The opinion of the court was delivered by: Mary Hannah Leavitt, Judge
Submitted: January 6, 2012
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge*fn1 HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge
Anthony Wagner (Claimant) petitions for review of an adjudication of the Workers' Compensation Appeal Board (Board) that denied his claim for benefits for the reason that he was exempt from coverage under his employer's workers' compensation policy. The Board affirmed the dispositive factual finding of the Workers' Compensation Judge (WCJ) that Claimant, an executive officer of the corporation that employed him, had exempted himself from coverage, in accordance with the Workers' Compensation Act (Act).*fn2 Discerning no error in the Board's adjudication, we affirm.
On June 24, 2009, Claimant filed a claim petition against Anthony Wagner Auto Repairs & Sales, Inc. (Employer) alleging that he had sustained work-related injuries in an automobile accident on July 21, 2006.*fn3 Employer's insurer, Harleysville Mutual Insurance Company (Insurer), denied the allegations. A hearing before a WCJ was scheduled and the issues were bifurcated. The first issue was whether Claimant, an executive officer of Employer, had waived workers' compensation coverage for himself under authority of Section 104 of the Act. It states, in relevant part, as follows:
An executive officer of a for-profit corporation or an executive officer of a nonprofit corporation who serves voluntarily and without remuneration may, however, elect not to be an employe of the corporation for the purposes of this act. For purposes of this section, an executive officer of a for-profit corporation is an individual who has an ownership interest in the corporation, in the case of a Subchapter S corporation . or an ownership interest in the corporation of at least five per centum, in the case of a Subchapter C corporation ..
77 P.S. §22 (emphasis added).
At the hearing, Claimant testified that from 1994 to 2004 he operated a motor vehicle garage, gas station, used car lot, and convenience store. He operated this business as a sole proprietorship, under the fictitious name "Wagner's Coach Repairs & Sales." In January 2004, Claimant's accountant, Michael Rowley, incorporated the business under the name "Anthony Wagner Auto Repairs & Sales, Inc." Claimant is the sole shareholder of the corporation, which is organized under the Internal Revenue Code as a Subchapter S corporation. Claimant testified that the corporation employs two individuals: a mechanic's assistant and himself, the mechanic.
Claimant stated that the J.L. Davis Insurance Agency (Agency) has been his insurance agent since 2002. Sometime in 2003, Agency assigned Lisa Tori to be responsible for his account. Tori reviewed his insurance needs; replaced expired policies; and placed all policies and relevant documents in a three ring binder for him. Claimant stated that his meetings with Tori usually took less than 15 minutes, during which time he signed whatever Tori asked him to. He did not read any of the documents he signed.
Claimant stated that he informed Agency in January of 2004 that he had incorporated his business and was advised that any necessary changes to his insurance coverage would be made at the August renewal meeting. Tori visited his shop in August, and he signed all the documents she presented. He did not recall signing any paperwork relating to his incorporation of the business. Claimant testified that he was not informed that, as an executive officer of the corporation, he could waive workers' compensation coverage for himself and pay a lower premium for the policy. Reproduced Record at 193a-194a (R.R.___).
Claimant then offered into evidence a letter from Tori dated August 16, 2005. The first sentence of the letter states that attached to it were forms "to exclude [Claimant]" from workers' compensation coverage now that the business was incorporated. Employee Exhibit 3; R.R. 317a. Attached to the letter exhibit was a Form LIBC-509, "Application for Executive Officer Exemption," and a Form LIBC-513, "Executive Officer's Declaration," which were blank.*fn4 Claimant also offered into evidence executed copies of these forms. Form LIBC-513 states, in pertinent part, that "I, the below named Executive Officer, do hereby knowingly and voluntarily elect not to be an employee of the below named corporation for purposes of the Pennsylvania Workers' Compensation Act, and waive all benefits and rights to which I might be entitled under the Pennsylvania Workers['] Compensation Act." Employee Exhibit 4; R.R. 322a. This statement was followed by Claimant's signature. Claimant acknowledged signing Forms LIBC-509 and 513 but stated that he did not read them first and that he would not have signed them had he known that he was waiving workers' compensation coverage.
On cross-examination, Claimant acknowledged that he graduated from high school and understands and reads English. He reiterated that typically he does not read official documents, including business contracts, invoices and tax returns, before signing them.
Insurer then presented the testimony of Tori. She explained that Claimant instructed her to deal with his girlfriend, Donna Dixon, about his insurance matters. Tori testified that she first learned Claimant had incorporated his business in August of 2005, when Dixon called her and informed her of the change. Tori testified that she advised Dixon that unlike a sole proprietorship, employees of a corporation, even officers, can be covered for workers' compensation insurance. However, Claimant's earnings would have to be included in the payroll on which the premium is calculated. Dixon responded that Claimant wanted the premium to remain the same and, thus, would exclude himself from workers' compensation coverage.
On August 16, 2005, Tori sent Claimant the letter that he offered into evidence as Employee Exhibit 3, which advised Claimant to fill out the attached Forms LIBC-509 and 513 so that he could be excluded from coverage. Tori testified that the exhibit was inaccurate because she had sent Claimant forms that were almost fully completed, except for the corporate form and federal tax identification number that ...