Penn. High Court Reaffirms Statutory Employer Defense

By | March 31, 2014

Pennsylvania’s Supreme Court on March 26 reaffirmed statutory employer defense in a general contractor liability case, in which a subcontractor was injured during construction work. The high court’s decision overturns a $1.5 million jury verdict for the injured worker and the matter has been remanded for further proceedings.

In the case of Patton vs. Worthington Associates Inc., Worthington Associates Inc. was hired as a general contractor firm to work on a construction project for a Levittown, Penn., church. In turn, Worthington entered into a standard-form subcontract with Patton Construction Inc., a Pennsylvania corporation where Earl Patton is the sole shareholder and an employee, to perform carpentry.

In Oct. 2001, while working at the construction site, Patton fell and sustained injuries to his back, according to court documents. Subsequently, Patton and his wife commenced a civil action against Worthington, alleging that the company failed to maintain safe conditions at the job site.

Worthington moved for summary judgment on the basis that it was Patton’s “statutory employer” and, accordingly, was immune from liability in tort pertaining to work-related injuries for which they bear secondary liability under the state’s Workers’ Compensation Act.

After the motion was denied, a trial commenced and Worthington reasserted its claim to immunity. The jury found Patton was an independent contractor of Worthington and that Worthington is not immune from civil liability related to Patton’s injuries. The jury returned a verdict in favor of the Pattons in the amount of $1.5 million in the aggregate. A superior court panel affirmed in a divided opinion.

But the seven justices in Pennsylvania’s Supreme Court ruled unanimously in favor of Worthington and reversed the lower courts’ ruling on March 26. In an opinion written by Justice Thomas Saylor, the high court explained that “the issue presented concerns whether Appellant is a statutory employer per the Workers’ Compensation Act and, as such, enjoys immunity from civil liability for injuries sustained by Appellee Earl Patton.”

(Since the case of McDonald v. Levinson Steel Co. in 1930, Pennsylvania courts have generally used multi-part criteria for general contractors to meet to create a statutory employer relationship, including: “An employer who is under contract with an owner or one in the position of an owner; premises occupied by or under the control of such employer; a subcontract made by such employer; part of the employer’s regular business entrusted to such subcontractor; and an employee of such subcontractor.”)

But, in Patton vs. Worthington Associates Inc., the trial court jury was asked to decide whether Patton was an independent contractor or an employee with respect to Worthington, according to the court documents.

Having set up “an errant dichotomy” for the jurors, the trial court proceeded to instruct the jurors concerning the differences between independent contractors and employees at common law, the Supreme Court stated in its ruling. And in doing so, the trial court “compounded the underlying conceptual difficulties it had engendered,” the high court stated.

In reversing the lower court rulings, Pennsylvania’s Supreme Court found that Patton’s relationship with the owner was undeniably a derivative one, arising per a conventional subcontract with Worthington, the general contractor. Under longstanding precedent, neither Patton Construction nor Patton was an independent contractor relative to Worthington, the high court stated.

Supreme Court’s Justice Saylor wrote, “Worthington is correct that the trial and intermediate courts inappropriately layered common-law concepts onto a distinctive statutory regime.”

The case is Patton vs. Worthington Associates, Inc., No. 32 MAP 2013, The Supreme Court of Pennsylvania Middle District, March 26, 2014.

Topics Workers' Compensation Commercial Lines Business Insurance Pennsylvania Construction Contractors

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