The Pennsylvania Supreme Court recently reaffirmed the statutory employer defense, resulting in the invalidation of a $1.5 million jury verdict. In Patton v. Worthington Associates, Inc., 2014 Pa. Lexis 788, (Pa. 2014), the defendant Worthington Associates, Inc. was engaged as general contractor for construction of an addition to a Levittown church. Worthington, in turn, entered into a subcontract with Patton Construction, Inc. to perform carpentry for the project. The plaintiff, the subcontractor’s sole employee, brought suit against Worthington Associates after falling and sustaining various injuries, alleging that Worthington failed to maintain safe conditions on the jobsite.

The trial court denied Worthington’s motion for summary judgment, based upon the statutory employer defense, reasoning that the issue in controversy was whether an injured employee of a subcontractor should be treated as an independent contractor or an employee of the general contractor. The trial court eventually sent the issue to the jury following trial in the form of an interrogatory as to whether the plaintiff was an independent contractor or an employee of Worthington. The Supreme Court noted that in ignoring the subcontract agreement and asking the jury to choose whether the plaintiff was an independent contractor or an employee of Worthington, the trial court “set up an errant dichotomy for the jurors.” The jury found that the plaintiff was an independent contractor and awarded a verdict of $1,500,000. In a divided opinion, the Superior Court affirmed. The Supreme Court reversed and invalidated the jury award, holding that the plaintiff was the statutory employee of the general contractor, and that the case should never have reached trial.

            In its March 26, 2014, opinion in Patton, the Supreme Court soundly reaffirmed the longstanding law of Pennsylvania that general contractors are immune from suit by employees of subcontractors pursuant to the Workers’ Compensation Act:

Pursuant to Section 302(b) of the Act, 77 P.S.§462, general contractors bear secondary liability for the payment of workers’ compensation benefits to injured workers employed by their subcontractors and thus have been denominated “statutory employers”…

            …statutory employers under Section 302(b) of the Act enjoy a measure of immunity from liability in tort pertaining to work-related injuries for which they bear secondary liability. See 77 P.S.§52 (embodying Section 203 of the Act); see also 77 P.S.§481(a) (providing that liability of employers under the WCA serves as an exclusive remedy). The Supreme Court had previously determined that this immunity pertains by virtue of statutory-employer status alone, such that it is accorded even where the statutory employer has not been required to make any actual benefit payments. See Fonner v. Shandon, Inc., 55 Pa. 370, 380, 724 A.2d 903, 907 (1999).

Patton, supra at 1-3.

What It Means to You

 

            In Patton, the Supreme Court held as a matter of law that Patton Construction, Inc. was a subcontractor and not an independent contractor relative to the Workers Compensation Act, “particularly since it is undisputed that the company’s contract was with the general contractors (Worthington) and not the owner (Christ United Methodist Church).” Id. at 15. As such, in any case involving an injury to an employee, it is critical to analyze the feasibility of the statutory employer defense, which will rest upon the contractual relationship between the defendant and the plaintiff’s employer. As seen in Patton, the availability of the defense can have significant financial implications, as it will provide a defendant with immunity from suit.