Boles v. Dormer Giant, Inc., 4 N.Y.3d 235 (2005)
An employer that fails to secure workers’ compensation coverage for its employees is not shielded from third-party liability for contribution or indemnity under Workers’ Compensation Law § 11.
Summary
Douglas Boles, an employee of Personal Touch Home Improvements, was injured while working on a house remodeling project managed by Dormer Giant. Boles sued Dormer Giant, who then brought a third-party action against Personal Touch for contribution and indemnity. Personal Touch moved for summary judgment, arguing that Workers’ Compensation Law § 11 barred Dormer Giant’s claim. The Court of Appeals held that because Personal Touch failed to secure workers’ compensation for Boles, it could not benefit from the statute’s protection against third-party liability. This decision reinforces the legislative intent that employers must uphold their end of the bargain by providing workers’ compensation to receive immunity from third-party lawsuits.
Facts
On April 5, 2001, Douglas Boles, while employed by Personal Touch Home Improvements, fell from a scaffold during a siding installation project. Dormer Giant, the general contractor, had subcontracted the siding work to Personal Touch. Boles sustained a crush injury to his foot as a result of the fall. Personal Touch did not have workers’ compensation insurance coverage for Boles at the time of the accident.
Procedural History
Boles sued Dormer Giant for personal injuries. Dormer Giant then commenced a third-party action against Personal Touch, seeking common-law indemnification and contribution. Personal Touch cross-moved for summary judgment, arguing that Workers’ Compensation Law § 11 barred Dormer Giant’s claim. Supreme Court granted Boles partial summary judgment and granted Personal Touch’s cross-motion, dismissing the third-party complaint. The Appellate Division affirmed. The Court of Appeals granted Dormer Giant’s motion for leave to appeal.
Issue(s)
Whether an employer that fails to secure workers’ compensation coverage for its injured employee is entitled to the protection from third-party liability afforded by Workers’ Compensation Law § 11.
Holding
No, because an employer must comply with Workers’ Compensation Law § 10 by securing workers’ compensation for its employees in order to benefit from the protection against third-party liability under Workers’ Compensation Law § 11.
Court’s Reasoning
The Court of Appeals reasoned that the legislative intent behind Workers’ Compensation Law § 11, especially the 1996 amendments, was to provide a balance between the rights of employees and the protection of employers who provide workers’ compensation coverage. The court emphasized that the 1996 legislation aimed to restore the original bargain between business and labor: “that workers obtain necessary medical care benefits and compensation for workplace injuries regardless of fault while employers obtain a degree of economic protection from devastating lawsuits.” (quoting Castro v United Container Mach. Group, 96 NY2d 398, 401-402 [2001]). The Court stated: “[t]he central component of the reform initiative was relief in the form of immunization from tort liability to employers . . . who provide workers’ compensation coverage“(Castro, 96 NY2d at 401 [emphasis added]). The court held that allowing an employer who fails to secure workers’ compensation to benefit from the third-party liability protection would be unfair to law-abiding employers and would discourage compliance with section 10. The court interpreted the term “[a]n employer” in the third paragraph of section 11 to mean only those employers who comply with section 10. The Court found that it would make no sense if the 1996 legislation freed noncompliant employers from tort liability as it was designed to grant protections to those who provided coverage. This interpretation aligns with the first paragraph of section 11, which conditions an employer’s protection from employee lawsuits on securing workers’ compensation.