Grand Court rules on health insurance

Godfrey Bowen and Air Tech Corporation Ltd were found guilty of failing to have a standard health insurance contract in place for an employee.

Bowen was fined $5,000 or 30 days imprisonment in default of payment. The company was also fined $5,000.

The company was further fined $2,500 for unlawfully deducting $1,315.75 from the employee’s pay. That amount was more than it was entitled to deduct for health insurance, since there was no health insurance contract in place.

After fines were imposed as sentences, Defence Attorney Clyde Allen gave immediate notice of appeal.

The offences occurred between 31 October, 2002, and 30 January, 2005.

Trial began on Monday, 8 October, and jurors heard evidence from the employee, who produced pay slips showing the insurance deductions.

It was believed to be the first case of its kind to go before the Grand Court,

Crown Counsel Trevor Ward also called insurance executives as witnesses; their evidence was that a policy was in force until it lapsed in October 2002 and the next time one was put in place was 2005.

Officials from the Health Insurance Commission gave evidence as to steps taken after receiving the employee’s complaint.

At the close of the Crown’s case, Justice Dale Sanderson heard legal arguments from Mr. Allen and Crown Counsel Trevor Ward in the absence of the jury.

On Wednesday, when jurors returned, the judge explained that the lawyers were trying to help him come to the right decision on a point of law that had not been decided in the Cayman Islands.

As a result of those arguments, he instructed the jury to find Godfrey Bowen not guilty of making unlawful deductions from the employee’s pay for health insurance. The judge said the trial would continue so that they could consider the one remaining charge against Bowen and the two charges against the company.

Bowen then gave evidence. He said he left the police force in 1985 and joined the family business, which was then known as Cayman Repairs and Appliances. He trained as a technician and was then asked to manage certain areas of the business, working in the field to supervise jobs and see that payments for work were collected on time. An office administrator dealt with pension and insurance and writing company letters.

He said the company fell into financial difficulties because of two big jobs taken on. In each case, the construction company concerned paid the first 50 per cent but never paid the final 50 per cent.

Shown notices from late 2002 that said the insurance policy had lapsed; Bowen said he had never seen them. He said he was never aware the insurance had lapsed because he was never on the administrative side of the business. He did not know about deductions because he did not do payroll.

He became a director in November 2004 and became aware of the insurance problem in early 2005 when he was going through the company’s papers. He told an inspector from the Health Insurance Commission that the company did not have health insurance at the time, but would pay employees’ expenses if they went to one of two doctors he named.

Bowen told the court that he spoke to an insurance broker and said he wanted him to arrange insurance and the broker should deal with the Air Tech office administrator for everything.

Cross-examined by Mr. Ward, Bowen said it was not correct that he ran the business. He was shown a letter addressed to the Chamber Pension Plan in February 2002 and signed by Godfrey Bowen, general manager. Asked if he would sign the letter as general manager if he were not, Bowen said yes – the administrator puts it in front of you, you sign it.

He was shown other documents from 1999 – 2003 signed by him as general manager or company representative. In two cases, he said if he signed it would have been on instruction from the directors. In another instance, he said the signature was not his.

The jury was released on Wednesday afternoon for further legal arguments.

On Friday morning, Justice Sanderson ruled that failure by an employer to effect and maintain a standard health insurance contract is an offence of absolute liability. The deduction from an employee’s pay of more than 50 per cent of the insurance premium is also an offence of absolute liability.

As such, the defendant’s state of mind was irrelevant.

In his instructions to the jury, Justice Sanderson explained this issue of law as pertaining to intention. He said it was not necessary for the Prosecution to prove that Bowen and Air Tech intended to not effect and continue a health insurance contract for the employee.

All that was necessary was for the prosecution to show that the events occurred. It was not necessary to prove that they were intended or came about by negligence or recklessness or mistake or lack of knowledge, the judge said.

Further, it was not a defence to say that Bowen and Air Tech did not intend not to have the health insurance in place.

It also was not a defence to say that either Air Tech or Godfrey Bowen did not intentionally fail to effect the insurance policy or did not have funds to pay, or that failure to pay was a mistake or a misunderstanding.

The judge cautioned that although Bowen and the company were charged with the same offence of failing to have insurance, the evidence was slightly different and their verdicts need not be the same.

The crown had to prove that Bowen was also an employer. The Health Insurance Law defines employer as ‘any person who has entered into a contract of employment with an employee, and includes any agent, representative or manager of such person who is placed in authority over an employee’.

For the charge of unlawful deduction by the company, the Crown had to prove the deduction was made and it was unlawful. It was not a defence to say the deduction was accidental, unintentional or unknowingly made.

After they jury’s unanimous verdicts, Mr. Ward said there were no sentencing precedents in Cayman at the Grand Court level. The law provided for a fine of up to $10,000 for failure to provide health insurance and $5,000 for the unlawful deduction.

He said the court would naturally wish to consider the sentence as a deterrent because it was important to send a clear message to employers.

Mr. Allen told the court that Air Tech has been out of business since early 2006 and there were no assets remaining.

He said Godfrey Bowen was now employed as a technician with a company owned by a relative. He was earning $4,000 per month.

In passing sentence, Justice Sanderson said the issue of health insurance is one that is very important in the Cayman Islands. He said he took judicial notice of the fact that this case was not an isolated incident.

There were complaints of employers failing to provide any or adequate insurance. Consequences could range from the innocuous to life-threatening. If an employer went bankrupt or was without assets, it left the employee with no recourse.

It was a serious problem, and the judge agreed with Mr. Ward that the sentences in this case could deter other potential offenders.

Justice Sanderson said he did not find Bowen to have been a credible witness and was sceptical about his advice to Mr. Allen about the company’s assets did not inspire confidence. He was equally sceptical that Bowen was not aware the company’s policy had lapsed or that deductions were being made.

The fact that the company made deductions from the employee’s salary for over two years was an aggravating feature. There was no right to take that money: it was illegally taken and illegally kept, the judge said.

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