General Liability Insurer Has No Claim Against Workers Compensation Insurer For Defense Of Suit Barred By Workers’ Compensation Exclusivity
Workers’ compensation is the exclusive remedy for an employee against her employer for a workplace injury. However, as a Massachusetts Superior Court judge recently concluded, the fact that a civil lawsuit was dismissed due to workers compensation exclusivity does not mean that it should have been defended by the employer’s workers’ compensation insurer.
The directors on the board of a mental health center were sued for wrongful death and breach of fiduciary duty by the estate of an employee of the center who was assaulted and killed by a patient. The Supreme Judicial Court eventually concluded that the directors were employers for purposes of the workers compensation exclusivity provision, and the claims against them were dismissed.
The directors had tendered the suit for defense to both the center’s general liability and workers’ compensation insurers. The workers’ compensation insurer disclaimed coverage. The general liability insurer defended, and then sued the workers compensation insurer to recover the costs of the defense.
On cross-motions for summary judgment, the Superior Court ruled in favor of the workers’ compensation insurer. Neither of the workers’ compensation policy’s two parts covered the claims against the directors. Part One of the policy covers claims for the payment of workers’ compensation benefits, and Part Two covers claims against the employer by the rare employee who opts out of the workers’ compensation system at the time of employment.
As to Part One, the court observed that the estate did not assert a claim for benefits within the workers’ compensation system. To the contrary, the estate sued the directors, and not the center, “in an obvious and unsuccessful attempt to recover damages” rather than workers’ compensation benefits. The fact that, under workers compensation exclusivity, the directors were not subject to suit by an employee of the center for a workplace injury, did not make the estate’s civil lawsuit into a workers’ compensation claim covered by Part One. The court went on to hold that because the Estate did not and could not allege that the employee had opted out of workers’ compensation coverage, the civil suit was not a claim covered by Part Two.
Posted In: Duty to Defend