WCF v. Argonaut Ins. Co.

2009 UT 18
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
----oo0oo----
Workers’ Compensation Fund and 	Nos. 20070160
Iverson Steel and Erection Company, 	20070180
Plaintiffs and Appellants,
v.
Wadman Corporation,
Defendant and Appellant,
v.
State of Utah Department of
Administrative Services, Division
of Risk Management; Argonaut
Insurance Co.; and Washington County 	F I L E D
School District,
Defendants and Appellee. 	March 24, 2009
---
Third District, Salt Lake
The Honorable Sandra N. Peuler
No. 020903830
Attorneys: 	James R. Black, Dennis V. Lloyd, Salt Lake City, for
appellant Workers’ Compensation Fund
Theodore E. Kanell, Russell W. Hartvigsen, Salt Lake
City, for appellee
---
NEHRING, Justice:
INTRODUCTION
¶1 	In this appeal, we determine who was responsible for
paying workers’ compensation benefits to Corey Searle, an
employee of Iverson Steel and Erection Company, who was injured
while working on the Santa Clara Middle School in Santa Clara,
Utah. 	Iverson had a subcontract with Wadman Corporation to
perform the steel erection component of the construction of the
Santa Clara Middle School; Wadman was the entity retained by the

1 Iverson was initially a plaintiff in this case, but it
subsequently assigned its rights to the WCF.
Nos. 20070160, 20070180 	2
Washington County School District to be the general contractor on
the project. 	Argonaut Insurance Company provided the workers’
compensation coverage for the project through an Owner-Controlled
Insurance Program, which we will refer to as the OCIP. 	After Mr.
Searle was injured, Argonaut refused to pay his claims. 	The
Workers’ Compensation Fund 1 then sued the Washington County
School District; the State of Utah Department of Administrative
Services, Division of Risk Management; Willis of Utah, Inc.;
Wadman; and Argonaut. 	The WCF stipulated to a dismissal of its
claim against Willis. 	The School District, the Division of Risk
Management, and Argonaut successfully moved for summary judgment.
The WCF appealed. 	It claims that the district court erred when
it concluded that the defendants were not responsible for
providing coverage to Iverson that covered Mr. Searle. 	After the
appeal was filed but before oral argument, the WCF settled with
the School District and the Division of Risk Management, leaving
only the WCF’s claim against Argonaut to be decided. 	As we
conclude that Mr. Searle was Wadman’s statutory employee, we
reverse.
BACKGROUND
¶2 	While working on the Middle School project for the
School District, Mr. Searle severely injured both legs when he
fell two stories and landed on concrete. 	Insurance coverage for
the Middle School project was controlled by the OCIP, which was
initially created by the Division of Risk Management. 	After the
OCIP’s creation, each school district within Utah had the option
of participating in the OCIP to help reduce construction costs.
The School District chose to participate in the OCIP for the
Middle School project. 	Argonaut was the designated workers’
compensation insurance carrier for all contractors and
subcontractors who enrolled in the OCIP. 	As part of its contract
with the School District, Wadman agreed to purchase workers’
compensation insurance through the OCIP. 	Wadman also agreed to
be responsible for ensuring that all subcontractors were enrolled
with the OCIP carrier, Argonaut.
¶3 	Although Wadman initially verified that all
subcontractors were properly enrolled in the OCIP, the steel
erection subcontractor originally retained by Wadman fell behind
schedule and Wadman replaced it with a new subcontractor,
Iverson, to complete the steel erection work. 	Wadman rejected
Iverson’s initial bid for the work, but an agreement was reached
after Iverson reduced its price to pass through to Wadman the

3 	Nos. 20070160, 20070180
savings in workers’ compensation premiums that Iverson would
realize because of the OCIP. 	After Iverson agreed to the
contract, Wadman trained Iverson in the safety practices required
by the OCIP, but it failed to send the OCIP enrollment form for
Iverson to Willis, the insurance broker that was assigned to be
the OCIP administrator. 	Iverson began working on the project on
January 28, 2002, and Argonaut began receiving insurance premiums
for the job. 	The WCF, Iverson’s alternate insurance provider,
did not receive premiums for the Middle School project.
Argonaut’s Senior Safety Management Consultant, J. Lemanski,
later inspected the construction site for safety, but he did not
comment on Iverson’s enrollment status. 	On February 7, 2002, Mr.
Searle was injured. 	The following day, Wadman submitted the
enrollment form for Iverson to Willis. 	Argonaut later issued
Iverson an insurance policy, but the effective date of the policy
was February 8, the day after the accident.
¶4 	Iverson submitted a claim for Mr. Searle’s injury to
Argonaut, which Argonaut denied. 	Argonaut based its denial on
the fact that the enrollment form was not submitted until the day
after Mr. Searle’s accident. 	The WCF then sued Argonaut, the
Division of Risk Management, the School District, Willis, and
Wadman. 	The defendants moved to dismiss. 	First, they contended
that the WCF did not have standing to bring its claim because it
was not injured. 	The WCF successfully overcame the challenge to
its standing by noting that it had obtained an assignment of
rights from Iverson and had paid Mr. Searle’s claim.
¶5 	Following discovery, the WCF stipulated to a dismissal
of its claims against Willis. 	The School District and the
Division of Risk Management moved for summary judgment. 	They
asserted that they could not be considered the employers or
insurers of Iverson because no contractual obligation existed
that required them to pay workers’ compensation. 	Argonaut also
moved for summary judgment, arguing that it did not have a
responsibility to provide insurance for Mr. Searle because Wadman
did not have agency authority to act for Argonaut, Iverson’s
employees were not loaned, the enrollment form for Iverson was
not submitted until after the accident, and Wadman was not the
statutory employer of Mr. Searle. 	Wadman opposed the other
defendants’ motions for summary judgment and amended its answer
to include cross-claims against Argonaut, the School District,
and the Division of Risk Management. 	The district court held a
hearing on all the motions before it and granted summary judgment
in favor of the School District, the Division of Risk Management,
and Argonaut. 	It also held that the grant of summary judgment to
those defendants made Wadman’s cross-claims moot.

Nos. 20070160, 20070180 	4
¶6 	The WCF appealed. 	Wadman filed a separate appeal. 	The
cases were assigned together for mediation. 	On September 7,
2007, prior to the mediation, Wadman assigned its rights to the
WCF. 	Mediation between the WCF, the School District, the
Department of Risk Management, and Argonaut was not successful.
A briefing schedule was set, and the WCF timely filed a brief in
which it advanced the claims of Iverson and Wadman that had been
assigned to it. 	The WCF argued that the district court’s grant
of summary judgment to Argonaut, the School District, and the
Division of Risk Management was in error. 	Prior to oral
argument, the WCF stipulated to the dismissal with prejudice of
its claims against the School District and the Division of Risk
Management. 	The WCF’s only remaining claim on appeal is,
therefore, that the district court erred in granting summary
judgment to Argonaut. 	The WCF advances the following arguments
for requiring Argonaut to provide coverage for Mr. Searle’s
accident: 	(1) Wadman was Argonaut’s agent and bound Argonaut to
provide coverage, (2) Iverson’s employees were loaned employees
and were covered by the Alternate Employer Endorsement of the
Argonaut Policy, (3) Argonaut must provide coverage because the
Middle School was an OCIP project and Argonaut was an OCIP
insurer, and (4) Argonaut must provide coverage because Wadman
was the statutory employer of Mr. Searle and because Argonaut was
bound to cover workers’ compensation claims against Wadman.
STANDARD OF REVIEW
¶7 	In order for summary judgment to be granted, there must
be no issue of material fact and the moving party must be
entitled to judgment as a matter of law. 	Utah R. Civ. P. 56(c);
Bowen v. Riverton City, 656 P.2d 434, 435 (Utah 1982). 	The
essential facts of the case regarding the terms and manner of Mr.
Searle’s employment are undisputed. 	As a result, the
responsibility of Argonaut to pay compensation for Mr. Searle’s
accident is an issue of law that we will decide. 	Bennett v.
Indus. Comm’n, 726 P.2d 427, 429 (Utah 1986); Whitehead v. Safway
Steel Prods., Inc., 497 A.2d 803, 806 (Md. 1985). 	The court has
jurisdiction over this matter pursuant to Utah Code section 78A-
3-102(3)(j) and gives no deference to the district court’s
conclusions of law, Krantz v. Holt, 819 P.2d 352, 353 (Utah
1991).
ANALYSIS
¶8 	The purpose of the Workers’ Compensation Act is to
provide compensation to injured employees “by a simple and speedy
procedure which eliminates the expense, delay and uncertainty” in
proving fault. 	Wilstead v. Indus. Comm’n, 407 P.2d 692, 693

5 	Nos. 20070160, 20070180
(Utah 1965); see Shupe v. Wasatch Elec. Co., 546 P.2d 896, 900
(Utah 1976) (Maughan, J., dissenting). 	When a dispute arises
regarding workers’ compensation insurance, “inferences . . .
constituting a worker’s right to recover are liberally construed”
in favor of the employee. 	Baker v. Indus. Comm’n, 405 P.2d 613,
614 (Utah 1965). 	The WCF argues that various doctrines have been
created to afford employees compensation and to prevent employers
from avoiding responsibility. 	Specifically, it argues that
Argonaut should have been required to provide coverage based on
the theory of agency authority, the loaned employee doctrine, the
requirement that insurance contracts be interpreted in favor of
the employee, and the statutory employer doctrine. 	We will
discuss each of these theories in turn, concluding that despite
shortcomings of the first three, Mr. Searle was the statutory
employee of Wadman and therefore covered by its compensation
carrier, Argonaut.
I. 	WADMAN DID NOT HAVE AGENCY AUTHORITY TO ACT FOR ARGONAUT
¶9 	The WCF claims that Wadman acted as Argonaut’s agent,
which obligated Argonaut to provide insurance. 	The argument
presented is that a principal, Argonaut, is bound by the acts of
an agent who has apparent authority to act. 	The WCF and Iverson
contend that since Wadman acted as if it had authority to
complete the workers’ compensation enrollment process, Argonaut
was bound by Wadman’s actions. 	See Restatement (Second) of
Agency § 8 (1958); Vickers v. N. Am. Land Devs., Inc., 607 P.2d
603, 604 (N.M. 1980).
¶10 	We indicated in Luddington v. Bodenvest, Ltd. that in
order to cloak a presumptive agent with authority, “‘the
principal [must have] manifested his . . . consent to the
exercise of such authority or [have] knowingly permitted the
agent to assume the exercise of such authority.’” 	855 P.2d 204,
209 (Utah 1993) (quoting Am. Jur. 2d Agency § 80 (1986)). 	We
also stated that “[i]t is the principal who must cause third
parties to believe that the agent is clothed with apparent
authority.” 	City Elec. v. Dean Evans Chrysler-Plymouth, 672 P.2d
89, 90 (Utah 1983). 	It is only when this consent has been
manifested by the principal that the agent has “the power to
affect the legal relations of the principal.” 	Restatement
(Second) of Agency § 7 (2007).
¶11 	The WCF and Iverson argue that Wadman’s actions imply
that agency authority existed. 	The record, however, contains no
evidence that Argonaut contributed to the formation of a belief
that Wadman was Argonaut’s agent or that Argonaut knowingly
permitted Wadman to “assume the exercise of such authority.”

Nos. 20070160, 20070180 	6
Luddington, 855 P.2d at 209. 	Argonaut contracted with Willis to
act as its agent, with the authority to receive all enrollment
forms and issue safety manuals. 	The limit of Wadman’s workers’
compensation responsibility was to verify that subcontractors
were properly enrolled in the OCIP as required by Wadman’s
contract with the School District.
¶12 	If Iverson believed that an agency relationship existed
between Wadman and Argonaut, it was Iverson’s responsibility to
verify that Argonaut had conferred this authority on Wadman.
Zions First Nat’l Bank v. Clark Clinic Corp., 762 P.2d 1090, 1095
(Utah 1988) (holding that “one who deals exclusively with an
agent has the responsibility to ascertain that agent’s authority
despite the agent’s representations”). 	Since Iverson did not
verify that Wadman had agency authority and since Argonaut never
stated that such an authority existed, Wadman could not have
acted to bind Argonaut as Iverson’s workers’ compensation
insurer.
II. 	IVERSON’S EMPLOYEES WERE NOT “LOANED” EMPLOYEES
¶13 	The WCF also contends that Iverson’s employees were
“loaned” to Iverson by Wadman and consequently were covered by
the Alternate Employer Endorsement of Argonaut’s workers’
compensation policy with Wadman. 	The WCF failed to state what
was meant by a “loaned employee” in its brief and did not explain
or include the full text or background of the Alternate Employer
Endorsement. 	Consequently, the substance of its argument is
unclear. 	We assume, however, that the WCF was referring to the
rule set forth in Ghersi v. Salazar, 883 P.2d 1352, 1356-57 (Utah
1994). 	Ghersi indicates that an employee is loaned if “‘(a) the
employee has made a contract of hire, express or implied, with
the special employer; (b) the work being done is essentially that
of the special employer; and (c) the special employer has the
right to control the details of the work.’” 	Id. (quoting 1B
Arthur Larson, Workmen’s Compensation Law § 48.00, at 8-343
(1992)). 	The loaned employee doctrine typically applies when a
temporary agency or general employer hires employees, placing
them on company payroll, and then loans the employees to other
“special” employers to actually perform work. 	Id.
¶14 	The WCF’s argument regarding how Iverson’s employees
were loaned is ambiguous. 	The WCF does claim, however, that
Iverson was Wadman’s special or alternate employer and should
therefore receive compensation from Wadman’s insurance provider,
Argonaut. 	It appears that the WCF contends that Wadman hired
Iverson’s employees as the “general employer” and then loaned the
employees back to Iverson as the temporary or “special employer,”

7 	Nos. 20070160, 20070180
which obligated Argonaut, as Wadman’s insurance provider, to
supply coverage under the Alternate Employer Endorsement.
¶15 	The loaned employee doctrine presupposes that workers
are “under contract to the [general labor] service to work as an
employee for a client” and that the general employer, which is
typically the temporary agency but in this instance would be
Wadman, is merely loaning the employees and not supervising the
actual work. 	Ghersi, 883 P.2d at 1356-57; see also Word v.
Motorola, Inc., 662 P.2d 1024, 1025 (Ariz. 1983). 	Here Iverson’s
employees did not have a contract with Wadman and no evidence was
presented that Iverson’s employees were on Wadman’s payroll or
would continue working for Wadman after the project was complete.
The inclusion of employees on the company payroll and their
continued employment with the general employer after the
completion of the project are key factors in determining if an
employee is loaned. 	See Ghersi, 883 P.2d at 1356-57. 	Iverson
contracted with Wadman as a company to perform work on the
project. 	Since no contract existed between Wadman and the
employees, as evidenced by the fact that the employees were not
directly paid by Wadman, Wadman could not have loaned the
employees to other entities. 	Furthermore, Wadman was responsible
for supervising Iverson’s work, so a loaned-employee relationship
could not have existed.
¶16 	The alternate argument that Iverson loaned its
employees to Wadman as the special employer also does not apply
in this case. 	A central test in determining if a labor service
loaned its employee is if it “was not responsible for performance
of the construction work.” 	Word, 662 P.2d at 1025 (emphasis
added). 	Iverson was responsible for the steel construction work;
therefore, it did more than furnish laborers. 	Because Iverson
provided laborers, contracted to erect the steel on the project,
and took responsibility for the performance of the steel work, it
could not have loaned its employees to Wadman. 	Since no evidence
was presented that Argonaut had a contract with Iverson to
provide workers’ compensation coverage for its loaned employees,
the designation of Iverson’s employees as “loaned”--and it is
clear that they were not “loaned”--is of no legal consequence.
III. 	NO CONTRACT WAS CREATED BETWEEN IVERSON AND ARGONAUT IN THE
ABSENCE OF THE COMPLETED ENROLLMENT FORM
¶17 	The WCF argues that a contract of insurance was formed
between Argonaut and the state to provide coverage for Iverson
since Argonaut was part of the “OCIP team” and was required to
provide insurance to all subcontractors. 	The WCF further
contends that the failure to submit the enrollment form was

Nos. 20070160, 20070180 	8
immaterial to the formation of a contract of insurance between
Iverson and Argonaut and therefore the contract should be
enforced.
¶18 	The notion that an implied contract existed between
Argonaut and other participants in the OCIP team that required
Argonaut to provide insurance to all subcontractors is not
supported by the terms found in the OCIP manual. 	The OCIP manual
supplemented the individual insurance policies issued to
contractors and subcontractors and set forth the terms of the
OCIP. 	The manual states that it “identifies, defines, and
assigns responsibilities related to the administration of the
[OCIP].” 	It also “[d]escribes the OCIP and details the
insurance-related responsibilities of the various parties
involved;” however, it “is not intended to provide coverage
interpretations” and the “terms and conditions of the policies
alone govern how coverage is applied.”
¶19 	Although the policy alone determines coverage, the OCIP
manual was nevertheless an essential element in defining the
contractual relationships that existed between the OCIP team
members. 	The manual specifies that its terms are binding and
“[t]he requirements of the [OCIP] Manual, including State of Utah
OCIP Safety and Health Manual, shall become a part of [the]
Contract Agreement.” 	It also states that any
“Contractor/Subcontractor shall cause all provisions and
requirements of the OCIP to be included in any
contract/subcontract agreement . . . and shall assure
compliance.”
¶20 	As a binding agreement defining the contractual
obligation among its parties, the OCIP manual mentions the
existence of an “OCIP team,” but does not require that the team
supply insurance to all subcontractors. 	The safety manual
defines the OCIP team as “the Owner (STATE OF UTAH/ENGINEER),
WILLIS CORROON and all applicable insurance carriers or the
representative of defined State agencies and firms working
together to implement the insurance program.” 	The manual
specifies that the owner’s responsibility consists of providing
general support for the worksite. 	The OCIP manual specifically
contemplates the possibility that a contractor may choose not to
enroll with the OCIP insurance provider. 	The manual specifies
that “[non-enrolled] contractors should notify their own
insurance company” instead of the OCIP insurance of injuries.
The OCIP manual also repeatedly states that although all
subcontractors should enroll in OCIP, coverage is only valid for
properly enrolled subcontractors, stating that “[t]he OCIP will
be only for the benefit of . . . Contractor/Subcontractor(s) of

9 	Nos. 20070160, 20070180
all tiers who have been properly enrolled in the OCIP program.”
In order to be properly enrolled, the manual specifies that all
contractors/subcontractors are required to submit enrollment
forms and complete certain requirements. 	Each subcontractor also
received a separate contract of insurance. 	The necessity of each
subcontractor obtaining a separate contract of insurance and
enrolling separately in the OCIP indicates no general contract of
insurance existed between Argonaut and all subcontractors.
¶21 	In the absence of a contract being formed by the
existence of the OCIP, the question remains if a contract was
otherwise created between Iverson and Argonaut. 	When determining
the starting date of an insurance contract, the law looks to the
contract terms. 	Vestin Mortgage, Inc. v. First Am. Title Ins.
Co., 2006 UT 34, ¶ 8, 139 P.3d 1055 (“An insurance policy is
merely a contract between the insured and the insurer and is
construed pursuant to the same rules applied to ordinary
contracts.” (internal quotation marks omitted)).
¶22 	The Argonaut enrollment expressly states that before
any contractors or subcontractors start work on the project,
Willis must receive the form. 	The OCIP manual confirms this
requirement and indicates that although “[t]he ‘Start Date’
indicated on the contract award form is the date that the
Contractor/Subcontractor is expected to begin operations at the
Project Site,” all subcontractors are to be properly enrolled
before access to the project site is allowed and coverage begins.
¶23 	The WCF argues that the form was not an essential
element of the contract. 	It cites testimony from Argonaut’s vice
president from a different case in which he opined that if the
State of Utah rolling wrap-up pieces were all in place, Argonaut
would provide coverage even without the form. 	This statement,
however, does not mean that the enrollment form, despite being
expressly made a part of the insurance contract, is superfluous.
Rather, the testimony illustrates that in one instance, an
Argonaut executive speculated that the form may not have been
necessary. 	In contrast to that statement, the OCIP manual
repeatedly states that submitting the form is required to
complete OCIP enrollment and that the form must be received by
Willis before any subcontractors can start work. 	The form is
necessary because it allows the insurance agent to track
applications for enrollment and obtain necessary information for
setting insurance rates.
¶24 	The WCF maintains that Wadman’s payment of a premium
for Iverson’s coverage to Argonaut and not the WCF demonstrates
that the form was a mere technicality and that a contract of

Nos. 20070160, 20070180 	10
insurance already existed between Argonaut and Iverson. 	The WCF
and Iverson fail to cite any case law supporting this assertion.
Several states, including Utah, have treated as enforceable
“binder” agreements between an insurance provider and an insured
that provide temporary insurance before the actual policy is
issued. 	See Williams v. First Colony Life Ins. Co., 593 P.2d 534
(Utah 1979). 	These binder agreements, however, typically require
an application to be submitted and the insurer to provide a
conditional receipt specifying the terms of the binder. 	Cain v.
Aetna Life Ins. Co., 659 P.2d 1334 (Ariz. Ct. App. 1983);
Springer v. Allstate Life Ins. Co. of N.Y., 731 N.E.2d 1106 (N.Y.
2000). 	The binder agreements also require, according to the
Fifth Circuit, that all conditions specified by the insurance
provider be met, Gladney v. Paul Revere Life Ins. Co., 895 F.2d
238 (5th Cir. 1990), “in order for a contract of temporary
insurance to exist,” Fox v. Catholic Knights Ins. Soc’y, 2003 WI
87, ¶ 23, 263 Wis. 2d 207, 665 N.W.2d 181 (2003) (citations and
internal quotation marks omitted). 	Although premiums were paid
to Argonaut, none of the other requirements for a binder
agreement were met.
¶25 	We previously stated that although “it is unfair for an
insurer to collect a premium which purports to cover a period
when in fact no such coverage exists: 	i.e., between the time of
the application and the delivery of the policy,” it is for
this reason, we have approved the rule that
ordinarily, when the insured has done
everything required of him and paid his
premium, the insurance takes effect from the
time of the issuance of a binding receipt,
even though the policy has not been
delivered. 	This is especially so when death
or injury occurs from some cause unrelated to
any possible ground for rejecting the
application.
Williams, 593 P.2d at 537.
¶26 	In this case, the application or enrollment form was
never received by Argonaut and the insurance company never issued
a binding receipt. 	Argonaut clearly stated that receipt of the
enrollment form was a prerequisite to coverage. 	Since Iverson
was required to submit the form and no binding receipt was given,
no contract was created. 	The terms of the OCIP manual were
clear. 	The manual plainly stated that the form must be submitted
as part of the enrollment process.

11 	Nos. 20070160, 20070180
¶27 	The WCF alternately argues that Argonaut was required
to provide coverage since it had a responsibility to verify that
all subcontractors were properly enrolled as part of its contract
with the OCIP. 	It contends that J. Lemanski, Argonaut’s Senior
Safety Management Consultant, was on the job inspecting the
premises for safety before the accident, had knowledge of
Iverson’s involvement, and had a responsibility to verify that
those working on the site were insured as part of the safety
inspections.
¶28 	Evaluating the safety of a job site is not the same as
verifying that a subcontractor has met all of the conditions
necessary to commence insurance coverage. 	The OCIP Safety and
Health Manual states, “Each Contractor shall bear sole and
exclusive responsibility for safety in all phases of their work.
Nothing contained herein shall relieve such responsibility.” 	It
also states that the role of OCIP team members includes the
“overall management responsibility for site safety and health,”
but “[t]his responsibility does not supersede, override, or take
precedence over that of Contractors who are ultimately
responsible for the safety and health of their employees . . . .”
The duty of OCIP team members was to oversee safety, not to
relieve contractors of responsibility. 	There is nothing in the
OCIP manual that indicates Argonaut contracted with the Division
of Risk Management to be responsible for ensuring that all
subcontractors were properly enrolled. 	In contrast, the OCIP
manual clearly specifies that Wadman had a responsibility to
ensure that all subcontractors were properly enrolled, and
pursuant to Utah Code section 34A-2-201, Iverson also had the
responsibility of making sure that its employees were insured,
which it failed to do. 	Although Argonaut may have had a
responsibility to conduct safety inspections, verification that
Iverson was properly enrolled was beyond the scope of Argonaut’s
responsibility.
IV. 	MR. SEARLE WAS A STATUTORY EMPLOYEE OF WADMAN
¶29 	In response to motions for summary judgment in the
district court, the plaintiffs contended that Argonaut and Wadman
were Mr. Searle’s statutory employers for purposes of workers’
compensation coverage. 	The WCF reiterates those arguments here,
urging us to find that under the OCIP “common law
employee/employer relationships are altered” and the key element
in determining a statutory relationship is the right to control.
¶30 	Argonaut asserts that the statutory employer argument
should be dismissed because the argument is a claim that could
only be brought by Wadman and because Wadman failed to file an

2 The legislature amended Title 34 in 2008. 	Because the
changes do not affect our analysis, we cite to the 2008 version.
Nos. 20070160, 20070180 	12
appellate brief. 	It is true that Wadman did not file an
appellate brief; Wadman, however, assigned its rights to the WCF
prior to the mediation and before a briefing schedule was set.
Accordingly, the WCF had the right to bring a claim directly
against Argonaut for coverage based on any claim that Wadman had.
The WCF did so on February 7, 2008, when it filed its opening
brief in which it asserted that Wadman was Mr. Searle’s statutory
employer and coverage should be provided by Argonaut. 	Argonaut
also argues that the brief filed by the WCF does not raise any of
Wadman’s claims. 	Although the WCF’s brief does not discuss the
elements of the statutory employer doctrine in great detail, it
does claim that Wadman was the statutory employer of Iverson,
which was sufficient to put Argonaut on notice of the statutory
employer argument. 	Since Wadman assigned its rights to the WCF
and since the joint brief raised Wadman’s claims, the WCF’s
statutory employer claim should not be dismissed.
¶31 	Utah Code section 34A-2-103(2) defines the
circumstances under which an employer/employee relationship is
created as a matter of law. 	This section states that an employer
is someone “who regularly employs one or more workers or
operatives in the same business, or in or about the same
establishment.” 	Utah Code Ann. § 34A-2-103(2) (Supp. 2008) 2.
Section 34A-2-103(7)(a)(ii), the statutory employee section, also
indicates that if
an employer procures any work to be done
wholly or in part for the employer by a
contractor over whose work the employer
retains supervision or control, and this work
is a part or process in the trade or business
of the employer, the contractor, all persons
employed by the contractor, all
subcontractors under the contractor, and all
persons employed by any of these
subcontractors, are considered employees of
the original employer for the purposes of
this chapter.
Utah Code Ann. § 34A-2-103(7)(a)(ii) (emphasis added). 	In
Bennett v. Industrial Commission, we clarified that the term
“supervision or control” includes the general contractor’s
ultimate control over the project. 	726 P.2d 427, 432 (Utah
1986); see also Pinnacle Homes, Inc. v. Labor Comm’n, 2007 UT App
368, ¶ 21, 173 P.3d 208.

13 	Nos. 20070160, 20070180
¶32 	In general, Argonaut cannot be described as a statutory
employer merely because it participated in the OCIP. 	In order
for a statutory employer relationship to exist, the employer must
procure the work to be done, retain supervision and control, and
the work must be part of the employer’s trade or business. 	Utah
Code Ann. § 34A-2-103(7)(a)(ii). 	Argonaut was not the statutory
employer of Iverson in this case because Argonaut did not procure
the services of Iverson, did not have ultimate control over
Iverson’s work, and was not in the trade or business of
construction.
¶33 	In contrast, the WCF correctly contended that Wadman
was Iverson’s statutory employer. 	Wadman hired Iverson to
complete the steel work and therefore procured Iverson’s
services. 	Wadman also exercised control over the project by
supervising Iverson’s work. 	Finally, Wadman’s line of trade and
business was construction, and thus erecting the steel part of
the building was part of its trade and business. 	Because Wadman
satisfies all the elements in section 34A-2-103(7)(a)(ii), it is
the statutory employer of Mr. Searle.
¶34 	Even if the level of supervision exercised by Wadman
was uncertain, an inference of supervision would still
automatically arise because the work being performed was part of
the employer’s business. 	Bennett, 726 P.2d at 432. 	In Bennett,
we determined that even though general contractors frequently
delegate a substantial amount of work to subcontractors, the
general contractor remains responsible so long as the
subcontractor’s work is a part or process of the general
contractor’s business. 	Id. 	In this case, the steel construction
performed by Iverson was part of Wadman’s general business of
construction and an inference of control arose because Wadman was
the general contractor.
¶35 	Argonaut claims that Iverson already had coverage
through the WCF and therefore the statutory employer doctrine did
not apply. 	Argonaut also contends that the WCF, having paid Mr.
Searle’s claim, had the right to seek reimbursement of unpaid
premiums from Iverson, and therefore Iverson had coverage through
the WCF. 	The WCF counters these arguments, stating that the
insurance coverage Iverson received from the WCF did not cover
the Middle School project and that Argonaut, not the WCF,
received premiums for the Middle School project.
¶36 	Typically, an employee cannot reach through the layers
of employers any further than the first-insured contractor.
Jacobsen v. Indus. Comm’n, 738 P.2d. 658, 661 (Utah Ct. App.
1987). 	Section 34A-2-103(7)(e) states that the statutory

Nos. 20070160, 20070180 	14
employer doctrine is applicable to contractors and subcontractors
unless “the employer who procures work to be done by the
contractor or subcontractor obtains and relies on . . . a valid
certification of the contractor’s or subcontractor’s compliance
with Section 34A-2-201.” 	Section 34A-2-201 provides,
An employer shall secure the payment of
workers’ compensation benefits for its
employees by:
(1) insuring, and keeping insured, the
payment of this compensation with the
Workers’ Compensation Fund;
(2) insuring, and keeping insured, the
payment of this compensation with any stock
corporation or mutual association authorized
to transact the business of workers’
compensation insurance in this state; or
(3) obtaining approval from the division in
accordance with Section 34A-2-201.5 to pay
direct compensation as a self-insured
employer in amount, in the manner, and when
due as provided for [by statute].
¶37 	Iverson did not provide Wadman with a certificate of
compliance with section 34A-2-201 for the Middle School project.
It could not have because it informed the WCF that Iverson’s
employees working on the Middle School project would not need to
be covered by the WCF while they were working on the project.
¶38 	Iverson did, however, provide some documentation of the
WCF coverage to Wadman. 	Under the OCIP, all subcontractors and
contractors were required to provide proof of 34A-2-201
compliance for off-site activities in order to enroll in the
OCIP. 	Iverson had to demonstrate compliance with the off-site
insurance requirement by showing that it had coverage through the
WCF for off-site jobs, which it did. 	This coverage did not
preclude Iverson from being a statutory employee for the Middle
School project since Wadman never received information that
Iverson had other insurance for the project. 	Utah Code Ann.
§ 34A-2-103(7)(e). 	To the contrary, Wadman requested that
Iverson reduce its bid in anticipation of the OCIP, not Iverson’s
usual insurance covering all work-related incidents on-site, and
paid the premium for Iverson to be covered under the OCIP.
Wadman informed Iverson that insurance would be provided, and
Iverson acted upon this belief. 	In this case, Wadman did not
rely on a certificate of insurance from Iverson, and therefore
the statutory employer doctrine applies.

15 	Nos. 20070160, 20070180
¶39 	As for Argonaut’s argument that Iverson actually had
coverage through the WCF because the WCF chose to pay Mr.
Searle’s claim and could then seek reimbursement from Iverson for
unpaid premiums, we find that it is without merit. 	If Argonaut’s
position was the law, employers that failed to enroll
subcontractors in the OCIP could presumably escape statutory
employer liability if the WCF chose to voluntarily pay injured
workers. 	Wadman should not be allowed to avoid responsibility as
the statutory employer of Iverson. 	Because Wadman procured
Iverson’s services and retained supervision and control over
Iverson’s work and because Iverson’s work was part of the
business of Wadman, we hold that Wadman was the statutory
employer of Iverson and therefore the statutory employer of Mr.
Searle.
¶40 	In addition to finding Wadman to be the statutory
employer of Iverson, we must determine if Argonaut, as Wadman’s
insurance provider, was required to pay workers’ compensation
benefits to Mr. Searle. 	Neither party contests that Wadman was
properly enrolled in the OCIP. 	The renewed policy between
Argonaut and Wadman became effective September 8, 2001, several
months before the accident. 	In the absence of the policy later
becoming invalid, the policy requires that Argonaut pay workers’
compensation insurance benefits for all of Wadman’s employees.
The Supplemental General Conditions for OCIP does state that
failure to follow procedure, such as verifying a subcontractor is
enrolled, may result in the termination of coverage. 	The effect
of this document on the policy, however, is unclear. 	In any
case, Argonaut is required by law to give notice to Wadman of any
policy cancellation. 	Section 34A-2-205(1)(b) states that a
workers’ compensation insurance policy “is in effect from
inception until canceled by filing with the division or its
designee a notification of cancellation in the form prescribed by
the division within ten days after the cancellation of a policy.”
Since no notice was given to Wadman by Argonaut of the insurance
policy being cancelled, the policy is still valid. 	Because
Wadman’s policy with Argonaut was still valid and Mr. Searle was
the statutory employee of Wadman, Argonaut must pay Mr. Searle’s
compensation benefits.
CONCLUSION
¶41 	We find that Wadman did not have agency authority for
Argonaut, that Iverson’s employees were not loaned, and that
Argonaut did not have a responsibility to ensure that Iverson was
properly enrolled in the OCIP. 	We also find that there was no
contract between Argonaut and Iverson. 	Argonaut still had a
responsibility to provide insurance coverage for Mr. Searle,

Nos. 20070160, 20070180 	16
however, because Iverson and Mr. Searle were the statutory
employees of Wadman and Argonaut was Wadman’s insurance provider.
Consequently, we reverse the district court decision granting
Argonaut summary judgment and remand for action consistent with
this opinion.
---
¶42 	Chief Justice Durham, Associate Chief Justice Durrant,
Justice Wilkins, and Justice Parrish concur in Justice Nehring’s
opinion.