National Fire Insurance Company of Hartford v. Beaulieu Company, LLC
Under the Workers' Compensation Act, Connecticut General Statutes §31-284, an employer must secure workers' compensation for its employees and C.G.S. §31-275(9) (A)(i) defines an "employee" as any person who has "entered into or works under any contract of service or apprenticeship with an employer…." The National Fire Insurance Company of Hartford, a.k.a. the CNA Insurance Companies, filed this action against its insured, Beaulieu Company, LLC, a roofing contractor, seeking unpaid premiums for workers' compensation insurance coverage. The court found that because it is difficult to predict labor needs for an upcoming policy period, the insurer prepares an estimated bill. After the term expires, the insurer audits the insured's payroll and expenditures to calculate the precise coverage provided and the appropriate premium and then issues a refund or supplemental bill. The court rendered judgment for the plaintiff. The defendant appealed claiming that it was clearly erroneous for the court to find, inter alia, that three workers who performed roofing work were employees of the defendant rather than independent contractors and, even if not employees, that they engaged in work that could make the plaintiff liable to provide workers' compensation benefits under the relevant policies. The Appellate Court affirmed the judgment. The trial court did not make an express finding that these workers were employees but found that they fit within a certain provision of the insurance policy because they engaged in work that could make the plaintiff liable to provide benefits. Even if the workers were not employed by the defendant as direct employees on its regular payroll, there was evidence that they worked under a contract of service with the defendant and that the defendant had a sufficient degree of the right to control the workers, such that they were employees or subcontractors with employees for purposes of the Workers' Compensation Act. The court did not err in finding that the plaintiff insurer was entitled to include these workers in its premium audit because they engaged in work that could have made the plaintiff liable under its policies. It was reasonable for the court to find that the defendant failed to provide proof that the workers lawfully secured their workers' compensation obligations for their employees, and, therefore, failed to exempt itself from having them included in the premium audit.