Daniel Milbauer vs. Erez Boostan

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WORKERS’ COMPENSATION APPEALS BOARD 1 2 STATE OF CALIFORNIA 3 4 Case No. LAO 0722567 DANIEL MILBAUER, 5 6 Applicant, 7 vs. 8 9 OPINION AND DECISION AFTER RECONSIDERATION (EN BANC) EREZ BOOSTAN, an individual and dba AMERICAN RUNNER ATTORNEY SERVICE, uninsured; and UNINSURED EMPLOYERS FUND, 10 Defendants. 11 12 On June 24, 2003, the Appeals Board granted reconsideration on its own motion pursuant 13 to Labor Code section 5900(b), with respect to the Supplemental Findings and Award of May 8, 14 2003.1 In that decision, the workers’ compensation administrative law judge (WCJ) found that the 15 applicant, while employed on October 17, 1994, by “Erez Boostan, an individual and dba 16 American Runner Attorney Service,” uninsured for workers’ compensation, sustained industrial 17 injuries to his back and upper and lower extremities, causing 66-1/4% permanent disability and a 18 need for further medical treatment. 19 The Uninsured Employers Fund (UEF), through its attorney of record,2 filed an untimely 20 petition for reconsideration raising an important jurisdictional issue in challenging the WCJ’s 21 decision. UEF contends that the WCJ incorrectly identified the employer, asserting that the 22 employer should have been identified as “American Runner Attorney Service, Inc., a corporation.” 23 UEF argues that because the correctly named corporation was not properly served as required by 24 1 25 We granted reconsideration on our own motion because the untimely petition for reconsideration of UEF presented important issues for which guidance is needed in the workers’ compensation community. 2 26 27 The Director of Industrial Relations enforces the provisions relating to UEF. (Lab. Code, §3710.) Attorneys with the Office of the Director, Legal Unit, represent the Director and UEF in proceedings before the Workers’ Compensation Appeals Board (“WCAB”). (Lab. Code, §3716.1.) For convenience, we will refer to both UEF and the Office of the Director, Legal Unit, as “UEF.” 1 Labor Code section 3716(d) and Yant v. Snyder & Dickerson (1982) 47 Cal. Comp. Cases 254 2 (Appeals Board en banc decision), there is no jurisdiction over the correct employer and no 3 jurisdiction over UEF.3 4 Because of the important legal issue presented, and in order to secure uniformity of 5 decision in the future, the Chairman of the Appeals Board, upon a majority vote of the members, 6 assigned this case to the Appeals Board as a whole for an en banc decision. (Lab. Code §115.)4 7 First, we conclude in this case that UEF’s petition for reconsideration regarding the correct 8 legal identity of the employer is without merit because the correct legal identity of the employer as 9 found by the WCJ in her decision served May 8, 2003, is supported by substantial evidence and 10 because UEF has offered no contrary evidence (either at trial or on reconsideration). 11 Second, we conclude that following the filing of an Application for Adjudication of Claim 12 (“application”), and as soon as an applicant determines that the employer is or may be uninsured 13 and has made a good faith effort to determine the correct legal identity of the employer, UEF may 14 be ordered to appear provisionally at proceedings and ordered to assist in determining the correct 15 legal identity of the employer pursuant to section 3716(d)(4). We announce several procedures 16 intended to obtain the early and active participation of UEF when either the employee has difficulty 17 in establishing the correct legal identity of the employer after good faith efforts, or when UEF 18 objects to the correct legal identity of the employer as asserted by the employee. BACKGROUND 19 20 Sustaining an industrial injury can be a terrible experience, but discovering that the 21 employer is uninsured makes that situation worse. The employee’s problems ought not to be 22 compounded further when his or her numerous attempts to determine the correct legal identity of 23 the uninsured employer are merely challenged by UEF without any efforts by UEF to determine or 24 assist in determining the correct legal identity at the earliest opportunity. The reality of this 25 3 26 4 27 All further statutory references are to the Labor Code. The Appeals Board’s en banc decisions are binding precedent on all Appeals Board panels and WCJs. (Cal. Code Regs., tit. 8, §10341; Gee v. Workers’ Comp. Appeals Board (2002) 96 Cal.App.4th 1418, 1425, fn. 6 [67 Cal. Comp. Cases 236, 239, fn. 6].) MILBAUER, Daniel 2 1 problem is plainly visible in the instant case by the eight and one-half years it has been pending on 2 the sole issue of the legal identity of the employer of applicant, who sustained a very serious 3 industrial injury on October 17, 1994. It appears no benefits have been paid to date. 4 In this case, applicant sustained a serious industrial injury to various parts of his body on 5 October 17, 1994, as a messenger/courier. He testified that he was riding a motorcycle, traveling 6 65 miles an hour, when a vehicle struck him. His employer was allegedly uninsured for workers’ 7 compensation. 8 As acknowledged by UEF in its petition for reconsideration, from the commencement of 9 proceedings there has been confusion as to the correct legal identity of the applicant’s employer at 10 the time of his injury. It appears that UEF has done little to alleviate that confusion, although UEF 11 has been an active participant in these proceedings since at least 1996. 12 In December of 1994, applicant filed an application in which he identified his employer as 13 “Erez Boostan, dba American Runner Attorney Service & Courier Network, Inc.” An amended 14 application named “Erez Boostan as an individual and substantial shareholder of American Runner 15 Attorney Service & Courier Network.” UEF was also named as a defendant in the amended 16 application. 17 On August 8, 1995, applicant served a Special Notice of Lawsuit on his alleged employer 18 identified as “Erez Boostan as an individual and substantial shareholder of American Runner 19 Attorney Service and Courier.” In October of 1995, UEF was served with this Notice, together 20 with a Declaration of Readiness (DOR). The DOR stated that the “Board’s assistance is required 21 to obtain jurisdiction over the uninsured employer and joinder of Uninsured Employers Fund.” 22 On October 17, 1996, UEF appeared by counsel at a Mandatory Settlement Conference 23 (MSC), at which UEF was formally joined as a party defendant. At that MSC, applicant asserted 24 that “American Runner Attorney Service and Courier” was his employer. There is no indication in 25 the record that UEF then asserted that some other entity was the correct legal identity of the 26 employer. 27 MILBAUER, Daniel 3 1 On February 19, 1997, applicant prepared a new DOR, which was served on UEF, with a 2 caption and a proof of service indicating that “American Runner Messenger Service, Inc.,” was his 3 employer. Thereafter, MSCs were held on March 19, 1997, and April 9, 1997, at which UEF 4 appeared, but these hearings were continued so that “American Runner Messenger Service, Inc.,” 5 could be properly served. 6 On April 29, 1997, applicant served the amended application and a Special Notice of 7 Lawsuit on “American Runner Messenger Service, Inc., as successor in interest to American 8 Runner Attorney Service and Courier and Courier Network, Inc., Erez Boostan as substantial 9 shareholder of American Runner Messenger Service, Inc.” 10 Sometime during these proceedings, “American Runner Messenger Service, Inc.,” filed for 11 bankruptcy. 12 bankruptcy. An Order issued from the bankruptcy court in January 1998, giving relief to proceed 13 against “American Runner Messenger Service, Inc.” Applicant obtained another attorney to seek relief from the automatic stay in 14 On January 19, 1998, applicant prepared a new DOR, served on UEF, which captioned 15 “American Runner Messenger Service, Inc.” as the employer. Additional MSCs were held on 16 March 11, 1998, and December 23, 1999, at which UEF again appeared. At the latter MSC, the 17 question of employment was specifically placed in issue. 18 The matter went to trial both on February 13, 2000, and March 23, 2000, with UEF 19 appearing. The minutes of trial reflect that “identification of the employer” was specifically placed 20 in issue. 21 documentary evidence included pay stubs for the period of August 1994 through November 1994, 22 identifying the employer as “American Runner Attorney Service,” located at 11377 W. Olympic 23 Blvd., G100, Los Angeles, CA 90064. UEF offered no evidence that “American Runner Attorney 24 Service, Inc.,” (or any other entity) was the correct legal identity of the employer. At trial, applicant testified and documents were introduced in evidence. The 25 After clarification of relief from the automatic bankruptcy stay, the WCJ issued a Findings 26 and Order on May 18, 2000, in which she found that evidence did not justify a finding of 27 employment by “American Runner Messenger Service, Inc. or its predecessor in interest, American MILBAUER, Daniel 4 1 Runner Service and Courier Network, Inc.” In the WCJ’s Opinion on Decision, she also stated that 2 applicant’s pay stubs identified his employer as “American Runner Attorney Service,” but that this 3 entity was not a properly served employer over which the WCAB had jurisdiction. Therefore, the 4 WCJ issued a finding of no employment by the only entity against which applicant proceeded. 5 By petition for reconsideration, applicant challenged the May 18, 2000 decision. UEF did 6 not petition for reconsideration or respond in any way. The Appeals Board denied reconsideration 7 based upon the Report and Recommendation of the WCJ, which was incorporated by reference. In 8 that Report, the WCJ indicated that the applicant was unsure of the name of the employer at trial 9 and submitted evidence of pay stubs that bore neither the name of a corporation nor Erez Boostan 10 as an individual. The WCJ stated that there was lack of evidence of employment by Erez Boostan 11 as an individual and a lack of jurisdiction over the employer (i.e., “American Runner Attorney 12 Service”) who appeared to have employed applicant at the time of his injury. 13 On October 11, 2001, applicant filed a new DOR, served on UEF, and attached a petition to 14 request an order for service by publication on the employer “Erez Boostan; American Runner 15 Attorney Service.” 16 applicant in attempting to identify and locate the correct legal employer. Service by publication 17 was ordered by the WCJ on November 29, 2001, at a proceeding held that day, at which UEF 18 appeared. The matter was ordered off calendar. The record is silent to this point on what steps 19 UEF had taken, if any, to determine the correct legal identity of the employer. The petition demonstrated the multiple and sustained efforts exerted by 20 On July 9, 2002, applicant filed another DOR, served on UEF. On August 8, 2002, an 21 MSC was held. At that time, UEF again appeared and the issues were framed, including the 22 correct legal identity of the employer. Applicant specifically contended that “Erez Boostan, an 23 individual, dba American Runner Attorney Service,” was the employer, but UEF made no 24 contention whatsoever about the correct name of the employer. Applicant also filed proof of 25 service by publication on “Erez Boostan, dba American Runner Attorney Service.” The matter was 26 set for trial but apparently taken off calendar inadvertently when the parties requested a 27 continuance. Therefore, applicant filed another DOR to put it back on calendar. At a conference MILBAUER, Daniel 5 1 held on December 30, 2002, at which UEF appeared, the matter was set for a further trial for 2 February 25, 2003. 3 At the February 25, 2003, trial, applicant and UEF introduced documents to be admitted in 4 evidence and the parties submitted the matter for decision on the record, including the issue of the 5 correct legal identity of the employer. UEF, again, offered no evidence to show that “American 6 Runner Attorney Service, Inc.,” (or any other entity) was the correct legal identity. 7 On May 8, 2003, the WCJ issued a Supplemental Findings and Award. The WCJ found 8 that at the time of injury applicant was employed by “Erez Boostan, an individual and dba 9 American Runner Attorney Service, uninsured for workers’ compensation.” For this finding, the 10 WCJ indicates she relied on applicant’s previous credible testimony, pay records for “American 11 Runner Attorney Service,” and investigation reports. The WCJ awarded specified benefits to 12 applicant against “Erez Boostan, an individual, and dba American Runner Attorney Service,” and 13 found that this entity was “willfully uninsured.” 14 15 UEF filed its untimely petition for reconsideration in response to the WCJ’s award served May 8, 2003. 16 In her June 6, 2003, Report and Recommendation on UEF’s petition, the WCJ notes that, 17 on August 8, 2002, UEF appeared and, with the applicant, prepared a pretrial conference statement. 18 This statement identified as evidence the documents showing valid service of the application, 19 Special Notice of Lawsuit, and the many fictitious names and corporations under which Erez 20 Boostan had done business. The WCJ states that at neither the MSC of August 8, 2002, nor at the 21 trial of February 25, 2003, did UEF submit evidence in support of its current position that 22 “American Runner Attorney Service, Inc.,” is the correct legal identity of the employer. At that 23 trial, both applicant and UEF asked that the issues be submitted for decision on the record without 24 further testimony. The WCJ further notes that UEF now contends that pay stubs exist which show 25 “American Runner Attorney Service, Inc.” (ARAS Inc) was the employer, not “American Runner 26 Attorney Service” (ARAS) as found by the WCJ. However, the WCJ states that the only pay stubs 27 MILBAUER, Daniel 6 1 in evidence show ARAS. Under “DISCUSSION” the WCJ gives the following reasons in support 2 of the Findings and Order as to the identity of the employer: 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 “Petitioner’s [UEF’s] contentions rest on documents not filed, much less in evidence. The pay stubs for applicant in evidence as Applicant’s #2 are from ‘American Runner Attorney Service’ [ARAS]. There are no pay stubs from ‘American Runner Attorney Service, Inc.’ [ARAS Inc.]. “Erez Boostan conducted business as American Runners Attorney Service & Courier Network, American Legalnet, Inc., American Runner Messenger Service, Inc., American Runner Attorney Service, Inc., and American Runner Attorney Service (App.#3). He was served notice of application and special notice of lawsuit by publication (App.#3). “The requirements of correct identification of the employer, ARAS, valid service to obtain jurisdiction over the employer, ARAS, required by Yant v Snyder & Dickerson (1982) 47 CCC 254 have been met. The requirements of Yant have not been met as to ARAS Inc but that is a moot point, since there is neither evidence nor any contention before the instant petition for reconsideration that ARAS Inc was the employer at the time of injury. “Applicant was unsure of the correct name of his employer as his employment badge was a different name from his pay stubs. He referred to his employer as ‘American Runner’ which is a shorthand name for either ARAS or ARAS Inc. His testimony supports the evidence in the pay stubs that he was employed by, because he was paid for his services by, ARAS. “Either petitioner has pay stubs not yet filed with the WCAB, and not offered as evidence or it has misread the evidence in Applicant’s #2: ARAS and only ARAS name is on the pay stubs to applicant at the time of injury.” On its merits, the WCJ recommends that the petition be denied. DISCUSSION 21 I. 22 UEF’s Petition On Its Merits 23 UEF’s contention in its petition for reconsideration that “American Runner Attorney 24 Service, Inc.,” is the correct legal identity of the employer is without merit. 25 First, the WCJ’s decision that “Erez Boostan, an individual and dba American Runner 26 Attorney Service,” is the correct legal identity of the employer is supported by substantial evidence. 27 MILBAUER, Daniel 7 1 As stated in the WCJ’s Report and Recommendation of June 6, 2003, Erez Boostan conducted 2 business under various names, including both “American Runner Attorney Service” and 3 “American Runner Attorney Service, Inc.,” but applicant’s pay stubs are captioned “American 4 Runner Attorney Service” (i.e., they are not captioned “American Runner Attorney Service, Inc.”). 5 6 Second, UEF offered absolutely no evidence at either trial to establish that “American Runner Attorney Service, Inc.,” is the correct legal identity of the employer. 7 Third, in its petition for reconsideration, all UEF offers, in substance, is an argument that 8 “American Runner Attorney Service, Inc.,” is the correct legal identity of the employer because 9 (a) applicant’s pay stubs are captioned “American Runner Attorney Service” and (b) “American 10 Runner Attorney Service, Inc.,” was in existence at the time of applicant’s injury. 11 discussed, however, the fact that “American Runner Attorney Service, Inc.,” may have been in 12 existence at the time of applicant’s injury means little, since Erez Boostan was concurrently 13 conducting business under several different names, including “American Runner Attorney 14 Service.” Moreover, the pay stubs did not recite “American Runner Attorney Service, Inc.,” but 15 instead recited “American Runner Attorney Service.” 16 17 As just Accordingly, the WCJ’s determination that “Erez Boostan, an individual and dba American Runner Attorney Service,” is the correct legal identity of the employer is affirmed. 18 II. 19 Determining The Correct Legal Identity of Employer and Ensuring Early and Active Participation by UEF 20 21 The record reflects that, since shortly after applicant’s industrial injury, the law firm of 22 Fensten, Gelber, Reyna & Martinez, LLP, tirelessly and commendably made every possible effort 23 to determine the correct legal identity of the employer in this matter, and to serve the employer 24 with the application and the Special Notice of Lawsuit, as noted above. There are check stubs, 25 database searches, special notices, all of which have been served on UEF. For all of applicant’s 26 counsel’s efforts, UEF has done little, if anything, to identify the correct employer, and it has done 27 MILBAUER, Daniel 8 1 nothing to submit evidence in support of its position. 2 determination of the correct legal identity of applicant’s employer at the time of his injury. This has delayed an expeditious 3 This case has been going on for some eight and one-half years on the issue of the correct 4 legal identity of the employer. During this time, applicant filed numerous DORs, several MSCs 5 were held, there were trials in February 2000, March 2000, and February 2003, and decisions 6 issued on the disputed issues in May 2000 and May 2003. At the February and March 2000 trials, 7 UEF offered no evidence regarding the correct legal identity of the employer. In the May 18, 2000, 8 decision, the WCJ determined that “American Runner Messenger Service, Inc.” was not the correct 9 legal identity of the employer. We denied applicant’s petition for reconsideration. UEF did 10 nothing. 11 documents were served on UEF. UEF still did nothing. The case went to trial again on February 12 25, 2003. UEF again offered no evidence on the correct legal identity of the employer. Now, in its 13 instant petition for reconsideration UEF asserts for the first time that “American Runner Attorney 14 Service, Inc.,” is the correct legal identity of the employer. Thereafter, applicant’s attorney served the employer by publication. Copies of all 15 UEF, of course, is “a ‘purely statutory creature’ whose liability depends on the strict 16 compliance with statutory conditions” and, “[i]n order to seek enforcement against … UEF of any 17 award against [an uninsured employer], [an] applicant [is] required to strictly meet the statutory 18 conditions.” (Ortiz v. Workers’ Comp. Appeals Bd. (1992) 4 Cal.App.4th 392, 398 [57 Cal. Comp. 19 Cases 172, 174]; see also, Aubry v. Workers’ Comp. Appeals Bd. (Amores) (1997) 56 Cal.App.4th 20 1032, 1034-1035 [62 Cal. Comp. Cases 870, 872-873]; Symmar, Inc. v. Workers’ Comp. Appeals 21 Bd. (Eckman) (1982) 135 Cal.App.3d 65, 70-71 [47 Cal. Comp. Cases 847, 851].) Nevertheless, 22 the Legislature has declared that UEF’s primary and essential purpose is “to ensure that workers 23 who happen to be employed by illegally uninsured employers are not deprived of workers’ 24 compensation benefits.” (Lab. Code, §3716(b) (emphasis added); DuBois v. Workers’ Comp. 25 Appeals Bd. (1993) 5 Cal.4th 382, 389 [58 Cal. Comp. Cases 286, 290]; Smith v. Workers’ 26 Compensation Appeals Bd. (Lee) (2002) 96 Cal.App.4th 117, 121, fn. 2 [67 Cal. Comp. Cases 107, 27 108, fn. 2]; see also Flores v. Workmen’s Comp. Appeals Bd. (1974) 11 Cal.3d 171, 173 [39 Cal. MILBAUER, Daniel 9 1 Comp. Cases 289, 290] (“[T]he California Legislature established [UEF] to serve as an immediate 2 source of funds for injured workmen whose employers have failed or refused either to obtain 3 workmen’s compensation insurance or to qualify as self-insurers”); Aubry v. Workers’ Comp. 4 Appeals Bd. (Amores), supra, 56 Cal.App.4th at p. 1034 [62 Cal. Comp. Cases at p. 871] (“[UEF] 5 was created by the Legislature to ensure that employees who are injured in the course and scope 6 [sic] of their employment receive adequate compensation even if their employers are uninsured”).) 7 Consistent with its basic purpose, UEF has a statutory duty to furnish information to the WCAB 8 and the applicant as to the identities, legal capacities, and addresses of uninsured employers, as 9 more fully discussed below. (Lab. Code, §3716(d)(4).) 10 11 12 In our 1982 en banc decision of Yant v. Snyder & Dickerson, supra, 47 Cal. Comp. Cases 254, we stated, in pertinent part: 21 “Although we agree that the applicant must identify the uninsured employer and effect proper service, the UEF should do what it can to facilitate the proceedings. The workers’ compensation judge’s criticism of the UEF’s failure to appear and to only raise objections by letter or by petition for reconsideration after a decision has issued has some merit. UEF should, furthermore, ascertain before a noticed hearing occurs whether or not there is a problem with identifying the proper uninsured employer or with service and make known its position to the workers’ compensation judge and the applicant at the earliest opportunity. We find nothing inconsistent between UEF’s statutory obligations and offering aid to the court by identifying the correct party defendant so a valid award may issue without wasting valuable trial calendar time. Indeed, we find it consistent with UEF’s counsel’s role as an ‘officer of the court’ to so aid the court. The legislative objective in creating UEF is to facilitate the payment of compensation to the injured worker who has the misfortune to be hired by an uninsured employer and we do not expect UEF to conduct itself in any way that will frustrate its legislative purpose.” (47 Cal. Comp. Cases at pp. 260-261; emphasis added.) 22 In 1990, subsequent to our decision in Yant, supra, the Legislature amended section 3716 to 13 14 15 16 17 18 19 20 23 24 25 26 27 add subsection (d)(4): “The director, on behalf of the Uninsured Employers Fund, shall furnish information as to the identities, legal capacities, and addresses of uninsured employers known to the director upon request of the board or upon a showing of good cause by the employee or the employee’s representative. Good cause shall include a declaration by the employee’s representative filed under penalty of MILBAUER, Daniel 10 1 2 3 4 5 6 7 8 9 perjury, that the information is necessary to represent the employee in proceedings under this division.” (Lab. Code, §3716(d)(4).) Pursuant to and consistent with our decision in Yant and section 3716(d)(4), we conclude that more active and early participation on UEF’s part is necessary to assure judicial efficiency and fairness to all parties concerned. This need is clearly evidenced by cases such as this where, in eight and one-half years, UEF has done essentially nothing to assist in identifying the correct legal identity of the employer, while the employee’s attorney has taken every step to identify and serve the correct legal employer, only to have UEF wait for a decision that it challenges at the last minute or, in this case, beyond the last minute. Therefore, to encourage and provide for the active participation by UEF at an earlier point, 10 we conclude that following the filing of an application, and as soon as applicant determines that the 11 employer is or may be uninsured and the employee has made a good faith effort to determine the 12 correct legal identity of the employer, including contacting UEF for assistance, UEF may be 13 ordered to appear at proceedings and ordered to assist in determining the correct legal identify of 14 the employer pursuant to section 3716(d)(4). This may come into play under one of the situations 15 noted below. 16 The procedures we announce here will enable UEF to comply more promptly and fully with 17 its legislative mandate “to serve as an immediate source of funds for injured workmen whose 18 employers have failed or refused either to obtain workmen’s compensation insurance or to qualify 19 as self-insurers.” (Flores v. Workmen’s Comp. Appeals Bd., supra, 11 Cal.3d at p. 173 [39 Cal. 20 Comp. Cases at p. 290].) 21 A. After Good Faith Efforts, Employee Unable to Determine Correct Legal Identity of Employer 22 UEF has access to numerous resources, including county databases recording fictitious 23 business name statements, and the Secretary of State’s corporate database. Accordingly, UEF 24 should be held responsible to use those resources to assist the WCAB and the employee in 25 identifying the correct employer after good faith attempts by the employee have failed. (Lab. Code, 26 §3716(d)(4).) 27 MILBAUER, Daniel 11 1 (1) Cases Where The Employee Is Represented 2 If a represented employee is unable to determine the correct legal identity of the uninsured 3 employer after good faith efforts, including contacting UEF for assistance, the employee may 4 request a priority conference. (Lab. Code §5502(c); Cal. Code Regs., tit. 8, §10555.) . When a 5 represented employee requests a priority conference on the issue of the correct legal identity of the 6 employer, UEF shall be added to the WCAB’s Official Address Record and ordered to appear 7 provisionally at that conference and to assist the employee and the WCAB in determining the 8 correct legal identity of the employer, in compliance with section 3716(d)(4). 9 At the priority conference, if the employee and UEF can agree on the correct legal identity 10 of the employer, the employee and UEF should submit a stipulation to the WCJ for formal 11 approval. 12 If the correct legal identity of the employer cannot be determined at the priority conference, 13 the employee and UEF shall provide a plan to complete discovery on the issue of the correct legal 14 identity of the employer. (Cal. Code Regs., tit. 8, §10555.) Then, the WCJ should continue the 15 matter for one or more status conferences, as needed (Cal. Code Regs., tit. 8, §10555), with UEF 16 again ordered to provisionally appear. Concurrently, pursuant to section 3716(d)(4), the WCJ 17 should order UEF to assist in identifying the correct legal entity within a reasonable period of time, 18 normally within six months. 19 At any subsequent status conference(s) (following assistance by UEF), the employee and 20 UEF may submit a stipulation regarding the employer’s correct legal identity to the WCJ for 21 formal approval. In the absence of a stipulation within a reasonable period of time (normally 22 within six months from the priority conference), the WCJ should either issue a notice of intention 23 to determine the correct legal identity of the employer based on documents offered and admitted 24 into evidence or set the matter for a trial on the disputed issue, and thereafter make a formal 25 finding. UEF, although not yet joined as a party, shall be served with any notice of intention or any 26 notice of trial, and it shall be afforded the same opportunity as the parties to present evidence on 27 MILBAUER, Daniel 12 1 the issue of the correct legal identity of the employer. Also, UEF shall be served with any formal 2 finding by the WCJ regarding the correct legal identity of the employer. 3 Once a finding is made regarding the correct legal identity of the employer (either based on 4 a stipulation, a notice of intention, or a trial), UEF generally will be forever bound by that finding, 5 unless it timely seeks reconsideration. (Lab. Code, §§5900(a), 5902, 5903, 5904.) Section 5900(a) 6 provides that “[a]ny person aggrieved directly or indirectly by any final order, decision, or award” 7 may file a petition for reconsideration. (Emphasis added.) Thus, if UEF has been served with a 8 WCAB decision that directly or indirectly aggrieves it, UEF may file a petition for reconsideration 9 even if it has not yet been joined formally as a party. (See, Arias v. Workers’ Comp. Appeals Bd. 10 (Aviles) (1983) 146 Cal.App.3d 813, 819-820 [48 Cal. Comp. Cases 659, 664].) Moreover, if 11 under such circumstances UEF fails to timely file a petition for reconsideration, this failure will 12 result in a waiver of “all objections, irregularities, and illegalities.” (Lab. Code, §5904; see Cedillo 13 v. Workmen’s Comp. Appeals Bd. (1971) 5 Cal.3d 450, 455-456 [36 Cal. Comp. Cases 497, 501]; 14 U.S. Auto Stores v. Workmen’s Comp. Appeals Bd. (Brenner) (1971) 4 Cal.3d 469, 476 [36 Cal. 15 Comp. Cases 173, 177-178].)5 16 After a finding is made on the correct legal identity of the employer, the employee must 17 serve the application and the Special Notice of Lawsuit on that employer, in compliance with the 18 requirements of section 3716(d), if the employee has not already done so. Then, UEF may be 19 formally joined as a party defendant and its statutory liability will attach. (Lab. Code, §3716(d).) . 20 (2) Cases Where The Employee Is Not Represented 21 If an unrepresented employee is unable to determine the correct legal identity of the 22 employer with the assistance of the Information & Assistance Officer or by any other means, the 23 employee may request a status conference on that issue. (Cal. Code Regs., tit. 8, §10301(s).) UEF 24 5 25 26 27 There may be limited circumstances under which UEF could petition to reopen a finding regarding the correct legal identity of the employer (Lab. Code, §§5803, 5804), however, UEF would have to show “good cause” – which necessarily would not include evidence on the issue that UEF could have discovered and presented earlier, had it exercised due diligence. (Merritt-Chapman & Scott Corp. v. Industrial Acc. Com. (Smith) (1936) 6 Cal.2d 314, 322324 [1 Cal. Comp. Cases 144, 151]; Nicky Blair’s Restaurant v. Workers’ Comp. Appeals Bd. (Macias) (1980) 109 Cal.App.3d 941, 956-957 [45 Cal. Comp. Cases 876, 886].) MILBAUER, Daniel 13 1 then shall be added to the WCAB’s Official Address Record and ordered to appear provisionally at 2 that conference to assist the employee and the WCAB in determining the correct legal identity of 3 the employer, in compliance with section 3716(d)(4). 4 5 At the status conference, if the employee and UEF can agree on the correct legal identity of the employer, the employee and UEF should submit a stipulation to the WCJ for formal approval. 6 If the correct legal identity of the employer cannot be determined at the status conference, 7 the WCJ should continue the matter for one or more status conferences, with UEF again ordered to 8 provisionally appear. Concurrently, pursuant to section 3716(d)(4), the WCJ should order UEF to 9 assist in identifying the correct legal entity within a reasonable period of time, normally within six 10 months. The matter would then proceed as outlined above, with UEF ordinarily being bound by 11 any stipulation or finding on the correct legal identity of the employer. Again, however, the 12 employee would have to serve the application and the Special Notice of Lawsuit on the employer, 13 if the employee had not done so previously, before UEF could be formally joined and before the 14 statutory requirements for UEF’s liability are met. 15 B. UEF Disputes the Employer Asserted by the Employee 16 When the employee asserts that he/she has determined the correct legal identity of the 17 employer, the employee has served that employer pursuant to section 3716(d), and UEF has been 18 joined as a party defendant, but UEF disputes the employee’s assertion, the represented employee 19 may request a priority conference on this issue. (Lab. Code §5502(c); Cal. Code Regs., tit. 8, 20 §10555.) The unrepresented employee may request a status conference. In either case, UEF shall 21 be ordered to appear at the conference. 22 At the conference, the parties may enter a stipulation as to the correct legal identity of the 23 employer to be formally approved by the WCJ. Absent a stipulation on that issue, the WCJ may 24 either issue a Notice of Intention based on admitted evidence or set the issue for trial and, 25 thereafter, issue a formal finding to be served on UEF. Whether the correct legal identity of the 26 employer is determined by way of stipulation, notice of intention, or trial, UEF ordinarily will be 27 forever bound by that determination, as discussed above. MILBAUER, Daniel 14 1 III. 2 Conclusion 3 In this case, we have set forth procedures designed to ensure UEF’s early and active 4 participation in situations where the injured employee has difficulty in determining the correct 5 legal identity of the uninsured (or allegedly uninsured) employer after good faith efforts, or where 6 UEF objects to the correct legal identity of the employer as asserted by the employee. 7 We have been compelled to adopt these procedures in order to prevent the kind of inaction 8 UEF has demonstrated in this particular case. For more than eight years after applicant’s October 9 1994 injury, UEF failed to offer any evidence on the issue of the correct legal identity of the 10 employer and it failed to assist the WCAB and the applicant in determining the correct legal 11 identity. Despite numerous opportunities over the years to specify the entity that UEF now 12 contends to be the employer’s correct legal identity, and to offer evidence in support of this 13 contention, UEF offered absolutely no evidence at any of the trials to show that “American Runner 14 Attorney Service, Inc.,” (or any other entity) is the correct legal identity of the employer. Indeed, it 15 was not until its June 2003 petition for reconsideration that UEF first asserted that “American 16 Runner Attorney Service, Inc.,” was the employer. Even now, UEF’s petition for reconsideration 17 only offers argument, and UEF fails to cite to any evidence that would specifically establish that 18 “American Runner Attorney Service, Inc.,” is the correct legal identity of the employer. (As 19 discussed above, applicant’s pay stubs are captioned “American Runner Attorney Service;” they 20 are not captioned “American Runner Attorney Service, Inc.”) 21 UEF’s actions (or, more accurately, its inactions) in this case are in gross contravention 22 of its duties under Yant, section 3716(d)(4), and section 3716(b), which expressly states that UEF 23 was “created to ensure that workers who happen to be employed by illegally uninsured employers 24 are not deprived of workers’ compensation benefits.” (Lab. Code, §3716(b); see also, DuBois v. 25 Workers’ Comp. Appeals Bd., supra, 5 Cal.4th at p. 389 [58 Cal. Comp. Cases at p. 290]; Flores v. 26 Workmen’s Comp. Appeals Bd., supra, 11 Cal.3d at p. 173 [39 Cal. Comp. Cases at p. 290] Smith 27 v. Workers’ Compensation Appeals Bd. (Lee), supra, 96 Cal.App.4th at p. 121, fn. 2 [67 Cal. MILBAUER, Daniel 15 1 Comp. Cases at p. 108, fn. 2]; Aubry v. Workers’ Comp. Appeals Bd. (Amores), supra, 56 2 Cal.App.4th at p. 1034 [62 Cal. Comp. Cases at p. 871].) UEF’s behavior here has been so dilatory 3 and so inconsistent with its statutory responsibilities that (based on what appears to have been a 4 willful failure to comply with its statutory obligations, a willful intent to disrupt or delay the 5 proceedings of the WCAB, and/or a pattern of actions that are indisputably without merit) we 6 seriously considered imposing sanctions and attorney’s fees against UEF and its counsel, jointly 7 and severally. (See, Lab. Code, §5813; Cal. Code Regs., tit. 8, §10561.)6 Because, however, we 8 only now announce appropriate procedures for UEF’s early and active participation when the 9 employee has difficulty in establishing the correct legal identity of the employer after good faith 10 efforts or UEF objects to the correct legal identity of the employer as asserted by the employee, we 11 have decided not to impose sanctions and attorney’s fees in this case. 12 If, in future cases, UEF and its counsel persist in this kind of behavior in the face of Yant, 13 section 3716(d)(4), section 3716(b), and our present decision, they are hereby expressly warned 14 that sanctions and attorney’s fees under section 5813 and Rule 10563 may well be imposed against 15 them. 16 For the forgoing reasons, IT IS ORDERED that as the Decision After Reconsideration of the Workers’ 17 18 /// 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 6 27 Although UEF is not liable for “any penalties” (Lab. Code, §3716.2; DuBois v. Workers’ Comp. Appeals Bd., supra, 5 Cal.4th 382 [58 Cal. Comp. Cases 286]), no statutory provision insulates UEF from liability for sanctions and attorney’s fees under section 5813 and Rule 10563. MILBAUER, Daniel 16 1 Compensation Appeals Board, the May 8, 2003 Supplemental Findings and Award of the workers’ 2 compensation administrative law judge be, and is hereby, AFFIRMED. 3 WORKERS’ COMPENSATION APPEALS BOARD (EN BANC) 4 5 _________________________________________________ 6 MERLE C. RABINE, Chairman 7 _________________________________________________ 8 WILLIAM K. O'BRIEN, Commissioner 9 10 _________________________________________________ 11 JAMES C. CUNEO, Commissioner 12 _________________________________________________ 13 JANICE JAMISON MURRAY, Commissioner 14 15 _________________________________________________ 16 FRANK M. BRASS, Commissioner 17 _________________________________________________ A. JOHN SHIMMON, Commissioner 18 19 20 _________________________________________________ 21 RONNIE G. CAPLANE, Commissioner 22 23 DATED AND FILED AT SAN FRANCISCO, CALIFORNIA 24 December 18, 2003 25 26 SERVICE BY MAIL ON SAID DATE TO ALL PARTIES AS SHOWN ON THE OFFICIAL ADDRESS RECORD. ed 27 MILBAUER, Daniel 17

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