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Crabtree v. Department of Labor & Industry

Court of Workers Compensation of Montana

November 3, 2017

BART CRABTREE d/b/a LODESTAR BUILDERS Appellant
v.
DEPARTMENT OF LABOR & INDUSTRY, UNINSURED EMPLOYERS' FUND Appellee.

          Submitted: April 4, 2017

         Summary: Employer Appellant appeals from a decision of agency Appellee ordering him to pay to the Uninsured Employers' Fund a penalty under § 39-71-504(1)(a), MCA, in the amount of $28, 259.82. Appellant argues the penalty is not supported by sufficient evidence in the record.

         Held: There is sufficient evidence in the record to support Appellee's imposition of a $28, 259.82 penalty under § 39-71-504(1)(a), MCA. Appellee's final agency order imposing the penalty is affirmed.

          ORDER AFFIRMING PENALTY UNDER § 39-71-504(1)(A), MCA

          DAVID M. SANDLER, JUDGE

         ¶ 1 Appellant Bart Crabtree, d/b/a Lodestar Builders (Crabtree), appeals from a decision of Appellee Department of Labor & Industry (Department) ordering him to pay a penalty of $28, 259.82 to the Uninsured Employers' Fund (UEF).

         FACTS AND PROCEDURAL HISTORY

         ¶ 2 On January 26, 2016, the UEF notified Crabtree that it received information he employed workers in his construction business without carrying the requisite workers' compensation insurance coverage for them. The UEF notified Crabtree that he could be assessed a penalty for such non-compliance and initiated a workers' compensation audit. On February 25, 2016, the UEF sent Crabtree a second notice.

         ¶ 3 On March 18, 2016, the UEF Investigator Sarah Elledge, in connection with the audit, issued a subpoena duces tecum to Crabtree requesting he produce business and employee records. The subpoena duces tecum was served on Crabtree March 30, 2016. Crabtree did not comply with the subpoena.

         ¶ 4 On April 25, 2016, Elledge notified Crabtree of the UEF's penalty calculation of $28, 259.82, based on an estimated payroll of $81, 688.01. Elledge notified Crabtree that if he disagreed with the penalty, he would need to comply with the audit of his business books and records. Crabtree failed to produce all of the documentation requested for the audit.

         ¶ 5 On May 18, 2016, an official penalty determination was assessed against Crabtree in the amount of $28, 259.82 for not providing workers' compensation coverage for its employees from October 1, 2014, to March 31, 2016. Crabtree requested an administrative review on June 17, 2016.

         ¶ 6 On June 20, 2016, the UEF issued a redetermination that Crabtree owed a penalty of $28, 259.82. On July 20, 2016, Crabtree filed an appeal of the Redetermination and requested a contested case hearing. A Notice of Hearing was issued July 26, 2016.

         ¶ 7 On August 4, 2016, the Department served Crabtree with its first discovery requests, which included Requests for Admission, Requests for Production, and Interrogatories.

         ¶ 8 On August 8, 2016, the Office of Administrative Hearings (OAH) issued a Scheduling Order informing the parties that "[a] party's failure to appear for any conference, and/or failure to obey orders issued by the Hearing Officer, may result in sanctions against that party that can include entry of default, dismissal of an appeal, imposition of liability or other appropriate sanctions."

         ¶ 9 Crabtree did not respond to the discovery requests and did not appear at a scheduled telephone conference. The Department filed a Motion to Compel on September 13, 2016. The Brief Supporting UEF Motion to Compel noted that a failure to respond to Requests for Admission deemed them admitted. Crabtree did not respond to the motion.

         ¶ 10 Hearing Officer David Evans issued an order on October 11, 2016, compelling Crabtree to respond to the Department's Requests, no later than October 24, 2016. The order noted that Crabtree had "not respond[ed] to OAH staff's request."

         ¶ 11 On October 24, 2016, Crabtree provided responses, but failed to produce all of the requested records, including his tax returns, and failed to explain the basis for his ...


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