SAIF Corp. v. Ward (In re Ward)

369 Or. 384

506 P.3d 386

In the MATTER OF the COMPENSATION OF Carl S. WARD, Claimant.

SAIF Corporation and Robert S. Murray, Petitioners on Review,

v.Carl S. Ward, Respondent on Review.

SC S068179

Supreme Court of Oregon.

Argued and submitted September 14, 2021

March 24, 2022

Beth Cupani, Appellate Counsel, SAIF Corporation, Salem, argued the cause and filed the briefs for petitioners on review.

Craig Miller, Miller Law, LLC, Portland, argued the cause and filed the brief for respondent on review.

Theodore P. Heus, Quinn & Heus, LLC, Beaverton, filed the brief for amicus curiae Oregon Trial Lawyers Association.

Before Walters, Chief Justice, and Balmer, Flynn, Duncan, Nelson, and Garrett, Justices.^**

NELSON, J.

This workers’ compensation case requires us to decide whether a truck driver (claimant) who sustained injuries while driving a truck that he leased directly from a trucking company, with restrictions that prohibited him from driving the truck for the use of any other company, is a "subject worker" within the meaning of ORS 656.027 such that the trucking company is required to provide workers’ compensation insurance coverage for claimant's injuries. SAIF and Robert S. Murray, the owner of Bob Murray Trucking (BMT), a for-hire carrier, seek review of the Court of Appeals’ opinion affirming the final order of the Workers’ Compensation Board. In that order, the board concluded that claimant was a subject worker of BMT under the workers’ compensation laws and did not qualify for the exemption to "subject worker" status contained in ORS 656.027(15)(c). For the reasons described below, we agree with the board that claimant is a "subject worker" who did not qualify for the exemption in ORS 656.027(15)(c) and, accordingly, was entitled to workers’ compensation coverage provided by BMT. We affirm the decision of the Court of Appeals and the Workers’ Compensation Board's final order.

I. FACTS

We take the facts from the board's findings, as set out in its final order. Those include the earlier findings of an administrative law judge (ALJ), as adopted by the board alongside its own factual summary.

BMT is a for-hire, interstate motor carrier that is in the business of hauling wood, steel, and general commodities. BMT is licensed by the federal Department of Transportation and its trucking operations are regulated by the Federal Motor Carrier Safety Administration. BMT is owned by Robert S. Murray.

Claimant worked as a truck driver for BMT between May and August 2016. To begin driving for BMT, claimant leased a tractor truck directly from BMT. Claimant signed a document entitled "Operator Lease/Independent Contractor Agreement." That agreement specifically stated that claimant "has not acquired, nor will [he] acquire by this acceptance of the Lease Agreement, any proprietary right, security interests or equity in the lease vehicle." The agreement also provided that the lease payments, occupational insurance fees, and maintenance fees were to be deducted directly from claimant's paycheck.¹ In exchange, the agreement granted claimant the right to use BMT's truck to haul loads but "only in interstate trucking in the United States on behalf of [BMT]."

For hauling loads for BMT, claimant was compensated at a rate of 37 cents per mile. In addition to the lease agreement, claimant also signed an acknowledgement that he received a copy of the BMT "Driver's Manual," which provided additional rules and regulations for the use of the truck, including safety rules, rules of personal conduct and dress, and various additional restrictions. One such restriction prohibited carrying any additional passengers in the truck without first obtaining permission from BMT.

The lease agreement and manual not only outlined claimant's interest in the leased truck, they also provided additional information about BMT's compensation incentives, primarily based on claimant's adherence to the rules outlined by BMT, timely submission of paperwork documenting mileage and vehicle inspections, accurate mileage sheets and reporting logs, daily inspection reports, frequent communication with BMT dispatch, customer service and professional demeanor when hauling loads for BMT, availability, truck cleanliness and appearance standards, and safe driving records.

BMT also monitored claimant's use of the truck by requiring that he only drive assigned routes and questioning claimant if he deviated from the route or made an unscheduled stop at a rest stop. BMT paid and provided for the following resources and expenses: liability insurance, fuel, and various equipment (including a radio, tools, flashlight, camera, and fire extinguisher). In addition, BMT placed its logo onto the truck to "identify the equipment as being in [BMT's] service" and prohibited claimant from making any changes to the appearance of the truck, particularly from placing his own signage anywhere on the truck. Although the lease agreement allowed claimant to identify other drivers who may be able to operate the truck for BMT, BMT reserved the right to "disqualify any driver provided by [claimant] who is determined to be unsafe by [BMT] in [BMT's] sole discretion." As noted above, the truck was to be used exclusively to haul loads for BMT.²

On August 9, 2016, claimant was operating the truck pursuant to the lease agreement by hauling a load for BMT. As required by the lease agreement, claimant had obtained BMT's permission for his girlfriend to ride in the passenger seat. During the drive, claimant began to experience difficulty with the truck's brakes and, eventually, claimant was unable to stop the truck. The truck flipped over. Claimant's girlfriend was killed, and claimant sustained serious physical injuries.

Claimant filed a workers’ compensation claim with SAIF seeking benefits for the injuries that he sustained in the accident. SAIF denied that claim. Relying on ORS 656.027(15), which provides that an individual "who has an ownership or leasehold interest in equipment and who furnishes, maintains, and operates the equipment" does not qualify as a subject worker who is entitled to workers’ compensation benefits, SAIF determined that claimant was not eligible for workers’ compensation benefits from BMT. An ALJ agreed with SAIF's contention and upheld its decision to deny claimant benefits.

The claim came before the Workers’ Compensation Board which disagreed with the ALJ and reversed the decision. In doing so, the board determined that claimant was unable, under the terms of the lease agreement between him and BMT, to "furnish" the truck to BMT because he had no transferable interest in the truck. Accordingly, the board held that claimant did not qualify for the exemption in ORS 656.027(15)(c) and was a subject worker entitled to workers’ compensation benefits.

SAIF and BMT (collectively, SAIF) sought judicial review, arguing that claimant was not a subject worker of BMT and that he was exempt from workers’ compensation coverage under ORS 656.027(15)(c). In response to the board's conclusion, SAIF argued that a truck is "furnished" under that exemption when a driver makes the equipment available to haul loads of goods for the carrier, regardless of whether the driver makes that same equipment available to other carriers, and that no transferable interest is required under the statute. SAIF contended that claimant met the terms of the exemption in ORS 656.027(15)(c) because he had a leasehold interest in the truck, as evidenced by the lease agreement between the parties, and he furnished the truck to BMT when he hauled goods for them. In response, claimant asserted that the board had correctly decided that a driver must have a transferable interest in the equipment (here, the truck) in order to "furnish" it and, thus, claimant did not qualify as a nonsubject worker under the exemption and was entitled to workers’ compensation insurance coverage from BMT.

The Court of Appeals affirmed the order of the Workers’ Compensation Board. SAIF v. Ward , 307 Or. App. 337, 347, 477 P.3d 429 (2020). To reach that conclusion, the Court of Appeals took a comprehensive approach to evaluating the workers’ compensation statutory framework and the requirements for the subject worker exemption described in ORS 656.027(15). As a preliminary matter, the Court of Appeals explained that, in its view, the text of ORS 656.027(15) contains two independent and separate requirements: (1) that the worker has an ownership or leasehold interest in the equipment; and (2) that the worker must furnish, maintain, and operate the equipment.

Ward , 307 Or. App. at 340, 477 P.3d 429. That court noted that the phrasing of the statute indicates that the first requirement—the ownership or leasehold interest—is distinct from the second requirement—furnishing, maintaining, and operating the equipment. Id. Then, that court began to examine the specific language in ORS 656.027(15) by first defining the terms in the statute, "furnish" and "leasehold interest," to resolve the statutory construction question presented in this case. Id. at 340-41, 477 P.3d 429.

The Court of Appeals first defined "furnish." That court concluded that, under the statute, a driver furnishes equipment "by providing or supplying that equipment to a for-hire carrier." Id. at 341, 477 P.3d 429. That court next turned to the meaning of the phrase "leasehold interest," explaining that "a leasehold interest, at a minimum, means that the claimant must have the ‘right to possession and use.’ " Id. at 343, 477 P.3d 429. Then, that court considered how the terms relate to each other within the statute itself, concluding that the use of both of the terms in ORS 656.027(15) implied that an interest beyond the mere right to possess and use the equipment was required to qualify for the exemption:

"[U]nder the plain meaning of the statutory text, a driver can ‘furnish’ equipment to a carrier by providing the equipment in service of the carrier—here, by producing the equipment to haul

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