Pennsylvania Supreme Court Holds that General Contractor was Immune from Suit by Employee of Subcontractor Under Workers’ Compensation “Statutory Employer” Doctrine

In a case which has attracted a great deal of attention from construction and insurance industry groups, and prodded the filing of numerous amici curiae briefs, the Pennsylvania Supreme Court in Patton v. Worthington Associates, overturned a $1.5 million jury verdict and ruled in favor of the defendant general contractor based on the “statutory employer” immunity doctrine under Pennsylvania’s Workers’ Compensation Act (the “Act”).

Worthington Associates, Inc. was engaged as general contractor on a construction project. Worthington, in turn, hired Patton Construction, Inc., a corporation wholly-owned by Earl Patton, as a subcontractor. Mr. Patton suffered significant back injuries when he fell at the project site. He and his wife filed a negligence suit against Worthington alleging failure to maintain a safe jobsite. Worthington moved for summary judgment, arguing that, pursuant to Section 302 of the Act, it was secondarily liable for the payment of workers compensation benefits to its subcontractors’ workers and, as such, entitled to immunity from tort claims (as the so-called “statutory employer”) even if it did not have to make such payments. The motion was denied and the matter was tried before a jury, which found that Patton was an independent contractor of Worthington and awarded the Pattons $1.5 million. This decision was affirmed by the Pennsylvania Superior Court.

Worthington appealed to the Pennsylvania Supreme Court, which reversed. The Court acknowledged that the protections of the statutory employee doctrine under the Act do not extend to employees of “independent contractors” but stated that for purposes of the Act this term has a unique meaning. Specifically, an “independent contractor” is a contractor that has a relationship with the owner of the project that is not derivative (i.e., is independent of any relationship between the general contractor and the owner), and, as such, does not include conventional subcontractors. The Court found that the trial court and Superior Court had misconstrued the relationship at issue. Mr. Patton could not be an independent contractor or employee of Worthington because Worthington had contracted with Patton Construction, and Mr. Patton was an employee of Patton Construction. Thus, Mr. Patton was an employee of a subcontractor, and, as such, Worthington was a “statutory employer” and entitled to the immunity provided by the Act.

Worthington further clarifies the circumstances pursuant to which a general contractor is entitled to rely upon the Act as a defense to claims asserted by an injured worker on a construction project. Even where the general contractor has not paid any workers’ compensation benefits, the general contractor will be immune from civil claims by employees of its subcontractors suing over injuries sustained on a construction project.

Interestingly, in a concurring opinion in the Worthington case, Justice Baer urged the Legislature to revise the statutory employer doctrine to mirror that of New Jersey, which only applies to immunize the general contractor where the subcontractor has failed to obtain workers’ compensation insurance and the general contractor pays the subcontractor’s employee’s workers compensation. See N.J.S.A. § 34:15-79(a) and Wilson v. Faull, 141 27 N.J. 105 (1958). Should the Pennsylvania Legislature revisit the Act, any potential changes, including those suggested by Justice Baer’s concurrence, would likely alter the analysis and the protections afforded general contractors under the Act.

William G. Frey is a Director in the Gibbons Business & Commercial Litigation Department and a member of the firm’s Construction Litigation Team.
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