Colorado § 8-43-408 - Default of employer - additional liability.

§ 8-43-408. Default of employer - additional liability.

(1) If an employer is subject to articles 40 to 47 of this title 8 and, at the time of an injury, has not complied with the insurance provisions of those articles or has allowed the required insurance to terminate, or has not effected a renewal thereof, the employee, if injured, or, if killed, the employee's dependents may claim the compensation and benefits provided in those articles.

(2) In all cases where compensation is awarded under the terms of this section, the director or an administrative law judge of the division shall compute and require the employer to pay to a trustee designated by the director or administrative law judge an amount equal to the present value of all unpaid compensation or benefits computed at the rate of four percent per annum; or, in lieu thereof, such employer, within ten days after the date of such order, shall file a bond with the director or administrative law judge signed by two or more responsible sureties to be approved by the director or by some surety company authorized to do business within the state of Colorado. The bond shall be in such form and amount as prescribed and fixed by the director and shall guarantee the payment of the compensation or benefits as awarded. The filing of any appeal, including a petition for review, shall not relieve the employer of the obligation under this subsection (2) to pay the designated sum to a trustee or to file a bond with the director or administrative law judge.

(3) A certified copy of any award of the director, administrative law judge, or panel ordering the payment of compensation entered in such case may be filed with the clerk of the district court of any county in this state at any time after the order of the administrative law judge awarding compensation, and the same shall be recorded by said clerk in the judgment book of said court and entry thereof made in the judgment docket, and it shall thenceforth have all the effect of a judgment of the district court, and execution may issue thereon out of said court as in other cases. Upon the reversal, setting aside, modification, or vacation of said order or award and upon payment to the trustee or furnishing of bond in accordance with the terms of this section, then, upon certification thereof by the director, administrative law judge, or panel, said record in the judgment book and the entry in the judgment docket shall be vacated, and any execution thereon shall be recalled.

(4) Any employer who fails to comply with a lawful order or judgment issued pursuant to subsection (2) or (3) of this section is liable to the employee, if injured, or, if killed, said employee's dependents, in addition to the amount in the order or judgment, for an amount equal to fifty percent of such order or judgment or one thousand dollars, whichever is greater, plus reasonable attorney fees incurred after entry of a judgment or order.

(5) In addition to any compensation paid or ordered in accordance with this section or articles 40 to 47 of this title 8, an employer who is not in compliance with the insurance provisions of those articles at the time an employee suffers a compensable injury or occupational disease shall pay an amount equal to twenty-five percent of the compensation or benefits to which the employee is entitled to the Colorado uninsured employer fund created in section 8-67-105.

(6) An employer who fails to comply with a lawful order or judgment issued pursuant to subsection (2) or (3) of this section shall be ordered to pay an amount equal to twenty-five percent of the compensation or benefits to which the employee is entitled to the Colorado uninsured employer fund created in section 8-67-105 in addition to any other amount ordered pursuant to this section or articles 40 to 47 of this title 8.

Source: L. 90: Entire article R&RE, p. 516, § 1, effective July 1. L. 92: (2) and (3) amended, p. 2166, § 3, effective June 2. L. 2017: (1) amended and (5) and (6) added, (HB 17-1119), ch. 317, p. 1706, § 7, effective July 1.

Editor's note: This section is similar to former § 8-44-107 as it existed prior to 1990.

ANNOTATION

I. General Consideration.

II. Fifty Percent Penalty.

III. Requirement of Bond.

IV. Entry of Judgment.

I. GENERAL CONSIDERATION.

Law reviews. For article, "HB 17-1119 Brings Reform to Workers' Compensation", see 46 Colo. Law. 58 (Nov. 2017).

Annotator's note. Since § 8-43-408 is similar to § 8-44-107 as it existed prior to the 1990 repeal and reenactment of the "Workers' Compensation Act of Colorado", articles 40 to 47 of this title, relevant cases construing that provision have been included in the annotations to this section.

The penalty provisions included in this section extend only to the failure to secure insurance and do not apply to the violation of other insurance-related provisions. U.S. Fidelity & Guar., Inc. v. Kourlis, 868 P.2d 1158 (Colo. App. 1994).

The plain language of subsection (1) recognizes that there are statutory limitations on various types of workers' compensation, however, it is also a provision for additional compensation for the amounts already provided. Merchants Oil, Inc. v. Anderson, 897 P.2d 895 (Colo. App. 1995).

This section is designed to encourage cooperation with the mandatory insurance requirements and to provide for additional compensation when the employer neglects or refuses to purchase insurance. Merchants Oil, Inc. v. Anderson, 897 P.2d 895 (Colo. App. 1995).

Because employer secured compensation for claimant, employer's failure to give the notice described in § 8-44-101 (1)(b) is not grounds for the imposition of penalties under subsection (1) of this section. McManus v. Indus. Claim Appeals Office, 81 P.3d 1074 (Colo. App. 2003).

Applied in Smart v. Radetsky, 86 Colo. 93, 278 P. 609 (1929); Melnick v. Indus. Comm'n, 656 P.2d 1318 (Colo. App. 1982).

II. FIFTY PERCENT PENALTY.

This section provides for 50% increase in compensation in event of employer's failure to comply with insurance provisions of the act. Index Mines Corp. v. Indus. Comm'n, 82 Colo. 272, 259 P. 1036 (1927); DeBeque Producers' Ass'n v. Indus. Comm'n, 83 Colo. 158, 262 P. 1019 (1928); Connell v. Cont'l Cas. Co., 87 Colo. 573, 290 P. 274 (1930); Publix Cab Co. v. Colo. Nat'l Bank, 139 Colo. 205, 338 P.2d 702 (1959); Tri-State Ins. Co. v. Indus. Comm'n, 151 Colo. 494, 379 P.2d 388 (1963).

And courts have no discretion in the imposition of the penalty of 50% imposed for failure to carry compensation insurance. Kamp v. Disney, 110 Colo. 518, 135 P.2d 1019 (1943).

The liability imposed by this section is not determined by good faith or willful neglect. The only question is: Has the employer insurance? Where the employer has none, its liability for the additional compensation necessarily follows. McKune v. Indus. Comm'n, 94 Colo. 523, 31 P.2d 322 (1934); Anderson v. Dutch Maid Bakeries, 106 Colo. 201, 102 P.2d 740 (1940).

Where a subcontractor is uninsured, and the primary contractor is insured, the contractor is the only employer contemplated by this section. Herriott v. Stevenson, 172 Colo. 379, 473 P.2d 720 (1970).

And where the primary contractor is insured, the 50% penalty does not apply, regardless of the fact that the subcontractor is uninsured. Herriott v. Stevenson, 172 Colo. 379, 473 P.2d 720 (1970).

Section does not violate Colo. Const., art. II, § 20. This section, providing a 50% increase in awards where no insurance is carried by the employer, is not unconstitutional as violative of Colo. Const., art. II, § 20. The section is not penal in its nature, but simply provides additional compensation in the class of cases mentioned. Flick v. Indus. Comm'n, 78 Colo. 117, 239 P.2d 1022 (1925).

Moreover, it is not "class legislation" and is not unconstitutional on that ground. Flick v. Indus. Comm'n, 78 Colo. 117, 239 P. 1022 (1925).

But this section does not provide for 50% increase in medical payments. Jacobson v. Doan, 136 Colo. 496, 319 P.2d 975 (1957).

And the words "compensation or benefits" in this section cannot be construed as including medical expenses. Indus. Comm'n v. Hammond, 77 Colo. 414, 236 P. 1006 (1925); Jacobson v. Doan, 136 Colo. 496, 319 P.2d 975 (1957).

For § 8-49-101 imposes upon an employer the duty of furnishing medical, surgical, nursing and hospital treatment and supplies and apparatus for a fixed time and to a fixed minimum regardless of the compensation allowed, and where such bills are not paid but are included in the award they are paid direct to those who have rendered the service or furnished the supplies. Jacobson v. Doan, 136 Colo. 496, 319 P.2d 975 (1957).

No election of remedies where claimant has no legal action. Where claimant has no legal cause of action under this section against the subcontractor in whose employ the deceased was at the time of injury, the bringing of an action does not constitute an election of remedies, and the claimant is not estopped by reason thereof from recovering compensation. Hartford Accident & Indem. Co. v. Clifton, 117 Colo. 547, 190 P.2d 909 (1948).

For where an employer has workmen's compensation insurance coverage, an employee has no election to make under this section. Sharmar Nursing Home v. Indus. Comm'n, 160 Colo. 197, 416 P.2d 161 (1966).

But an employee whose employer's workmen's compensation insurance coverage has lapsed, has alternative remedies due to his employer's noncompliance with the act: He can sue at common law or he can claim workmen's compensation benefits plus a 50% penalty for the noncompliance of his employer. Sharmar Nursing Home v. Indus. Comm'n, 160 Colo. 197, 416 P.2d 161 (1966).

The concept of primary reimbursement does not impliedly grant a cause of action to third parties against an uninsured employer. Absent a specific provision in the act governing no-fault insurance or in the Workers' Compensation Act, the general assembly may not be deemed to have created a private tort remedy favoring no-fault carriers for an employer's failure to obtain workers' compensation coverage. United Sec. Ins. Co. v. Sciarrota, 885 P.2d 273 (Colo. App. 1994).

The term "election" in the present context connotes a conscious choice between one of two or more distinct and separate alternatives. It applies to a situation where different remedies are provided for a given wrong upon one and the same set of facts. Sharmar Nursing Home v. Indus. Comm'n, 160 Colo. 197, 416 P.2d 161 (1966).

Factual question as to election of remedies. Where plaintiff contends that employer coerced plaintiff to believe that defendant was insured at the time of workmen's compensation filing and acceptance of benefits, and that plaintiff filed a civil action as soon as he became aware that civil relief was available, the plaintiff presented a factual question as to whether he made a valid election to pursue his workmen's compensation remedy. Baker v. Redystick Prods. Co., 674 P.2d 1011 (Colo. App. 1983).

Pursuit of one remedy bars the other. If an employee of a nursing home whose workmen's compensation insurance coverage has lapsed elects to pursue one of the remedies under this section, recovery via the other is barred. Sharmar Nursing Home v. Indus. Comm'n, 160 Colo. 197, 416 P.2d 161 (1966).

Deduction of compensation for violation of a safety rule made after the addition under this section. Under § 8-52-104 50% of the compensation to which an injured employee is entitled may be deducted for the violation of a reasonable safety rule, and where the compensation is increased 50% for failure of employer to carry insurance, under this section, deduction for violation of the safety rule is to be made after the addition of the 50% for failure to insure. McKune v. Indus. Comm'n, 94 Colo. 523, 31 P.2d 322 (1934).

Insurance company's failure to cover liability as promised does not affect employee's right to recover from employer. The fact that an insurance company assured an employer that his workmen's compensation insurance policy would be made to cover injuries to employees engaged in work at a distant location by notation on its books, which notation was not made, does not affect the rights of an employee to recover from the employer compensation for injuries received, the employer's remedy, if any, being by an action against the insurance company. Connell v. Cont'l Cas. Co., 87 Colo. 573, 290 P. 274 (1930).

Realty company's construction activities not within insurance coverage. A real estate company's home construction operation is an unrelated business activity not included within its insurance policy with the state compensation insurance fund. Evergreen Inv. & Realty Co. v. Baca, 666 P.2d 166 (Colo. App. 1983).

Fifty percent increase in benefits pursuant to subsection (1) not penal in nature, but rather simply a provision for additional compensation. Eachus v. Cooper, 738 P.2d 383 (Colo. App. 1986).

III. REQUIREMENT OF BOND.

Requirement of bond is for advantage of employer and he is not obliged to give such bond unless he elects to do so. Indus. Comm'n v. Hammond, 77 Colo. 414, 236 P. 1006 (1925).

IV. ENTRY OF JUDGMENT.

Claim within section's purview absent determination of claimant's eligibility for compensation. Since a claim arises at the time of the accident for purposes of the workmen's compensation act, it is a claim within the purview of § 15-12-803, notwithstanding the fact that a department of labor referee has not made a determination in a workmen's compensation proceeding concerning the claimant's eligibility for compensation nor an order entered pursuant to subsection (3) of this section. First Nat'l Bank v. Long, 44 Colo. 317, 616 P.2d 180 (1980).

Reduction to judgment of award. The award having become final by reason of respondent's failure to pursue administrative review, it is proper for the claimant to reduce the award to judgment. Hard v. Indus. Comm'n, 174 Colo. 51, 482 P.2d 353 (1971).

Entry of judgment by clerk constitutional. Entry of judgment by a clerk of the district court on an award does not violate § 1 of art. VI, Colo. Const. Ontario Mining Co. v. Indus. Comm'n, 86 Colo. 206, 280 P. 483 (1929).

For the act of a clerk in entering judgment on an award is a ministerial act and not the exercise of a judicial function. The judgment so entered is not a judgment rendered, but a judgment of the industrial commission, which thenceforth has the effect of a judgment of the district court. Ontario Mining Co. v. Indus. Comm'n, 86 Colo. 206, 280 P. 483 (1929).