One of the largest utility companies in Florida may, after all, be shielded from tort claims by the grand bargain of workers’ compensation law, even though it had contracted maintenance work to another firm, a Florida appellate court has decided in a rare reversal of its own opinion.
In Tampa Electric Co. vs. Gansner and Carter, the 2nd District Court of Appeal found that its ruling in October 2020 was in error. After rehearing the case, the appeals court held that TECO’s obligation to maintain its Big Bend Power Station was required by regulation and, thus, the company may be considered a statutory employer, immune from high-dollar lawsuits and bound only by the exclusive remedy of workers’ comp.
The reversal and the court’s acceptance of TECO’s unusual “contractual obligation with customers” argument has raised questions among some attorneys in the state. The ultimate outcome of the case could have significant financial and insurance implications for Florida business, especially TECO, which has seen a number of accidents at the power plant.
A retired workers’ compensation judge suggested that the court has teed it up for the Florida Supreme Court to examine the question of when a company is immune from tort claims.
“It’s such a controversial issue and it’s such a big employer, they may just let the Supreme Court take it and wipe their hands of it,” said Stephen Rosen, who served as a comp judge for 12 years before retiring last year.
The workplace injuries happened in 2017. TECO had contracted with Zachry Industrial to do maintenance work at the Big Bend station south of Tampa, and Donald Gansner and James Carter were working for Zachary Industrial when they were sent to repair a leak. The two were about to perform work on an access door on one of the condenser units at the plant when the door blew open, slamming the workers with a massive column of water, the court explained.
Gansner was seriously injured and was unable to return to work, one lawsuit said. Carter fractured his spine.
The U.S. Occupational Safety and Health Administration investigated. OSHA had already fined the utility company almost $127,000 for what was termed a “willful” violation following an accident four months earlier that killed five workers, according to news reports at the time. The workers were performing a maintenance procedure that TECO knew was dangerous, OSHA charged.
Another worker, a contract employee, was killed in an incident at the power station early this year.
After the October 2017 incident, Gansner and Carter received workers’ compensation benefits through Zachry Industrial. But they and their families also filed a negligence lawsuit against TECO, charging it had caused the mishap at the power station.
The power company argued that it was the statutory employer, even though it had contracted the maintenance work to Zachary, and that Gansner and Carter were limited to workers’ compensation benefits.
The statutory employee doctrine, long established by statute and by the courts, holds that in many cases the contracting company is considered an employer, protected by the exclusive remedy of workers’ comp, even if the subcontractor hired the injured workers. Florida workers’ comp law, the court explained, considers the contractor and the subcontractor “to be employed in one and the same business or establishment.” And the contractor shall be liable for the compensation to workers if the subcontractor has not obtained workers’ comp insurance.
The TECO case, however, was complicated because questions arose over whether there was an actual contract between Tampa Electric and Zachry Industrial for the work being done at the time of the accident. With those questions of material fact, TECO argued that it had a contract, of sorts, with its customers to maintain its equipment. It had delegated part of that obligation to Zachry, TECO attorneys contended.
Hillsborough County Circuit Judge Ralph Stoddard disagreed and found that TECO was not the statutory employer. Its maintenance obligation is required by state regulations, not by contract, he wrote.
The 2nd District Court of Appeal upheld that reasoning in its 2020 opinion. But this month, the court changed course. The Nov. 10 per curiam opinion noted that TECO does indeed have a regulatory duty to maintain its generating equipment, but it also has a contractual obligation. The judges did not fully explain what changed their minds in the last 12 months.
“Tampa Electric’s status as a statutory employer would not be defeated by the existence of a regulatory obligation that overlaps with a corresponding contractual obligation to maintain the equipment,” the appeals court wrote. “When Tampa Electric subcontracted with Zachry Industrial for the purposes of maintaining its equipment, it sublet to Zachry Industrial its implied obligation to maintain in working condition the equipment it uses to generate the electricity it is contractually obligated to supply.”
The court relied in part on a 1989 appeals court decision that held that a company can still be considered a statutory employer even if the service is regulated by the state.
The appeals court reversed the trial court in part and remanded the case, noting that the trial judge’s denial of summary judgment – that TECO should be allowed lawsuit immunity – should be reexamined.
The appeals court said that ‘TECO might still have the facts to win, but it was too early in the case to say they couldn’t,” Rosen, the retired comp judge, explained. Gansner and Carter could also ask the Supreme Court to take up the question of when a firm can be considered a statutory employer.
Appellate court Judge Susan Rothstein-Youakim concurred with the 2nd DCA opinion but took issue with one part of TECO’s argument. The utility company had argued that it had an implied contract with its customers to maintain its equipment. But the pertinent part of Florida’s workers comp statute applies to contract work, not to “work that contributes to the performance of the contract,” the judge said.
“Thus, section 440.10(1)(b) does not create statutory employer status whenever a party enters into a contract with another that ‘contributes to’ or ‘facilitates’ its work under a separate contract,” Rothstein-Youakim continued. Although it is well established in the workers’ compensation context that a contractual obligation may be implied, “we must be careful not to infer so much that we lose sight of what the statute actually says.”
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