This is Part Two of a two part Blogpost where Boston Personal Injury Lawyer, the attorney, reviews and analyzes a recent First Circuit U.S. Court of Appeals ruling, in which an insurer sought a declaration that there was no coverage for an personal injuries as the result of an accident involving a contract worker who severed his arm in a wool picking machine. The worker had sued the Massachusetts recycling company where he had been working for a number of months. (Click here to view Part One)
PART TWO : THE COURT ANALYZES DISTINCTION BETWEEN “LEASED WORKER” AND “TEMPORARY WORKER” IN POLICY TO DETERMINE COVERAGE
Having reviewed the underlying facts of the case, the Court went on to analyze the express language of the insurance policy, attempting to discern whether the lower court had correctly determined that the the worker’s contract was indefinite and therefore not temporary, which was its basis for ruling that there was no coverage for the accident.
In the policy a leased worker was defined as a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. A temporary worker was defined as a person who is furnished to you to substitute for a permanent “employee” on leave or to meet seasonal or short-term workload conditions.
The question then for the Court of Appeals was whether Torres was a “leased worker,” and thus excluded from coverage; or a “temporary worker,” thus obligating Scottsdale to provide a defense and coverage in Torres’s lawsuit. The district court had determined that Torres was not a temporary worker on the basis that the term “short term” worker, though not defined in the policy, suggested a brief and relatively finite period of time.
Based on deposition testimony of CTC’s president that Torres was to stay at CTC “for as long as he was needed”, and a Venturi manager’s testimony that Torres was assigned to CTC “indefinitely,” the lower court determined that “indefinite” and “short-term” were mutually exclusive, that Torres’ stay with CTC was indefinite and that he was therefore not a “temporary worker”. Therefore his claim was not covered under the policy.
The Court of Appeals disagreed. As “short-term” was not defined in the policy, but only used as a modifier for “workload conditions.” Strictly construing the language against the insurer, the court determined that Torres’ “indefinite” placement was not necessarily incompatible with the possibility that he was addressing a “short-term workload condition.”
The Court felt a factual determination was necessary to resolve issues as to what is a normal workload in the industry, what was the record as to CTC’s intent in using Torres, and ultimately whether Torres was “furnished” to meet “short-term workload conditions.” The case was therefore remanded to the district court for further proceedings.
Comment: The use of leased labor in the workplace is growing day by day. Employers gain an advantage in not having to pay most of the added costs of retaining employees, which is especially advantageous when such workers are needed on a part time or seasonal basis. However, employers may have added an unforeseen risk involving a potential gap in insurance coverage when the leased worker is injured on the job. This case looks at the issue and serves as a warning for the unwary employer. Where worker’s compensation insurance provides coverage for employees injured on the job and generally bars the employee from suing the employer for those injuries. Third parties who suffer injuries on the employer’s worksite are generally covered by the employer’s general liability insurance. Leased employees injured on the job, however, may not be covered under either policy because they neither fit the definition of “employee”, while an employer’s liability policy may not cover work-related injuries sustained by a leased employee. Absent coverage, the leased employee’s may be looking to the employer for recovery.
Scottsdale Insurance Co., v. Torres