideration of the UEF and Tryon. ALJ Dye granted Medlin’s petition for reconsideration so that the UEF was immediately liable for Medlin’s income and medical benefits since David O. had not secured workers’ compensation coverage and had entered bankruptcy proceedings. Accordingly, paragraph five of the award was amended to reflect as follows:

David O. Griffith failed to comply with KRS 342.340, and the Uninsured Employers’ Fund was joined as a party. David O. Griffith has entered bankruptcy proceeds, and the UEF is liable for the awarded TTD, PPD, and medical, benefits. The UEF Fund shall be subrogated to all rights of Medlin against David O. Griffith for benefits paid herein.

          ALJ Dye also amended his decision to reflect Medlin’s award is not subject to the 1996 version of KRS 342.730(4), but is subject to the tier-down provisions of KRS 342.730(4) enacted in 1994.

ANALYSIS

KRS 342.610(2) states in relevant part:

A contractor who subcontracts all or any part of a contract and his or her carrier shall be liable for the payment of compensation to the employees of the subcontractor unless the subcontractor primarily liable for the payment of such compensation has secured the payment of compensation as provided for in this chapter. Any contractor- or his or her carrier who shall become liable for such compensation may recover the amount of such compensation paid and necessary expenses from the subcontractor primarily liable therefore. A person who contracts with another:

....

(b) To have work performed of a kind which is a regular or recurrent part of the work of the trade, business, occupation, or profession of such person shall for the purposes of this section be deemed a contractor, and such other person a subcontractor.

          To be liable for Medlin’s work injuries as up-the-ladder employers, KRS 342.610(2) mandates Tryon and Mikron must have contracted with Medlin’s employer, David O., to have work performed of a kind which is a regular and recurrent part of their trade, business, occupation, and profession. In General Elec. Co. v. Cain, 236 S.W.3d 579, 586, 587, 588 (Ky. 2007), the Kentucky Supreme Court defined what constitutes a regular or recurrent part of the work of the trade, business, occupation, or profession as follows:

     In Daniels, 933 S.W.2d at 824, the Court of Appeals also formulated definitions of “regular” and “recurrent,” viz.:

 

     “Recurrent” simply means occurring again or repeatedly. “Regular” generally means customary or normal, or happening at fixed intervals. However, neither term requires regularity or recurrence with the preciseness of a clock or calendar.

     Thus, the court construed “regular” to apply not only to the nature of the owner's business but to the frequency of the occurrence of a need to perform the work in question. As so defined, “regular” and “recurrent” are almost redundant.

     Webster's New College Dictionary 928 (1995), defines “recurrent” as “occurring or appearing again or repeatedly,” which would apply to, e.g., routine maintenance. It defines “regular” as “customary, usual or normal.” Webster's, supra, at 934. Therefore, as used in KRS 342.610(2)(b), “regular” means that the type of work performed is a “customary, usual or normal” part of the premises owner's “trade, business, occupation, or profession,” including work assumed by contract or required by law. “Recurrent” means that the work is repeated, though not “with the preciseness of a clock.” Daniels, 933 S.W.2d at 824.

...

     The treatise notes that, “with a surprising degree of harmony,” the courts agree on a general rule of thumb that a statute deeming a contractor to be an employer “covers all situations in which work is accomplished which this employer, or employers in a similar business, would ordinarily do through employees.” Larson's, supra, at § 70.06[1].

D. CONCLUSION

     Work of a kind that is a “regular or recurrent part of the work of the trade, business, occupation, or profession” of an owner does not mean work that is beneficial or incidental to the owner's business or that is necessary to enable the owner to continue in business, improve or expand its business, or remain or become more competitive in the market. Larson's, supra, at § 70.06[10]. It is work that is customary, usual, or normal to the particular business (including work assumed by contract or required by law) or work that the business repeats with some degree of regularity, and it is of a kind that the business or similar businesses would normally perform or be expected to perform with employees.

(emphasis added.)

          Pertinent to the issue on appeal is the October 24, 2014, deposition of Karl Rother (“Rother”), Vice President of Tryon. Regarding Tryon’s employees and the nature of the work they perform, Rother testified:

Q: Do you know how many – well, I’ll be specific. Does it have employees who are drivers?

 

A: No.

 

Q: Does it have employees that are mechanics or work with the trucks or trailers?

 

A: No.

 

Q: Are most – then I’m trying to understand. Most of the people that are involved with Tryon are involved with dispatching and office and other administrative aspects of the business?

 

A: Correct.

 

Q: All right. Any other areas that you have employees involved?

 

A: No.

          Rother addressed the services Tryon, as a corporation, offers:

Well, again, as a motor carrier, we’re providing the liability in case there’s an accident and someone were found at fault.

 

There’s cargo insurance to protect the load. There’s making sure that the drivers have met the DOT requirements.

 

Our resources would be to support the agents, handle some of the customers.

              …

Q: Okay. Now, does Tryon itself own trucks?

A: No.

Q: Okay. And I mean tractors or trailers?

 

A: No.

 

Rother offered testimony concerning Exhibit 12, the lease agreement between Tryon and David O.:

Q: Now, this is the agreement you reached with David O. Griffith. And again, I think we already said it’s been signed in June of 2013 and would have been [sic] effect at the time that this accident occurred.

 

What is the equipment you’re referring to as part of the equipment and service agreement?

 

A: The equipment would be the tractor and the trailer that they are presenting to be leased.

 

Q: Okay. And so what you’re doing is leasing the tractor and trailer, right?

 

A: Yes.

 

Q: Does this agreement anywhere require – Tryon would be identified in this document as the carrier; is that correct?

 

A: Yes.

 

Q: And in this case Mr. Griffith is the independent contractor?

 

A: Yes.

Q: All right. Beyond providing you with the tractor, what else has he given you as part of this agreement? What service does he give?

A: I’m not sure if I understand.

Q: Well, it says equipment and service agreement. I understand what the equipment is now. What’s the service?

 

A: Well, that he’s going to present that vehicle to us, that he’s going to properly maintain it.

 

And during the time that he’s working for us he’ll be paid 75 percent of the trip revenues, and that we’ll [sic] providing the liability insurance, and he will be providing to us a piece of equipment and a driver that’s going [sic] meet all the DOT requirements.

Rother testified Medlin was not required to report to Tryon after completing his haul:

Q: All right. By the way, once he dropped the load, was he responsible for calling Tryon to determine whether it was going to be a deadhead or whether he was going [sic] pick up a load while there?

 

A: My understanding is that Randy Medlin would get the load from David Griffith. And when that load was completed, he would call David Griffith. And if David Griffith reloaded him, that’s how he would come back.

 

Q: So he had no responsibilities necessarily – while he might deal with Tryon, it wasn’t mandated. He didn’t have to call Tryon once he completed a load?

A: He would have done everything directly with his owner.

Rother testified Medlin was, however, required to undergo orientation through Tryon:

A: Well, we’re talking about Randy Medlin’s orientation with what he’s required to do from a DOT standpoint while the truck was leased onto Tryon Trucking.

 

…

 

The process is if there’s someone who is going to be driving the truck and it’s a new person, they have to go through an orientation.

Rother identified O.L. Smith (“Smith”) as Tryon’s agent in Kentucky at the time of Medlin’s MVA.[1]

Q: What does it mean to be an agent of record?

 

A: Well, basically he would represent Tryon Trucking to his group of customers being Micron [sic].

 

Q: Okay. In other words, your contact with customers does Tryon go out and solicit customers within Kentucky on its own?

 

A: The general process is we go out and find an agent that will represent Tryon Trucking. We’re hoping that he has the initial relationship with the customer.

 

Q: Okay. Sure.

 

A: And then we collectively work to maintain that.

 

Q: I’m just trying to understand what did you offer that Mr. Smith doesn’t already have?

 

A:  Well, Mr. Smith was not a motor carrier, so he didn’t have the liability insurance coverage. He didn’t have authority, but he had a relationship with the customer.

…

Q: I understand from your testimony today that O.L. Smith who was the Tryon agent at the time of this accident; is that correct?

 

A: Yes.

 

Q: O.L. Smith is responsible for bringing in the client who is Micron [sic]?

 

A: Yes.

 

Q: He is the reason there was a load to drive that day?

 

A: Yes

 

Q: When O.L. Smith – Micron [sic] contacts O.L. Smith and says I want to do a load out of Richmond, Kentucky, does O.L. Smith have the absolute authority to choose whatever driver he wants to use presuming it’s a qualified driver?

 

A: Yes.

 

Q: And then David O. Griffith with whom you had an owner/operator contract with at the time of the incident; is that correct?

A: Yes.

 

Q: David O. could have then driven the load himself, could he not?

 

A: That’s correct.

Q: Could he have given it to somebody else other than Randy Medlin?

 

A: Yes, he could have.

 

Q: Did he have any obligation to give jobs to Randy Medlin?

 

A: No.

 

Q: Did O.L. Smith have any obligation to give jobs to David O.?

 

A: No.

 

Q: Did Micron [sic] have any obligation to give business to O.L. Smith to your knowledge?

 

A: No.

 

Regarding the benefit Tryon derived from the load Medlin hauled while in the employ of David O., Rother testified as follows:

Q: The loads that Randy hauled for Micron [sic], did Tryon make something off the deal?

 

A: Certainly.

 

Q: Okay. In other words, you’re contracting with people so that you can make money off of interstate transportation. And, God knows, that’s what keeps us all alive, but you’re in the business of making sure that loads get from one place to another interstate –

 

A: Yes.

 

Q: - under your license and you want it done right, and you contract with a number of people to do it, is that fair?

 

A: Yes.

 

Q: Okay. And the idea is so that you can make money and they can make money?

 

A: Yes.

 

Q: Okay. And that is what Tryon is all about is regular and recurrent from them, that’s what you do for your business?

 

A: For 50 years.

Smith was deposed on December 10, 2014. At the time of Medlin’s accident, Smith found loads for Tryon. His son, David E., his grandson, David O., and David O.’s wife helped with the dispatching. Smith owned the trailer Medlin was hauling at the time of the MVA. Smith testified the trailer was not leased to Tryon. “I’ve never had none [sic] of my trailers signed on to Tyron [sic].” Smith received an eight percent commission per load from Tryon, and he gave four percent to his son, David E. 

David E. was deposed on December 10, 2014. At the time of Medlin’s MVA, David E. worked for his father, as a dispatcher and coordinator. He explained his job as follows:

Q: Okay. Around July 2013 if you could walk me through a typical start to finish process on how a load would be procured and then the process of a load would be procured and then the process of coordinating a load for transportation?

A: Okay well, uh, you have a customer such as in, I noticed in Mr. Rothers’ thing that you guys used Mikron a lot and so I’ll just stick with that, Mikron Corporation, would call our office. They would say I need a truck at such and such a time to go to wherever, Texas, Ohio whatever the case may be and then I would go down my list of available trucks, call those drivers, whoever was up first and dispatch the load out. Now, and that was pretty much the way that would go and I would, you’d just go down your list and then tell whoever what you had available.

 

Q: This list was, what was David O’s involvement? In order words was he just another driver on the list?

 

A: Yes he was just another driver on the list.

 

Q: Did you have other drivers on the list that were not connected to David O. or his trucking?

 

A: Yeah, yeah.

 

Q: When you dispatched a load tell me about how you knew which truck or trailer would be utilized?

 

A: Uh, in most circumstances the owner/operators of course when they lease on they [sic] lease [sic] on [sic] a truck and a trailer so naturally they take their trailer. In this particular instance it was a van load and we took a van trailer at [sic] that belonged to my father.

 

Q: Did you ever have to, and as the business model existed at that time, did you ever [sic] a driver to drive and then also have to provide your own truck or trailer?

 

A: Only in the circumstances were [sic] they worked for me.

 

Q: Okay. You or O.L.?

 

A: Well maybe I misunderstood the question but I thought she was asking if I had to utilize a driver in somebody else’s truck. Is that what you were asking?

 

Q: That is what I was asking.

A: Not usually most of the time it was everybody and Mr. Medlin had an assigned truck.

 

Q: And when you said drivers who drove for you what do you mean by that as opposed to other drivers?

 

A: Well, in my trucks, my three trucks that I mentioned. Each one of them had an assigned driver.

 

Q: Okay so those assigned drivers, let’s say if you’re running three trucks that would be three assigned drivers and those drivers would simply be on your list?

 

A: Right.

Q: And the truck and the trailers, the three that were your’s [sic], were those leased to any other individual or company?

 

A: No just Tryon.

 

Q: Did you enter into a separate contract with Tyron [sic] Trucking aside from David O.’s contract with Tryon Trucking?

A: Right each truck had it’s [sic] own lease agreement.

 

…

Q: Okay. Now you said that you mostly dispatched.

 

A: Yes ma’am.

 

Q: And that would involve you going down the list and contacting a driver and saying I have a load?

 

A: I have a load.

Q: Uh, you mentioned Mikron who, you know was the customer of the client on that date. Did you have numerous different clients?

 

A: Well there was [sic] three or four others yeah.

Q: Three or four others so basically you had about four or five repeat type clients?

 

A: Yeah.

 

Q: And Mikron was one of them?

 

A: They was [sic] one of our biggest at that time yeah.

 

Q: And if one of your clients had a load they would call either you or O.L. to get the process started?

 

A: Yes ma’am.

At the time of Medlin’s MVA, Tryon was the only motor carrier with which David E. and his father worked.

David E. was asked about the purpose behind using a motor carrier such as Tryon:

A: Uh, rights and authority, insurances, uh, road, DOT rules and regs. There’s several different reasons.

David E. provided the following concerning the qualifications of the drivers who drove for Tryon:

Q: Okay do you remember any discussions during those conversations about what drivers were to work for Tyron [sic] or work on Tyron [sic] loads, what standards has [sic] to be met or what with regard to the drivers had to be met? In other words do you remember conversations concerning, you know, the drivers?

 

A: They have a minimum requirement standard you know, a CDL, no tickets, I mean I think they have a tolerance for even tickets but basically you’ve just got to be [sic] a clean record, no drugs, alcohol and things of that sort. And so much experience, I don’t know, that’s changed over, you know, different companies.

 

Q: So the drivers had to be approved by Tyron [sic]?

 

A: Yeah.

Q: And did they, did Tyron [sic], did Tyron [sic] depend upon you to make sure that they met those standards or did they make an independent determination?

A: I would always just give them the application that I sent straight to Tyron [sic] which at that point it was just in the process.

David E. described an agent’s job in relation to Tryon:

A: An agency’s [sic] job is to solicit freight, uh, acquire trucks such as owner/operators or whatever to handle that business.

 

Q: Okay do they do anything else other than get freight and trying to get somebody to haul it?

 

A: Right.

 

Q: That’s all they do?

 

A: That’s pretty much yes.

Q: Okay. And your dad you said he was the agent for Tyron [sic] at the time of this accident?

 

A: At the time of the accident yes sir.

…

 

Q: Okay and tell me how that would work and let me back up and ask the question this way. And I believe I know what we’re doing here but I want to make sure I understand. You would solicit or somebody would contact with a load correct?

 

A: Yeah.

 

Q: Alright and then what you would do would see if you had a driver for that load.

 

A: For that load.

Q: On your list.

 

A: Yeah.

 

Q: Now is everyone on your list a Tyron [sic] leased truck?

 

A: At this particular –

 

Q: Or at that time of the accident?

 

A: At that time yes sir.

 

Q: Okay. So when a load came in it was going to be put on a Tyron [sic] truck?

 

A: Yes sir.

 

Q: If there was another carrier or somebody else that wanted a load hauled or I’m sorry let me ask the question this way. There was [sic] no other carriers that you dealt with at that time other than Tyron [sic] since everybody on your list was Tyron [sic]?

 

A: Right.

 

Q: And your drivers, since their vehicles were leased to Tyron, couldn’t haul any other carrier’s load other than a Tyron [sic] load otherwise they would be in violation of their lease then correct?

 

A: Right.

 

Q: Alright. Now with that background in my mind the, once you got the load and you got delivery, the money from the load would go to Tyron [sic] correct?

A: From the customer.

 

Q: From the customer.

 

A: To Tyron [sic] yeah.

Q: Okay and then Tyron would send the money where?

 

A: They, they distributed it, they distributed it as per the contract to whatever the owner/operator made and whatever the agent made.

 

Q: Okay.

 

A: Okay that would be distributed amongst whoever was concerned with that load.

 

Q: Okay so they would, do I understand this then, they would pay the owner/operator so much and then they would pay you and O.L. a commission?

 

A: Pay O.L. yeah.

David E. acknowledged that he and his father acted as a broker.

Q: And that’s what Mr. Smith was was [sic] a broker. He would get a load and broker it out but in this case you can only put it on one type of truck.

 

A: Because that was the company that we represented yes.

 

Q: That was the company that you had to get the loads for.

 

A: Right.

 

Q: Now that company were they to provide all of the insurance coverages and paperwork you were suppose to have or what was the agreement?

 

A: The agreement was that they had right of authority and the liability insurance to cover the trucks and the freight, the cargo insurance.

Q: Alright.

 

A: And the DOT numbers like we expressed, the permits.

 

Q: Okay.

 

A: The licensing.

 

David O. was deposed on December 10, 2014. David O. is David E.’s son and Smith’s grandson. He testified that at the time of Medlin’s MVA, David E. was the owner of the truck leased to Tryon, but he was in the process of buying it from his father. David O. drove exclusively for Tryon at the time of Medlin’s accident, and he considers himself an independent contractor of Tryon. “That’s what’s on the lease agreement yes ma’am.” He testified once vehicles are leased to Tryon, those vehicles cannot be used to haul any other company’s freight unless it’s approved by Tryon.

Regarding the circumstances surrounding Medlin driving for him, David O. testified:

I’ve known Randy for a few years. We was [sic] in the fire service together. I knew he owned a truck before and he was needing some extra money because he was doing some strip mining or some kind of mining work and it was slow and I let him know that I just, I’m trying to buy a truck off of my father and he kind [sic] just made the minimum requirements for Tyron [sic] so we come [sic] over and I got him an application from Tyron [sic] and it went from there.

The payment arrangement between he and Medlin was that Medlin would be paid 25% of the amount David O. earned for the load.

The record contains the July 2, 2015, deposition of Lorijean Withrow (“Withrow”), Director of Logistics and Inventory at Mikron. Concerning the nature of Mikron’s business, she testified:

Q: Okay. I take it shipping is a very important part of Mikron’s business plan, for lack of a better term.

 

A: Well, I mean, we’re a manufacturer. That’s our core competency. We outsource that process because it’s not our core competency.

 

Q: But I mean, shipping is something that Mikron has always done during its entire time, that it ships from its plants to the various – well, does it ship to distributors or – back up. Let me ask this way. I’m sorry. What does Mikron sell?

 

A: We sell engineered windows and door components.

 

Q: That’s true for the Richmond plant, also?

 

A: Correct, uh-huh.

 

…

 

Q: How many of your customers require that you ship it?

 

A: None of them require it. It’s part of – it depends on the size of the customer itself. If it’s a full truckload, we’ll pay the freight. It’s really optional to the customer in some cases. It will be a will-call load. They may have their own fleets and actually pick up the load.

 

Q: How much of Richmond’s time is spent shipping? It sounds like a lot.

 

A: Well, we outsource the shipping aspect.

 

Q: I didn’t ask that. How much are you dependent upon somebody handling the shipping?

 

A: We depend on our internal staff to pick, pack, and load the truck based on the customer order. So that’s a day-to-day –

Q: But every day you’re shipping out of that plant?

 

A: Five days out of the week, yes.

…

 

Q: Would you say in 90- percent of the cases, you’re shipping it – sorry. I keep – I don’t mean to say that you, Mikron, are shipping it. Are 90 percent of the orders you fill ones that are shipped from the plant?

 

A: I would say 90 percent of the time – 90 to 95 percent of the time, the contracted carrier is taking the load.

 

Q: Okay. The contracted carrier you’re speaking of is one that has a contract with Mikron?

A: Correct.

Q: Okay. Somebody that you’re paying to ship it?

 

A: Correct.

 

Q: And that recurs from day-to-day?

 

A: Correct.

Withrow testified Mikron does not have a fleet of trucks, and all of its shipping is outsourced.

Attached as an exhibit to Withrow’s, Rother’s, and David E.’s depositions is the lease agreement between Tryon and David O. titled “Equipment and Service Agreement between Independent Contractor and Carrier” and dated June 27, 2013.

Despite the UEF’s representations to the contrary, the case of Com., Uninsured Employers’ Fund v. Ritchie, 2012-SC-00746-WC, rendered March 20, 2014, (Designated Not To Be Published), is indeed instructive here with respect to both its similarities and distinctions. Ritchie was a truck driver for United, Inc. and was hauling a load that included a sign manufactured by Image Point. Image Point had contracted with Interchez to arrange for delivery of the sign. In an opinion upholding the Board’s reversal of the decision finding Interchez and Image Point had up-the-ladder liability, the Supreme Court described the roles of Image Point and Interchez as follows:

Image Point contracted with Interchez to arrange for the delivery of its goods. Interchez does not itself own any trucks or other transportation modes. Instead it found independent shipping companies to haul loads on behalf of its clients. Image Point electronically sent information to Interchez every fifteen seconds about what products it needed shipped and where they needed to be sent. After receiving the information, Interchez organized the data and determined which transportation mode best fit the product to be shipped. Interchez allowed carriers to bid on the specific shipment and then selected the bidder who won the contract to ship the goods. After completion of the shipment, Interchez paid the carrier and then billed Image Point. Prior to contracting with Interchez, Image Point arranged for the transportation of its goods in-house. There is no evidence that Image Point ever owned a delivery truck or employed anyone to deliver its products.

Slip Op. at 1.

          The Supreme Court ultimately concluded as follows:

There is sufficient evidence in this matter that the shipment of signs manufactured by Image Point to its purchasers was a regular and recurring part of its business. Image Point informed Interchez of its shipping needs every fifteen minutes each business day, indicating that Image Point frequently shipped its products. The shipment of products also was a part of the contracts Image Point entered into with its customers. However, while shipping was regular and recurring, there is no evidence that Image Point, or a similar business, would use or be expected to use its own employees to perform that task. There is nothing in the record to indicate that Image Point ever owned a fleet of delivery trucks or employed individuals to transport its signs. While there is evidence that Image Point used to perform the same tasks inhouse that Interchez now performs, no evidence exists to show that Image Point employees physically transported its goods to purchasers. Further, there is also no evidence that Interchez was ever equipped with the skilled manpower or tools to actually ship products. Interchez is only a conduit to connect manufacturers with shipping companies. We agree with the Court of Appeals that Interchez and Image Point are not Ritchie's up-the-ladder employers.

Slip Op. 4. (emphasis added.)

          In the case sub judice, Mikron, like Image Point, is a manufacturer of goods. As held by the Supreme Court in Ritchie, “while shipping was regular and recurring, there is no evidence that Image Point, or a similar business, would use or be expected to use its own employees to perform that task.” Id. Withrow, Mikron’s designated representative, testified Mikron does not own trucks, and all of its shipping is outsourced. As substantial evidence supports ALJ Wolff’s interlocutory determination, adopted by ALJ Dye, that Mikron was not an up-the-ladder employer of Medlin at the time of his accident, we affirm.

          That said, there are several distinctions between Ritchie and the case sub judice with respect to Tryon that were not considered by ALJ Wolff or ALJ Dye. While this Board is not a fact-finding tribunal, we feel compelled to address the most significant distinctions.

          In Ritchie, Interchez acted as “a conduit to connect manufacturers with shipping companies.” Id. It served “as an electronic and telephonic switchboard for the posting, coordination, scheduling and exchange of information regarding the timetables for an availability of potential hauls.” Id. at 2. In the case sub judice, the testimony of Smith and David E. establish they, collectively acting as Tryon’s agent, were the ones to coordinate and dispatch hauls. They acted as a “broker” between customers such as Mikron and the motor carrier Tryon. 

          In Ritchie, “there is no evidence Interchez leased, owned or operated any trucks for us in transportation or was physically responsible for the shipping and delivery of products.” Id. In the case sub judice, the deposition testimony of Rother, David E., and David O. indicate Tryon leased trucks. The lease agreement for the truck Medlin drove at the time of his accident is in the record.

          An ALJ may reverse a dispositive interlocutory factual finding on the merits in the event of new evidence, fraud, or mistake. ALJ Wolff’s declaration in the January 11, 2016, Interlocutory Opinion and Order that “[t]he facts and working relationships in this claim are almost identical to the facts and working relationships” in Ritchie is a mistake of fact with respect to Tryon that compels a second look by ALJ Dye. See Bowerman v. Black Equipment, 287 S.W.3d 858 (Ky. App. 2009). On remand, ALJ Dye must fully address the distinctions between Ritchie and the case sub judice with respect to Tryon in the context of a renewed analysis of Tryon’s up-the-ladder liability pursuant to KRS 342.610(2). In doing so, should ALJ Dye determine Tryon is an up-the-ladder contractor pursuant to KRS 342.610(2), ALJ Dye shall issue the appropriate amended order and award.

          Finally, it is important to state that, in the January 11, 2016, Interlocutory Opinion and Order, ALJ Wolff prematurely dismissed all parties except for the UEF and David O. We vacate those portions of ALJ Wolff’s January 11, 2016, Interlocutory Opinion and Order dismissing Tryon as a party.[2]

          Accordingly, those portions of the January 11, 2016, Interlocutory Opinion and Order and the undated Order overruling the UEF’s petition for reconsideration of ALJ Wolff and the October 30, 2017, Order and Award and November 27, 2017, Order adopting ALJ Wolff’s finding Mikron is not an up-the-ladder contractor pursuant to KRS 342.610(2) are AFFIRMED. Those portions of the January 11, 2016, Interlocutory Opinion and Order and the undated Order overruling the UEF’s petition for reconsideration and the October 30, 2017, Order and Award and November 27, 2017, Order of ALJ Dye adopting ALJ Wolff’s finding Tryon is not an up-the-ladder contractor pursuant to KRS 342.610(2) and dismissing Tryon as a party are VACATED. This claim is REMANDED to ALJ Dye for additional findings in accordance with the views expressed herein. On remand, should ALJ Dye determine Tryon is an up-the-ladder contractor pursuant to KRS 342.610(2), ALJ Dye shall enter the appropriate amended order and award finding Tryon liable for income and medical benefits and reimbursement to the UEF of all past work-related medical expenses and other medical benefits paid.

          ALL CONCUR.

COUNSEL FOR PETITIONER/

UNINSURED EMPLOYERS’ FUND:

 

HON CD BATSON

UNINSURED EMPLOYERS’ FUND

1024 CAPITAL CENTER DR STE 200
FRANKFORT KY 40601

 

COUNSEL FOR RESPONDENT/

TRYON TRUCKING, INC.:

 

HON JOEL AUBREY

HON KELLEY D GRAY

303 N HURSTBOURNE PKWY STE 110
LOUISVILLE KY 40222

 

COUNSEL FOR RESPONDENT/

RANDY MEDLIN:

 

HON JOHN F KELLEY JR

P O BOX 3199
LONDON KY 40743

 

COUNSEL FOR RESPONDENT/

DAVID O. GRIFFITH:

 

HON JAMES RIDINGS

120 N MAIN ST
LONDON KY 40741

 

COUNSEL FOR RESPONDENT/

ORLA L. SMITH d/b/a

O.L. SMITH TRUCKING:

 

HON DAVID HOWARD

216 E FOURTH ST
LONDON KY 40741

COUNSEL FOR RESPONDENT:

 

HON ROBERT E STOPHER

HON PETER J GLAUBER

400 W MARKET ST STE 2300
LOUISVILLE KY 40202

 

COUNSEL FOR RESPONDENT/

MIKRON INDUSTRIES INC.

 

HON KIMBERLY VAN DER HEIDEN

P O BOX 55
CARLISLE KY 40311

 

COUNSEL FOR RESPONDENT:

 

HON LUCAS BRAUN

P O BOX 951
LEXINGTON KY 40588

 

COUNSEL FOR RESPONDENT:

 

HON MICHELE MCGILL

810 CRESCENT CENTRE DR STE 160
FRANKLIN TN 37067

 

ADMINISTRATIVE LAW JUDGE:

 

HON BRENT DYE

ADMINISTRATIVE LAW JUDGE

657 CHAMBERLIN AVE

FRANKFORT KY 40601