Massachusetts Business Owner’s Death in Auto Accident While Attending to Side Business is Not Compensable
In a case that illustrates the difficulties that can arise from intertwined small businesses, a Massachusetts appellate court affirmed a decision of the state’s Industrial Accident Reviewing Board that denied a death benefits claim after an administrative law judge found the employee’s death in a New Hampshire automobile accident did not arise out of and in the course of the employment [Yang’s Case, 2019 Mass. App. LEXIS 102 (Aug. 13, 2019)]. Prior to his unfortunate death the employee had been the principal in two separate businesses, one in Massachusetts, which had secured a workers’ compensation insurance policy covering his employment, and a second in New Hampshire that had ceased operations and which apparently had no such policy in place.
Background
Yang was the principal of a family-owned business (OITC). The business imported chemicals from China for sale to domestic companies that manufactured pharmaceuticals, food supplements, and animal feed. In 2005, OITC purchased a workers’ compensation policy from the insurer to cover its four employees, including Yang.
Yang was engaged in other commercial enterprises, including a restaurant in New Hampshire that opened in 2010 and which operated as a separate limited liability corporation formed by Yang. The businesses did not always operate separately, however. During the restaurant’s operations, Yang often used OITC’s bank account to pay the restaurant’s ongoing bills. OITC also often paid Yang’s personal bills.
The restaurant failed and Yang ultimately decided to sell the property. He died in an automobile accident on February 4, 2014, as Yang was driving to meet with a broker and a potential buyer.
Death Benefits Claim
After a three-day hearing, the ALJ found that Yang was advancing his own personal interests, and not those of OITC, at the time of the accident.. As a result, the ALJ denied and dismissed the claim. The reviewing board summarily affirmed the ALJ’s decision.
Appellate Court’s Decision
The appellate court said the ALJ’s finding that Yang was traveling to New Hampshire to serve his personal interests, not those of OITC, was amply supported in the record. The court stressed that the undisputed financial intermingling that was present in the situation did not dictate a different result. While the fact that OITC largely funded the restaurant venture was a factor to be considered in examining whether it was part of OITC’s overall business, the court said that was not conclusive.
Travel at Employer’s Behest or Was it Personal?
The court also stressed that where, as here, the travel at issue was by a person who had unfettered control over the “corporate purse,” there could be cause for greater scrutiny whether the travel property should be considered undertaken at the employer’s behest or instead for personal reasons.
No Natural Connection Between the Businesses
The appellate court added that the ALJ’s decision was consistent with sound policy considerations, because it did not render the insurer liable for risks beyond those the insurer agreed to cover. According to the court, this was not a case where there was a “natural connection” between the business of OITC and that of the restaurant. Again, there was ample support in the record for the ALJ’s findings.