Law360 - March 27, 2014
By: Dan Packel
Law360, Philadelphia (March 27, 2014, 2:50 PM ET) -- The Pennsylvania Supreme Court on Wednesday preserved a long-standing practice of immunizing general contractors from liability for injuries to subcontractors’ employees, overturning a $1.5 million jury verdict that was upheld by an intermediate appeals court.
The seven justices ruled unanimously in favor of contractor Worthington Associates Inc., saying that both courts erred when they concluded that the general contractor was not a “statutory employer”— who by law is protected from tort claims in exchange for bearing secondary liability for workers compensation benefits — of an employee of its subcontractor.
They said that the trial court improperly allowed a jury to conclude that the plaintiff in the lawsuit, Earl Patton, was actually an independent contractor, rather than an employee of the subcontractor, Patton Inc. The opinion also scolded the Pennsylvania Superior Court for failing to correct the error.
“We note that we are no more pleased to disturb a compensatory jury award than the intermediate court. In the present circumstances, however, the governing law should have been applied by the trial court at the summary judgment stage, before the case ever reached trial, and certainly our error-correcting court should have recognized and vindicated this law on appeal,” Justice Thomas Saylor said in the opinion.
The decision will likely spare general contractors a surge in insurance expenses that would have been likely if the Superior Court decision was upheld.
“When you expose general contractors in the construction industry to costs that didn’t exist before, you’re going to create more uncertainty and you’re going to drive up insurance premiums,” said Jonathan Landesman, a partner at construction boutique Cohen Seglias Pallas Greenhall & Furman PC. “Underwriters are looking at these cases, and now they know that tort liability does not exist.”
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