LARRY M. INGRAM, 
Employee, 
Applicant
v. 
ENGINE & GEAR WORKS, INC.,
Uninsured Employer,
and 
ENGINE & GEAR ALASKA, INC.,
Uninsured Employer,
Defendants.

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FINAL DECISION AND ORDER
AWCB Case No. 199729609
AWCB Decision No. 00-0008
Filed with AWCB Anchorage, Alaska
on January 14, 2000

We heard the applicant's claim of employee status in Anchorage, Alaska on November 30, 1999. Mr. Ingram represented himself as did Richard Hogan and Clifford Bishop. Attorney William Walker represented Tony Marinelli. Allen Marinelli represented himself at a previous hearing before the Board on September 22, 1999; his testimony was incorporated into this hearing without objection. We closed the record at the conclusion of the hearing.

I. Was Larry Ingram an employee or independent contractor?

II. If Mr. Ingram is determined to be an employee, did Engine & Gear Works, Inc. or Engine & Gear Alaska, Inc. employ him?

On June 9, 1998, Larry M. Ingram filed a Report of Occupational Injury or Illness naming Engine & Gear as his employer. He asserted that on November 13, 1997, he had fallen on the ice outside the machine shop where he was working at 2130 E. Dimond and fractured his right femur. On July 16, 1998, Mr. Ingram filed a claim for Workers' Compensation, naming Engine & Gear Alaska as his employer. On December 2, 1998, through attorney James J. Hanlon, Engine & Gear Alaska, Inc. filed a Controversion Notice denying all benefits claimed by Ingram.

At a pre-hearing on September 8, 1997, the parties discussed whether the appropriate alleged employer was Engine & Gear Works, Inc. or Engine & Gear Alaska, Inc. The parties agreed, through counsel, that the correct employer was Engine & Gear Alaska, Inc. At a subsequent pre-hearing on April 2, 1999, Mr. Ingram asserted that his former attorney was incorrect in identifying Engine & Gear Alaska, Inc. as his employer. Mr. Ingram asserted that the correct employer was, in fact, Engine & Gear Works, Inc. At a further pre-hearing on May 28, 1999, Mr. Ingram again modified his position, stating he believed Engine & Gear Works, Inc. and Engine & Gear Alaska, Inc. were the same company, and he had been working for both companies. By the time the case came before the Board for hearing, Mr. Ingram had reverted to his earlier opinion that the correct employer was Engine & Gear Works, Inc.

At a hearing on June 23, 1999, the Board attempted to identify the employer. Attorney James Hanlon, who represented Engine & Gear Alaska, Inc., informed the board that it was up to Mr. Ingram to assert the proper entity, and refused to advise the board of the proper corporate name on the date of Mr. Ingram's injury. The Board ordered that investigation be done into the proper alleged employer and that a hearing be conducted to resolve the matter.

A review of our Workers' Compensation Employer Information database revealed two entities operating under the name Engine & Gear: Engine & Gear Co., Inc. and Engine & Gear Works, Inc. A "DBA" notation indicates that at some point Engine & Gear Co., Inc. was doing business as Engine & Gear Works, Inc. No information existed in this database for the entity Engine & Gear Alaska, Inc. These corporations had not obtained Workers' Compensation Insurance, nor had any of the corporations been issued a certificate of self-insurance.

Investigation into the Department of Commerce database revealed corporate records for three corporations containing the names Engine & Gear. Engine & Gear Co., Inc. was incorporated on May 21, 1976, involuntarily dissolved on September 16, 1996, and listed Richard L. Hogan as 100% owner and president and Lorraine Stoby as secretary with no ownership interest. Engine & Gear Works, Inc. was incorporated on July 19, 1979, involuntarily dissolved on September 29, 1997, and listed Richard Hogan as 100% owner and president. Engine & Gear Alaska, Inc. was incorporated on June 09, 1997 and listed Richard L. Hogan as president with 40% ownership; Jeanne M. Bishop as vice-president with 40% ownership; Tony M. Marinelli as secretary with 15% ownership; and Lorraine C. Hogan as treasurer with no ownership interest. Allen Marinelli was also listed as a 5% shareholder of Engine & Gear Alaska, Inc., but is not a director or an officer.

At a pre-hearing on July 21, 1999, Mr. Hogan submitted documents purporting to have changed the corporate structure of Engine & Gear Alaska, Inc. prior to the date of Mr. Ingram's injury. These documents included: Lorraine C. Hogan's resignation from the Board of Directors of Engine & Gear Alaska, Inc. on September 15, 1997; Jeanne M. Bishop's resignation from the Board of Directors of Engine & Gear Alaska, Inc. on September 15, 1997; a document indicating Clifford Bishop became a member of the Board of Directors as the vice-president and treasurer of Engine & Gear Alaska, Inc. on September 15, 1997; a stock transfer dated September 15, 1997, indicating transfer of Jeanne M. Bishop's 40 shares of stock to Clifford Bishop; Richard Hogan's resignation from the Board of Directors of Engine & Gear Alaska, Inc. dated October 17, 1997; a stock transfer of Richard Hogan's 40 shares of stock to Clifford Bishop; and a Hold Harmless Clause dated October 17, 1997 and signed by Clifford Bishop indicating Mr. Bishop's agreement to hold Mr. Hogan harmless from any possible lawsuits existing at that time or subsequently brought against Engine & Gear Alaska, Inc. However, these documents were not filed with the Department of Commerce until July 21, 1999, a year and a half after Mr. Ingram's injury, and after Mr. Ingram had filed his claim.

At the same pre-hearing, Mr. Hogan submitted five checks drawn on the account of Engine & Gear Alaska, Inc: A check dated September 17, 1997, made out to and endorsed by Larry Ingram, signed by Richard Hogan and Clifford Bishop, and containing the notation "8/25 - 8/29 Advance on Profits." A check dated October 15, 1997, made out to and endorsed by Larry Ingram, signed by Richard Hogan and some unidentifiable person, and containing the notation "pay advance." A check dated November 3, 1997, made out to and endorsed by Larry Ingram, signed by Richard Hogan and Clifford Bishop, and containing the notation "advance against [illegible] profits." A check dated November 13, 1997, the date of Mr. Ingram's injury, made out to and endorsed for deposit only by Larry's Auto Repair, signed by Richard Hogan and Clifford Bishop, and containing the notation "Engine Installation." The last check is dated November 28, 1997, is made out to and endorsed by Larry Ingram, is signed by Richard Hogan and Clifford Bishop, and contains the notation "Advance." Mr. Hogan asserted that the notations on the checks proved that Mr. Ingram was not an employee for purposes of Workers' Compensation. In the alternative, Mr. Hogan asserted that if the Board found Mr. Ingram to be an employee, the checks show he worked for Engine & Gear Alaska, Inc., rather than Engine & Gear Works, Inc.

Adding to the confusion regarding the correct corporate name is the fact that on July 17, 1998, Clifford Bishop responded to a letter regarding Mr. Ingram's case under the purported letterhead of Engine & Gear Works Alaska, Inc., a combination of the names Engine & Gear Works, Inc., and Engine & Gear Alaska, Inc. Mr. Bishop signed the letter as Manager of Engine & Gear Works Alaska, Inc.

At a hearing before the board on September 22, 1999, Larry Ingram testified that he was "hired by Engine & Gear Works, Inc., 2130 E. Dimond Blvd. in Anchorage, Alaska, on or about June 25th, '97, by Richard Hogan, owner/manager." (September 22, 1999, hearing before the Board, hereinafter 9/22/99.) Mr. Ingram testified that he had been referred to Mr. Hogan by the Alaska State Employment Services, and was hired as an auto machinist on or about June 25th, 1997. (9/22/99) He testified that both Richard Hogan and Clifford Bishop interviewed him for the position. (November 30, 1999, hearing before the Board, hereinafter 11/30/99.) In support of these assertions, Mr. Ingram submitted a photocopy of an appointment slip from the Alaska Employment Service, indicating Mr. Ingram was scheduled to have an appointment on June 11, 1997 at "Engine & Gear Works" and was to be interviewed, according to the slip, by "Cliff."

Mr. Ingram testified that he used the extensive machinery Engine & Gear Works had in their shop to perform his work. (9/22/99) He testified that he continued to work at the shop from June until November, when he was injured. (11/30/99)

Mr. Ingram testified that he had no written employment contract with Engine & Gear Works, "it was just verbal." (9/22/99) Mr. Ingram stated that when he was originally hired by Engine & Gear Works, Inc., he "was to work on a labor rate of commission of shop time. That means I got a percentage of what they charged on shop time what I did on the job." (11/30/99) He indicated he did not bill any jobs to the customers directly, he "just kept track of the time [he] did on a job for them." (11/30/99) Mr. Ingram further testified that sometime prior to the date of his injury, he was asked to "go on hourly wage, and [he] agreed to do that." (11/30/99) He asserted that at the time of his accident, he worked "eight hours a day, five days a week" at a rate of $16.00/hour. (9/22/99) He testified that he had to keep track of his time by punching in and out on the time clock in the machine shop. (9/22/99) Mr. Ingram testified that Thursday, November 13, 1997, the date of his accident, was "a normal working day" for him. (9/22/99)

Mr. Ingram stated that he was paid by checks in the names of both companies. (11/30/99) He testified that both Mr. Bishop and Mr. Hogan signed his checks, regardless of which company name they bore. (9/22/99) Mr. Ingram testified that during the week of his injury, he was "working on projects for, I understood was billed out to Engine & Gear Works, and under the direction of Richard Hogan." (9/22/99) Specifically, he stated he was working on some gearboxes for Anchorage Sand & Gravel, a customer of Engine & Gear Works, Inc. (11/30/99) Mr. Ingram testified that he was not paid his wages regularly and that he would have to force Mr. Bishop and Mr. Hogan to pay him by threatening to quit. (11/30/99)

Mr. Ingram testified that after noticing the change of corporate name on his checks from Engine & Gear Works, Inc. to Engine & Gear Alaska, Inc., he asked about it and "was told by Mr. Hogan that there was just going to be a change in the name and they had another partner or something to that effect." (11/30/99) He further testified:

Richard Hogan testified that he "hired Mr. Ingram originally under Engine & Gear Works." (6/23/99) But that "as Engine & Gear Alaska was formed, . . . Larry just transferred as an employee." (6/23/99) Mr. Hogan testified that a notation was posted in the shop "above where the time was normally kept" indicating that the company had changed to Engine & Gear Alaska, Inc. and the date of the alleged change. (11/30/99) Mr. Ingram testified that he did not recall having seen such a notation. (11/30/99)

Mr. Hogan testified that he had a copy of the "Intent to Purchase" the property signed by Tony Marinelli. He asserted that the check registers for the accounts of each corporation would establish that Engine & Gear Works was taken over by Engine & Gear Alaska prior to the date of injury. (11/30/99) However, none of the parties submitted these check registers for the Board's review.

Mr. Hogan testified that in October of 1997, he sold his interest in Engine & Gear Alaska to Clifford Bishop and did not have much to do with the company thereafter. (6/23/99) He stated that he was, however, "bound in completion of an environmental problem that has been going on, I'm responsible to DEC and EPA . . . , but I was not doing any work in the company." (6/23/99) He testified that the only activity in which Engine & Gear Works was engaged during the fall of 1997, was "the completion of an ongoing project of shipping, consolidating and shipping the soil out to Oregon." (6/23/99) He testified that he and Engine & Gear Works remained responsible for the clean up, but not the machine shop. (6/23/99) In his questioning of Mr. Ingram, Mr. Hogan asserted that "the different equipment that was in that shop was all potential customer equipment that was being worked on. . ." (11/30/99)

Mr. Hogan acknowledged that on November 13, 1997, the date of Mr. Ingram's injury, the bank owned the property located at 2130 E. Dimond Blvd, but that his name was on the loan. (6/23/99) When asked whether there was a lease between Engine & Gear Alaska, Inc. and the bank permitting to Engine & Gear Alaska, Inc. to conduct business on the property, Mr. Hogan testified: "Not formally, just in talking to their vice-president concerning the takeover and the purchase of it. That was the extent of my knowledge of their relationship with the bank was a verbal future plan and the direction it was going. . . everything was directed towards the purchase of the property. . . .[by] Tony Marinelli and Engine & Gear Alaska, Inc., and JDI. So, we discussed the plan with the bank toward completion of the environmental clean up." (6/23/99)

Tony Marinelli testified as follows:

Tony Marinelli testified that the clean up was never completed and the purchase never occurred. (11/30/99) He testified that his brother, Allen Marinelli "was supposed to run the shop. But, it was pretty well made clear that [Richard Hogan] was the one that was running the shop. He basically would tell Allen what he expected and we would do it. We did have, I mean don't get me wrong, it's not like we were just there for nothing, I mean, we had an interest in it, but our interest was ahead." (11/30/99) He testified that he and his brother were potential investors protecting their future interest. (11/30/99) "My whole concept to begin with was to buy the property and use it for JDI, for parking equipment or a wash bay, or whatever, and rent off the rest of the property, when I was approached about the machine shop." (11/30/99) He went on to state:

Allen Marinelli testified that Engine & Gear Alaska owned no equipment and that Richard Hogan owned all of the equipment in the machine shop. (9/22/99) He testified that he came in as manager of the machine shop to oversee the workflow with an eye towards buying the business. In his capacity as shop manager, he was aware that Mr. Ingram punched a time clock every day. (9/22/99) He further testified that Engine & Gear Works, Inc. had other employees working in the shop.

Allen Marinelli testified that Mr. Hogan's personal residence was located on the property at 2130 E. Dimond. (9/22/99) He testified that one of the biggest disputes they had with Mr. Hogan was over Workers' Compensation. They informed Mr. Hogan that "the insurance has to be in place for us to be in operation." (9/22/99) He testified that he and his brother confronted Mr. Hogan the day before Mr. Ingram's injury and "were promised that Workers' Compensation [insurance] would be in place by morning, which it wasn't." (9/22/99) He further testified that Mr. Hogan informed him: "this is my business and you do not have the authority to tell me what I can do to earn money for myself." (9/22/99) In regards to the checks written to Mr. Ingram containing the notation "advance", Allen Marinelli described this as one of Mr. Hogan's "little tricks, to show advances." (9/22/99) He explained: "Larry was never paid his wages. He is owed a lot of money just in wages alone. He was never even caught up from the first week." (9/22/99) After pressure was applied to pay Mr. Ingram his wages, "they would come up with some money and put it as an advance." (9/22/99)

Both of the Marinelli brothers testified that they knew nothing of the purported resignation of Mr. Hogan, Ms. Hogan and Ms. Bishop as corporate officers of Engine & Gear Alaska, Inc. until July of 1999, over a year after Mr. Ingram's injury. (9/22/99) Both also testified that Anchorage Sand & Gravel was a customer of Engine & Gear Works, Inc., not Engine & Gear Alaska, Inc. (9/22/99)

Clifford Bishop testified that he had no involvement with Engine & Gear Works, but later acknowledged that he was the secretary-treasurer of Engine & Gear Works at the time of Mr. Ingram's injury in 1997 and through to the present. (11/30/99) Regarding his involvement with Engine & Gear Alaska, he testified he was "trying to get this thing coordinated with Tony and Allen and doing a change over the this Engine & Gear Alaska." (11/30/99)

Mr. Bishop testified that he did not know what agreements existed between Mr. Ingram and Mr. Hogan as far as wages but that his understanding was that it was on a commission basis. He testified that sometime prior to Mr. Ingram's injury, he discussed "at length with Mr. Ingram the fact of a business license, the fact of percentage work, or contract work rather, on the various projects coming in. (11/30/99) Mr. Bishop stated that "It was agreed upon at that time that Mr. Ingram would do the subcontracting on the machine work." (11/30/99) However, Mr. Ingram testified that he did not recall having this conversation. (11/30/99)

Mr. Bishop asserted that Workers' Compensation does not apply to Mr. Ingram's injury because Mr. Ingram was a subcontractor and therefore not an employee of either corporation. (11/30/99) However, when asked, Mr. Bishop could not identify a general contractor from whom Mr. Ingram subcontracted. (11/30/99) Mr. Bishop further testified that on the date of his injury, Mr. Ingram "was not there all day, he was not working on any project whatsoever for Engine & Gear Works or Engine & Gear Alaska." (11/30/99)

Mr. Bishop called Stephan Strunk as a witness. He stated, in essence, that on November 13, 1997, he was with Mr. Bishop at the machine shop during the times they were not on parts runs or at lunch. He testified that during the time he was on the premises, he did not see Mr. Ingram performing any type of work on any type of project within the building located at 2130 E. Dimond. (11/30/99) "There was nothing on, no equipment, no lathe, no crank turners, nothing, nothing was turning." (11/30/99) When asked if he was an employee of Engine & Gear Works, Mr. Strunk replied: "Well, I was working for Cliff in the shop. Whether it was for Engine & Gear, I do not know, exactly, to tell you the truth." (11/30/99)

I. EMPLOYMENT RELATIONSHIP

For purposes of this decision, we will assume that Mr. Bishop intended to assert that Mr. Ingram was an independent contractor rather than a subcontractor. Mr. Bishop is not an attorney and was not represented when he appeared before the Board. He attempted to defend the claim on the grounds that Mr. Ingram was a subcontractor and therefore not entitled to Workers' Compensation coverage. However, Mr. Ingram's status as a subcontractor would bring him under the Workers' Compensation Act. Alaska Statute 23.30.045(a) states, in pertinent part, "If the employer is a subcontractor, the contractor is liable for and shall secure the payment of the compensation to employees of the subcontractor unless the subcontractor secures the payment." Therefore, even if Mr. Ingram were a subcontractor, the person or entity for which he worked would be liable under the Workers' Compensation Act as a general contractor. Although Mr. Bishop did not identify a general contractor, it is clear that you cannot have a subcontractor without a general contractor.

Because the classification of Mr. Ingram as a subcontractor does not relieve liability under the Act, we will assume that Mr. Bishop intended to classify Mr. Ingram as an independent contractor. We therefore turn to the question of whether Mr. Ingram was an employee or independent contractor.

AS 23.30.120(a) provides in part: "In a proceeding for the enforcement of a claim for compensation under this chapter it is presumed, in the absence of substantial evidence to the contrary, that (1) the claim comes within the provisions of the chapter...."

AS 23.30.395 provides in part:

(12) "employee" means an employee employed by an employer as defined in (13) of this section;

(13) "employer" means the state or its political subdivision or a person employing one or more persons in connection with a business or industry coming within the scope of this chapter and carried on in this state. See also 8 AAC 45.890.

The Alaska Supreme Court has held "the text of AS 23.30.120(a)(1) indicates that the presumption of compensability is applicable to any claim for compensation under the workers' compensation statute." Meek v. Unocal Corp., 914 P.2d 1276, 1279 (Alaska 1996), quoting Municipality of Anchorage v. Carter, 818 P.2d 661, 665 (Alaska 1991). We have followed the court's rationale, applying the presumption to the question of employee/employer relationships. Blue v. Dept. of Corrections, AWCB Decision No. 98-0301 (December 2, 1998); Smith v. Molly Ann Phenix, AWCB Decision No. 98-0207 (August 11, 1998); Buswell v. New Hope Ministries, AWCB Decision No. 96-0012 (January 5, 1996). But see Malone v. Lake and Peninsula Borough School District, AWCB Decision No. 95-0337 (December 7, 1995).

We find Mr. Ingram's testimony concerning his work with the employer is evidence that he had an employment relationship with the employer. Following the court's rationale in Meek, we must apply the presumption of compensability from AS 23.30.120(a)(1) to the claim. Nevertheless, we find the checks submitted by Mr. Hogan containing the notations "advance" and "engine installation" are substantial evidence rebutting the presumption, and Mr. Ingram must prove his claim by a preponderance of the evidence. Meek, 914 P.2d at 1280.

Before an employee/employer relationship arises for the purpose of workers' compensation, an express or implied contract of employment must exist. Alaska Pulp Corp. v. United Paperworkers Intern. Union, 791 P.2d 1008 (Alaska 1990); Childs v. Kalgin Island Lodge, 779 P.2d 310, 313 (Alaska 1989)).

The formation of an express contract requires four elements: an offer encompassing its essential terms, an unequivocal acceptance of the terms by the offeree, consideration, and an intent to be bound. Id. See also Hall v. Add-Ventures, Ltd., 695 P.2d 1081, 1087 n. 9 (Alaska 1985). An implied contract is formed by a relation resulting from "the manifestation of consent by one party to another that the other shall act on his behalf and subject to his control, and consent by the other so to act." Childs, 779 P.2d at 314 (citing 9 W. Jaeger, Willston on Contracts sec. 1012, at 4-5 (3d ed. 1967)(quoting Zehr v. Wardall, 134 P.2d 805 (6th Cir. 1943)).

Mr. Ingram testified that he had no written contract for hire, "it was just verbal." It is clear from the evidence that Engine & Gear Works was seeking a machinist and Mr. Ingram applied to work as a machinist for Engine & Gear Works. He was interviewed and soon after began doing work in the shop. Although he was not paid regularly, he was compensated for at least some of the work he did. Furthermore, Mr. Hogan testified that he "hired" Mr. Ingram "under Engine & Gear Works." We find that a preponderance of the evidence establishes that Mr. Ingram had an express contract for hire with Engine & Gear Works, Inc. at the time he began working at the machine shop. We must next determine whether he was contracted as an employee or independent contractor.

In order to determine whether Ingram was an independent contractor or an employee of Engine & Gear Works, Inc. or Engine & Gear Alaska, Inc., we must first establish whether either Engine & Gear Works, Inc. and/or Engine & Gear Alaska, Inc. are "employers" subject to the Workers' Compensation Act. Kroll v. Reeser, 655 P.2d 753, 756 (Alaska 1982). In Kroll, the court considered whether Kroll, who was having a rental unit built, was an employer. The court questioned whether the "activity, either by itself or as an element of his rental activities, was a profit-making enterprise which ought to bear the costs of injuries incurred in the business, or was the construction activity simply a cost-cutting shortcut in what was basically a consumptive and not a productive roll played by Kroll." Id. at 757.

From this language, we concluded in Goodman v. C.R. Lewis & Co. AWCB Decision No. 93-0008 (January 14, 1993), that "when a person engages himself (as in self-employment) or another person in consumptive activities, that is activities which are for the person's own consumption as opposed to supplying a product or service for others, he/she is not engaged in a business or industry. Activities which are related to running one's own life, are not employment activities and, as such, the person engaged in those activities is not self-employed." Id. at 7. The Board went on to find that "managing one's investments is purely a consumptive activity. It is part of the business of life. In managing his investments, Employee was not supplying a product or service for others. Accordingly, he was not self-employed." Id.

It is clear from the evidence that in June of 1997 when Mr. Ingram began working as an engine machinist at 2130 E. Dimond, Engine & Gear Works, Inc. was an active corporation engaged in the repair and rebuilding of engines. It had customers, including Anchorage Sand & Gravel for whom it provided products and services. Allen Marinelli testified that Engine & Gear Works, Inc. had other employees at the shop. The evidence establishes that it was intended to be a "profit-making enterprise." Kroll, at 757. We therefore conclude that when Mr. Ingram was "hired" in June of 1997, Engine & Gear Works was an employer.

The testimony differs as to whether Engine & Gear Works, Inc. continued in the business of engine repair and rebuilding on November 13, 1997, the date of Mr. Ingram's injury. Richard Hogan asserted that Engine & Gear Alaska, Inc. took over the machine shop prior to the date of the injury, and that Engine & Gear Works, Inc. was responsible for the clean up only. The Marinelli brothers asserted that Engine & Gear Alaska, Inc. had not yet taken over the machine shop on the date of the injury because the clean up had not been completed.

In support of his position, Richard Hogan pointed to the checks written to Larry Ingram on the account of Engine & Gear Alaska, Inc. However, we find that the checks do not overcome the remainder of the credible evidence, which establishes by a preponderance that Engine & Gear Alaska, Inc. was not in the business of engine repair and rebuilding on November 13, 1997. Mr. Hogan himself testified that "[e]verything was directed towards the purchase of the property." (6/23/99) He described the arrangement between the bank and Engine & Gear Alaska, Inc. as a "verbal, future plan." (6/23/99)

The evidence establishes that at some point in the future the Marinelli's would become the owners of the machine shop and run it. However, the transaction never took place. Engine & Gear Alaska, Inc. was not yet providing products and services to others. It was engaged in the activity of completing the environmental clean up with an eye towards running the machine shop. The Marinelli's were protecting their future interest in the business, and as such, were engaged in a consumptive activity. Under Goodman, Engine & Gear Alaska, Inc. was not engaged in a business. Under Kroll, therefore, Engine & Gear Alaska, Inc. was not an employer.

It is apparent that a machine shop was in operation at 2130 E. Dimond in Anchorage, Alaska on November 13, 1997. Having found that Engine & Gear Alaska, Inc. was not an employer under the Act, we find that Engine & Gear Works, Inc. continued to operate the machine shop on November 13, 1997. Engine & Gear Works was engaged in a business or industry coming within the scope of the Act and carried on within Alaska. Its purpose was to generate income for its owners and it provided products and services to others. Engine & Gear Works is therefore a potential employer under Kroll.

Although Engine & Gear Works, Inc. was involuntarily dissolved on September 29, 1997, prior to the date of Mr. Ingram's injury, the corporate survival statute states that a dissolved corporation "continues to exist for the purpose of . . . defending actions against it." AS 10.06.678(a). In Gossman v. Greatland Directional Drilling, Inc., 973 P.2d 93, 98 (Alaska 1999), the Alaska Supreme Court determined that the corporate survival statute allows plaintiffs to sue dissolved corporations on causes of action that accrue after dissolution. The court reasoned that permitting an action against a dissolved corporation for causes of action accruing after dissolution would address "any policy concern that a corporation could avoid known potential liability by arranging for its convenient death." Id. at 98. We find that the same reasoning should apply to Workers' Compensation claims and conclude that a dissolved corporation continues to exist for purposes of defending a Workers' Compensation claim against it.

Having identified Engine & Gear Works, Inc. as a potential employer, we turn now to the question of whether Mr. Ingram was an employee of that corporation. The test for distinguishing between an employee and an independent contractor is the "relative nature of the work test" adopted by the Alaska Supreme Court in Searfus v. Northern Gas Co., 472 P.2d 966, 969 (Alaska 1970), and Ostrem v. Alaska Workmen's Compensation Bd., 511 P.2d 1061 (Alaska 1973) and incorporated in our regulations at 8 AAC 45.890.

The first element of the relative nature of the work test under 8 AAC 45.890 is whether the applicant's "work is a separate calling or business." Mr. Ingram testified that he would often have to threaten to quit in order to get paid. This indicates he had the right to terminate the relationship at will. The right to terminate the relationship at will leads to a "strong inference of employee status. 8 AAC 45.890(1)(B).

The evidence also suggests that Engine & Gear Works, Inc. provided the "tools, instruments, and facilities to accomplish the work and they are of substantial value," leading to an "inference of employee status." 8 AAC 45.890(1)(D). The testimony differs as to whether, at the time of his injury, Mr. Ingram was paid for his work "on an hourly or piece rate wage rather than by the job." Therefore, no inference can be drawn from this evidence.

The second component of the relative nature of the work test is whether the applicant's work is a "regular part of the employer's business or service. We have already determined that Engine & Gear Works, Inc. was in the business of repairing and rebuilding engines. The testimony indicates that Engine & Gear Works, Inc. supplied the customers and billed them for Mr. Ingram's work. Mr. Ingram testified that he worked for Engine & Gear Works as an auto machinist, the same "business" as that engaged in by Engine & Gear Works, Inc. We therefore find that Mr. Ingram's work was a regular part of the employer's business or service, leading to an inference of employee status. 8 AAC 45.890(2).

The third element of the test is whether the work can be expected to carry its own accident burden. Based on the nature of Mr. Ingram's work as well as his testimony regarding the amounts he was paid for his work, we find that Mr. Ingram was unlikely to be able to meet the costs of industrial accidents out of the payment for the services. We therefore find a strong inference of employee status. 8 AAC 45.890(3).

The fourth component of the test questions whether the work involves little or no skill or experience. We find that Mr. Ingram's work does involve some skill and experience and, therefore, draw no inference from this evidence.

The fifth and sixth elements are somewhat blended under the facts of this case. The fifth element is "whether the work is sufficient to amount to the hiring of continuous services, as distinguished from contracting for the completion of a particular job." The sixth element of the test is "whether the work is intermittent, as opposed to continuous." The evidence indicates that Mr. Ingram began working in June of 1997 and continued to work until November 13, 1997. None of the evidence presented would support the conclusion that Mr. Ingram worked on just one job during that time. We therefore find this too establishes an inference of employee status.

In spite of Mr. Strunk's testimony that "nothing was turning" the day Mr. Ingram was injured, we find, based on the factors above, that Mr. Ingram was an employee of Engine & Gear Works, Inc. on the date of his injury.

II. LIABILITY

This decision does not decide the issue of whether Mr. Ingram's injury occurred in the course and scope of his employment with Engine & Gear Works, Inc. We therefore retain jurisdiction of the claim for that purpose. In the event Mr. Ingram's injury is found to have occurred in the course and scope of his employment, we find Richard Hogan and Clifford Bishop personally, jointly, and severally liable, together with the corporation Engine & Gear Works, Inc., for payment of all compensation or other benefits for which the corporation is liable under this chapter. AS 23.30.075(b) states:

Both Richard Hogan and Clifford Bishop signed the checks written to Mr. Ingram for payment of his work. We find that each had the authority to insure the corporation or apply for a certificate of self-insurance. We further find that neither Mr. Hogan nor Mr. Bishop fulfilled their obligation to maintain Workers' Compensation insurance. Therefore, they are each liable for the payment of compensation or other benefits due for which the corporation is found to be liable.

AS 23.30.255 also addresses liability when a corporation is uninsured. AS 23.30.255 states:

Our records indicate that Mr. Hogan is the president of Engine & Gear Works, Inc. Mr. Bishop testified that he is the treasurer of Engine & Gear Works, Inc. Engine & Gear Works, Inc. failed to secure the payment of compensation as required by AS 23.30.075. This supplies us with another reason to hold Mr. Hogan and Mr. Bishop "severally personally liable, jointly with the corporation, for the compensation and other benefits" which may accrue under the Act "in respect to an injury which happens to an employee of the corporation while it has failed to secure the payment of compensation." In the event Mr. Ingram's injury is found to have occurred within the course and scope of his employment, Mr. Hogan and Mr. Bishop will be personally, jointly, and severally liable for Mr. Ingram's compensation.

III. TONY MARINELLI’S ATTORNEY’S FEES AND COSTS

AS 23.30.155(d) provides in pertinent part:

The major dispute in this claim was whether the entity of Engine & Gear Works, Inc. (the productive company under the control of Mr. Bishop and Mr. Hogan) or Engine & Gear Alaska, Inc. (the consumptive company in which Tony and Allen Marinelli were involved) employed Mr. Ingram on the date of his injury. We find Engine & Gear Works, Inc. forced Engine & Gear Alaska, Inc. to defend against a last injurious exposure situation.

In deciding whether reimbursement is required under AS 23.30.155(d), we must first determine whether Engine & Gear Works, Inc., the earlier employer, controverted the employee's claim on the grounds of the last injurious exposure rule. Crone v. Sohio Alaska, AWCB No. 92-0044 (February 27, 1992). We find Mr. Bishop and Mr. Hogan controverted the employee’s benefits by their actions in their pleadings and assertions and testimony at Board hearings.

In Grace Drilling Company v. Alaska United Drilling, 3AN 92-6015 Civil (Alaska Super. 1994), (Grace) at 5, the superior court (Judge Hunt) held that "[t]he legislature's primary intent in enacting the 1988 amendment [to AS 23.30.155(d)] was to provide continuous benefits to an employee in those cases where employers dispute liability among themselves." The court added that the fees and costs provision was enacted "to discourage an employer who controverts . . . solely on the grounds that another employer is liable from refusing to pay the employee." Put another way, the court described this enactment as a "disincentive not to pay the employee. . . ." Id. at 6.

Although Engine & Gear Alaska never paid benefits as a purported "last employer," as we found above, Engine & Gear Alaska was a consumptive corporation, not a business for purposes of Workers' Compensation, and not an employer under Kroll. Accordingly, we conclude Engine & Gear Alaska was never obligated to pay the employee’s benefits during the pendency of the dispute between Engine & Gear Alaska and Engine & Gear Works. Nevertheless, Engine & Gear Alaska was forced to defend a last injurious exposure claim.

The next question is whether to order Engine & Gear Works (Mr. Hogan and Mr. Bishop) to reimburse costs and attorney's fees of Tony Marinelli¹ Under AS 23.30.155(d), reimbursement may be made to the "prevailing employer." We find Engine & Gear Alaska is the prevailing employer. Tony Marinelli is the secretary of Engine & Gear Alaska, Inc. Accordingly, we find Engine & Gear Works liable for the attorney's fees and costs incurred by Tony Marinelli. AS 23.30.155(d); See Bush v. Eero Volkswagen of Anchorage, AWCB No. 91-0059 (March 1, 1991); and High v. Neal & Company, AWCB No. 89-0065 (November 3, 1989).

Tony Marinelli’s counsel, William K Walker, filed an affidavit of attorney’s fees and costs on October 6, 1999. Mr. Walker claimed no costs, but according to his affidavit he billed 10.25 hours of attorney time. At the November 30, 1999 hearing, Mr. Walker testified he incurred an additional 3.25 hours, inclusive of the November 30, 1999 hearing. Mr. Walker bills at $150.00 per hour. We find the hours claimed and the billing rate quite reasonable when considering the convoluted nature of this matter. Accordingly, we conclude Engine & Gear Works, Inc., Mr. Hogan, and Mr. Bishop, are personally, jointly and severally liable for Mr. Marinelli’s attorney’s fees in the amount of $2,025.00 (13.50 X $150.00). This amount shall be paid directly to Mr. Walker, unless Mr. Marinelli has already paid his attorney, in which case, Engine & Gear Works or its agents shall reimburse Mr. Marinelli directly.

1. On the date of his injury, Mr. Ingram was an employee rather than an independent contractor.

2. On the date of his injury, Engine & Gear Works, Inc employed Mr. Ingram.

3. In the event Mr. Ingram's injury is determined to have occurred within the course and scope of his employment with Engine & Gear Works, Inc., Richard Hogan and Clifford Bishop are personally, severally, and jointly liable with the corporation for compensation and other benefits to which Mr. Ingram is due under the Act.

4. The employer, Engine & Gear Works, Richard Hogan, and Clifford Bishop are personally, severally, and jointly liable for payment of or reimbursement for $2,025.00 in Tony Marinelli’s attorney’s fees.

Dated at Anchorage, Alaska this 14th day of January, 2000.

/s/ Darryl Jacquot
Darryl Jacquot,
Designated Chairman

/s/ John A. Abshire
John A. Abshire, Member

/s/ S.T. Hagedorn
Steve Hagedorn, Member

This compensation order is a final decision. It becomes effective when filed in the office of the Board unless proceedings to appeal it are instituted. Proceedings to appeal must be instituted in Superior Court within 30 days of the filing of this decision and be brought by a party in interest against the Board and all other parties to the proceedings before the Board, as provided in the Rules of Appellate Procedure of the State of Alaska.

A party may ask the Board to reconsider this decision by filing a petition for reconsideration under AS 44.62.540 and in accordance with 8 AAC 45.050. The petition requesting reconsideration must be filed with the Board within 15 days after delivery or mailing of this decision.

Within one year after the rejection of a claim or within one year after the last payment of benefits under AS 23.30.180, 23.30.185, 23.30.190, 23.30.200 or 23.30.215 a party may ask the Board to modify this decision under AS 23.30.130 by filing a petition in accordance with 8 AAC 45.150 and 8 AAC 45.050.

I hereby certify that the foregoing is a full, true and correct copy of the Decision and Order in the matter of LARRY M. INGRAM employee / applicant; v. ENGINE & GEAR WORKS, INC. uninsured employer and ENGINE & GEAR ALASKA, INC., uninsured employer / defendants; Case No. 199729609; dated and filed in the office of the Alaska Workers' Compensation Board in Anchorage, Alaska, this 14th day of January, 2000.

Debra C. Randall, Clerk