Southerland v. B. V. Hedrick Gravel & Sand Co. , 123 N.C. App. 120 ( 1996 )

ARNOLD, Chief Judge.

Appellants first assign error to the Industrial Commission’s award of workers’ compensation benefits to plaintiff as a misapplication of the law. We agree and vacate the opinion and award.

The central issue in this case is whether the Industrial Commission had jurisdiction over this claim. A jurisdictional question may be raised at any stage of the proceeding. Askew v. Tire Co., 264 N.C. 168, 171, 141 S.E.2d 280, 282 (1965). Ordinarily, to come within the provisions of the Workers’ Compensation Act, a claimant has the burden of proving that an employer-employee relationship existed at the time of the injury. Durham v. McLamb, 59 N.C. App. 165, 168, 296 S.E.2d 3, 5 (1982). Further, in order for a sole proprietor to be included as an employee under his business’ workers’ compensation coverage, he must show that (1) he is actively engaged in the operation of the business, and that (2) his insurer is notified of his election to be covered. N.C. Gen. Stat. § 97-2(2) (1991).

Under N.C. Gen. Stat. § 97-86 (Supp. 1995) and our case law, it is axiomatic that an opinion and award entered by the Industrial Commission will not be disturbed on appeal unless a patent error of law exists therein. Hoffman v. Ryder Truck Lines, Inc., 306 N.C. 502, 505, 293 S.E.2d 807, 809 (1982). The Commission’s findings of fact are conclusive on appeal if they are supported by competent evidence even though there is evidence to the contrary. Click v. Freight Carriers, 300 N.C. 164, 166, 265 S.E.2d 389, 390 (1980). However, the reviewing court has the right and the duty to make its own independent findings of jurisdictional facts from its consideration of all the evidence in the record. Richards v. Nationwide Homes, 263 N.C. 295, 303-304, 139 S.E.2d 645, 651 (1965). The sole proprietor’s employee status is a jurisdictional fact, thus this Court has the duty to make its own independent finding, after reviewing all the evidence in the record. Doud v. K & G Janitorial Servs., 69 N.C. App. 205, 208, 316 S.E.2d 664, 667, cert. denied, 312 N.C. 492, 322 S.E.2d 554 (1984).

The dispositive statutes in the present case are G.S. § 97-2(2) and N.C. Gen. Stat. § 97-19 (1989) (amended 1994). G.S. § 97-2(2) requires sole proprietors to make an election in order to be eligible for workers’ compensation benefits.

Any sole proprietor or partner of a business whose employees are eligible for benefits under this Article may elect to be included as an employee under the workers’ compensation coverage of such business if he is actively engaged in the operation of the business and if the insurer is notified of his election to be so included.

G.S. § 97-19 explains the liability of principal contractors who sublet work to subcontractors:

Any principal contractor, intermediate contractor, or subcontractor who shall sublet any contract for the performance of any work without requiring from such subcontractor or obtaining from the Industrial Commission a certificate, issued by the Industrial Commission, stating that such subcontractor has complied with G.S. 97-93 hereof, shall be liable, irrespective of whether such subcontractor has regularly in service less than four employees in the same business within this State, to the same extent as such subcontractor would be if he were subject to the provisions of this Article for the payment of compensation and other benefits under this Article on account of the injury or death of any such subcontractor, any principal or partner of such subcontractor or any employee of such subcontractor due to an accident arising out of and in the course of the performance of the work covered by such subcontract. If the principal contractor, intermediate contractor or subcontractor shall obtain such certificate at the time of subletting such contract to subcontractor, he shall not thereafter be held liable to any such subcontractor, any principal or partner of such subcontractor, or any employee of such subcontractor for compensation or other benefits under this Article. If the subcontractor has no employees and waives in writing his right to coverage under this section, the principal contractor, intermediate contractor, or subcontractor subletting the contract shall not thereafter be held liable for compensation or other benefits under this Article to said subcontractor. Subcontractors who have no employees are not required to comply with G.S. 97-93. The Industrial Commission, upon demand shall furnish such certificate, and may charge therefor the cost thereof, not to exceed twenty-five cents (25).

The manifest purpose of this statute ... is to protect the employees of irresponsible and uninsured subcontractors by imposing ultimate liability on principal contractors, intermediate contractors, or subcontractors, who presumably being financially responsible, have it within their power, in choosing subcontractors, to pass upon their financial responsibility and insist upon appropriate compensation protection for their workers.

Greene v. Spivey, 236 N.C. 435, 443, 73 S.E.2d 488, 494 (1952). G.S. § 97-19 protects the employees of a subcontractor, not the subcontractor himself. Doud at 212, 316 S.E.2d at 669.

The Full Commission adopted the opinion and award of the Deputy Commissioner, we therefore refer to the findings and conclusions of the Commission. The parties stipulated that Southerland Construction Company is located in Baileyton, Alabama and is a sole proprietorship. Also stipulated was that at the time of subletting the work on the construction project to Service Construction Company, and at the time of plaintiffs fall, Southerland Construction Company maintained a policy of workers’ compensation insurance in compliance with the workers’ compensation laws of Alabama and North Carolina. The Commission concluded as a matter of law:

Even though a certificate of insurance would not have shown that plaintiff failed to elect to cover himself as a sole proprietor, and even though plaintiff had complied with N.C.G.S. § 97-93. [B]y having coverage for his employees, the undersigned is of the opinion that with N.C.G.S. § 97-19 must be strictly construed, and that by failing to require and obtain a certificate of insurance from plaintiff, defendants are liable for all compensation and benefits due under the Act for plaintiff’s injury by accident.

The Commission erroneously concluded that because defendants failed to comply with G.S. § 97-19 by not obtaining an insurance certificate from plaintiff, that defendants are therefore liable. G.S. § 97-19, however, is not applicable to the present case and does not afford plaintiff coverage. Had one of plaintiffs employees been injured, only then would defendants’ failure to obtain from plaintiff an insurance certificate merit the Commission awarding benefits to one of plaintiffs employees.

The facts before us show that plaintiff, a sole proprietor, failed to elect to be included as an employee under the workers’ compensation coverage of his business. Consequently, plaintiff has not established that an employer-employee relationship existed at the time of injury either by electing coverage under G.S. § 97-2(2), or by being an employee under G.S. § 97-19. Therefore, because no employer-employee relationship existed the Commission lacked jurisdiction to hear plaintiff’s claim and we vacate the Commission’s opinion and award.

Vacated and reversed.

Judges WYNN and MARTIN, Mark D., concur.