Brickstreet Mutual Insurance Co. v. Zurich American Insurance Co.
700 F. App'x 198
| 4th Cir. | 2017Background
- January 2012: Jonathan Gutierrez, a "covered employee" under a PEO agreement, was seriously injured while working at Taggart Site Services' mine; he filed a workers' compensation claim with EIN Resources (the PEO), not with Taggart.
- EIN's carrier BrickStreet accepted the claim as compensable and began paying benefits (over $2M to date); no protest was filed with the West Virginia Workers' Compensation Office of Judges.
- BrickStreet sued Taggart's insurer, Zurich, in federal court seeking contribution (half) toward Gutierrez's benefits; Zurich moved to dismiss for lack of subject-matter jurisdiction.
- The district court denied dismissal, granted summary judgment for BrickStreet, and held Zurich obligated to share payments.
- The Fourth Circuit found no controlling West Virginia authority on three key legal questions and certified those questions to the West Virginia Supreme Court of Appeals under the Uniform Certification of Questions of Law Act.
Issues
| Issue | Plaintiff's Argument (BrickStreet) | Defendant's Argument (Zurich) | Held |
|---|---|---|---|
| 1) Whether jurisdiction over insurer-on-insurer disputes about contribution for workers' comp benefits lies exclusively with WV Workers' Compensation Office of Judges | Federal court jurisdiction is proper for an insurance-coverage dispute separate from claim-adjudication; Act governs only claim administration | All issues tied to workers' compensation benefits must proceed through the Act's administrative process; BrickStreet should have used state procedures | Certified to WV Supreme Court: Fourth Circuit concluded no controlling state authority and certified the question for resolution |
| 2) Whether W. Va. Code §33-46A-7 mandates the designated party's WC policy as primary and precludes shared coverage between PEO and client-employer | Statute/regulation do not preclude contractual allocation or shared coverage; parties/policies can determine priority | Statute and WV regulation make PEO policy primary when PEO is designated; client-employer is only "ultimately liable" if PEO/carrier fails | Certified to WV Supreme Court: Fourth Circuit found ambiguous state law and certified whether statute/regulation fix priority or allow shared arrangements |
| 3) Whether "ultimately liable" means client-employer liable only upon PEO/carrier default when PEO is designated to provide coverage | Parties can contractually allocate responsibilities; "ultimately" does not necessarily limit liability to default situations | "Ultimately liable" contemplates secondary/triggered liability—client-employer liable if PEO fails to provide coverage | Certified to WV Supreme Court: Fourth Circuit determined the statutory text/regulation left the question unsettled and certified it |
| 4) Whether an "other insurance" clause in the PEO's policy can require the client-employer's insurer to share when the PEO is named sole employer but not insured under the client's policy | BrickStreet: its policy names Taggart as an additional insured so both policies insure the same party; other-insurance clause applies to require pro rata sharing | Zurich: policies do not insure the same party; EIN was the sole insured for this claim so other-insurance clause is inapplicable | Certified to WV Supreme Court: Fourth Circuit found no controlling WV decision and certified whether the clause applies in these circumstances |
Key Cases Cited
- State v. Janicki, 422 S.E.2d 822 (W. Va. 1992) (explaining that an "other insurance" clause can limit liability only when multiple policies insure the same party, subject, and risks)