Judge: Labor violated company’s due process rights

The Department of Labor has been found to have violated an insurance company’s constitutional due process rights in connection with a 2008 Labor complaint filed by a housekeeper.

Due to the violation, Superior Court Associate Judge David A. Wiseman reversed the Labor secretary’s order issued in 2009 and remanded Royal Crown Insurance Corp.’s appeal to Labor for further proceedings.

Wiseman said that placing the burden on Royal Crown—which is entitled to notice under the Administrative Procedure Act—to check a Labor website for the notice of hearing without additional guidance as to when that notice will appear violates APA’s mandate that a person entitled to notice is “timely informed” of the time, place, and nature of the hearing.

Section 4945 of the Commonwealth Employment Act of 2007 allows Labor to conduct service of process exclusively through publication—so long as it’s accomplished in “any English-language newspaper of general circulation in the Commonwealth.”

Wiseman said that to comply with the Act’s Section 4945, Labor was required to serve any notice by publication in an English-language newspaper of general circulation.

In this case, Wiseman said, Labor did not.

Wiseman said Labor acted outside the scope of the law when it directed Royal Crown to receive notice of the hearing by periodically checking for the information on Labor’s website.

Wiseman, however, determined that Labor had statutory jurisdiction over Royal Crown’s obligations under the bond number.

The judge also ruled that Royal Crown identified no error under the statute as to Labor’s order for Royal Crown to pay complainant Nelia P. Manalang $1,846.

Similar to the case of Premier Insurance Co., Wiseman noted, Labor mailed a notice of claim to Royal Crown’s mailing address but chose to serve the actual notice of hearing solely by publication through its website.

Therefore, Wiseman said, Labor’s service of notice violated Royal Crown’s constitutional due process rights—a violation of a section of APA.

According to court documents, Royal Crown, a bonding company, issued a bond number to Wall Street Empire Inc., an employer seeking to hire nonresident worker employees under the Nonresident Workers Act. As a requisite, an employer must obtain a performance bond to secure the performance of certain specific obligations of the employer.

Under the bond number, Royal Crown became a surety to Empire, guaranteeing certain payments in case Empire failed to satisfy damages obligations to a nonresident worker.

In July 2008, Manalang, a nonresident worker, filed a complaint with Labor regarding a wage dispute with her employer, Empire.

Royal Crown was not a party to Manalang’s complaint. The Labor administrative hearing officer held a hearing in April 2009. Neither Empire nor Royal Crown appeared for the hearing.

On June 3, 2009, the Labor administrative hearing officer issued an order, finding that Empire was liable for damages in the total amount of $10,273.25.

The hearing officer also held that Labor must inform Royal Crown of its surety obligations if Empire and others jointly liable failed to satisfy Manalang’s damages award.

Royal Crown received notice of Manalang’s filing of the complaint on a notice that reminded it of its obligations subject to a surety bond issued to Empire.

The notice instructed Royal Crown to check the schedule for administrative hearings on Labor’s website. The notice warned Royal Crown in bold letters that, “This is the only notice [Royal Crown] will receive from Labor.”

Around a year after the notice, Royal Crown received a notice of claim, dated Aug. 4, 2009.

On Nov. 25, 2009, the administrative hearing officer issued a decision in the bonding case. In its decision, the hearing officer found that Royal Crown should be ordered to partially satisfy Empire’s obligation to Manalang by paying the wage portion to the limits of the bond.

No hearing was held before the administrative hearing office.

On Dec. 10, 2009, Royal Crown filed an appeal with the Labor secretary. However, in its decision on Dec. 30, 2009, the Labor secretary found that “nothing in [Royal Crown’s] statement of grounds for appeal requires any different result from that reached by the hearing officer.”

Royal Crown filed a petition for judicial review of an agency action and the APA.