Court shuts down contractor's 'end run' around WC exclusivity provision

The Connecticut Supreme Court ruled that a contractor's assignment of an unfair trade practices claim to the estates of two deceased workers violated the public policy embodied in the Workers' Compensation Act. As a result, the trial court properly found that the assignment was not enforceable.

Case name: Stearns and Wheeler, LLC v. Kowalsky Bros., Inc., No. SC 17906 (Conn. 10/07/08).

What it means: The assignment of a contractor's claim under the Connecticut Unfair Trade Practices Act to the estates of two deceased workers is not enforceable where such an assignment would enable the estates to seek damages from the workers' employer. Because the assignment of the claim would undermine the public policy limiting remedies against employers and would effectively circumvent the workers' compensation exclusivity provision, it is not enforceable.

Nebraska: Notification of claims acquisition goes electronic (06/23/11)
Maine: Deadline for comments on 14-day rule approaching quickly (01/05/12)
Comments being accepted on radiogenic cancer claims (05/31/11)
Oregon: Notice of claim acceptance changes (12/01/11)
Washington: Department issues inquiry on settlement agreements (08/25/11)

Summary: A condominium association hired an environmental engineering firm to study the discolored appearance of a sedimentation pond located on the association's property. The firm determined the source of the discoloration and the association sought bids for the repair project, which included cleaning out the manholes to seal the drain pipe. The defendant employer submitted the winning bid. Two of its employees died from asphyxiation while working in a manhole. Their estates settled wrongful death actions against the engineering firm. The firm alleged that the employer violated CUTPA and that this violation caused the firm to suffer an ascertainable economic loss. Pursuant to the settlement agreement reached in the wrongful death cases, the firm assigned its CUTPA claim to the workers' estates. The Supreme Court agreed with the trial court that the assignment was unenforceable because it circumvented the workers' compensation exclusivity provision.

The Supreme Court reasoned that if it enforced the assignment of the firm's CUTPA claim to the workers' estates, the estates could seek to recover damages from the employer "that ultimately derive from the deaths of its former employees for injuries that the employees sustained during the course of their employment." Permitting such an assignment "would provide a veritable road map for the circumvention of the workers' compensation exclusivity provision in all cases where a subcontractor's employee is injured, and recovers tort damages for those injuries from the general contractor," the court concluded.

November 4, 2008

Newsletter Sign-up