No Lawsuit for You! When Subcontractors Cannot Sue the General Contractor
May 27, 2014
Can a subcontractor sue a general contractor over a work site accident? A recent decision by the Pennsylvania Supreme Court loudly and clearly said, "NO." Why not? The court ruled in Patton v. Worthington Associations, Inc. that Pennsylvania’s long-standing “statutory employer” provided immunity to the general contractor in a lawsuit brought by an injured worker and overturned a $1.5 million jury verdict.
What happened in Patton that brought the court this conclusion? Worthington Associates, Inc. (“Worthington”) was hired as the general contractor to work on a church. Worthington entered into a standard form subcontract with Patton Construction, Inc. for carpentry work. Patton Construction’s sole shareholder and employee was Earl Patton. Mr. Patton fell at the construction site in October 2001, injuring his back. He sued Worthington, alleging that, as the general contractor, it failed to maintain safe conditions at the construction site.
During the lawsuit, Worthington moved for summary judgment on the basis that it was Mr. Patton’s statutory employer and was immune from tort liability for Mr. Patton’s work related injuries pursuant to Pennsylvania’s Workers’ Compensation Act. The trial court denied Worthington’s motion on the basis that a jury had to determine whether or not Mr. Patton was an independent contractor. As such, the case proceeded to trial. The jury concluded that Mr. Patton was an independent contractor of Worthington, so that Worthington could be sued by Mr. Patton. On appeal by Worthington, the Pennsylvania Superior Court rejected Worthington’s argument that, as a matter of law, it was a “statutory employer” of Mr. Patton.
The Pennsylvania Supreme Court took the case on the question of whether the Superior Court’s ruling nullified the statutory employer doctrine by holding the issue should be submitted to the jury. On appeal, the Court of Pennsylvania unanimously reaffirmed the statutory employer doctrine as the law in Pennsylvania and further ruled the court is supposed to determine whether a general contractor is a statutory employer. The Supreme Court found that Mr. Patton’s relationship with Worthington was “purely derivative” of the subcontract between Patton Construction and Worthington. Mr. Patton’s role as the principal and sole employee made no difference as to the general-subcontractor relationship between Worthington and Patton Construction.
Why is this case such an important victory for the construction industry? The statutory employer doctrine is a significant “shield” for general contractors in defending against lawsuits brought by workers injured on their job sites. This defense provides some peace of mind to general contractors and should eliminate the fear an on-the-job injury to an employee of a subcontractor could diminish any financial benefit from bidding on a construction project. Had the Superior Court decision remained in effect, general contractors would have seen a flood of new litigation against them, and it certainly would have affected the ability to bid on new projects, as well as the overall cost of construction projects throughout the state of Pennsylvania.
Please contact Spilman if you have questions about whether a claim you have or has been asserted against you may fall under the Pennsylvania (or another state’s) Workers’ Compensation law.