Sub-subcontractor's employee not entitled to coverage from contractor

In Delaware, a contractor is not required to monitor its subcontractor's workers' compensation insurance coverage during the entire coverage period.

Case name: Cordero v. Gulfstream Development Corp., No. 718, 2011 (Del. 11/20/12).

Ruling: The Delaware Supreme Court dismissed a workers' compensation claim brought by the employee of a sub-subcontractor against the subcontractor and contractor.

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What it means: In Delaware, a contractor is not required to monitor its subcontractor's workers' compensation insurance coverage during the entire coverage period.

Summary: An employee of a sub-subcontractor was injured while working on a construction project. The sub-subcontractor had provided the subcontractor with a certification of workers' compensation insurance. At the time of the employee's injury, the insurance was canceled. Because the sub-subcontractor was uninsured at the time of his injury, the employee sought workers' compensation coverage from the subcontractor and contractor. Both took the position that he was not entitled to coverage. The Delaware Supreme Court dismissed the employee's claim.

State law imposed liability on a contractor to insure workers' compensation claims by its subcontractor's employees, except where it obtains a valid certification of insurance from the subcontractor and retains the certification for three years. The court explained that the law does not state that the contractor's liability is reinstated if the subcontractor furnishes a valid certification but later allows the insurance to lapse. The court recognized that its decision left employees of subcontractors that allowed their insurance to lapse uncovered by workers' compensation insurance. However, the court said that the employee could pursue other remedies by suing.

The court found that the legislature did not intend to impose upon a contractor a duty to monitor and verify, on an ongoing basis, that a subcontractor's workers' compensation insurance remained valid. Here, the employee did not present evidence that the subcontractor or contractor knew or had reason to believe that the certification provided by the sub-subcontractor might become false.

Read more at the WorkersComp Forum homepage.

February 25, 2013

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