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Vail v. S/L Services, Inc.

Supreme Court of North Dakota

August 11, 2017

Dawn Vail, individually and as Trustee for North Dakota Workforce Safety & Insurance, Plaintiff
v.
S/L Services, Inc., Defendant

         Certified Questions of Law from the United States District Court for the District of North Dakota, the Honorable Charles S. Miller.

         CERTIFIED QUESTIONS ANSWERED.

          Thomas J. Conlin (argued) and Stacy D. Stennes (appeared), Minneapolis, MN, for plaintiff.

          Robert B. Stock (argued) and Jordan B. Weir (on brief), Fargo, N.D., for defendant.

          OPINION

          McEVERS, JUSTICE.

         [¶ 1] Under N.D.R.App.P. 47, a magistrate judge for the United States District Court for the District of North Dakota certified seven questions to this Court involving Dawn Vail's right to bring a common law tort action against S/L Services, Inc., for personal injuries she sustained while working for S/L Services. We conclude the exclusive remedy provisions of our workers' compensation laws do not preclude Vail's tort action against S/L Services under provisions authorizing the action for willfully misrepresenting to Workforce Safety and Insurance ("WSI") the amount of payroll upon which a premium is based, or for willfully failing to secure workers' compensation coverage for employees. We answer the certified questions accordingly.

         I

         [¶ 2] We briefly summarize the district court's statement of facts for the certified questions. On August 23, 2012, S/L Services, a Montana company, applied to WSI for workers' compensation coverage for workers in North Dakota. In the application, S/L Services estimated that in the next 12 months it would have 42 employees and total taxable wages of $976, 500. On August 28, 2012, WSI issued S/L Services a premium statement charging an estimated premium for August 23, 2012 to August 31, 2013, which was based upon the number of employees that S/L Services reported and the employees' estimated wages. S/L Services paid that premium and WSI issued S/L Services a certificate of premium payment.

         [¶ 3] After S/L Services paid the initial premium, Vail came to work for S/L Services as a welder's helper. Vail suffered a workplace injury on May 25, 2013. During her employment, S/L Services treated Vail as an independent contractor, and before she started work, she completed a tax form for independent contractors for the 2012 tax year and reported her compensation to the IRS using that form.

         [¶ 4] Vail filed a claim for her injuries with WSI. WSI required S/L Services to complete a form asking for information about Vail's employment, including the dates of her employment, her hourly wage, and whether her work was full time, part time, or seasonal. The form also asked whether S/L Services was contesting the claim. S/L Services' response stated Vail was a subcontractor and not an employee. WSI thereafter required S/L Services to complete a worker relationship questionnaire to determine whether Vail was an employee or an independent contractor.

         [¶ 5] In July 2013, WSI determined S/L Services was an employer of Vail and any similarly situated workers and awarded Vail related benefits. WSI's order required S/L Services to submit all wages for all employees, including Vail and any similarly situated employees, to WSI for the previous six years. WSI's order advised S/L Services that it had 30 days to seek reconsideration and, if reconsideration was not sought, the decision would become final. S/L Services did not seek reconsideration of WSI's decision within 30 days.

         [¶ 6] On August 22, 2013, S/L Services submitted a payroll report to WSI for the period from August 23, 2012 to August 31, 2013. Despite WSI's prior order that S/L Services provide payroll information for Vail and others similarly situated, S/L Services did not include Vail's wages or the wages of other welder's helpers in that payroll report.

         [¶ 7] On September 6, 2013, WSI issued S/L Services a premium billing statement in the amount of $26, 737.23 for the period from August 23, 2012 to August 31, 2013. According to WSI's audit supervisor, WSI increased the adjusted total wages in its premium billing to reflect WSI's earlier determination that Vail was an employee and to include an amount for Vail's wages for that premium period. On September 12, 2013, S/L Services paid the requested amount of the billed premium for the billing period from August 23, 2012 to August 31, 2013.

         [¶ 8] In November 2013, S/L Services asked WSI to reconsider its decision to classify Vail as an employee and pay her benefits, but the record does not reflect that WSI acted upon that request.

         [¶ 9] In the first quarter of 2014, WSI audited S/L Services for the reporting period when Vail was injured, August 23, 2012 through August 31, 2013, as well as for S/L Services' current reporting period from September 1, 2013 to August 31, 2014. In June 2014, WSI informed S/L Services an additional premium for other welder's helpers was due for the period when Vail was injured and for the current period. S/L Services subsequently paid the additional premium.

         [¶ 10] In November 2013, Vail filed a claim with the North Dakota Department of Labor for overtime pay based on her status as an employee. S/L Services contested the claim, contending Vail was an independent contractor and not an employee. In June 2014, the Department of Labor determined Vail was an employee and she was entitled to overtime pay during her employment with S/L Services.

         [¶ 11] Meanwhile, in January 2014, Vail, individually and as trustee for WSI, filed a tort action against S/L Services in federal district court for personal injuries she sustained while working for S/L Services. The federal district court initially denied S/L Services' motion to dismiss for failure to state a claim, concluding S/L Services' action in opening a WSI account in August 2012 before Vail's injuries and paying some premiums at that time did not preclude her from bringing a personal injury action against S/L Services. S/L Services later moved for summary judgment. The federal district court thereafter certified seven questions of law to this Court after determining they may be ...


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