Arizona Court of Appeals Division One Holds that an Uninsured Respondent Employer May Participate Through Separate Counsel in Workers’ Compensation Proceedings.

Moises Avila suffered a shoulder injury while working as a landscaper.  The Industrial Commission found that Avila had sustained a reduction in earning capacity, entitling him to receive a disability payment of $156.89 per month.  Avila thereafter requested and received a hearing in front of an ALJ, during which the ALJ permitted Avila’s uninsured employer to participate through separate counsel.  The ALJ entered an award for Avila in the amount of $168.36 per month.  This appeal followed.

The Arizona Appeals Court rejectedAvila’s argument that the ALJ erred in allowing Avila’s uninsured employer to participate in the proceedings through its own counsel.  Although an employer that fails to obtain workers’ compensation insurance “shall not be entitled to the benefits of [the workers’ compensation laws] during the period of noncompliance,” A.R.S. § 23-907(A), such benefits do not include separate representation.  The Court explained that an uninsured employer has an interest in the outcome of workers’ compensation proceedings because the workers’ compensation laws provide that an award paid by the Special Fund acts as a judgment against the uninsured employer.

Judge Thompson authored the opinion; Judges Johnsen and Ehrlich concurred.