273 C.D. 2014

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Joel Zitofsky dba
Interior Contract Designers,
Petitioner
v.
Workers’ Compensation
Appeal Board (Wilson),
Respondent
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No. 273 C.D. 2014
Submitted: July 11, 2014
BEFORE: HONORABLE BERNARD L. McGINLEY, Judge
HONORABLE MARY HANNAH LEAVITT, Judge
HONORABLE P. KEVIN BROBSON, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE BROBSON
FILED: January 8, 2015
In this appeal from a decision of the Workers’ Compensation Appeal
Board (Board), Petitioner Joel Zitofsky, who does business as Interior Contract
Designers (Zitofsky), argues that the Board erred in affirming a decision by a
workers’ compensation judge (WCJ), which held, inter alia, Zitofsky liable for
workers’ compensation benefits to Charles Wilson (Claimant) commencing
August 20, 2009. For the reasons set forth below, we affirm the Board.
BACKGROUND
The following facts are not in dispute.1 Claimant was injured on
September 25, 2004, while in the employ of Zitofsky. Zitofsky hired Claimant for
1
Much of this background is gleaned from unchallenged factual findings of the WCJ.
construction work. Claimant was injured when he fell through the floor of a
building that Zitofsky was renovating in Wilkes-Barre, Pennsylvania.
A company named All Staffing, Inc. (All Staffing) issued a Notice of
Compensation Payable (NCP) dated April 12, 2005 (Reproduced Record (R.R.)
116a), and began making temporary total disability benefit payments to Claimant.
In the NCP, “Interior Contract Design/All Staffing” is identified as the employer,
with an address located in Lansford, Carbon County, Pennsylvania.
Oriska
Insurance Company (Oriska) is identified as the insurer or third-party administrator
for the claim. Over the next several years, as matters would arise with respect to
Claimant’s benefits, All Staffing, not Oriska and not Zitofsky, hired counsel and
purported to represent the interests of the “employer” in those proceedings. The
reason for Oriska’s absence during this time is clear from the record and the WCJ’s
factual findings. Apparently, Oriska had insured All Staffing up until July 1, 2004,
months before Claimant’s injury, at which point the policy expired. There is
nothing in the record to suggest that Oriska ever insured Zitofsky’s workers’
compensation liability under Pennsylvania law.
What happened next is unfortunate for both Claimant and Zitofsky,
but not unsurprising given the above circumstances. On August 20, 2009, All
Staffing ceased paying benefits under the NCP without any explanation. Claimant
filed numerous petitions against “All Staffing Inc./Interior Contract and Design,”
at the Carbon County address, and several insurance companies in an effort to
reinstate his benefits. This appeal, however, arises out of a petition for penalties
dated October 18, 2010, which names Zitofsky alone as Claimant’s employer, with
an address in Wilkes-Barre, Luzerne County, Pennsylvania. (R.R. 14a-15a.) In
finding of fact number 7, the WCJ refers to this filing as a “Joinder Petition.”
2
In an answer to the penalty petition (R.R. 12a-13a), Zitofsky raised
several defenses. Zitofsky claimed that he was not Claimant’s employer:
Joel Zitofsky d/b/a Interior Contract Designers was not
the Employer of Claimant. Interior Contract Designers
has a contract with All Staffing, Inc. who supply staffing
for the needs of Interior Contract Designers. The
Claimant was an employee of All Staffing, Inc. Interior
Contract Designers had been informed that All Staffing,
Inc. provided workers’ compensation insurance for its
employees which All Staffing, Inc. purchased from
Oriska Insurance Company.
Zitofsky also contended:
Joel Zitofsky d/b/a Interior Contract Designers did not
receive timely notice of the employee’s claim. The
employee’s claim is barred by the doctrines of res
judicata and collateral estoppel. The claimant’s claim is
time barred. The claimant’s claim is barred by doctrines
of waiver and estoppel.
(R.R. at 12a-13a.) In addition, the administrative docket, part of the certified
record in this matter, indicates that on or about November 8, 2010, Zitofsky filed a
Petition for Joinder of Additional Defendant, seeking to join the Uninsured
Employers Guaranty Fund (Fund)2 as an “additional carrier” with respect to
Claimant’s penalty petition. The docket also shows that both Claimant’s penalty
petition against Zitofsky and Zitofsky’s joinder petition with respect to the Fund
were assigned to a WCJ for disposition.
2
Legislation established the Fund “for the exclusive purpose of paying to any claimant or
his dependents workers’ compensation benefits . . . and any costs specifically associated
therewith where the employer liable for payments failed to insure or self-insure its workers’
compensation liability . . . at the time the injuries took place.” Section 1602(c) of the Workers’
Compensation Act (Act), Act of June 2, 1915, P.L. 736, added by the Act of November 9, 2006,
P.L. 736, 77 P.S. § 2702(c).
3
Following hearings, the WCJ issued his decision. As noted above, the
WCJ found that Claimant was injured when he fell through the floor of a building
while working for Zitofsky. (Finding of Fact (F.F.) #1.) All Staffing issued the
NCP and began paying Claimant benefits under the Act. (F.F. #2.) The WCJ
wrote:
2.
. . . According to Mr. Zitofsky, he paid All
Staffing to take care of his personnel and human
resources obligations such as workers’ compensation.
3.
All Staffing has never entered an appearance
in these proceedings but through the testimony of Mr.
Zitofsky and [Claimant], we learned that [Claimant] was
hired by Mr. Zitofsky to do construction work; however,
[Claimant’s] paychecks and his subsequent workers’
compensation benefits came from All Staffing. Other
than receipt of his wages and his workers’ compensation
benefits, [Claimant] had no contact or communication
with All Staffing . . . .
The WCJ also found, as noted above, that over the years All Staffing appeared and
purported to represent the interests of the “employer” in proceedings regarding
Claimant’s benefits. (F.F. #4.) Furthermore, Oriska Insurance Company did not
insure All Staffing at the time of Claimant’s injury. (F.F. #5.) The WCJ found
that this dispute arose when All Staffing unilaterally ceased making benefit
payments to Claimant, prompting Claimant’s filing, inter alia, of the penalty
petition that is the subject of this appeal. (F.F. #6.)
Finding that Oriska Insurance Company neither insured All Staffing
nor Zitofsky at the time of Claimant’s injury, the WCJ concluded that the carrier
owed no obligation to Claimant on his claim under the Act. (F.F. #8.) The WCJ,
however, made additional findings with respect to All Staffing and Zitofsky:
7.
. . . [I]n the course of these proceedings, the
Claimant filed a specific Joinder Petition against
4
[Zitofksy]. As a result, . . . Zitofsky has been present
during these proceedings and represented by counsel.
...
9.
Joel Zitofsky operates a company known as
Interior Contract and Design at 146 West River Street,
Wilkes-Barre, Pennsylvania. For several years, he had an
arrangement with a payroll company known as All
Staffing which managed his payroll and insurance
matters such as workers’ compensation.
This
relationship was successful until August 20, 2009, when
[Claimant’s] workers’ compensation benefits ceased. In
fact, while [Claimant] worked for Mr. Zitofsky, he
received regular paychecks from All Staffing. And,
following his injury on September 25, 2004, he received
regular workers’ compensation benefits from All
Staffing. According to Mr. Zitofsky, the system worked.
From 2004 up until Mr. Zitofsky was served with the
Petition for Joinder in this matter, he had no idea there
was any problem with [Claimant’s] claim; and he was not
aware of the various proceedings that took place over the
years. We note from the Bureau documents that although
Mr. Zitofsky’s company was named as the Employer on
Bureau documents and during prior litigation, everything
was sent to All Staffing/Interior Contract and Design
with an address in Lansford, Pennsylvania. There is
nothing until recently that was served directly upon Mr.
Zitofsky’s company in Wilkes-Barre, Pennsylvania. As
already indicated, All Staffing handled all prior
proceedings involving [Claimant], and All Staffing
obtained and paid legal counsel over the years. It appears
now that All Staffing defrauded [Claimant], Mr.
Zitofsky, and the Oriska Insurance Company.
10. Mr. Zitofsky argues that because he was not
a party to any of the prior proceedings, he cannot be held
accountable at this late date. Unfortunately, the fact that
Mr. Zitofsky paid a company to handle his payroll and
workers’ compensation claims does not absolve him of
liability; that company was only his agent. He is the
principal who remains responsible for the acts of his
agent.
5
11. We sympathize with Mr. Zitofsky, but the
. . . Act places the burden of providing workers’
compensation to employees directly upon the Employer.
The fact that Mr. Zitofsky’s arrangement with All
Staffing allowed him to not actively participate in
[Claimant’s] claim over the years does not shield him
from that liability. Nor does the statute of limitations
apply because the Claimant was receiving compensation
until August 20, 2009. Thus, there was no controversy or
issue prior to that date. In fairness to Mr. Zitofsky,
however, we do not find that he willfully violated any
terms of the . . . Act. Therefore, although we will grant
the Penalty Petition to get the Claimant compensated, we
will not assess any penalties against Mr. Zitofsky.
(F.F. ##7, 9-11.)
Based on the foregoing factual findings, the WCJ concluded that
Zitofsky, as Claimant’s employer at time of injury, was responsible for
compensating Claimant under the Act.
He concluded that All Staffing and
Zitofsky were jointly and severally liable under the Act to pay benefits to Claimant
at a rate of $410.27 per week, commencing August 20, 2009. He awarded interest
on past due benefits at a rate of 10% per annum. And, as noted above, he refused
to assess a penalty against Zitofsky under the circumstances. The WCJ’s decision
does not address Zitofksy’s petition to join the Fund as an additional carrier.
On appeal to the Board, Zitofsky challenged portions of the WCJ’s
factual findings numbered 4, 9, 10, and 11. Specifically, Zitofsky argued that All
Staffing did not represent “Employer’s” interests during the workers’
compensation proceedings. Rather, Zitofsky contended that All Staffing lacked
authority to engage in those activities and never acted as Zitofsky’s agent.
Zitofsky strongly disputed the WCJ’s finding that he was served with a Petition for
Joinder. To the contrary, Zitofksy contended that the only petition he received was
Claimant’s penalty petition.
Zitofksy contends that he should not be held
6
responsible for the acts of All Staffing, which defrauded Zitofsky. He further
contends that he has never been served with a claim petition or a joinder petition,
and, therefore, Claimant’s claim against Zitofsky is barred by the statute of
limitations and the statute of repose. The Board, nonetheless, affirmed the WCJ’s
determination. This appeal followed.3
DISCUSSION
In his brief, Zitofsky raises three issues for our consideration. First,
he challenges the portions of both WCJ findings of fact 7 and 9, wherein the WCJ
finds that Claimant filed and served upon Zitofksy a petition to join Zitofsky as a
party in the proceedings on Claimant’s claim and penalty petitions. In a related
issue, Zitofsky contends that the WCJ erred in failing to conclude that Claimant’s
claim against Zitofsky was time-barred. Claimant’s third and final challenge to the
WCJ’s decision is his contention that Claimant should be estopped from asserting a
claim against Zitofksy. We address each of these issues seriatim.
A. WCJ Finding Re: Joinder Petition
The WCJ found that Zitofsky had been served with a joinder petition,
appeared, and fully participated, through counsel, in the hearing on the underlying
penalty petition. Zitofsky contends that he was never served with a joinder petition
and that no such petition appears in the docket of the administrative proceeding. In
response, Claimant tacitly concedes the point. He notes, however, that Zitofksy
did receive the penalty petition, answered it, and appeared before the WCJ to
3
Our review in an appeal from an order of the Board affirming a WCJ’s decision is
limited to considering whether the WCJ’s necessary factual findings are supported by substantial
evidence and whether the WCJ erred as a matter of law. 2 Pa. C.S. § 704.
7
defend against it. Claimant recasts Zitofsky’s challenge as a challenge to the form
of the petition that Claimant filed; a challenge that Claimant alleged Zitofksy has
waived.
We do not agree with Claimant’s characterization of Zitofsky’s claim.
To the contrary, we see this issue as a straightforward challenge to a factual finding
by the WCJ. Our task is to determine whether substantial evidence exists in the
record to support the WCJ’s factual findings that Claimant filed a Joinder Petition
against Zitofksy and served such a petition on Zitofsky in this matter. There is no
evidence in the record to support these findings. Unless material to the outcome of
this matter, however, our decision invalidating these findings does not require
reversal of the Board’s decision affirming the WCJ. We, therefore, must address
Zitofsky’s remaining issues on appeal.
B. Timeliness of Claim
Zitofsky raises the issue of whether Claimant has asserted a timely
claim against Zitofsky for compensation under the Act.
arguments in this regard.
He advances three
First, Zitofsky argues that neither the Bureau of
Workers’ Compensation (Bureau) nor Claimant complied with the service
requirements of the Act or the governing regulations. Second, to the extent the
Claimant contends that service on All Staffing affected service on Zitofsky,
Zitofsky contends that All Staffing was not Zitofksy’s authorized agent for service
of process.
Finally, Zitofsky argues that Claimant’s claim for compensation
against Zitofsky is barred by the three-year limitations period set forth in
Section 315 of the Act.4
4
77 P.S. § 602.
8
In response, Claimant argues that Zitofsky had sufficient notice of the
allegations against him as Claimant’s employer to hire counsel, respond to the
penalty petition, and appear before the WCJ for the hearing on the penalty petition.
Claimant argues that because Zitofsky had notice of the issues through service of
the penalty petition, the absence of an earlier claim petition directed directly to him
and not to All Staffing is not critical, as the WCJ possessed the authority under the
Act to grant the relief Claimant sought based on the evidence. Claimant contends
that Zitofsky’s “authorized agent” argument is misplaced.
He contends that
Zitofsky’s liability has never been premised on the acts of All Staffing; rather,
Zitofsky’s liability exists under the Act by virtue of his status as Claimant’s
employer.
Claimant further argues that Claimant’s penalty petition against
Zitofsky, under which the WCJ ordered Zitofksy to make benefit payments to
Claimant, was timely, because it was filed within three years of the last payment of
compensation to Claimant, albeit by All Staffing.
We find it curious that Zitofsky presses that Claimant knew who his
employer was, where he was located, but failed to serve a claim petition on
Zitofsky and instead served All Staffing. It is curious because it appears that
Zitofsky only recently abandoned his argument that he was not Claimant’s
employer at the time of injury. Indeed, in his response to the penalty petition,
Zitofsky expressly denies having an employer/employee relationship with
Claimant.
To the contrary, Zitofsky argued that All Staffing was Claimant’s
employer. Rather than describing All Staffing as merely a “payroll service,” in his
answer to the penalty petition Zitofsky contended that All Staffing was, in fact, a
staffing agency that supplied Zitofsky with labor for his business. He further
9
claimed that he relied on All Staffing’s representations that All Staffing maintained
workers’ compensation insurance for all of its employees, including Claimant.
The evidence adduced before the WCJ, particularly the testimony of
Zitofsky himself, reveals a different relationship, but not materially so for purposes
of this matter. Zitofsky testified that several years prior to Claimant’s injury, he
retained All Staffing as “basically a payroll service.” (R.R. 93a.) He testified that
he made payments to All Staffing for insurance and payroll, and All Staffing
would handle processing the payroll and insurance for employees. (Id.) He further
testified that he became aware of Claimant’s injury the day after it occurred and
even visited Claimant in the hospital.
(R.R. 92a.)
When asked whether he
prepared a report on Claimant’s injury, he testified that he personally did not:
“[B]ut I have a secretary who dealt with Allstaffing.” (R.R. 93a.)
The record shows that All Staffing issued first a notice of
compensation denial (NCD), on October 11, 2004, with respect to Claimant’s
September 25, 2004 injury, identifying the “Employer” as “All Staffing/Interior
Contract Designs” at All Staffing’s address in Lansford, Carbon County,
Pennsylvania. (R.R. 114a.) In response, on or about October 25, 2004, Claimant
filed his Claim Petition, addressed to the very same “Employer” and address listed
in the NCD. All Staffing would later issue the NCP. All Staffing made workers’
compensation benefit payments to Claimant as a result of the September 25, 2004
work injury, which Zitofsky was aware of as early as September 26, 2004. In
short, consistent with Zitofsky’s testimony, All Staffing “handled” Claimant’s
workers’ compensation claim with respect to his work-related injury while
10
working for Zitofksy, just as it was apparently hired to do.5 The record is thus
adequate to support the WCJ’s factual finding that Zitofsky hired All Staffing to
handle both payroll and workers’ compensation matters with respect to Zitofsky’s
employees. It appears entirely reasonable to us, under the circumstances, that
Claimant would deal directly with All Staffing, Zitofsky’s agent for these
purposes, on all matters relating to his workers’ compensation benefits. In dealing
with All Staffing, Claimant followed the construct created by Zitofsky.
See
Section 401 of the Act6 (defining “employer” to include employer’s “authorized
agent”).
Section 414 of the Act7 provides that “the department shall serve upon
each adverse party a copy of the petition together with a notice that such petition
shall be heard by the [WCJ] to whom it has been assigned.” 8 This appeal arises
under the penalty petition filed against Zitofsky, not the claim petition filed by
Claimant in October 2004.9 The record shows that Zitofsky received the penalty
5
Whether All Staffing “handled” the claim in compliance with the law or its contractual
relationship with Zitofsky is a question outside of the scope of this proceeding.
6
77 P.S. § 701.
7
77 P.S. § 775.
8
In using the term “department” the General Assembly apparently is referring to the
Department of Labor and Industry. The Bureau of Workers’ Compensation is an entity within
the Department, and is the entity to which Section 414 of the Act refers.
9
We acknowledge that the Bureau regulations contain a separate section dealing with
petitions to join additional defendants. 34 Pa. Code § 131.36. As noted above, the record does
not show that Claimant ever filed a petition to join Zitofsky as an “additional defendant.” In
responding to the penalty petition before the WCJ, however, Zitofsky did not argue that Claimant
failed to file a petition for joinder and thus the WCJ could not rule on the penalty petition. An
issue not raised before the WCJ is waived. See Dobransky v. Workers’ Comp. Appeal Bd.
(Continental Baking Co.), 701 A.2d 597, 600 (Pa. Cmwlth. 1997) (“[T]he strict doctrine of
waiver is applicable in workers' compensation proceedings”), appeal denied, 724 A.2d 936 (Pa.
(Footnote continued on next page…)
11
petition in question, retained counsel, filed an answer to the penalty petition, and
appeared before the WCJ to oppose it. Accordingly, we see nothing in the record
that would suggest any violation of the Act or regulations with respect to service of
the penalty petition.10
Section 315 of the Act provides, in relevant part:
In cases of personal injury all claims for
compensation shall be forever barred, unless, within three
years after the injury, the parties shall have agreed upon
the compensation payable under this article; or unless
within three years after the injury, one of the parties shall
have filed a petition as provided in article four hereof. . . .
Where, however, payments of compensation have been
made in any case, said limitations shall not take effect
until the expiration of three years from the time of the
making of the most recent payment prior to date of filing
such petition . . . .
Here, the record establishes that Claimant served his claim petition on All Staffing,
Zitofsky’s designated agent for handling workers’ compensation matters, well
(continued…)
1998); Mearion v. Workers’ Comp. Appeal Bd. (Franklin Smelting & Ref. Co.), 703 A.2d 1080,
1081 (Pa. Cmwlth. 1997) (issues not raised before the WCJ are waived), appeal
denied, 725 A.2d 1223 (Pa. 1998).
10
To the extent Zitofsky contends that Claimant and/or the Bureau had an obligation to
serve him personally with the claim petition filed back in October 2004, we find no merit to that
argument. As noted above, Claimant served the claim petition on the entity that issued the NCD,
All Staffing by and on behalf of named employer “All Staffing/Interior Contract Designs.” The
WCJ found as fact, and the record supports the findings, that Zitofsky retained the services of All
Staffing to handle such matters. Indeed, even if Claimant had served Zitofsky with the original
claim petition in 2004, the record evidence in this matter strongly suggests that Zitofsky would
have passed it on to All Staffing to handle. Zitofsky does not contend otherwise. Accordingly,
under the circumstances, service of the claim petition in October 2004 on All Staffing was
appropriate.
12
within the three-year limitation period provided in this section. Accordingly, the
claim was timely. The three-year limitation does not apply to Claimant’s penalty
petition against Zitofsky. But even if it did, the penalty petition was filed well
within three years of the date that All Staffing ceased paying benefits under the Act
on behalf of its principal and Claimant’s employer, Zitofsky.
C. Estoppel
Finally, Zitofsky argues that Claimant is estopped from asserting a
claim against Zitofsky. Zitofsky relies upon our Supreme Court’s decision in
Westinghouse Electric Corporation v. Workers’ Compensation Appeal Board
(Korach), 883 A.2d 579 (Pa. 2005), in support of his claim. In essence, Zitofsky
argues that Claimant, through silence when he should have spoken, intentionally,
or by culpable negligence, induced Zitofsky into believing that Zitofsky owed no
workers’ compensation benefits to Claimant as a result of the work-related injury.
He did so, Zitofsky reasons, because he never directly notified Zitofsky of the
claim.
Key elements to prevail on an equitable estoppel argument are action
or inaction by a party that causes the other party to believe certain facts exist and
then rely on those facts to his or her detriment. See Korach, 883 A.2d at 586;
Gadonas v. Workers’ Comp. Appeal Bd. (Boeing Defense), 931 A.2d 95, 100 (Pa.
Cmwlth. 2007), appeal denied, 948 A.2d 805 (Pa. 2008). These key elements
simply are not present on this record. First, as noted above, Claimant pursued his
claim for benefits with All Staffing in response to All Staffing’s issuance of an
NCD on behalf of itself and Zitofsky’s business as “Employer.” There is no
evidence in the record to support Zitofsky’s contention that Claimant knew or
should have known that he should have ignored the NCD and, instead, filed a
13
claim against Zitofsky and his business only and served it on Zitofsky personally.
As we held above, based on the construct Zitofsky set up, Claimant acted
reasonably in responding to All Staffing’s NCD.
Second, Zitofksy fails to convince us that he detrimentally relied on
any act of Claimant. The Act obligates Zitofsky, as Claimant’s employer, to pay
benefits for the work-related injury. Zitofsky acknowledged on the record that he
was aware of the injury. He further acknowledged that when such an injury would
occur, his secretary would refer the matter to All Staffing. That appears to have
happened in this case because All Staffing issued the NCD and then the NCP. All
Staffing paid benefits that, as a matter of law, Zitofsky was obligated to pay. Now,
the WCJ has issued an order, directing the Zitofsky to pick up and pay where All
Staffing left off. Under these facts, we fail to see how Zitofsky could be found to
have detrimentally relied on anything that Claimant did in this matter.
Accordingly, we will affirm the Board’s order.11
P. KEVIN BROBSON, Judge
11
We again note that the decision before us on appeal does not dispose of Zitofsky’s
petition for joinder of the Fund. Accordingly, whether the Fund has any statutory obligation in
this matter is a question outside the scope of this appeal.
14
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Joel Zitofsky dba
Interior Contract Designers,
Petitioner
v.
Workers’ Compensation
Appeal Board (Wilson),
Respondent
:
:
:
:
:
:
:
:
:
No. 273 C.D. 2014
ORDER
AND NOW, this 8th day of January, 2015, the order of the Workers’
Compensation Appeal Board is hereby AFFIRMED.
P. KEVIN BROBSON, Judge

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