Penn. Superior Court reverses $5.6M jury verdict, finding defendant immune as statutory employer
Michael Pansini, counsel for the plaintiff, said he plans to appeal the decision, calling the statutory employer doctrine 'anachronistic.'
In a Jan. 31 opinion in Yoder v. McCarthy Construction, a unanimous three-judge panel of the appeals court overturned the Philadelphia jury’s $5,590,650 award to plaintiff Jason Yoder, who was injured while working on a job site. Defendant McCarthy Construction had appealed the verdict, asking the court to determine whether it qualified as Yoder’s statutory employer under the Workers’ Compensation Act, which would thus make McCarthy immune from the suit.
Judge John Bender, writing for the court, cited the Pennsylvania Supreme Court’s layout of elements that must be present for employers to have immunity from a negligence suit, “(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)[;] (5) An employee of such subcontractor.”
“If these elements are met, statutory employers enjoy immunity ‘by virtue of statutory-employer status alone, such that it is accorded even where the statutory employer has not been required to make any actual benefit payment,’” said Bender, who found that McCarthy qualified “as Mr. Yoder’s statutory employer under the five-part McDonald test and is therefore entitled to tort immunity. Accordingly, we are compelled to reverse the judgment entered in favor of Mr. Yoder and remand for the entry of judgment in favor of McCarthy.”
Bender was joined by President Judge Jack Panella and Judge Megan Sullivan.
The court found that McCarthy met each of the five necessary prongs.
According to the court, McCarthy meets the first element as he is under contract with the owner of the library, specifically when the incident occurred.
“McCarthy does not need to have been the general contractor on the project, so long as the other elements of the McDonald test are established. Because McCarthy has a contract with the owner, we deem the first McDonald element satisfied,” said the court.
In regard to the second element, McCarthy established that they both occupied and controlled the premises (though only one was required).
“Initially, with respect to occupancy, this court has agreed that ‘an employer effectively occupied the premises when its supervisor was present at the site on a daily basis and when its employees were regularly present on the premises at the same time as the subcontractor’s employees,’” said Bender.
“Not only did McCarthy occupy the site in that it was doing work both on the roof and inside of the library, it also communicated with the subcontractors to ensure the library project’s completion and had responsibility for the safety of the job site,” Bender continued. “Further, Mr. Yoder’s counsel emphasized to the jury multiple times that McCarthy acted as the general contractor on the project, coordinating, scheduling, and supervising the work to be done. As such, McCarthy meets the second McDonald element, as it both occupied and controlled the job site,” the court further asserted.
McCarthy met the third element, as records show McCarthy entered into a contract with Yoder’s employer, RRR. In the contract with Norwood Borough, McCarthy even identifies RRR as its subcontractor.
With the fourth element, the court concluded that because Norwood Borough contracted with McCarthy, and McCarthy then subcontracted with RRR, the demand was met.
The court found that Yoder’s testimony did not support “Mr. Yoder’s argument that McCarthy never hired roofers, nor does it establish that McCarthy was not in the business of working as a general contractor on construction projects of this nature. Therefore, for the foregoing reasons, we determine that McCarthy fulfills the fourth McDonald element.”
Finally, in terms of the fifth element, the court agrees with McCarthy that judicial estoppel applies.
“McCarthy argues that Mr. Yoder was not an independent contractor of subcontractor, RRR, but instead an employee of RRR. Significantly, to support that Mr. Yoder was an employee of RRR, McCarthy points out that Mr. Yoder sought and obtained workers’ compensation benefits from RRR, with his claim resolved in a ‘Compromise and Release Agreement by Stipulation Pursuant to Section 449 of the [WCA,]‘ dated October 10, 2017,” Bender said, noting that McCarthy also pointed to the fact that, under the compromise and release, Yoder formally resigned his employment with RRR. “In addition, we observe that Mr. Yoder was represented by counsel when entering into the Compromise and Release Agreement and submitting his resignation,” said the court, responding to Yoder’s argument that he was not an employee of RRR but, instead, an independent contractor who RRR hired to work on the project.
“Because McCarthy meets all five elements of the McDonald test, we are constrained to conclude that it is Mr. Yoder’s statutory employer, rendering it immune from tort liability. While we express our displeasure with having to disturb the jury’s verdict, taking away Mr. Yoder’s damages award, we are bound by controlling law to reverse the judgment entered in favor of Mr. Yoder and remand for the entry of judgment in favor of McCarthy,” Bender wrote.
Counsel for McCarthy, John Hare of Marshall Dennehey Warner Coleman & Goggin in Philadelphia, said in a statement: “McCarthy Construction is gratified that the Superior Court panel unanimously reaffirmed the continuing vitality of the statutory employer doctrine. The primary purpose of the doctrine is to ensure payment of workers’ compensation benefits to injured workers if their direct employers fail to provide those benefits. It is only because these statutory employers are obligated to pay benefits in a reserve capacity that they receive tort immunity, so the result ordered by the Superior Court is consistent with settled Pennsylvania law.”
“It’s hard to sort of wrap my head around it,” said attorney for the appellee Michael Pansini of the Pansini Law Firm in Philadelphia, of the ruling, calling the statutory employer doctrine “anachronistic,” adding, “It should not be the law of the land in Pennsylvania anymore.”
“It has no role whatsoever in today’s construction world, because a subcontractor cannot get on a job site ever, without showing proof of workers’ compensation benefits,” Pansini said. “The general contractor gets this free ride to basically get a shield against liability if a worker gets injured due to their negligence, because they never pay workers’ comp benefits ever.”
“SWIF and the taxpayers were going to get their money back,” he added, referring to money he said would been returned to the State Workers Insurance Fund, which is funded by taxpayers. “And because of this ruling, this court’s opinion, taxpayers are going to lose out.”
Pansini said he plans to try to get the Superior Court’s decision overturned.
“It is our goal to continue. We are going to ask for reconsideration, we’re going to be seeking en banc review, and if that is unsuccessful we will be going to the Pennsylvania Supreme Court to address these issues,” said Pansini.
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