Comp exclusivity provision fails to provide escape for premises owner

A worker was not limited to suing the premises owner under workers' compensation law if a premises owner mandates that the independent contractor participate in a workers' compensation program, even an owner-controlled insurance program.

Case name: Culp v. Archer-Daniels-Midlands Co. and Jacob Field Services North American, Inc., No. 4:08CV3197 (D. Neb. 04/17/09).

Ruling: The U.S. District Court, District of Nebraska denied summary judgment for an agricultural premises owner, finding the owner did not qualify as the injured worker's employer.

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What it means: Under Nebraska law, if a premises owner mandates that the independent contractor participate in a workers' compensation program, even an owner-controlled insurance program, the premises owner will not be considered an employer of the contractor's workers. Therefore, the worker was not limited to suing the premises owner under workers' compensation law.

Summary: An independent contractor's employee was injured while working on the premises of an agricultural processing facility. The employee sued the facility for damages. The contractor established that the premises owner required the contractor to obtain workers' compensation insurance for the contractor's workers for injuries occurring on its premises.

However, as an addendum to the agreement, the premises owner required the contractor to participate in an owner-controlled insurance program independent of the workers' compensation coverage. The addendum specified that the contractor's participation in the OCIP would satisfy its duties and obligations for workers' compensation insurance. The premises owner argued that it qualified as the injured employee's "statutory" employer under the terms of the addendum and thus, the employee's exclusive remedy was under workers' compensation.

The District Court rejected the premises owner's arguments. It pointed out that a premises owner is considered an employer when it does not specifically require the independent contractor to procure workers' compensation coverage. The owner is exempt from being considered an employer when it requires his contractor to take out compensation insurance. The court found that the addendum requiring the contractor to procure OCIP insurance did not remove its obligation to carry workers' compensation insurance. Thus, the court held the contractor remained the employer for application of the exclusivity provision.

The court held the employee was not precluded from pursuing damages against the owner.

June 11, 2009

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