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NO. COA12-169 NORTH CAROLINA COURT OF APPEALS Filed: 18 December 2012 JAMES ARTHUR SMITH, Employee, Plaintiff, v. DENROSS CONTRACTING, U.S., INC., Employer, NONINSURED, and DENNIS BARRETT Individually, and THE NEW YORK STATE INSURANCE FUND, Carrier; and KAPSTONE KRAFT PAPER, Employer, SENTRY INSURANCE, Carrier, Defendants. North Carolina Industrial Commission Nos. W51771 & PH-2483

Appeal by defendant The New York State Insurance Fund from Opinion November and Award by entered the North 12 October 2011 and amended 22

2011

Carolina

Industrial

Commission.

Heard in the Court of Appeals 15 August 2012. Hedrick, Gardner, Kincheloe & Garofalo, L.L.P., by Michael G. Soto and M. Duane Jones, for defendant-appellant The New York State Insurance Fund. Wallace and Graham, plaintiff-appellee. P.A., by Whitney V. Wallace, for

Cranfill Sumner & Hartzog, LLP, by Ashley Baker White and Holland B. Ferguson, for defendants Kraft Paper and Sentry Insurance. BRYANT, Judge.

-2Where the New York State Insurance Fund accepted premium payments calculated by the Fund to provide workers' compensation liability insurance to employees of DenRoss Contracting, U.S., Inc., working in North Carolina with knowledge that DenRoss

maintained only clerical staff in New York State, the Fund is estopped to deny coverage for plaintiff's compensable injuries on the basis of quasi-estoppel. Where the record indicates that

the New York State Insurance Fund filed a denial of plaintiff's claim within thirty-days of notice of claim from the Commission, we reverse the Commission's sanction for late filing. New York State Insurance Fund asserted a valid Where the basis for

contesting plaintiff's claim, we reverse the Commission's award for asserting an unreasonable defense. In 2004, DenRoss Contracting, U.S., Inc., (DenRoss)

contracted with the New York State Insurance Fund (NYSIF) to provide NYSIF's workers' New York compensation Insurance coverage for its employees. and

Fund

Workers'

Compensation

Employers' Liability Policy specifically excluded from insurance liability coverage "bodily injury occurring outside the State of New York." auditor, and DenRoss was audited annually in person by a NYSIF the policy was automatically renewed after the

audit and the premiums were paid.

-3Prior to 2010, DenRoss worked at jobsites throughout the United States and Canada providing maintenance service for paper mill machines. In September 2009, DenRoss entered into a

contract with defendant Kapstone Kraft Paper (Kapstone) to clean and paint a paper machine located at Kapstone's plant in Roanoke Rapids, North Carolina. To perform the work, DenRoss hired

twenty-four employees, including plaintiff James Smith. On 3 October 2009, plaintiff was working at the Roanoke Rapids jobsite plant floor; on the a catwalk catwalk suspended gave way; twenty feet and above the

plaintiff

fell.

Plaintiff suffered injuries including a heel fracture, a hip contusion, broken ribs, and a right knee injury. All parties

have stipulated that plaintiff's injuries are compensable. On 7 October 2009, plaintiff filed a Form 18 and later two amended forms giving notice of the accident to his employer and the claim of the employee with the North Carolina Industrial Commission. DenRoss filed a Form 61, Denial of Workers'

Compensation Claim. On its Form 61 denial of plaintiff's workers' compensation claim, DenRoss stated that it should not be held responsible for payment: its insurance carrier, NYSIF, had coverage of the

-4claim; and Kapstone was the principal contractor and statutory employer. Kapstone plaintiff's filed a Form 33R also denying liability for

injuries.

Kapstone

listed

defendant

Sentry

Insurance as its insurance carrier but contended that plaintiff was either an independent contractor or the employee of an

independent contractor at the time of his compensable injury. On 20 November 2009, Deputy Commissioner Adrian Phillips issued an order to compel DenRoss as follows: 1. . . . [E]ither begin making [workers' compensation] payments immediately or notify the Commission of a denial no later than Friday, November 20, 2009[.]

. . . 3. If [DenRoss] is in compliance with N.C.G.S. []97-93 and insurance is available, it is ORDERED that [DenRoss] must submit this compensable claim to its insurance carrier for payment immediately and ensure that all benefits to which Employee-Plaintiff is entitled under the Act are paid . . . ."

The order was not appealed, and no notification of a denial was provided the Industrial Commission. On 3 May 2010, the case came on for hearing before Deputy Commissioner Phillips. 2011, Deputy In an Opinion and Award filed 15 March Phillips ordered NYSIF to pay

Commissioner

-5plaintiff temporary total disability compensation. NYSIF was

also ordered to pay plaintiff's medical expenses incurred for the treatment of his to injury Evelyn further by accident and attendant care

expenses

payable

Troutman, concluded was

plaintiff's that the

mother. of

Commissioner

Phillips

denial

plaintiff's indemnity benefits therefore, outstanding services. Defendants Commission). appealed to defendants benefits, were

unreasonable to a 10%

and untimely; penalty for care

subject

medical

treatment,

and

attendant

the

Full

Commission

(the

On 12 October 2011, the Commission filed an Opinion and Award setting forth the following issues: Whether NYSIF was

subject to the jurisdiction of the Commission under the North Carolina Workers' Compensation Act; and whether NYSIF provided workers' compensation insurance for DenRoss in North Carolina. The Commission concluded that all parties were properly before it and were subject to and bound by the provisions of the North Carolina Workers' Compensation Act; and that the Commission had jurisdiction over the parties. The Commission further concluded

that DenRoss was covered by NYSIF at the time of plaintiff's injury and ordered NYSIF to pay plaintiff temporary total

-6disability compensation at the rate of $747.04 per week from 3 October 2009 until plaintiff returns to suitable employment; to pay current and future medical expenses and medical treatment provided for plaintiff's injury by accident; and to pay Evelyn Troutman for attendant care services at a rate of $11.00 per hour for nine hours a day for the period from 4 October 2009 to 26 December 2009. The indemnity Commission benefits[, also concluded that "[p]ayment and of these care

medical

benefits

attendant

services] has been unreasonably and untimely denied, therefore; [sic] Defendants are subject to a penalty of 10% [of the

outstanding indemnity benefits, medical benefits, and attendant care services]. . . . N.C. GEN. STAT.

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