Lead Opinion
OPINION
The issue presented concerns whether Appellant is a statutory employer per the Workers’ Compensation Act and, as such, enjoys immunity from civil liability for injuries sustained by Appellee Earl Patton.
Concomitant with the treatment of traditional employers, statutory employers under Section 302(b) enjoy a measure of immunity from liability in tort pertaining to work-related injuries for which they bear secondary liability under the Act. See 77 P.S. § 52 (embodying Section 203 of the Act); see also 77 P.S. § 481(a) (providing thаt liability of employers under the WCA serves as an exclusive remedy). This Court has previously determined that this immunity pertains 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 payments. See Fonner v. Shandon, Inc.,
The above would seem to be relatively straightforward. Accord McDonald,
Appellant, Worthington Associates, Inc., was engaged as the general contractor for an addition to a Levittown church. Wor-thington, in turn, entered into a standard-form subcontract with Patton Construction, Inc., a Pennsylvania corporation of which Appellee Eаrl Patton is the sole shareholder and an employee, to perform carpentry.
On October 26, 2001, while working at the construction site, Mr. Patton fell and sustained injuries to his back. Subsequently, the Pattons commenced a civil action against Worthington contending that the company failed to maintain safe conditions at the jobsite. Worthington moved for summary judgment on the basis
The trial court’s substantive concern was with the principle that a general contractor is not a statutory employer relative to employees of an independent contractor. See, e.g., N.T., Dec. 1, 2009, at 185-95, 258 (discussing Lascio v. Belcher Roofing Corp.,
For clarity, we pause to observe that — given that Worthington contracted with Patton Construction, Inc., and not Mr. Patton in his personal capacity — Mr. Patton himself had no contract whatsoever with Worthington and, accordingly, could not in the first instance be denominated an “independent contractor” or even a contractor for purposes of Sections 203 or 302(b) of the Act. Moreover, Mr. Patton was most certainly not a common-law employee of Worthington’s; rather, he was an employee of Patton Construction, Inc. Nevertheless, having set up an errant dichotomy for the jurors, the court proceeded to instruct them concerning the differences between independent contractors and employees at common law. In doing so, the trial court compounded the underlying conceptual difficulties it had engendered, because this Court has long held that, for the salient purposes under Sections 203 and 302(b) of the WCA, the term “independent contractor” carries a narrower meaning than it does at common law. See, e.g., McDonald,
The jury returned a verdict in favor of the Pattons in the amount of $1.5 million in the aggregate.
Post-trial motions were denied, and Worthington lodged an appeal. A Superi- or Court panel affirmed in a divided opiniоn with the majority crediting and embellishing upon the trial court’s approach. See Patton v. Worthington Assocs., Inc.,
Judge Bender dissented, relying on decisions of this Court confirming that traditional general contractor/subcontractor scenarios give rise to a statutory employment relationship per Section 302(b). See id. at 495-97 (Bender, J., dissenting). The dissenting opinion distinguished several of the cases relied upon by the majority and the trial court, since the general contractors in those matters had attempted to contractually evade their statutory responsibilities to injured employees оf their subcontractors through a declaration that the subcontractor was independent. See, e.g., Lascio,
We allowed appeal to address the noted difficulties with the trial court’s approaсh, perpetuated in the published opinion of the Superior Court. Our review is plenary.
In its brief, Worthington emphasizes that it maintained an ordinary contractor/subcontractor relationship with Patton Construction, Inc. Thus, according to the company, the present circumstances represent a “classic statutory employer situation.” Brief for Appellant at 14 (quoting Peck,
Worthington reiterates that the employees of subcontractors typically are neither themselves independent contractors nor employees of general contractors. See, e.g., Brief for Appellant at 25 (“The fundamental flaw in the question approved by the Superior Court majority is that it forces the jury to determine whether the plaintiff is an employee or independent contractor of the general contractor when the only accurate answer is that he is an employee of the subcontractor” (emphasis in original)).
Shoemaker Construction Co. and the Insurance Federation of Pennsylvania, Inc., have filed an amici brief elaborating upon the essential points made by Worthington. These amici also note that the immunity created by the Act has encountered criticism and been treated with circumspection by the judiciary. See Brief for Amici Shoemaker Constr. Co. and Ins. Fed. Of Pa., Inc., at 8-11. While amici express no difficulty "with the proposition that statutes curtailing individual rights should be applied with care, they find the approach of the trial and intermediate courts here to be so “precipitous and poorly-reasoned” as to raise concerns about the competency of the judicial system. Id. at 11, 32. A separate group of amici including twenty-one contractors and subcontractors wrote to warn of the impact of “a tremendous amount of new legal liability [introduced by the Superior Court’s Patton decision] into the construction industry in the absence of any indication from the Pennsylvania General Assembly that it intended to abrogate long-standing legal protections
In response, the Pattons and their ami-cus, the Pennsylvania Association for Justice, rely largely upon the reasoning of the trial and intermediate courts. In addition, they contend that the present circumstances do not entail a “classic statutory employer situation,” since “Mr. Patton was not only the injured employee of the subcontractor, but also the (independent) subcontractor as it related to Worthington.” Brief for Appellees at 10; accord Brief for Amicus Pa. Ass’n for Justice at 10 (alluding to the uniqueness of the facts, since Mr. Patton was the principal of Patton Construction, Inc.). Furthermore, highlighting the opinion of a dissenting Justice in the Former decision, amicus criticizes the application of immunity in favor of statutory employers who are not required to pay workers’ compensation benefits. According to amicus, “the only way to even the scales of justice, considering the inherent inequity of the statutory employer immunity,” is to strictly construe the threshold requirements for attaining statutory employer status when considering immunity questions. Id. at 23-25.
Upon review, and for the reasons already indicated, we agree with Worthing-ton and its amici that the approach of the trial court and the Superior Court majority is flawed. As explained above, a century ago, this Court established that, per the terms of Section 302(b), a conventional relationship between a general contractor maintaining control of a jobsite and a subcontractor implicates the statutory employer concept relative to employees of the subcontractor working there. See McDonald,
The ... original contractor in control of the premises to perform the work it had engaged to do ... is regarded by the Workmen’s Compensation Law as the employer to those engaged on or about the work within the scope of the undertaking. ... This relation of employer to those employed about the premises includes only those whose work is a part of that embrаced within the terms of the [original contractor’s] contract with the owner. The work of a contractor, on the same premises, in fuHherance of the owner’s general plan, on the same structure or enterprise, performing under another and different contract with the owner is, as to the person under consideration, the work of an independent contractor under the law, and his employees] or those under him must look to him for compensation. Each is separate and distinct, operating within his own sphere, though engaged on the same general work.
Id. at 507,
Qualp then carefully distinguished this limited conception of an “independent contractor” — i.e., one having a distinct and independent contract with the owner— from conventional subcontractor scenarios.
Based on the above, Worthington is correct that the trial and intermediate courts inappropriately layered сommon-law concepts onto a distinctive statutory regime. Per Qualp and McDonald, conventional subcontractors are dependent contractors, not independent ones, for purposes of Sections 203 and 302(b). For these purposes, their employees are not contractors at all, nor, at least in the absence of special circumstances, are they employees of the general contractor.
Here, as a matter of law, Patton Construction, Inc., was a subcontractor and not an “independent contraсtor” relative to Sections 203 and 302(b) of the Act, particularly since it is undisputed that the company’s contract was with the general contractor (Worthington) and not the owner (Christ United Methodist Church).
In response to the argument of the Pattons and their amicus that Mr. Patton’s status as the principal of Patton Construction, Inc., alters the above calculus, we disagree. Individuals elect to conduct their affairs using the corporate form for various reasons, including to insulate their personal assets from exposure to liability for the debts of the corporation. See, e.g., Lumax Indus., Inc. v. Aultman,
We note that we are no more pleased to disturb a compensatory jury award than the intermediate court. In the present circumstances, however, the governing law should have been applied by the trial court at the summary judgment stage, before the case ever reached trial, and certainly our error-correcting court should have recognized and vindicated this law on appeal. Since this did not happen, it has been left for us to do so at this late juncture, four years after trial.
Finally, in terms of the disagreement by the Pattons’ amicus with the holding of Fonner, Fonner is a majority decision of this Court which has been controlling law on a matter of statutory construction for almost fifteen years. Thus, the argument that it reflects poor public policy is at this point best expressed to the Legislature. The courts cannot abide the sort of distortions which occurred here as a counterbalance to previous decisions with which some may disagree. Were we to do so, we would not quell the sorts of apprehensions about the competency of the justice system expressed by several of Worthington’s am-ici While we have no difficulty with the proposition that statutory-employer status should be assessed carefully when asserted as a defense to tort liability, see Travaglia,
The order of the Superior Court is reversed, and the matter is remanded for any further actions as may be necessary to conclude it, consistent with this opinion.
Chief Justice CASTILLE and Justices EAKIN, BAER, TODD, MeCAFFERY and STEVENS join the opinion.
Justice BAER also files a concurring opinion.
Notes
. Act of June 2, 1915, P.L. 736 (as amended, 77 P.S. §§ 1-1041.1, 2501-2626) (the "WCA” or the "Act”).
. Section 302(b) is phrased in terms broader than the "classic” statutory employer scenario involving general contractors and employees of their subcontractors. Peck v. Del. County Bd. of Prison Inspectors,
.Statutory-employer status is also imposed per Section 302(a) of the Act, аs recently addressed in Six L’s Packing Co. v. W.C.A.B. (Williamson),
. The jury also found that Mr. Patton was comparatively negligent and assigned twenty percent of the causal fault to him.
. Indeed, Worthington observes that if Mr. Patton had been an actual employee of Wor-thington’s, the statutory employment concept would be irrelevant, since Worthington would bear workers’ compensation liability and enjoy the immunity from tort liability available to a conventional employer. See Brief for Appellant at 25-26.
. Since the decision in Qualp, both Sections 203 and 302(b) have been amended, but the operative language has remained materially the same, thus reinforcing that the opinion reflects the meaning intended by the Legislature. See 1 Pa.C.S. § 1922(4) (embodying the principle of statutory construction that "[w]hen a court of last resort has construed the language used in a statute, the General Assembly in subsequent statutes on the same subject matter intends the same construction to be placed upon such language").
. We note that the viability of Qualp’s holding has been questioned as it concerns the applicability of Sections 203 and 302(b) to the employees of persons or entities which have no direct contractual relationship with putative statutory employers, see Travaglia v. C.H. Schwertner & Son, Inc.,
Concurrence Opinion
concurring.
Given the clear and unambiguous language of the relevant provisions of the Workers’ Compensation Act (Act), as consistently interpreted by decades of precedent from this Court, I am constrained to join the Majority Opinion in full. As has been written several times over the past thirty-five years, however, the mandatory nature of workers’ compensation has rendered the statutory employer doctrine obsolete.
When the Workers’ (then Workmen’s) Compensation Act was first enacted by the General Assembly in 1915, employers were given the option to elect into the scheme of no fault limited liability contained within the Act, or to remain liable (with all available defenses) in common law for injuries sustained by their employees in the workplace. With that right of refusal came the statutory employer doctrine, which gave employees the ability to receive workers’ compensation benefits from, in the most common scenarios, a general contractor when the injured worker’s employer, the subcontractor, elected not to carry workers’ compensation coverage. However, even general contractors could refuse to elect to provide coverage for a subcontractor’s employees, so long as prominent notice was provided in the workplace, but, “[i]t soon became clear that only foolish contractors would reject the Act in this fashion, since acceptance of workers’ compensatiоn financial responsibility provided concomitant immunity to common law negligence claims, pursuant to Section 303.... ” Richard M. Jurewicz & Arthur L. Bugay, The Statutory Employer Defense in Pennsylvania Third Party Actions (Plaintiffs Perspective), 69 Pa. B.A.Q. 29, 30 (Jan. 1998). Indeed, as early as 1929, this Court recognized that electing to carry workers’ compensation coverage was the norm, because by disavowing the Act, contractors lost the immunity provisions that came with it. See Swartz v. Conradis,
In 1974, amendments to the Act removed the optional election element. The respective common law roles оf the parties — injured employee versus negligent employer — were lost with the mandatory application of the Act. Yet, the statutory employer doctrine remained without any basis in policy or usefulness, continuing to harm employees of subcontractors by prohibiting them from suing a third party tortfeasor, and harming the subcontractors themselves by immunizing negligent general contractors from subrogation claims. As a former member of this Court cogently noted, “[i]n reality, application of [the 1974] amendments rarely, if ever, will result in the general contractor assuming responsibility for providing workers’ compensation insurance because in the modern construction workplace, general contractors will rarely, if ever, award a contract absent the subcontractor showing proof of workers’ compensation coverage.” Fonner v. Shandon,
Adopting such a paradigm would achieve several of the purposes found in the Pennsylvania Workers’ Compensation Act. First, it maintains the primary purpose of the Act: the prompt payment of certain, statutorily' defined benefits to an injured worker, regardless of fault. Second, it perpetuates the concomitant quid pro quo of immunity to the paying employer, whether a subcontractor or general contractor, that is equally important to the operation of the Act. Third, it preserves the Section 481(b) third party cause of action for injured employees in essentially all circumstances, without punishing the employee for what amounts to nothing more than happenstance if the negligent third party happens to be a general contractor. Cf. Frazier v. WCAB (Bayada Nurses, Inc.),
. A lone, and extremely narrow exception to the statutory requirement that employers provide workers' compensation for their employees exists for employers that hold a religious objection to providing the benefits. 77 P.S. § 484. This provision permits applications to be filed with the Department of Labor and Industry for a waiver from workers! compensation coverage on the basis that the employer is
a member of a recognized religious sect or division thereof and is an adherent of estаblished tenets or teachings of such sect or division by reason of which he is conscientiously opposed to acceptance of the benefits of any public or private insurance which makes payments in the event of death, disability, old age or retirement or makes payments toward the cost of, or provides services for medical bills [...].
Id. § 484(a).
. Cf. 77 P.S. § 481(b), which provides:
In the event injury or death to an employe is caused by a third party, then such employe, his legal representative, husband or wife, parents, dependents, next of kin, and anyone otherwise entitled to receive damages by reason thereof, may bring their action at law against such third party, but the employer, his insurance carrier, their servants and agents, employes, representatives acting on their behalf or at their request shall not be liable to a third party for damages, contribution, or indemnity in any action at law, or otherwise, unless liability for such damages, contributions or indemnity shall be expressly provided for in a written contract entered into by the party alleged to be liable prior to the date of the occurrence which gave rise to the action.