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Nichols v. Jacobsen – Exclusive Remedy of Workers’ Compensation

Workers’ compensation laws provide that employers who provide workers’ compensation insurance benefits to qualified employees are typically immune from personal injury litigation stemming from workplace injuries and occupational diseases. That’s why workers’ compensation is sometimes referred to as the “exclusive remedy” for workers. scaffoldingsilouette

But questions regarding who is an employer and who is required to provide workers’ compensation insurance and who is a “third party” for legal purposes can be complex, particularly on a construction site. That’s because there are so many different entities – from site owners to general contractors to subcontractors.

When workers are injured on-the-job at a construction site, they should seek guidance from an attorney to explore all possible options. 

A recent workers’ compensation lawsuit out of Utah reveals how a case like this could quickly get complicated. In Nichols v. Jacobsen, a man working for a subcontractor of a construction company in 2011 when scaffolding came loose and fell on top of him, causing him to suffer serious bodily injury.

The general contractor required all of its subcontractors to participate in a contractor-controlled insurance program, in which the general contractor paid for a single insurance policy from a single insurer that would cover all of the general contractor’s subcontractors in the event of a workplace injury. Subcontractors were still free to purchase their own workers’ compensation insurance, but the contractor-controlled coverage was intended as the primary source of coverage for workers.

Apparently immediately after the accident, a supervisor with the general contractor informed a supervisor with the subcontractor to, “Take him wherever you want (for medical treatment) because he’s not our employee.”

There was dispute as to who actually paid the benefits; plaintiff asserted the coverage came from his employer, but general contractor asserts it has paid, “from day one, dollar one.” It was undisputed that general contractor did eventually pay more than $100,000 in workers’ compensation benefits.

Plaintiff filed a lawsuit against the general contractor alleging the company’s negligence caused his injuries and thus he filed a lawsuit with the district court.

Defendant moved for summary judgment, arguing it was immune from the personal injury lawsuit per the state workers’ compensation act exclusive remedy provisions as as an “eligible employer.” To support this argument, defense stated:

  • General contractor procured work that was part of or process of its trade or business;
  • General contractor secured payment of workers’ compensation benefits for plaintiff;
  • General contractor created and maintained a written workplace accident and injury reduction program that met the requirements of the statute.

District court granted summary judgment to defendant on these grounds. Plaintiff appealed.

Appeals court affirmed on the “procured work” requirement, but it reversed the stance in so far as the “securing payment” requirement, finding that a length of time passed before the subcontractor started making workers’ compensation payments and this had an impact on whether the company had indeed secured the payments as the law requires. The appellate court didn’t address the workplace accident/ injury reduction program requirements.

Defendant appealed to the Utah Supreme Court, which determined the company did qualify as an “eligible employer” under the statute, which means it does have to pay workers’ compensation benefits, but it is immune from personal injury litigation by the injured worker.

For information on Atlanta work injury compensation, contact J. Franklin Burns, P.C., at 1-404-303-7770.

Additional Resources:

Nichols v. Jacobsen, April 28, 2016, Utah Supreme Court

More Blog Entries:

Wilson v. Conagra Foods – Immediate Reporting of Work Injury, April 10, 2016, Georgia Workers’ Compensation Lawyer Blog