|Hearings Unit: Final Order
In the Matter of
and Summitt Forests, Inc., Respondents.
Case Number 06-97
Amended Final Order of the Commissioner
Issued December 3, 1996.
FINDINGS OF FACT
ULTIMATE FINDINGS OF FACT
CONCLUSIONS OF LAW
Where two farm labor contractors, an individual and his corporation, underreported their Oregon payroll to their workers´ compensation insurer and thereby substantially underpaid their Oregon workers´ compensation insurance premiums, they failed to make sufficient workers´ compensation insurance premium payments when due. While Respondents´ actions justified a sanction up to and including revocation of their license, the Commissioner granted Respondents a one year provisional license on the condition that they provide the Commissioner with information about their current workers´ compensation insurance coverage and premium payments and pay the Bureau of Labor and Industries $45,000 for use in administering and improving compliance with farm labor contractor laws. ORS 658.445(3); former OAR 839-15-145 (6) and 839-15-520(2), (3)(j).
Pursuant to notice, a hearing was held on September 5 and 6, 1996, in Salem, Oregon, before Administrative Law Judge Douglas A. McKean. The Bureau of Labor and Industries (the Agency) was represented by Judith Bracanovich, an employee of the Agency. Scott R. Nelson (Respondent Nelson) and Summitt Forests, Inc. (Respondent Summitt) were represented by James Mountain, Attorney at Law. Mr. Nelson was present throughout the hearing on his own behalf and as Respondent Summitt´s representative.
The Administrative Law Judge (ALJ) received administrative exhibits X-1 to X-37; Agency exhibits A-1 to A-15, A-17 to A-23 (pp. 3 to 7), A-25 (pp. 1 to 6, 10), and A-27 to A-33; and Respondents´ exhibits R-1 to R-7. The Agency withdrew exhibits A-16, A-23 (pp. 1 and 2), A-24, A-25 (pp. 7 to 9), and A-26.
The Agency called John Hegener, Audits Manager, SAIF Corporation, as its witness. Respondents called the following witnesses (in alphabetical order): Mike Backen, a forester with Boise Cascade Corporation; John Booten, Ombudsman for Small Business, Department of Consumer and Business Services; Douglas Hunter, an insurance broker; Scott R. Nelson, Respondent; Glen Novak, a forester with Boise Cascade Corporation; David Seifers, forestry consultant; and Daisey Walker, office manager for Respondent Summitt. The record closed on September 6, 1996.
Having fully considered the entire record in this matter, I, Jack Roberts, Commissioner of the Bureau of Labor and Industries, make the following Findings of Fact (Procedural and on the Merits), Ultimate Findings of Fact, Conclusions of Law, Opinion, and Amended Order.
1) On April 25, 1996, the Agency issued a "Notice of Proposed Revocation of Farm Labor Contractor License" to Respondents. The basis for the proposal was Respondents´ alleged failure to provide workers´ compensation insurance or to make workers´ compensation insurance premium payments when due. Respondents filed an answer and requested a hearing.
2) On July 10, 1996, the Hearings Unit issued to Respondents and the Agency a "Notice of Hearing." With the hearing notice, the Hearings Unit sent Respondents a "Notice of Contested Case Rights and Procedures" containing the information required by ORS 183.413, and a complete copy of the Agency´s administrative rules regarding the contested case process -- OAR 839-50-000 through 839-50-420. At the participants´ request, the ALJ later changed the location of the hearing and, on his own motion, changed the time for convening the hearing.
3) On July 17, 1996, the Agency filed a motion to amend its Notice of Proposed Revocation. Respondents filed a response, moved to dismiss the notice, and moved to postpone the hearing. The Agency responded. Following a conference call, the Administrative Law Judge granted the motion to amend the Notice of Proposed Revocation, granted the motion for postponement, and denied the motion to dismiss. As amended, the Notice of Proposed Revocation alleged that between March 1991 and September 1992, Respondents failed to make sufficient monthly workers´ compensation insurance premium payments when due, which demonstrated that Respondents´ character, competence, and reliability made them unfit to act as a farm labor contractor. Respondents filed an answer to the amended notice.
4) On July 25, 1996, the Agency filed a motion for partial summary judgment. After an extension of time, Respondents filed a response and a cross-motion for summary judgment. The Agency replied and responded to the cross-motion. Following oral argument, the ALJ granted the Agency´s motion for partial summary judgment and denied Respondents´ cross- motion.
5) The ALJ issued a discovery order to the participants directing them each to submit a summary of the case according to the provisions of OAR 839-50-210. The Agency and Respondents each submitted a timely summary and later supplemented it. In their summary, Respondents moved to dismiss the charging document. The Agency responded and moved to disallow the testimony of Respondents´ expert witness. Respondents responded and filed a hearing memorandum. Following oral arguments, the ALJ denied both motions during the hearing.
6) At the start of the hearing on September 5, 1996, Respondents´ attorney said that he had received and read the Notice of Contested Case Rights and Procedures and had no questions about it.
7) Pursuant to ORS 183.415(7), the ALJ verbally advised the Agency and Respondents of the issues to be addressed, the matters to be proved, and the procedures governing the conduct of the hearing.
8) On September 13, 1996, the Hearings Unit issued a Proposed Order in this matter. Respondents filed timely exceptions. The ALJ denied Respondents´ request for oral argument. Respondents´ exceptions have been addressed throughout this final order.
9) On September 27, 1996, the Commissioner issued a Final Order. On September 30, 1996, Respondents filed a Petition for Judicial Review and requested an order staying the enforcement of the final order pending resolution of the appeal. Following negotiations, Respondents and the Commissioner entered into a Settlement Agreement and the Commissioner withdrew the final order for reconsideration. On reconsideration, the Commissioner issues this Amended Final Order in which (1) the findings of fact, conclusions of law, and opinion remain unchanged from the original final order, and (2) the "Order" section has been amended to reflect the terms of the Settlement Agreement.
FINDINGS OF FACT -- THE MERITS
1) From 1983 to 1988, Respondent Nelson, a natural person, did business as Summitt Enterprises from Ashland, Oregon, where he lived. He was licensed by the Agency with a special indorsement authorizing him to act as a farm labor contractor with regard to the forestation or reforestation of lands. On February 13, 1987, Respondent Nelson voluntarily canceled the assumed business name of Summitt Enterprises.
2) On February 13, 1987, Summitt Enterprises, Inc. (SEI) was incorporated in Oregon. Respondent Nelson was SEI´s president and registered agent. His wife, Paula Nelson, was the corporate secretary. SEI´s principal office was in Ashland. Respondent Nelson and SEI were jointly licensed by the Agency to act as a farm labor contractor with regard to the forestation or reforestation of lands.
3) In January 1989, the Agency wrote Respondent Nelson regarding SEI´s failure to submit any certified payroll reports concerning SEI´s 1988 contracts.
4) During the period October 1, 1988, through September 30, 1989, SAIF Corporation (SAIF) provided a workers´ compensation insurance policy to SEI. During that time, SEI had contracts in Oregon worth around $742,000 and reported $92,083 in payroll to SAIF. SEI also had contracts in California worth around $545,000 and reported $593,000 in payroll to California´s state workers´ compensation fund. At all times material, California´s workers´ compensation insurance rates for reforestation workers were less than Oregon´s rates. Respondent Nelson reported Oregon workers´ payroll to the California state compensation fund rather than to SAIF in order to pay California´s lower workers´ compensation insurance premiums. SAIF conducted a final premium audit during November 1989 to March 1990 for the policy period October 1, 1988, through September 30, 1989. In April 1990, SAIF sent Respondent Nelson a Final Premium Audit Billing for $262,128. The additional premiums billed resulted primarily from adjustments for unreported payroll for Oregon reforestation workers. In May 1990, SAIF notified Respondent Nelson that $255,392 had to be paid by June 13, 1990, or SAIF would cancel SEI´s workers´ compensation insurance policy. On June 13, 1990, SAIF canceled the policy. SEI appealed the final premium audit billing to the Director of the Department of Insurance and Finance (DIF). In November 1990, Respondent Nelson, on behalf of SEI, entered into an agreement and stipulated order wherein he agreed that SEI "failed to properly report payroll to SAIF Corporation, and failed to maintain verifiable payroll records, all as required by the policy terms[.]" SEI paid SAIF $279,745, representing $255,392 in premium assessments plus interest and a penalty. The order confirmed SAIF´s audit and dismissed SEI´s appeal.
5) In November 1989, Respondent Nelson incorporated a new company, Summitt Forests, Inc. (Respondent Summitt), in California. Respondent Nelson was the president, the registered agent, and (with his wife) the owner of the corporation. Paula Nelson was the corporate secretary. From November 1989 to September 30, 1996, Respondent Nelson and Respondent Summitt were jointly licensed by the Agency with a special indorsement authorizing them to act as a farm labor contractor with regard to the forestation or reforestation of lands. At times material, Respondent Summitt maintained its office and clerical staff in the Ashland area, but it had a post office box in Yreka, California. It´s telephone number was Respondent Nelson´s telephone number in Ashland. Respondent Summitt used an Oregon bookkeeper, an Oregon accountant, an Oregon payroll service, and an Oregon business insurance agent. It had its vehicles registered in Oregon and had its bank accounts with the Ashland branch of United States National Bank. Until October 1992, Respondent Nelson employed a secretarial service to pick up Respondent Summitt´s mail from the Yreka post office box and ship it to him in Ashland. Respondent Nelson´s intent was to set up a California base of operation so that newly hired employees would be considered California employees.
6) Between March 1, 1991, and September 4, 1992, Wausau Insurance Companies (Wausau) provided a workers´ compensation insurance policy to Respondent Summitt. Monthly premiums were billed based on Respondent Nelson´s estimates of Oregon payroll. From those estimates, between March 1, 1991, and September 1, 1992, Wausau billed and Respondent Summitt paid $57,455 for the policy. Beginning in June 1992, Wausau audited Respondent Summitt´s records. The payroll records were not auditable because they were incomplete, inaccurate, inconsistent, and incapable of independent verification. Following the final premium audit, Wausau sent Respondent Summitt two billings: one for $561,062 in additional premiums for the policy period March 1, 1991, to March 1, 1992; and the other for $287,233 in additional premiums for the policy period March 1, 1992, to the policy cancellation date of September 4, 1992. Respondent Summitt appealed both billings to the Department of Consumer and Business Services (DCBS), which was formerly DIF. On March 1, 1996, DCBS issued a final order directing Wausau to modify the final premium audit billing consistent with the order (reducing the premium for certain payments made to Barrett Business Services, to subcontractors, and to employees working in Washington). Because Respondents´ records were not auditable, DCBS permitted Wausau to base the workers´ compensation insurance premiums on its estimate of Respondent Summitt´s payroll being equal to 50 percent of contract receipts. Wausau issued a revised premium billing of around $538,000. Respondents and Wausau settled the matter for $475,000, which Respondents paid around August 30, 1996.
7) During the period March 1991 to September 1992, Respondent Summitt employed supervisors, who were responsible for supervising foremen, who, in turn, were responsible for supervising the workers. Respondent Summitt employed many workers who were citizens of Mexico but who worked in the United States for approximately 10 months a year. During the reforestation season, the workers often shared living quarters in Oregon with co-workers, local friends, or relatives. They frequently used a friend´s or relative´s mailing address as their own. Respondent Summitt provided vehicles, usually vans, to its foremen. The foremen were authorized to use the vans to transport new workers from Oregon to Yreka, California, to hire the new workers, and then to return them to Oregon. The foremen signed up the new Oregon workers at California restaurants. Respondent Nelson intended to create the appearance that Respondent Summitt was a California company and that, by using a California hiring location, the workers were residents of California. Respondent Nelson attempted to establish California residency for the workers to avoid paying workers´ compensation insurance premiums to Wausau within the state of Oregon.
8) From April 8, 1991, to June 17, 1992 (when it canceled the contract), Barrett Business Services (Barrett) contracted with Respondent Summitt to provide leased employees to Respondents for reforestation work. The contract established that Summitt and Barrett were "joint employers" for purposes of the applicable workers´ compensation laws, and required Respondent Summitt to maintain workers´ compensation insurance on the leased employees. Respondent Summitt was responsible for the day-to-day supervision of the joint employees. Through the way he reported payroll, Respondent Nelson attempted to change the workers´ status on each job. He attempted to limit the amount of time that Respondent Summitt called itself the employer on a given contract to under 30 days, and then he subcontracted out the remaining days of the work performed on the contract. "On day 30, that laborer was assigned to Barrett as a leased employee but continued working under the same supervisor. Nelson attempted to change that laborer´s status by assigning him to Barrett, and Nelson hoped that under those circumstances the laborer was no longer a Summitt employee despite the fact that the laborer performed the same function, for the same supervisor as the previous day. In the latter circumstance, Barrett would have reported the payroll to its insurer; [Respondent Summitt] would not have reported the laborer´s payroll to Wausau." By doing this, Respondent Nelson expected to be exempt from Oregon´s workers´ compensation law and instead pay California´s lower workers´ compensation premium rates, thereby decreasing his insurance costs. He also took advantage of lower workers´ compensation insurance rates paid by Barrett. Under this plan, Respondent Summitt could only work up to 30 days at an Oregon site and remain exempt from paying Oregon workers´ compensation insurance. The plan depended on the workers being California workers. On some Oregon contracts, Respondent Summitt´s employees worked more than the 30-day limit. From Respondents´ records, it was not possible to determine how long employees worked on any one contract in Oregon or whether employees worked at a single location for no more than 30 days. Respondent Nelson advised a payroll service how to divide the payroll for purposes of reporting amounts to more than one state.
9) In November 1992, an Agency investigation showed that Respondent Summitt´s certified payroll reports failed to provide information required by law.
10) From September 7, 1992, to October 16, 1993, Respondent Summitt had no Oregon workers´ compensation insurance. During that time, Respondent Summitt employed Oregon workers to work on at least 10 reforestation contracts in Oregon. These workers were not California workers temporarily working in Oregon. In June 1993, the Department of Insurance and Finance issued a "Proposed and Final Order Declaring Noncompliance and Assessing a Civil Penalty" to Respondent Summitt. DIF found that Respondent Summitt was in violation of Oregon workers´ compensation laws as a noncomplying subject employer and ordered Respondents to pay a $1,000 civil penalty. Respondents requested a hearing. In March 1994, the matter was dismissed after Respondent Summitt entered into a stipulation wherein, without admitting that it was a noncomplying employer, it paid the $1,000 civil penalty.
11) At the time of hearing, Respondent Summitt had a good financial reputation, which included paying its bills on time (including the bills of its current workers´ compensation insurer). Respondents´ reforestation work was of high quality and timely performed. They hired good employees, took good care of the employees, and kept the equipment in good repair. Respondent Nelson communicated well with his staff and business contacts and took care of problems quickly. He was involved with his community as a volunteer and coach.
ULTIMATE FINDINGS OF FACT
1) During times material, Respondents were licensed as a farm labor contractor, doing business in Oregon. Respondent Summitt was an Oregon employer.
2) During times material, Respondents intentionally and repeatedly reported Oregon reforestation employees as California employees in order to pay California´s workers´ compensation insurance premiums rather than Oregon´s premiums. They intentionally underestimated and underreported Respondent Summitt´s Oregon payroll to its Oregon workers´ compensation insurers. Respondents did so to decrease workers´ compensation insurance costs in Oregon.
3) As a consequence of intentionally underestimating and underreporting Respondent Summitt´s Oregon payroll to its workers´ compensation insurer, Respondents failed to make sufficient workers´ compensation insurance premium payments when due.
4) Respondents´ character, reliability, and competence make them unfit to act as a farm labor contractor.
1) The Commissioner of the Bureau of Labor and Industries of the State of Oregon has jurisdiction over the subject matter and the persons herein. ORS 648.405 to 658.503.
2) The actions, inactions, and statements of Respondent Nelson are properly imputed to Respondent Summitt. Since Respondent Nelson was Respondent Summitt´s owner and president during all times material herein, and his actions, inactions, and statements were made within the course and scope of that employment or agency, Respondent Summitt is responsible for those actions, inactions, and statements.
3) Respondent Summitt was not exempt from providing Oregon workers´ compensation insurance coverage for its Oregon employees. ORS 656.126(2); OAR 436-50-055. In the Matter of Summitt Forests, Inc. v. NCCI and Wausau Underwriters Insurance Company, # INS 92-10-031 (3-1-96).
4) Pursuant to ORS 658.445(3), the Commissioner of the Bureau of Labor and Industries has the authority to and may revoke Respondents´ license to act as a farm labor contractor if the "licensee´s character, reliability or competence makes the licensee unfit to act as a farm labor contractor."
Former OAR 839-15-145 provides, in part:
"The character, competence and reliability contemplated by ORS 658.405 to 658.475 and these rules includes, but is not limited to, consideration of:
"(6) Whether a person has paid worker´s compensation insurance premium payments when due."
Former OAR 839-15-520 provides in part:
"(2) When the * * * licensee demonstrates that the * * * licensee´s character, reliability or competence makes the * * * licensee unfit to act as a Farm or Forest Labor Contractor, the Commissioner shall propose that the * * * license of the licensee be suspended, revoked or not renewed.
"(3) The following actions of a Farm or Forest Labor Contractor * * * licensee or an agent of the * * * licensee demonstrate that the * * * licensee´s character, reliability or competence make the * * * licensee unfit to act as a Farm Labor Contractor:
"(j) Failure to make workers´ compensation insurance premium payments when due[.]"
Respondents failed to make sufficient workers´ compensation insurance premium payments when due. The forum has considered the manner, duration, and extent of Respondents´ conduct in so failing to make these payments. The forum has also considered the evidence presented by Respondents bearing on their character, reliability, and competence. Under the facts and circumstances of this record, and pursuant to the applicable law and rules, Respondents have demonstrated their unfitness to act as a farm or forest labor contractor, and their license must be revoked.
1. Summary Judgment Granted to the Agency
Pursuant to OAR 839-50-150 (4)(a)(A), the Agency filed a motion for summary judgment on the issue of whether Respondents paid sufficient workers´ compensation insurance premium payments when due. The Agency asserted that the final order of the Department of Consumer and Business Services, In the Matter of Summitt Forests, Inc. v. NCCI and Wausau Underwriters Insurance Company, # INS 92-10-031 (3-1-96), should be given preclusive effect on this issue. The Administrative Law Judge granted that motion. Subsection (c) of OAR 839-50-150(4) provides that, where the Administrative Law Judge grants the motion, the decision shall be set forth in the proposed order. This order has been issued according to that procedure.
A. Issue Preclusion
Since this case involves the preclusive effect of an administrative proceeding, it is governed by the common law. Nelson v. Emerald People´s Utility District, 318 Or 99, 104, 862 P2d 1293,1296 (1993). A DCBS decision on an issue may preclude relitigation of the issue in this proceeding if five requirements are met. Nelson, 318 Or at 104, 862 P2d at 1296; Fisher Broadcasting, Inc. v. Department of Revenue, 321 Or 341, 898 P2d 1333 (1995). The five requirements are:
1. The issue in the two proceedings is identical.
As noted above, the issue is whether Respondents made sufficient workers´ compensation insurance premium payments when due. The Agency contends that this issue was fully litigated before DCBS and the doctrine of issue preclusion (or collateral estoppel, as referred to in OAR 839-50-150(4)(a)(A)) applies to preclude relitigation of it. Respondents contend, in part, that this issue was not before DCBS -- that the issue there was whether Respondents´ workers´ compensation insurance carrier overbilled Respondents following a final premium audit.
It´s true that the issue as framed by the Agency is not stated expressly in the DCBS order. However, the forum does not believe that, to serve as the basis for issue preclusion, the issue has to appear expressly in the DCBS final order. See, for example, State v. McAllister, 72 Or App 611, 696 P2d 1138, 1140 (1985). I find that the narrower issue -- whether Respondents made sufficient workers´ compensation insurance premium payments -- was actually and necessarily included in the decision of DCBS. Of course, DCBS decided many other issues along the way, including whether the reforestation workers employed by Respondents were California workers temporarily working in Oregon or Oregon workers temporarily working in other states. But an ultimate fact decided was that Respondents failed to make sufficient workers´ compensation insurance premium payments during the policy period (due to the underreporting of Oregon payroll). Although DCBS ordered Wausau to reduce elements of the final premium audit billing, Wausau´s final billing (after the DCBS final order) was for $538,000 in additional premiums due for the policy period -- that is, premiums in addition to the $57,455 Respondent Summitt paid previously on the basis of its underreported Oregon payroll.
Because I narrowed the issue above, this leaves the question of when the premium payments were due. Wausau did not determine that additional premiums were due until after it had conducted the final premium audit. The audit program and an appeal process are established by the insurance contract and by statute. See ORS 737.318 and 737.505. In its order, DCBS did not expressly decide when the additional premiums found owing were due.
Respondents argue that this question was not before DCBS and that, under the statutory scheme, premiums found due following a final premium audit are not due retroactively; they are due after they are billed. Therefore, Respondents argue, the issues are not identical as between the two proceedings, the requirements of issue preclusion have not been met, and summary judgment should not be granted.
Respondents argue further that they made each of the monthly premium payments when due and that, following their appeal of the final premium audit billing, they promptly settled with the insurer and paid the settlement amount. The Agency argues that the additional premium amounts were due at the time they accrued, where Respondents avoided paying the correct premium during the policy period by charging Oregon workers performing reforestation work in Oregon to Respondent Summitt´s California workers´ compensation insurance policy. Citing In the Matter of Efrain Corona, 11 BOLI 44 (1992), aff´d without opinion, Corona v. Bureau of Labor and Industries, 124 Or App 211, 861 P2d 1046 (1993), the Agency argues that this "premium-due-as-accrued" rationale was implicitly adopted by this forum under the facts in Corona where, following a final premium audit, the contractor owed some $600,000 in premiums as a result of underreporting payroll during the three policy years in question, notwithstanding that the contractor made timely monthly premium payments. The Commissioner held in that case that the contractor failed to make the $600,000 in workers´ compensation insurance premium payments over the three years, or, in other words, when due, citing OAR 839-15-520(3)(j). Corona, 11 BOLI at 56-57.
The Commissioner has interpreted the rule and the meaning of "when due." Where a farm labor contractor has underreported payroll during the period of a workers´ compensation insurance policy and, after a final premium audit, where additional premiums are found due, those additional premiums were due as they accrued. This interpretation recognizes that if the contractor had correctly reported his actual payroll to his insurer, he would have been making additional premium payments throughout the period of the policy.
Applying the rule, as interpreted, to the facts of this case leads to the following conclusion: Respondents failed to make workers´ compensation insurance premium payments when due as a result of underreporting Respondent Summitt´s Oregon payroll to Wausau during the policy period.
Accordingly, I find that the issue in the two proceedings -- whether Respondents paid sufficient workers´ compensation insurance premium payments -- is identical. Concerning whether the premiums were paid when due, by decision of the forum, I grant summary judgment to the Agency based on the rule as interpreted and applied to the facts in this case. OAR 839-50-150(4)(a) (providing that the Administrative Law Judge may grant summary judgment on his own motion as to all or any part of the issues raised in the pleadings).
2. The issue was actually litigated and was essential to a final decision on the merits in the prior proceeding.
Respondents contend that what was litigated before DCBS was whether Wausau overbilled them for workers´ compensation insurance coverage. The Agency contends that what was litigated was whether additional premiums were owed by Respondent Summitt to Wausau.
As found in the previous section of this Opinion, the issue of whether Respondents paid sufficient workers´ compensation insurance premium payments was not expressly articulated by DCBS. However, while the issue before DCBS may be expressed as whether Wausau overbilled Respondent Summitt or whether Respondent Summitt owed additional premiums, I find that the issue -- whether sufficient workers´ compensation insurance premium payments were made during the policy period -- was actually and necessarily litigated and was essential to a final decision on the merits in the DCBS proceeding. DCBS found that Respondents misreported their Oregon workers´ payroll to the California insurance fund and that their payroll records were not auditable. As a result, DCBS estimated Respondent Summitt´s Oregon payroll to be 50 percent of its Oregon contract receipts. Although it ordered Wausau to adjust its final billing, DCBS effectively affirmed that Respondent Summitt owed over half a million dollars in additional premiums. This determination that additional premiums were owed, or, put another way, that Respondents had made insufficient premium payments during the period of the policy, was essential to the final decision on the merits. I find that this requirement for issue preclusion has been met.
3. The party sought to be precluded has had a full and fair opportunity to be heard on that issue.
Respondents again contend that the issue before DCBS was not whether they made sufficient workers´ compensation insurance premium payments when due. They argue that they did not have the opportunity to litigate their fitness of character. The Agency contends that DCBS fully and fairly heard Respondents´ evidence and legal arguments about whether additional premiums were owed, along with the other issues, including whether Respondent Summitt was an Oregon or California employer.
After reviewing the proposed and final orders issued by DCBS, I am satisfied that Respondents had a full and fair opportunity to be heard on the issue before me. The DCBS hearing was held before a hearings officer over the course of five days. Respondents were represented by counsel, as were Wausau and NCCI. Respondents had strong reasons, given the amount of additional premiums billed, to litigate aggressively. Respondents filed extensive exceptions to the proposed order, and the Insurance Commissioner heard oral argument on the exceptions. Respondents´ fitness of character was not an issue before DCBS, but it likewise is not an issue on which issue preclusion or summary judgment has been sought. I conclude that this requirement for issue preclusion has been met.
4. The party sought to be precluded was a party or was in privity with a party to the prior proceeding.
Respondents acknowledge that they were parties to the DCBS proceeding. They contend, however, that they were the petitioner in that proceeding and claim it is unfair to use their partial failure to carry their burden before DCBS as a sword by the Agency to use summarily to revoke their license.
The only question here is whether Respondents were parties to the prior proceeding. They were. It does not matter that they were petitioners. Their other claim is unpersuasive. This requirement for issue preclusion has been met.
5. The prior proceeding was the type of proceeding to which this forum will give preclusive effect.
"Some, but not all, types of administrative proceedings are appropriate to establish issue preclusion. Whether an administrative decision has a preclusive effect depends on: (1) whether the administrative forum maintains procedures that are ´sufficiently formal and comprehensive´; (2) whether the proceedings are ´trustworthy´; (3) whether the application of issue preclusion would ´facilitate prompt, orderly and fair problem resolution´; and (4) whether the ´same quality of proceedings and the opportunity to litigate is present in both proceedings.´" Nelson, 318 Or at 104, 862 P2d at 1297 (citations omitted).
Respondents contend that this requirement has not been met because DCBS´s predecessor agency, DIF, refused to give preclusive effect to its own ruling from a prior premium audit proceeding, citing Bruer´s Contract Cutting v. National Council on Compensation Insurance, 116 Or App 485, 489, 841 P2d 690 (1992).
The Agency contends that the DCBS proceeding had sufficient safeguards, had formal and comprehensive procedures, was trustworthy, and provided the same opportunity to litigate as this forum, and that application of issue preclusion would facilitate prompt, fair, and orderly problem resolution. It argues that the DCBS proceeding is appropriate to establish issue preclusion and the DCBS decision should have preclusive effect.
Further, the Agency contends that, under the premium audit appeal process established by statute, an employer may appeal each audit for each policy year, even though the same issues (such as whether a travel expense allowance is part of payroll, as in Bruer´s) are involved in successive audits and even though earlier audit appeals (involving the same issues) may have become final. For this reason, determinations on issues made in previous premium audit appeals do not have preclusive effect on those issues in subsequent audit appeals.
However, the Agency argues, this does not mean that a determination made in an audit appeal is not final and is not entitled to preclusive effect (by DCBS or any other agency) regarding that audit. In other words, a determination made in a final order (for example, about an issue in a 1992 audit) is final and is entitled to preclusive effect regarding that 1992 audit, subject to the insured´s right to appeal that order. Thus, even though an issue may arise in a 1996 audit that also arose in the 1992 audit, and the 1992 audit appeal determination may not preclude relitigation of the issue as presented in the 1996 audit, the insured is not permitted to relitigate the 1992 audit. The final order from the 1992 audit is final and should have preclusive effect as to the 1992 audit issues.
I have reviewed the DIF proposed and final orders in In the Matter of Bruer´s Contract Cutting, Case No. 88-1-3 (Final Order 6-30-89) (regarding a policy period April 1985 to March 1986); the Oregon Court of Appeals case Bruer´s Contract Cutting v. National Council on Compensation Insurance, 116 Or App 485, 489, 841 P2d 690 (1992) (regarding the policy period April 1986 to March 1988); and the order on remand from the just-cited court of appeals case, In the Matter of the Petition of Bruer´s Contract Cutting, Case No. 89-03-016 (1993) (regarding the same policy period, April 1986 to March 1988). In the court of appeals case, DIF´s interpretation of ORS 737.318 was that the Legislature intended that an employer retain the right to appeal the results of audits for each policy year and each insurer. The court agreed with that interpretation and, after quoting the DIF order ("´Issue preclusion does not apply in the final audit billing appeal process´"), the court stated, "Issue preclusion does not prevent [DIF] from considering the estoppel claim." Bruer´s, 116 Or App at 489, 841 P2d at 692. The court decided that issue preclusion did not apply to the estoppel claim on the basis of DIF´s interpretation of ORS 737.318 and on the basis that the parties had not litigated the estoppel claim in a prior DIF proceeding (citing Drews v. EBI Companies, 310 Or 134, 139, 795 P2d 531 (1990)).
I am persuaded that issue preclusion does not apply to bar relitigation of issues in successive audit appeals. However, I am also persuaded that issue preclusion may apply to an issue decided in an audit appeal when that issue arises in another proceeding dealing with the same audit. This is a different situation than the one considered in Bruer´s. In this proceeding, the Agency seeks to preclude the relitigation of an issue that was decided in Respondents´ 1992 audit (that is, whether Respondents made sufficient workers´ compensation premium payments during the policy period) in a BOLI proceeding focusing on the same audit period. The BOLI proceeding was not held pursuant to the requirements of ORS 737.318 or 737.505. Thus, I do not find the reasoning or holding in Bruer´s dispositive here. That being so, I turn to the other questions to be considered under this requirement for issue preclusion.
It appears to me from the contents of the DCBS proposed and final orders in In the Matter of Summitt Forests, Inc. v. NCCI and Wausau Underwriters Insurance Company and from ORS 183.315 (which does not exempt DCBS from the contested case procedures in the Administrative Procedures Act) that DCBS maintains procedures that are sufficiently formal and comprehensive. Given those procedures, as well as the administrator´s review of Respondents´ exceptions and of the record, and the reasoning described in the final order, I am satisfied that the DCBS proceeding was trustworthy. I also find that application of issue preclusion would facilitate prompt, orderly, and fair problem resolution because (1) DCBS already spent five days hearing evidence on the same factual issues that this forum would have to consider (and thereby saved the participants the time and expense of presenting that evidence again), (2) the Agency properly waited until DCBS issued a final order, thereby permitting the orderly consideration of this common issue by this forum, and (3) it allows an agency with greater expertise in workers´ compensation insurance matters to consider and decide an issue first, and then allows this forum to rely on that expertise and rule consistently, which promotes fairness. Finally, it appears that the Administrative Procedures Act applies to both agencies´ contested case hearing processes. Both agencies hold hearings after due notice; both permit the parties to be represented by counsel and to present evidence, arguments, motions, and exceptions; both issue proposed orders and receive exceptions to those orders; both issue final orders following a review of the record and exceptions by the appropriate official. In each proceeding, Respondents had a strong incentive to litigate the issues aggressively. I do not find that, by providing a summary method of resolving disputed issues in the context of the contested case hearing process, the Bureau has impermissibly or improperly diminished the quality of the proceedings or the opportunity to litigate. I conclude that the same quality of proceedings and the opportunity to litigate is present in both proceedings. Accordingly, I find that this requirement for issue preclusion has been met.
I conclude that all requirements of issue preclusion have been met. The Agency´s motion for summary judgment is granted. As stated in the Ultimate Findings of Fact above, Respondents failed to make sufficient workers´ compensation insurance premium payments when due.
2. Summary Judgment Denied to Respondents
Respondents requested summary judgment on the basis of issue preclusion, relying on a ruling in Lane County circuit court granting summary judgment in favor of Respondent Summitt against Northwest Reforestation Contractors Association, Inc. et al.
Applying the same requirements for issue preclusion discussed above, the outcome of Respondents´ motion is determined by the fourth question -- was the party sought to be precluded a party or in privity with a party to the prior proceeding. Respondents contend that Northwest Reforestation Contractors Association sent a letter to the Agency complaining about Respondents, and thus the association became the Agency´s complainant in this proceeding. Further, they argue, the association was acting as a private attorney general attempting to enforce statutes that the Commissioner is authorized to enforce. Thus, the argument goes, the Agency was somehow a party or in privity with the association in the circuit court case. The Agency contends that it was neither a party nor in privity to a party in the court case, it had no control over the association in the litigation, and the association is not the Agency´s complainant in this contested case.
I find that the Agency was neither a party nor in privity to a party in the circuit court case. Accordingly, that requirement of issue preclusion has not been met and the motion for summary judgment must be denied.
3. Motion to Dismiss Denied
On July 31, 1996, Respondents moved to dismiss the charging document because it failed to state a claim. The Agency´s Notice of Proposed Revocation sought to revoke Respondents´ license because they failed to make "sufficient" workers´ compensation insurance premium payments when due. Respondents contended that the phrase "sufficient payment" was a "nullity" because "sufficient" had no basis in the statutes and was neither used nor defined in the Agency´s rules. Respondents relied on Megdal v. Board of Dental Examiners, 288 Or 293, 320, 605 P2d 273 (1980). Respondents also claimed that their state and federal constitutional rights, as well as principles of administrative law, would be violated if the Agency revoked their license based on this notice. The Administrative Law Judge denied the motion, finding that the notice adequately stated a claim. Further, the ALJ said he needed "more than a one-sentence conclusion that Respondents´ rights are being violated before [he could] fairly consider such claims."
At hearing, Respondents renewed their motion to dismiss for failure to state a claim. Again, relying on Megdal, they argued that there was no basis in the statutes or rules for revoking their license on the ground that they did not make "sufficient" premium payments. They argued further that, even if the Agency had properly "adopted a rule that the failure to make a ´sufficient´ premium payment is grounds for revoking a license, that rule also is inconsistent with the legislative policy of ORS 658.445(3)." They claim that the statutes and rules provide no guidance on what constitutes "sufficient" payment, and therefore whether a failure to make sufficient payments will result in revocation "is a matter that is left entirely to the Forum´s purely ad hoc discretion. That violates Article I, section 20 of the Oregon Constitution and the Due Process Clause of the Fourteenth Amendment." Respondents´ Hearing Memorandum, at 9-11.
At hearing, the Agency argued that "sufficient" is an elastic term that is appropriately developed on a case-by-case basis. The Agency compared the instant case to Corona, wherein the contractor failed to make "sufficient" premium payments during a three year period and, following a final premium audit and appeal, the insurer billed the contractor for around $600,000 in additional premiums.
The ALJ denied Respondents´ motion, ruling that the Commissioner had established in a previous contested case that failure to make sufficient workers´ compensation insurance premium payments when due was a basis for determining whether someone had the requisite character, reliability, or competence to act as a farm labor contractor.
The facts here are unlike the facts in Megdal, where the Board of Dental Examiners had not made a rule proscribing the kind of conduct charged. Here, the Commissioner has adopted a rule stating that, when assessing a person´s character, reliability, or competence, the Agency will consider whether the person made workers´ compensation insurance premium payments when due. OAR 839-15-145(6). The Commissioner adopted another rule providing that failure to make workers´ compensation insurance premium payments when due demonstrates that the person is unfit to act as a farm labor contractor. OAR 839-15-520(3)(j).
The Agency is entitled to interpret these rules, and its interpretation of its own rules is entitled to deference. 1000 Friends of Oregon v. LCDC (Lane Co.), 305 Or 384, 390-91, 752 P2d 271, 275 (1988) (the legislative choice to entrust the agency both with setting standards and with applying them can imply that the agency´s view of its standards is to be given some appropriate respect).
In Corona, the contractor had made monthly premium payments, but, because he underreported his payroll, he underpaid his premiums by around $600,000 during the policy period. The Commissioner held that this demonstrated a failure to make workers´ compensation insurance premium payments when due. The Commissioner made it clear that, when determining a farm labor contractor´s fitness to be licensed, the Agency will consider whether the licensee made sufficient workers´ compensation insurance premium payments when due. In Respondents´ case, the forum is applying the same law as was applied in Corona. In other words, this case represents the application of existing law and rules to a situation factually similar to Corona.
Given the similarities between the facts in Corona and those found here, I conclude that the ALJ´s ruling was correct and Respondents´ rights have not been violated. The ruling denying Respondents´ motion to dismiss is affirmed.
In their answer, Respondents contend that the Commissioner is estopped from revoking their license for the reason alleged in the amended Notice of Proposed Revocation because, at the time of the answer, those allegations related "to a currently ongoing premium audit appeal process and are properly and exclusively within the jurisdiction of DCBS and/or the Oregon Court of Appeals."
The Agency argues that the appeal of the DCBS final order (now apparently dismissed with the settlement of Wausau´s final billing) does not affect the order for purposes of issue preclusion. The Agency also argues, in effect, that the matters alleged are matters within the jurisdiction of the Commissioner even if they are the subject of the DCBS litigation.
Given the Satisfaction of Judgment filed with DCBS, this issue may be moot. Nevertheless, if it is not moot, I find that the Agency is not estopped from seeking to revoke Respondents´ license. A pending appeal does not affect the finality of a judgment for purposes of claim or issue preclusion. Hickey v. Settlemier, 116 Or App 436, 841 P2d 675 (1992), aff´d in part, rev´d in part, 318 Or. 196, 864 P2d. 372 (1993); and see Corona, 11 BOLI at 57 (citing cases for the same proposition). Further, the Commissioner clearly has jurisdiction to decide whether a licensee has the requisite character, reliability, and competence to act as a farm labor contractor. Whether a licensee is providing workers´ compensation insurance coverage is a substantive matter that is influential in the Commissioner´s decision whether to grant or deny a license. In the Matter of Z and M Landscaping, Inc., 10 BOLI 174, 181 (1992). The Commissioner has by rule and final order also made it clear that properly paying for workers´ compensation insurance is a matter the Agency will consider when assessing a licensee´s character, reliability, and competence. I conclude that the factual matters alleged in this case are within the Commissioner´s jurisdiction, notwithstanding that the same issues were once before DCBS.
A. Civil Penalty
In their hearing memorandum, Respondents contend that a civil penalty is not authorized here because there is no statutory authority to assess a civil penalty for failure to make sufficient workers´ compensation insurance premium payments when due, and because the Agency´s Notice of Proposed Revocation stated that it was seeking only revocation of Respondents´ license. Yet at hearing, Respondents argued that it would be permissible for the forum to assess a civil penalty in lieu of revoking their license.
The Agency contended that, while a civil penalty is permissible (as acknowledged by Respondents at hearing), it is not appropriate under the facts of this case.
ORS 658.453 is the Commissioner´s statutory authority for assessing a civil penalty. In subsection (1), the statute specifies the violations for which a civil penalty may be assessed. OAR 839-15-508 similarly lists the violations for which the Commissioner may impose a civil penalty. Neither the statute nor the rule lists a failure to make workers´ compensation insurance premium payments when due as a basis for assessing a civil penalty.
OAR 839-15-520 addresses violations for which a license may be denied, suspended, revoked, or not renewed. It provides in section (8) that, "Nothing in this rule shall preclude the Commissioner from imposing a civil penalty in lieu of denying or refusing to renew a license application or in lieu of suspension or revocation of a license." This forum has previously ruled that, even when revocation is the only sanction proposed, the Administrative Law Judge may take evidence of mitigating and aggravating circumstances for consideration in assessing a civil penalty under ORS 658.453 and OAR 839-15-520(8), to determine which sanction is appropriate. See, for example, In the Matter of Clara Perez, 11 BOLI 181, 194-95 (1993); Corona, 11 BOLI at 58.
In this case, however, a civil penalty is not an available sanction. As the forum said in both the Perez case and the Corona case, the "Commissioner may impose any sanction authorized by statute." In those cases, violations were alleged for which a civil penalty was authorized by ORS 658.453. This is not the case here. Here, neither the statute nor the rule lists a failure to make workers´ compensation insurance premium payments when due as a basis for assessing a civil penalty. Respondents´ assertion at hearing that a civil penalty would be an appropriate sanction in lieu of revocation cannot confer such authority on the Commissioner. Accordingly, a civil penalty is not a sanction available in this case.
Respondents contend that revocation is an unjust, inappropriate, and grossly disproportionate sanction in this case given: the misuse by this forum of the final premium audit appeal, the age of the alleged events, the fact that Respondent Nelson sought only to attain a legal economic advantage by adjusting his insurance costs, and the preponderance of evidence showing Respondents´ high character, reliability, and competence.
The Agency contends that revocation is the appropriate sanction because Respondents intentionally lowered their Oregon workers´ compensation insurance costs by misreporting their Oregon workers´ payroll to California, and they did so in a way that was directly contrary to and in circumvention of the intention of the Oregon Legislature and the workers´ compensation statutes. The Agency contends that Respondents intentionally misreported the Oregon workers´ payroll to California and failed to maintain verifiable records both before and after Wausau was the insurer. These actions, according to the Agency, demonstrate that Respondents character, reliability, or competence make them unfit to act as a farm labor contractor.
The preponderance of the evidence in the whole record demonstrates that Respondents intentionally and over a period of years circumvented Oregon´s workers´ compensation insurance system by misclassifying and misreporting Oregon workers as California workers, thereby reducing Respondents´ Oregon workers´ compensation insurance costs.
After he admitted in the settlement with SAIF that he failed to report the workers properly and failed to keep verifiable records, Respondent Nelson continued to do the same thing with Wausau. At hearing he denied the substance of his admissions to SAIF. I found Respondent Nelson´s testimony that he thought his records were verifiable and that he thought he was following the requirements of the law not credible.
The preponderance of evidence is persuasive that Respondents knowingly recruited and employed Oregon workers to work on contracts in Oregon. Hauling them across the border to California and having them sign a form does not make them California workers. I am persuaded that Respondent Nelson was not merely trying to lawfully avoid paying Oregon´s workers´ compensation insurance, he was deliberately evading compliance with the letter and the spirit of the Oregon workers´ compensation insurance laws. These were not the innocent mistakes of a young entrepreneur. These were calculated efforts by Respondent Nelson to create an illusion of something that was untrue -- that Respondent Summitt was a California employer employing California workers. All the credible evidence exposes the illusion. The lesson Respondent Nelson appears to have learned from his experience with SAIF was that he needed to create a better illusion. He created Respondent Summitt, which he incorporated in California; he established a California post office box to create the illusion of a place of business in California; and he made up a form for Oregon workers to sign in California to create the illusion that these were California workers. All of this was done to disguise the truth. After Respondent Summitt´s insurance policy with Wausau was canceled, Respondents continued to recruit and employ Oregon workers to work in Oregon, and they did so without any workers´ compensation insurance in Oregon. Respondents´ claim that these workers were all covered by California insurance was unsupported by any evidence aside from Respondent Nelson´s testimony. Whether the claim is true or not, the fact remains that Respondents continued to employ Oregon workers and, apparently, misclassify and misreport them to California. This does not reassure the forum that Respondents changed their manner of operating even after the Wausau audit.
The forum was impressed by witnesses´ testimony concerning Respondents´ general treatment of workers and the quality of Respondent Summitt´s services. It is admirable that Respondent Nelson is active in his community and as a coach for children´s sports. However, the Commissioner has made it clear in rulemaking and in contested case hearings that failure to make sufficient workers´ compensation insurance premium payments when due is an action that may demonstrate a licensee´s lack of fitness to act as a farm labor contractor. Former OAR 839-15-145(6), 839-15-520(3)(j); Corona, 11 BOLI at 57-60. Under the facts found in this case concerning their failure to make sufficient premium payments when due -- which demonstrate the intentional manner in which Respondents evaded the law, the ongoing nature of that behavior, its duration, and the magnitude of those actions -- I conclude that Respondents´ character, reliability, and competence demonstrate that they are unfit to act as a farm labor contractor. Accordingly, pursuant to ORS 658.445(3) and OAR 839-15-520(3)(j), revocation of their license is the appropriate sanction.
6. Respondents´ Exceptions
Respondents take exception to the forum´s decision to grant summary judgment to the Agency. Many of their arguments are the same ones they made in opposition to the motion. Those arguments have been addressed in section 1 of the opinion above.
Respondents also argue that additional issues were before this forum that were not before DCBS, to conclude that the issues in the two proceedings were not identical. However, the issues Respondents raise either were not issues before the forum or were matters discussed apart from summary judgment. For example, Respondents claim that an issue presented in this proceeding was whether the manner of Respondents´ underlying conduct and their subjective intentions are reprehensible. (Respondents´ exceptions, at 8) That issue was not before the forum. On summary judgment, the issue was whether Respondents made sufficient workers´ compensation insurance premium payments when due. Facts about Respondents´ manner of reporting their payroll and paying their insurance premiums were relevant to the issue before the forum and DCBS, but there was no issue about whether their conduct or intentions were reprehensible. Respondents´ intentions were relevant when determining their character, reliability, and competence, but not when determining whether they made sufficient premium payments. Respondents raise false issues and their arguments based on them are without merit.
Respondents also claim that the issue in the two proceedings was not identical because the forum narrowed the issue and granted summary judgment sua sponte on the remaining question concerning when the payments were due. However, the forum did not decide that remaining issue -- concerning when the payments were due -- under the doctrine of issue preclusion. The forum decided that question separately, on its own motion. The forum holds that the identical issue (as narrowed for purposes of issue preclusion) was decided in the two proceedings.
On the other requirements of issue preclusion, Respondents raise similar arguments and false issues. For example, Respondents argue that they did not have a full and fair opportunity to litigate the so-called rule announced in Corona during the DCBS proceeding. However, the Agency did not announce a new rule in the Corona case. See section 3 of the opinion. For purposes of issue preclusion, the issue litigated -- whether Respondents made sufficient workers´ compensation insurance premium payments -- did not require Respondents to litigate any Corona rule. The issue was a factual one. Between March 1, 1991, and September 4, 1992, did Respondents make sufficient premium payments? They paid $57,455. Following the premium audit, Wausau billed them for $848,295 more. Although DCBS ordered Wausau to make adjustments in that billing, DCBS agreed with Wausau that Respondents had misreported Oregon workers on their California payroll, that it was appropriate for Wausau to estimate Respondent Summitt´s payroll at 50 percent of its contract receipts, and that Wausau could again bill Respondents for additional premiums. While the DCBS final order did not use the words "Respondents made insufficient workers´ compensation insurance premium payments," DCBS clearly reached that conclusion. After the final order issued, Wausau billed Respondents for an additional premium of $538,000 and settled for $475,000. Litigating this issue before DCBS did not require Respondents to litigate any Corona rule. The Agency applied the same rules in both this case and the Corona case.
Regarding Respondents´ exception to the forum´s granting summary judgment "sua sponte" on the issue of when the premium payments were due, the forum has explained its reasoning in section 1.A.1., above. Respondents argue that a determination of when premiums are due should be consistent with the workers´ compensation statutory scheme and the insurance contract. The forum disagrees. In situations where a farm labor contractor intentionally underreports payroll and therefore underpays premiums during a policy period, the Commissioner finds that the contractor has not made premium payments when due. Additional premiums paid after an audit are based on payroll earned during the policy period. If the contractor had properly reported the payroll as it accrued, the premiums would have been billed and paid during the policy period, "when due." Simply because the workers´ compensation statutes and insurance contracts allow for the payment of these additional premiums after an audit does not mean that the Commissioner must be blind to the reasons why the premiums were not paid during the policy period when they would have been due, but for the underreporting of payroll. Accordingly, the Commissioner rejects Respondents´ arguments.
Regarding Respondents´ exception to the ruling denying their motion for summary judgment, the forum stands by the ruling. Respondents contend that the Agency was in privity with the plaintiffs in the Northwest Reforestation Contractors Assoc. Inc. v. Summitt Forests, Inc. (NRCA) circuit court case "because those plaintiffs essentially were acting as the Agency´s complainant and were acting in the Agency´s place as private attorneys-general." Plaintiffs brought that case under ORS 658.475, which gives any person the right to sue farm labor contractors to enjoin them from committing future violations of farm labor contractor laws. The Agency recognizes that statutory right of private persons, but such recognition does not make the Agency a party in every such suit, nor does it place the Agency in privity with those persons. Respondents cited the NRCA court of appeals case (CA A86294, slip opinion issued August 28, 1996) in their case summary and their hearing memorandum. I have taken official notice of the court of appeal´s decision and the fact that the Bureau of Labor and Industries filed an amicus curiae brief in the case. I do not find, however, that the Agency became a party to or in privity with a party in that case by filing an amicus brief. To the extent that Respondents present new facts in their exceptions that were not part of the record, those facts were not considered by the Commissioner in preparing the final order. OAR 839-50-380(1). This exception has no merit.
Respondents´ exception concerning the denial of their motion to dismiss has been addressed, in part, in section 3 of this opinion. In their original motion and in their renewed motion, Respondents contended that the Agency´s charging document failed to state a claim for revocation. They argued that the Commissioner does not have the authority to revoke a license for failure to make "sufficient" monthly workers´ compensation insurance premium payments. To the extent that Respondents raise new issues in their exceptions, those issues have not been considered by the Commissioner. OAR 839-50-380(1). Respondents´ argument that a failure to pay premiums for the correct number of workers is not a violation of ORS 658.417(4) (citing the minority view in the NRCA appellate case) has no merit. In its amended notice, the Agency did not allege a violation of ORS 658.417(4). Respondents´ arguments that the rules are "subject to impossibly huge variations" are likewise without merit. When determining the fitness of farm labor contractors´ to be licensed, the Commissioner may appropriately assess on a case-by-case basis whether sufficient premium payments have been made when due, relying on such factors as the proportion between paid and unpaid premiums, the reason for underpayment, and the length of time the premiums went underpaid. Finally, Respondents´ rights against ex post facto laws have not been violated. Even if the constitutional prohibitions against ex post facto laws applied in this administrative proceeding, which they do not, Respondents have not been subjected to retrospective rules. As noted in section 3 above, the forum is applying the same law here -- ORS 658.445(3), OAR 839-15-145, and 839-15-520(3) -- as it applied in Corona. These rules were in effect during all times material in this case.
Respondents´ exception regarding the forum´s estoppel ruling is without merit.
Regarding the exceptions to findings of fact, the forum made minor revisions to clarify the findings. Respondents argue that the ALJ did not explain why he chose some evidence over other evidence and why he ignored certain inferences. Where there is conflicting evidence in the record, the forum need not discuss why it chose which evidence to believe. Likewise, if from a basic finding of fact the forum could rationally infer a further fact, the forum need not explain the rationale by which the inferred fact is reached. Dennis v. Employment Division, 302 Or 160, 169-70, 728 P2d 12, 18 (1986). Respondents also suggest findings of facts the forum finds irrelevant. They suggest inferences the forum declines to draw. The basic and ultimate findings of fact are supported by a preponderance of credible evidence in the whole record.
In challenging the second ultimate finding of fact, which Respondents claim is irrational, they ask, "Why would Respondent Nelson go to all the trouble of transporting workers to California to have them sign up for work, of training workers in California, of entering into a lease contract with Barrett, of hiring a California employee to retrieve mail, of opening a California post office box, and of registering vehicles in California, if not to actually ensure their California status and the California status of their workers?"
The answer is: To disguise Oregon workers as California workers to avoid paying higher workers´ compensation insurance premiums in Oregon. The lengths and expense to which a person is willing to go in pursuit of a scheme is a reflection of the benefit that would accrue from getting away with it, not evidence of its legitimacy. Respondents argue that, "Substantial evidence in the whole record establishes that Respondent Nelson honestly believed that the actions which were taken were sufficient under the law." To the contrary, the preponderance of evidence in the whole record establishes that Respondent Nelson sincerely hoped that his actions were sufficient to allow him to get away with paying California workers´ compensation rates to cover Oregon workers. An Oregon contractor who schemes to misrepresent its status as a California employer or its Oregon workers as California workers in order to avoid paying the workers´ compensation insurance rates that its competitors must pay has not demonstrated the requisite character, reliability, or competence to act as a farm labor contractor.
Respondents exceptions to the conclusions of law repeat many of their arguments concerning the rulings on summary judgment and the motion to dismiss. Those arguments have been addressed above.
Finally, Respondents take exception to the decision to revoke their license and the holding that a civil penalty is not an available sanction in this case. The forum´s reasoning on these issues is given in section 5 of the opinion. Respondents´ exceptions do not persuade me to change those decisions.
NOW, THEREFORE, having found facts that justify a sanction up to and including revocation of Respondents´ farm labor contractor license;
As authorized by ORS 658.405 to 658.503 and pursuant to the terms of a Settlement Agreement entered into by Respondents Scott R. Nelson and Summitt Forests, Inc. and the Commissioner of the Bureau of Labor and Industries on November 15, 1996, the Commissioner makes the following order:
(1) The Commissioner agrees to license Respondents for one year effective October 1, 1996, provided the Commissioner determines that Respondents meet all statutory and regulatory requirements. Said license, and the first one year renewal of said license, if granted, would be provisional, subject to the following conditions:
(a) Respondents acknowledge and agree to comply with the interpretation of the agency rule applied in In the Matter of Efrain Corona, 11 BOLI 44 (1992), that a substantial underpayment of workers´ compensation premiums because of under-reporting of payroll constitutes a failure to make workers´ compensation payments when due; and
(b) Respondents contemporaneously provide the Commissioner with a copy of any report submitted by Respondents to Respondents´ workers´ compensation insurance carrier for purposes of determining premium billings; and
(c) Respondents annually provide the Commissioner with a copy of Respondents´ estimated payroll reported to Respondents´ workers´ compensation insurance carrier for assessment of annual premium for each policy year; and (d) Respondents notify the Commissioner within one business day of:
i. Any notice by Respondents to their workers´ compensation insurer of Respondents´ intent to cancel or in any way modify Respondents´ workers´ compensation coverage; or
ii. Any notice by Respondents´ workers´ compensation insurer to Respondents of insurer´s intent to cancel or in any way modify Respondents´ workers´ compensation coverage; and
(e) If Respondents´ workers´ compensation insurance is canceled, Respondents provide the Commissioner, within two business days of giving to the insurer or receiving from the insurer notice of said cancellation, evidence of Respondents´ continued coverage under the same insurer or replacement coverage under another qualified insurer; and
(f) Respondents monthly provide the Commissioner with copies of any and all bid awards and ongoing contracts for forestation work with public entities, and notification of forestation contracts with private entities; and
(g) Respondents comply with all laws and rules regulating farm labor contractors.
(2) Respondents understand and acknowledge that upon proof of Respondents´ failure to comply with items (1) (a), (b), (c), (d), (e) or (f) of this Amended Order, the Commissioner may immediately revoke Respondents´ license and not issue Respondents a license prior to October 1, 1998.
(3) Respondents agree to pay:
(a) $30,000 to the Bureau of Labor and Industries to be used for the administration of farm labor contractor statutes and rules; and
(b) $15,000 to the Bureau of Labor and Industries to be used for technical assistance to promote and improve compliance with laws regulating farm labor contractors.
Of this $92,083, only $29,124 represented payroll for workers engaged in reforestation and related activities. The remaining payroll was for shop employees, timber cruisers, and clerical office employees.
Respondent Summitt paid a total of $81,795 to Wausau during this period. However, this amount included $24,340 in premiums paid for employees working in Idaho from May 1 to September 1, 1992. Subtracting this amount from the total paid leaves $57,455, representing the total premium paid based on Respondent Summitt´s estimated Oregon payroll for the period March 1, 1991, to September 1, 1992.
This case was attached to the Agency´s summary judgment reply brief, which in turn was marked for hearing as an administrative exhibit.
This case was also attached to the Agency´s summary judgment reply brief and marked for hearing as an administrative exhibit.
Northwest Reforestation Contractors Association, Inc. et al v. Summitt Forests, Inc., Case No. 16-93-09532 (Order granting summary judgment dated September 21, 1994). The motion, order, and judgment were submitted as an exhibit attached to Respondents´ cross-motion for summary judgment, which in turn was marked for hearing as administrative exhibit.
The constitutional prohibitions against ex post facto laws are generally confined to penal statutes. Megdal v. Oregon State Board of Dental Examiners, 288 Or 293, 605 P2d 273, 275-76 (1980); Brown v. Multnomah County District Court, 280 Or 95, 570 P2d 52, 54 (1977); Kilpatrick v. Snow Mountain Pine Co., 105 Or App 240, 243, 805 P2d 137,139 (1991). The prohibitions do not apply here.