PA Superior Court Reverses $5.5 Million Verdict, Concluding General Contractor was Statutory Employer and Immune from Civil Damage Claim

PA Superior Court Reverses $5.5 Million Verdict, Concluding General Contractor was Statutory Employer and Immune from Civil Damage Claim

PA Superior Court Reverses $5.5 Million Verdict, Concluding General Contractor was Statutory Employer and Immune from Civil Damage Claim

The Norwood Public Library entered into a contract with McCarthy, a carpentry company, to remove and replace the library’s roof. McCarthy subcontracted with roofing company, RRR Contractors, Inc. (“RRR”), for part of the roofing work. Mr. Yoder worked for RRR. Mr. Yoder sustained critical injuries after he fell through an uncovered hole in the roof of the library while working there as a roofer.

During the investigation of the incident, McCarthy admitted that as a carpentry company it, not RRR, the roofing company, had the duty to patch the hole in the roof in “tongue and groove” style. Moreover, the cover for the hole needed to be capable of sustaining twice the weight of any individual worker, equipment, and tools. On the date of the accident, Mr. Yoder was on the roof and saw an OSHA-mandated red-flag perimeter, signifying that the workplace was safe and secure. Per his foreman’s instructions, Mr. Yoder was walking on the roof, attempting to deliver 4×8 foot foam rectangular boards to his co-workers, when he fell twenty feet through an unmarked and uncovered hole in the roof, and landed on his back. Mr. Yoder was rushed to the hospital where he was diagnosed with devastating injuries to his spine. Mr. Yoder received worker’s compensation benefits from RRR. It is noteworthy that according to the Workers’ Compensation Act, general contractors take on secondary liability for the payment of worker’s compensation for the employees of any subcontractors. In the event a subcontractor defaults on securing worker’s compensation coverage, then the coverage purchased by the general contractor would apply. In this regard, the general contractor is considered under the law to be a statutory employer of the subcontractor’s employee.

Mr. Yoder filed a complaint against McCarthy, alleging negligence. McCarthy answered raising the defense that Mr. Yoder’s claims were barred or limited by the exclusivity provisions of the Pennsylvania Workers’ Compensation Act. Mr. Yoder filed an amended complaint. McCarthy filed a motion for summary judgment, claiming that it was Mr. Yoder’s statutory employer and immune from suit. Sixteen months after the filing of the amended complaint, McCarthy filed an answer to the amended complaint, again asserting all of the defenses available to it under the Pennsylvania Workers’ Compensation Act. Mr. Yoder filed a motion to strike McCarthy’s answer as untimely, and a response to McCarthy’s motion for summary judgment. The trial court denied McCarthy’s motion for summary judgment without explanation and granted Mr. Yoder’s motion to strike McCarthy’s answer.

At trial, the trial court determined that, although the statutory-employer defense is not waivable, McCarthy failed to meet any of the prongs of the test to establish that it was Mr. Yoder’s statutory employer. The jury determined that McCarthy was negligent, and returned a unanimous verdict in favor of Mr. Yoder in the amount of $5,000,000. The court later awarded delay damages in the amount of $590,650.69. McCarthy appealed the decision. See Yoder v. McCarthy Construction, Inc., No. 1605 EDA 2021 (Pa. Super. Jan. 31, 2023)

The Superior Court affirmed that McCarthy did not waive the statutory-employer defense, i.e. subject matter jurisdiction, which may be raised at any time, including by the court sua sponte if necessary. LeFlar v. Gulf Creek Indus. Park No. 2, 515 A.2d 875, 879 (Pa. 1986). Thereafter, the Court analyzed McDonald v. Levinson Steel Co., 153 A. 424, 426 (Pa. 1930) to determine whether McCarthy met its burden to demonstrate that it was Mr. Yoder’s statutory employer. Before an employer will be considered a statutory employer for purposes of the statutory employer immunity defense, the following five elements must be present: (1) an employer who is under contract with an owner or one in the position of an owner; (2) premises occupied by or under the control of such employer; (3) a subcontract made by such employer; (4) part of the employer’s regular business entrusted to such subcontractor; and (5) [the plaintiff is] an employee of such subcontractor. The Court focused on element (5), which the trial court utilized in reaching its conclusion that Mr. Yoder was an independent contractor for RRR, and not its employee. Ultimately, the Court concluded that because Mr. Yoder demanded and received benefits as an employee, he was judicially estopped from claiming that he was not an employee of RRR.

In reviewing the Worker’s Compensation Law, 77 Pa.C.S.A. Section 462, the Superior Court noted that general contractors take on secondary liability for the payment of worker’s compensation for the employees of any subcontractors. In the event a subcontractor defaults on securing worker’s compensation coverage, then the coverage purchased by the general contractor would apply. In this regard, the general contractor is considered under the law to be a statutory employer of the subcontractor’s employee.

In exchange for this secondary liability taken on by a general contractor under the law, the general contractor is granted immunity from any tort liability arising out of the same incident.

The court found that, given that the Plaintiff had received worker’s compensation benefits, the Plaintiff was judicially estopped from denying his employee status. The court noted that the record confirmed that the Plaintiff was an employee of the subcontractor at issue, and not an independent contractor.

As such, the Pennsylvania Superior Court ruled that a statutory employer status is not limited to general contractors at a job site.

The court additionally noted that worker’s compensation immunity, including with respect to the issue of whether or not a Defendant is a statutory employer, is a jurisdictional issue that cannot be waived.

The court additionally noted that whether a Defendant is a statutory employer is a question of law for the court, not a question of fact for the jury.

In the end, the Superior Court found that the Defendant was a statutory employer and was therefore immune from any liability.