Bolles Case Increases Liability for Uninsureds

Sunday, March 27, 2005 | 0

EMPLOYER WHO DOES NOT BUY WORKERS COMP INSURANCE MAY BE IMPLEADED INTO EMPLOYEE'S LAWSUIT DESPITE LACK OF "GRAVE INJURY"

by Larry Rogak

Douglas Boles v Dormer Giant, Inc. , NYLJ 2/23/05 (Court of Appeals 2005)

The Court of Appeals has ruled that an employer who has failed to purchase workers compensation insurance does not get the benefit of the "grave injury" standard and thus may be freely impleaded as a third party into lawsuits brought by its employees.

On April 5, 2001, plaintiff Douglas Boles was installing vinyl siding on a two-story one-family house when the scaffold on which he was standing collapsed, causing him to fall eight feet to the ground and suffer a crush injury of his right foot with multiple fractures, ankle dislocation and related nerve damage. The homeowners on whose house plaintiff was installing the siding had hired The Dormer Giant, Inc. d/b/a Dormers Are Us as their general contractor for this remodeling project. Dormer Giant subcontracted the siding work to Personal Touch Home Improvements, Inc., and plaintiff was working for Personal Touch at the time of his accident.

Plaintiff and his wife commenced a personal injury action against Dormer Giant, the general contractor. Dormer Giant, in turn, brought a third-party action against the subcontractor, Personal Touch, seeking, among other things, common-law indemnification and contribution. When plaintiff moved for partial summary judgment on liability under Labor Law section 240(1), Personal Touch cross-moved against Dormer Giant for summary judgment to dismiss the third-party complaint on the basis that Dormer Giant's claim for common-law indemnification and contribution was barred by Workers' Compensation Law section 11. Dormer Giant opposed the motion, arguing that section 11 did not apply because Personal Touch had failed to secure workers' compensation for plaintiff.

Both Supreme Court and the Appellate Division held that it was irrelevant, for purposes of a third party action, that Personal Touch did not buy workers comp insurance. The Court of Appeals reversed.

Section 10 of the Workers' Compensation Law provides that employers shall purchase workers comp insurance, and that "if an employer fails to secure the payment of compensation for his or her injured employees and their dependents as provided in section fifty of this chapter, an injured employee . . . may, at his or her option, elect to claim compensation under this chapter, or to maintain an action in the courts for damages on account of such injury . . ."

Section 11 of the workers comp law provides in part that "an employer shall not be liable for contribution or indemnity to any third person based upon liability for injuries sustained by an employee acting within the scope of his or her employment," unless the employee suffered a "grave injury" as defined by the statute.

In holding that employers who do not buy workers comp insurance do not get the protection of the "grave injury" threshold for third party suits, the Court of Appeals reasoned that "Employers that do not secure workers' compensation for their employees are not holding up their end of the bargain between business and labor that undergirds section 11. The Legislature can not have intended to extend the statute's heavily negotiated protections from third-party liability to scofflaws, which would be unfair to law-abiding employers and might discourage compliance with section 10."

Consequently, the decisions of the Supreme Court and Appellate Division were reversed, and Personal Touch's Motion to dismiss the third party complaint against it was denied.

by Lawrence Rogak.

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