Evergreen Investment & Realty Co. v. Baca

TURSI, Judge,

dissenting.

Because I agree with the referee’s interpretations of the policy as applied to the pertinent statutes and facts involved in this claim, I respectfully dissent. The policy promises “to pay promptly when due all compensation and other benefits required of [Evergreen] by the workmen’s compensation law.” (emphasis added) And, § 8-44-102, C.R.S.1973, mandates that any contract for the insurance of workmen’s compensation shall be subject to all provisions of the workmen’s compensation act.

The policy does not contain any applicable exclusions. It does contain the following condition:

“This policy is issued by the company and accepted by the insured with the agreement that if any change in classifications, rates or rating plans is or becomes applicable to this policy under any law regulating this insurance or because of any *168amendments affecting the benefits provided by the workmen’s compensation law, such change with the effective date thereof shall be stated in an endorsement issued to form a part of this policy.”

Additionally, when the Fund accepted Evergreen’s application it instructed Evergreen to keep a complete and accurate payroll record according to classification of operations and stated that after the policy period it would audit the payroll and adjust the premium. The policy provides for retroactive assessment of premiums if any change in classifications, rates, or rating plans occurs during the policy year.

Evergreen relied upon Scheidell’s assurance that he carried workmen’s compensation insurance, and Scheidell did in fact withhold a sum from Platt’s wages to pay for the coverage. At the hearing on Platt’s claim, it was first established that Schei-dell’s coverage had lapsed, and therefore, Evergreen became Platt’s constructive employer by operation of the act. The referee concluded that since the Fund had written a policy covering all compensation claims with no exclusion or condition in the policy to limit liability in this matter, the policy must be construed against the Fund, and Evergreen is entitled to coverage. See State Automobile & Casualty Underwriters v. Beeson, 183 Colo. 284, 516 P.2d 623 (1973); Urtado v. Shupe, 33 Colo.App. 162, 517 P.2d 1357, aff’d sub nom., Urtado v. Allstate Insurance Co., 187 Colo. 24, 528 P.2d 222 (1974). I agree.

The Fund’s reliance on State Compensation Fund v. Batis, 117 Colo. 1, 183 P.2d 891 (1947) is misplaced. In Batís, because of the failure of an independent contractor to insure his operation, the carrier for the constructive employer was held liable. See also Industrial Commission v. International Mutual Liability Insurance Co., 103 Colo. 419, 86 P.2d 970 (1939). Although here, the liability is in the first instance imposed upon the employer, the policy and § 8-44-102 mandate that the insurance carrier discharge the employer’s liability to the extent imposed by law. Century Indemnity Co. v. Klipfel, 99 Colo. 213, 61 P.2d 842 (1936). See also Travelers Insurance Co. v. Industrial Commission, 71 Colo. 495, 208 P. 465 (1922). Thus, by imposing the duty upon the carrier to indemnify the employer for liability imposed by law, the cost of coverage of constructive employees is ultimately placed on the entity best able to spread the risk. See Industrial Commission v. Lopez, 150 Colo. 87, 371 P.2d 269 (1969); 4 A. Larson, Workmen’s Compensation Law, § 92.20 (1979).

In cases such as this, the insurance carrier’s obligation is not only to the employer, but also to the employee. The obligation is to ensure that an injured employee of the employer get the benefits called for by the statute. 4 A. Larson, § 92.20, supra. Applying the public policy set forth in Lopez, supra, when Evergreen extended its operation into the development of the real estate so as to enhance its sales, the policy was also extended thereto. The burden of such extensions is thus spread throughout the entire area of workmen’s compensation, and the cost is recouped by provisions for retrospective assessment of premiums based on reclassification of risks. Therefore, since the policy is one of full coverage, and since Evergreen has not breached a material condition of the insuring agreement, Platt’s injury is covered. See 4 A. Larson, Workmen’s Compensation Law § 93.40 (1979).

I would vacate the order of the Industrial Commission and remand with directions to enter an award in accordance with the views contained in this dissent.