Cracking the Code of the Workers' Comp

Cracking the Code of the Workers’ Comp Bar

Friday, April 1, 2016

Cory R. Ford WilliamsFord 101 Loudoun Street, SW Leesburg, Virginia 20175 Phone: 703.777.6535 Email: [email protected] www.williamsfordlaw.com

CORY R. FORD is a partner at the WilliamsFord law firm who exclusively practices personal injury, wrongful death and medical malpractice law. Prior to joining the firm, Cory was an Assistant Commonwealth’s Attorney for the County of Westmoreland, Virginia and before serving in that position, he was a sole practitioner managing his own law firm.

Cory is best known for the strategic advice and insights he provides to clients, drawing from his years of practice focusing on a full range of personal injury issues as well as his well-honed legal research and analytical skills. Virginia insurance law and legislation is very complex and Cory keeps abreast of the newest developments so he can guide his clients with the best strategies for the resolution of their case.

Clients are immediately comforted by Cory due to his calm and compassionate demeanor when handling intense and emotionally-charged cases, including some of the most heart-wrenching catastrophic injury cases that families unfortunately face. Cory is widely recognized for guiding clients in the settlement of complex personal injury issues and for vigorous representation if a client’s problem results in litigation.

While attending George Mason University School of Law, Cory received several honors, including winning Best Oralist in the Upper Class Moot Court Competition, becoming an Associate Editor on the law school’s Federal Circuit Bar Journal, and interning for Magistrate Judge Alan Kay in the United States District Court for the District of Columbia. Prior to attending law school, Cory earned his B.A degree from the College of William and Mary in 2001.

Cory is also admitted to practice in the United States District Courts (Eastern and Western Divisions) of Virginia and litigates federal cases. http://www.williamsfordlaw.com/our-team/attorneys/cory-r-ford WORKERS’ COMPENSATION BAR: CRACKING THE CODE I. What is it? a. What is it not?

i. It’s not the Lien ii. Statutory Lien Found in 65.2-309

b. The existence of a statutory lien necessarily means someone is liable, whom you can sue. Then you pay back the comp carrier.

c. Ex: Construction worker near road, hit by drunk. Comp pays for his medical bills, because at the time he was injured, he was acting within course and scope of his employment on the job. You sue drunk driver, repay the compensation carrier its statutory lien out of the verdict or settlement.

II. Basics: Who is Covered under the Act? This matters, because if the Act does not apply, neither does its statutory bar to suit.

a. Counted for what purpose? 65.2-101 “Definitions”

i. “Employee” (1) means: Every person, including aliens and minors, in the service of another under any contract of hire or apprenticeship, written or implied, whether lawfully or unlawfully employed, except (i) one whose employment is not in the usual course of the trade, business, occupation or profession of the employer or (ii) as otherwise provided in subdivision 2 of this definition.

ii. “Employee” (2) shall not mean: Employees of any firm, corporation …that has regularly in service less than three employees. -- Va. Code 65.2-101(2)(h )

iii. “Any person hired by the employer to work in the usual course of the employer’s business is an “employee” under the Act, regardless of how often or for how long he may be employed. With the exception of farm and horticultural businesses, both full-time and part-time employees who are regularly employed to carry out the trade or business of the employer must be counted in determining the number of employees “regularly in service.” Pineda v. Brothers, 78 O.W.C. 1 (1999).

III. The Workers’ Compensation Bar

A. Assuming the Act applies, what is the Bar? Bar to suit = immunity!

Virginia Code § 65.2-307. Employee's rights under Act exclude all others; exception.

A. The rights and remedies herein granted to an employee when his employer and he have accepted the provisions of this title respectively to pay and accept compensation on account of injury or death by accident shall exclude all other rights and remedies of such employee, his personal representative, parents, dependents, or next of kin, at common law or otherwise, on account of such injury, loss of service, or death.

B. Noteworthy: see § 65.2-307 (B). A new provision designed to prevent a comp carrier from arguing the comp bar applies to a civil lawsuit, then the opposite in front of the Commission when comp benefits are sought.

B. Translation

“Shall exclude all other rights and remedies” means immunity. You can’t sue them at common law, it’s barred. Exclusive remedy is under the Act for Workers’ Compensation benefits.

IV. Statutory Employer and Statutory Co-Employee

A. § 65.2-302. Statutory employer.

Enter the “Statutory Employer” or in other words, not a traditional, common law, (i.e., “real”) employer, but one the statute says is an “employer” for purposes of the Act. This is the single most important and difficult statute to contend with:

A. When any person (referred to in this section as "owner") undertakes to perform or execute any work which is a part of his trade, business or occupation and contracts with any other person (referred to in this section as "subcontractor") for the execution or performance by or under such subcontractor of the whole or any part of the work undertaken by such owner, the owner shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if the worker had been immediately employed by him.

B. When any person (referred to in this section as "contractor") contracts to perform or execute any work for another person which work or undertaking is not a part of the trade, business or occupation of such other person and contracts with any other person (referred to in this section as "subcontractor") for the execution or performance by or under the subcontractor of the whole or any part of the work undertaken by such contractor, then the contractor shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if that worker had been immediately employed by him.

1. Does that mean as long as Acme is the first company/entity to start hiring anyone to perform work (employees, independent contractors, etc.) then that makes Acme the statutory employer and immune? NO.

2. You must read in conjunction with § 65.2-101 (o):

“However, nothing in this title shall be construed to make the employees of any independent contractor the employees of the person or corporation employing or contracting with such independent contractor.” See also Sykes v. Stone, 186 Va. 116, 121-122 (1947) and Bamber, v. City of Norfolk, 138 Va. 26, 34 (1924).

In other words, if an owner—i.e., the other person in the phrase “…for another person” under §65.2-302(B)—contracts with a general contractor, that does NOT make the employees of the general contractor the employees of the owner!!

So, the owner has a choice: do the work himself through his own employees (he’s the statutory employer, and responsible for comp insurance), OR he can hire a contractor to do it, making the GC the statutory employer. The analysis of who the statutory employer is must be done under 65.2-302.

B. Fellow Servant

1. Fellow Servant is not defined in § 65.2-101!

There is a definition of “co-employee” in § 65.2-101 but it’s not really the one you care about. Beware: in the case law, what you are looking for is immunity on the basis that two workers are fellow servants.

The case law will use “co-employee” sometimes interchangeably with “fellow servant” and it’s this usage you care about, whether or not that fits the definition of “co-employee” in § 65.2-101. See, e.g., White Crane Serv. v. Howell, 282 Va. 323 (2011).

2. Fellow Servant is not defined in the lien creation section (§ 65.2-309), which talks about “…any other party.” That’s something else. That’s a party you CAN sue, a fellow employee is one you CAN’T sue.

3. 65.2-800: “Duty to Insure Payment, Effect of Insurance.”

65.2-800 is the Fellow Servant statute:

A. While such insurance remains in force he [employer] or those conducting his business shall only be liable…” ... C. [Subsection C provides further clarification.] “A person other than an employer or statutory employer, or a person employed by either whose acts result in injury or death shall be deemed ‘an other party’ within the meaning of § 65.2-309.

V. Four Players Under the Act

Now you have enough information to identify the relevant potential actors under the Act. There are four:

1) Employer (i.e., common law employer) -- 3 or more employees.

2) Statutory Employer (65.2-302(A) or (B))

a. Ex: Think builders. Ajax, a big construction company, buys land and is thus the owner. Premises owner and project developer. Ajax acts as its own general contractor to build a big building, using its own employees. To the employees, Ajax signs their paychecks and is their employer (common law). b. However, Ajax also fits squarely into the 65.2-302(A) definition of “statutory employer.” Who else would be? Either way, Ajax is an “employer” under the Act, presuming Ajax has 3 or more employees.

3) “A person employed by either” an employer or statutory employer. Namely, a fellow servant /statutory co-employee. See Feitig v. Chalkey, 185 Va. 96, 38 S.E. 2d 73 (1946). As long as you have a statutory employer, and this potential defendant is “conducting his business” the potential defendant is a fellow employee. “Conducting his business” gives rise to the “stranger to the work” test, below.

4) “An other party” – anyone who may be liable for the injury who is not an employer, statutory employer, or a person employed by either (again…this means one employed by either the employer or statutory employer).

Long story short: if you have “an other party” then you have someone you can sue. You pay back any applicable comp liens for “an other party.” For parties 1-3, you have no civil lawsuit, you are confined to comp benefits.

Well…sort of…

VI. The Great Tradeoff

There’s a social tradeoff when it comes to the Act. This is of tremendous historical significance, it’s not arbitrary.

The claimant is relieved of the necessity of proving negligence and proximate cause. He is also relieved of any need to resist such affirmative defenses as contributory negligence and assumption of the risk. In exchange, the law relieves the employer of exposure to actions at law from employees sustaining such injuries. Whalen, 229 Va. at 170-71, 327 S.E.2d 106.

At the turn of the 20th century, capital and labor were at war. War in the literal sense, not just a war of words.

 Lattimer Massacre - 19 unarmed striking Polish, Lithuanian and Slovak1 coal miners were killed and 36 wounded by the Luzerne County sheriff’s posse for refusing to disperse during a peaceful march. Most were shot in the back.  Ludlow Massacre – two dozen killed, including miner’s wives and children  Colorado Labor Wars – 47, plus the ones who died at Ludlow  Bombing of Los Angeles Times (subject of “American Lightning”)  Battle of Blair Mountain – 50-100 killed  1920 Alabama Coal Strike – 16 or more dead  Steel Strike of 1919 – 18 dead  Paint Creek Mine Wars – 50 from violence, many more from starvation. “A confrontation between striking coal miners and coal operators in Kanawha County, West Virginia, centered on the area between two

1 Statistics from Wikipedia, found at: https://en.wikipedia.org/wiki/List_of_worker_deaths_in_United_States_labor_disputes

streams, Paint Creek and Cabin Creek. 12 miners were killed on July 26, 1912 at Mucklow. On February 7, 1913, the county sheriff’s posse attacked the Holly Grove miners’ camp with machine guns, killing striker Cesco Estep. Many more than 50 deaths among miners and their families were indirectly caused, as a result of starvation and malnutrition.  1905 Teamsters Strike – 21 killed

October 1, 1910: John J. ("J.J.") and James B. ("J.B.") McNamara (both labor union members) bombed the Los Angeles Times building. The Los Angeles Times was owned by an adamant capitalist and outspoken anti-labor critic. The bombing started a fire that killed 21 and injured 100 more. The trial became the trial of the century, the McNamara brothers were defended by Clarence Darrow. A great read: “American Lightning” by Howard Blum.

First Worker’s Comp Act in America: “Federal Employer’s Liability Act” of 1908, signed by Teddy Roosevelt for some federal workers.

1911: The Great Trade Off: Washington and Wisconsin sign into law first “modern” Worker’s Compensation Acts embodying the principle that an injured worker would be paid his wages, and in trade he gave up the right to sue. Adopted as a model throughout the United States as state by state passed their own versions in the years and decades following. What does each respective party get?

 Employers no longer face the threat of lawsuits.  Employees no longer have to prove the employer was negligent.

Two Potential Arguments by an Uninsured, Deadbeat Employer:

1) “I am not subject to the Act.” – outcome: easy. They do not enjoy immunity. “While such insurance remains in force he [employer] or those conducting his business shall only be liable…” - § 65.2-800. There is no giving up the civil lawsuit here. By the entity’s own admission, they do not fall under the Act, they almost certainly don’t have insurance. The Comp bar does not apply.

a. Can enjoy immunity if they voluntarily purchase insurance that is in effect! See 65.2-305.

2) “I’m a Statutory Employer, and therefore Immune” – much more common. a. NUCLEAR OPTION

VII. The Great Tradeoff, Betrayed.

A. § 65.2-800 makes it clear that exclusivity of remedies (immunity) only occurs “while such insurance remains in force.” Is a loss of that immunity the only consequence?

B. 65.2-801 – Every employer shall “secure his liability thereunder by one of the following methods.”

1. You may be dealing with a self-insurer (paragraph A2). If so, read § 65.2-801 carefully and see if the “statutory employer” complied with his self-insurer obligations.

2. Chances are, if you’re dealing w/ a statutory employer under the Act the method they choose is to simply buy comp insurance (paragraph A1).

a. The entity must keep records of insurance (65.2-804).

Didn’t buy comp insurance? Uh-oh…

C. Virginia Code § 65.2-805: “Civil Penalty for Violation of 65.2-800, - 803.1, and -804.

1. Outcome: the bogus statutory employer should have kept its mouth shut and just accepted the fight of a civil lawsuit!

2. Best case scenario for the Plaintiff.

3. Under -805, if an entity claims to be a Statutory Employer (trying to get immunity) without having engaged in its respective part of the Great Tradeoff (insuring injury), then:

a. Fined $500-$5,000

b. Loses Immunity.

c. Loses the ability to defend that lawsuit upon the following grounds:

i. That the Employee was negligent (NO CONTRIB!)

ii. That the injury was caused by a fellow employee.

iii. Assumption of risk

This is huge. Do not overlook this. If a defendant claims to be a statutory employer2 and therefore immune, force them to disclose their insurance. Use discovery. At the Plea in Bar, in argument, and on brief, inform the judge that it is not enough to simply “be a statutory employer.” As a matter of fact and evidence, they must affirmatively show that insurance was purchased and in effect at the time of the incident. If not…they’re TOAST!

Just remember the words “…while such insurance remains in force…”

Important! Read 65.2-805 very carefully. It presents an ELECTION OF REMEDIES if a defendant is a statutory employer:

“..either for compensation under this title or at law in a suit instituted by the employee against such employer…”

If they are not a statutory employer, but claim to be…they are not immune. Remember, four potentials: employer, statutory employer, fellow employee, or “other party.” This was the case in Rodriguez v. Leesburg Bus. Park, LLC, 287 Va. 187 (2014). The defendant, LBP, was not the statutory employer, not the employer, nor a fellow servant. Therefore, it was an “other party” amenable to suit. Note that there’s no double-recovery for an “other party” because if the plaintiff received comp benefits, there’s a lien under § 65.2-309.

Practice tip: A lot of bogus “statutory employers” claim that status in an obvious attempt to gain immunity without the social tradeoff. That is…until you do discovery and force them to disclose their insurance (which they don’t have) because they never truly believed they were the statutory

2 Not a fellow servant, this won’t work for a fellow servant! See below.

employer in the first place. Be prepared to argue in the alternative to the judge: they are not the statutory employer under § 65.2-302(A) or (B), and therefore not immune. Assuming, arguendo, they are the statutory employer, you’ve exercised your election to sue them, and they’ve lost defenses under § 65.2 -805.

If they are a statutory employer, but uninsured, then you can either:

 Get comp  Sue them, and get the benefits of the waiver of defenses under 65.2-805.

VIII. Statutory Employer – Normal Work Test or Subcontracted Fraction Test

A. Normal Work Test – what is the issue?

How do you determine the trade, business, or organization (“TBO”) of an entity under 65.2-302?

65.2-302 (and 65.2-101(o)) are statutes of allowance, not restriction. It’s the freedom to either undertake work, and therefore the responsibility for comp., or to contract it out instead. It’s the difference between being engaged in a certain work and undertaking it yourself (through your employees), versus being more of an investor and having it done for you.

An owner can do work which is part of his TBO and subcontract out the actual performance of that work. In this case, the owner is the statutory employer and liable for comp, and likewise immune. Bamber, v. City of Norfolk, 138 Va. 26, 34 (1924), dealing with what is now 65.2-101(o) really is worth a read.

The owner contracts out to perform the work. It’s not his TBO. Think: investor, hiring someone who IS in that TBO to perform the work.

Ex: Again, classic example: O purchases 300 acres. O wants to reap rental income off of commercial tenants, and then someday sell for a profit. Hires a GC to build the rental property. Now, the contractor is liable for comp under subsection B, because the contractor is the “statutory employer.”

This scheme makes intuitive sense. If you build or make something (buildings, sewing factories, doughnut factories) it takes capital, equipment, and manpower. Doughnuts don’t make themselves and then bake themselves using the sun’s rays. Either you employ bakers and have ovens, or you don’t. Either you do that task, or you’re more of an investor, and contract/pay someone to do it for you. This is a simple scenario of course, and in the real world, it can get much more murky and complex.

Ex: Acme is sued. It claims it is the statutory employer and immune.

Step 1: what is the TBO of Acme? Step 2: Does Acme have insurance?

How do you determine what the TBO of an entity is? Remember, the test is useful, but the issue is always “what is the TBO of this entity?” You use the TBO to determine who the statutory employer is under § 65.2- 302. The tests are useful. But don’t get lost in the tests. The Court may very well say the test can be dispensed with, as the clear wording of the statute controls!

B. The Normal Work Test

1. Applicability

"In a situation in which an employee of an independent contractor sues a private entity that owns a project, we have applied the "normal work test" to determine whether the injured party was engaged in the trade, business, or occupation of the owner at the time of his or her injury."

Jones v. Com., 267 Va. 218, 223, 591 S.E.2d 72, 75 (2004) (citing Bassett Furniture Indus., Inc. v. McReynolds, 216 Va. 897, 902-03, 224 S.E.2d 323, 326-27 (1976) and Johnson v. Jefferson Nat' I Bank, 244 Va. 482, 485, 422 S.E.2d 778, 780 (1992).

2. The Test: "A private entity has broad discretion to choose its business activities. Many activities may be important to the success of the business, but would not necessarily constitute the trade, business, or occupation of the owner. Therefore, if the owner is a private entity, we have repeatedly focused on whether the 'activity is, in that business, normally carried on through employees rather than independent contractors."' Nichols v. VVKR, Inc., 241 Va. 516, 521, 403 S.E.2d 698, 701 (1991) quoting Shell Oil Co. v. Leftwich, 212 Va. 715, 722, 187 S. E.2d 162, 167 (1972).

Major Cases: Johnson v. Jefferson Nat’l Bank, 244 Va. 482, 422 S.E.2d 778 (1992), Shell Oil Co. v. Leftwich, 212 Va. 715, 187 S.E.2d 162 (1972), Bassett Furniture Indus., Inc. v. McReynolds, 216 Va. 897, 224 S.E.2d 323 (1976), Cinnamon v. Int’l Bus. Mach., Corp., 238 Va. 471, 475, 384 S.E.2d 618, 619 (1989).

Think: suing upwards. Not suing another co-employee across the work field, suing up at an owner or general contractor where you’re trying to determine whether the defendant is a statutory employer (presumably, you know who the common law employer is). Up the ladder, up the food chain. Vertical, not horizontal. Use the Normal Work Test.

“It clearly appears to be the purpose of section 20(a) to bring within the operation of the Compensation Act all persons engaged in any work that is a part of the trade, business or occupation of the original party who undertakes as owner, or contracts as contractor, to perform that work, and to make liable to every employee engaged in that work every such owner, or contractor, and subcontractor, above such employee. But when

the employee reaches an employer in the ascending scale, of whose trade, business or occupation the work being performed by the employee is not a part, then that employer is not liable to that employee for compensation under section 20(a). At that point paragraph 5 of section 12 intervenes and the employee's right of action at common law is preserved.”

Sykes v. Stone, 186 Va. 116, 121-122 (1947).

3. “Expanded” Normal Work Test

Beware public utility companies and governmental entities as defendants who are claiming immunity. Their TBO is defined by their statutory or regulatory mandate. Short version: whatever the statute or regulation says is their responsibility, IS their responsibility, whether they do it normally through their own employees or not! It’s not what they do…it’s what they are supposed to do. See Henderson v. Central Telephone Co. of Virginia, 233 Va. 377 (1987).

C. The Subcontracted Fraction Test

The second test is the "subcontracted fraction" test. It is sometimes also looked at as a "second prong" or exception to the Shell Oil/Normal Work test, to be applied when the work being done is a subcontracted portion of a main contract.

"In the context of the construction business, it relates to a general contractor, the party obligated by the main contract with the owner to complete the whole project. If the work out of which the accident arose was, in the language of Shell Oil,

"obviously a subcontracted fraction of [that] contract" and, in the language of the statute, "not a part of the trade, business or occupation of" the owner, the general contractor who engaged the subcontractor to perform that fraction is the statutory employer of the injured worker, whether directly employed by the primary subcontractor or by a secondary subcontractor."

Stone v. Door-Man Mfg. Co., 260 Va. 406, 416, 537 S.E. 2d 305, 310 (2000).

 Personal Opinion on the “Subcontracted Fraction Test”—it’s not particularly helpful. One, it’s not really a full test. The Court views it more as a “prong” or corollary of the “normal work” test.

More importantly, let’s examine its utility in determining what the TBO is of an entity. Why do you determine the TBO? To see who (if anyone) under 65.2- 302 is the statutory employer. You’re better off just analyzing the words of the statute—it’s actually simpler.

Look carefully above at 65.2-302(B) in light of the factual scenario quoted by the Court above. If you have a situation where an owner buys land to develop (to do construction on the land of some sort), then just substitute the word “owner” in the phrase “…for another person.” The owner, who is not in that TBO (hence, he’s contracting out the work…the owner is more of an investor) then contracts with a contractor to have work done.

Assuming that contract from the owner to the contractor is the “main” contract, as it so often is in the construction industry, we’d commonly just refer to that particular main contractor as the general contractor. Then, the general contractor may subcontract smaller portions of that work out.

Do we need to confuse the situation by use of a “subcontracted fraction” test? 65.2-302(B) pretty clearly states the contractor (in common speech, the general contractor) is the statutory employer. The test just isn’t all that helpful, it’s almost self-defined in 302(B). It’s exactly the scenario that 65.2-302(B) describes. So you can use that test if it somehow helps you, but otherwise…just argue the wording of the statute. That’s what really matters anyhow.

IX. Fellow Servant

A. “Stranger to the Work” Test

1. Easy Scenario: You are hurt by your co-worker. You both have the same common law employer. It’s barred. 2. Much harder: Employee of general contractor hurt by employee of subcontractor. 3. The Test:

The "stranger to the work" test, applied to varying facts, necessarily produces varying results. It requires that the facts of each case be analyzed to determine whether the defendant in a common-law action was, at the time of the plaintiff's injury, a stranger to the work in which the plaintiff was engaged. If the defendant was "no stranger," then he was not an "other party" … and the common-law action against him is barred by [the Act].

Whalen v. Dean Steel Erection Co., 229 Va. 164, 168 (1985) (reference to old Code sections omitted).

Well…o.k. If the defendant was “no stranger” to what?

Remember 65.2-800, the fellow servant statute: “…an employer, a statutory employer, or a person employed by either.”

65.2-800: “Duty to Insure Payment, Effect of Insurance.”

A. While such insurance remains in force he [employer] or those conducting his business shall only be liable…” ... B. Subsection C provides further clarification. “A person other than an employer or statutory employer, or a person employed by either whose acts result in injury or death shall be deemed ‘an other party’ within the meaning of § 65.2-309.

So who is a “fellow servant” of a plaintiff? The Plaintiff’s common law co- employees, clearly. Also, anyone employed by the statutory employer or “conducting his business.”3

B. A few examples:

1) An employee of Virginia International Terminals (VIT) was injured on the job. VIT was the general contractor in a contract with the Virginia Port Authority. The contract was for VIT to manage, operate, and conduct the business of a commercial port/terminal whose operations included loading

3 There is a statutory exception for victims of sexual assault. They may seek comp, or alternatively sue their attacker. See Virginia Code § 65.2-301.

and unloading commercial freight, storing commercial freight in warehouses, breaking down freight from shipping containers, removing shipping material from freight, and general maintenance of port facilities.

VIT subcontracted with Waste Management, a waste management guy was negligent on the day in question and hurt the plaintiff, a VIT employee. So essentially, an employee of the general contractor was suing down, at the employee of a subcontractor. Outcome:

“…in order for VIT, the plaintiff's employer, to reasonably operate the terminal in a clean, safe, and orderly manner, the premises had to be kept free of large quantities of shipping debris and waste generated daily. This required collecting the debris and removing it from the terminal to a landfill.”

Anderson v. Dillow, 262 Va. 797, 801 (2001).

Outcome: The defendant was not a stranger to the work; the exclusive remedy was under comp.

2) Clean Sweep Professional Parking Lot Maintenance, Inc. v. Talley, 267 Va. 210 (2004):

General Contractor of construction site subcontracts with asphalt company. Driver of asphalt truck hurt by the negligence of the employee of another subcontractor. Driver of asphalt truck doesn’t “work” at that jobsite…just delivering asphalt. But the defendant was not a “stranger to the work” of the general contractor, and therefore exclusive remedy is comp.

COMPARE Bosley:

“We have held repeatedly that a subcontractor's employee who merely delivers materials to a job site is not engaged in the trade, business, or occupation of the general contractor. Yancey, 252 Va. at 44, 471 S.E.2d at 474-75; Hipp v. Sadler Materials Corp., 211 Va. 710, 711, 180 S.E.2d 501, 501-02 (1971); Burroughs v. Walmont, Inc., 210 Va. 98, 100, 168 S.E.2d 107, 108 (1969); see Peck v. Safway Steel Prods., Inc., 262 Va.

522, 526, 551 S.E.2d 328, 329-30 (2001). In contrast, when an injured employee's duties extend beyond delivery of materials to the job site, and the employee performs an act that is an essential part of the work of the general contractor, the injured employee has engaged in the trade, business, or occupation of the general contractor. See Peck, 262 Va. at 528, 551 S.E.2d at 330; Bosher v. Jamerson, 207 Va. 539, 542-43, 151 S.E.2d 375, 377 (1966).

Bosley v. Shepherd, 262 Va. 641, 648-49 (2001).

3) White Crane Serv. v. Howell, 282 Va. 323

On the date in question, David L. Howell (the plaintiff), an employee of Green [the General Contractor & the Statutory Employer], acting within the scope of his employment, was engaged in the placement of steel beams as they were lifted into place by White Crane. White Crane employed Kenneth Burgess (the Defendant) as a crane operator to lift the beams. The plaintiff alleged that Burgess negligently operated the crane while hoisting a beam, causing the crane to tip over, losing control of the beam and allowing it to swing into a man-lift upon which the plaintiff was standing, striking and injuring the plaintiff.

The plaintiff brought this action in the circuit court against White Crane and Burgess (the defendants). Green (the GC and SE) was not a party.

 Who is the statutory employer? Green (not a party), the General Contractor.  How about White Crane? A subcontractor. White Crane was an employer subject to the Act. But--didn’t have insurance.  Burgess? Employee of White Crane who was negligent.

“…the parties entered into a stipulation of facts relevant to the plea as well as certain conclusions of law to which they agreed. The stipulation stated that the defendants were uninsured for workers' compensation liability as

required by the Act; the plaintiff had claimed and received workers' compensation benefits from his employer, Green; the defendants would ordinarily have been deemed to be the plaintiff's statutory co-employees; and, if the defendants had carried workers' compensation insurance, this action would have been barred by the Act. The parties agreed in their stipulation that the dispositive question on the plea in bar was whether the defendants' lack of workers' compensation insurance deprived them of the protection of the exclusivity provisions of the Act.

“The defendants were not "strangers to the work." Both the plaintiff and the defendants were engaged in the same construction project at the time of the accident and both were engaged in the trade, business and occupation of Green, the general contractor. The defendants were subcontractors under Green and the plaintiff was Green's direct employee. The parties to this action were therefore statutory co-employees. Pfeifer v. Krauss Constr. Co. of Va., Inc., 262 Va. 262, 266-67, 546 S.E.2d 717, 718-19 (2001).” … An independent contractor and his employees, if engaged in the same project in which the injured worker is employed and not "strangers to the work," are deemed the injured worker's statutory co-employees even though he is employed by another contractor on the same project. Although the statutory co-employees are not the injured worker's statutory employers, and are therefore not liable for the payment of workers' compensation benefits to him4, they come within the canopy of the Act. Because the legislative purpose is to bring within the Act all those who are engaged in the work that is a part of the owner's or general contractor's trade, business or occupation, such statutory co-employees are entitled to the exclusivity protections of the Act. The injured worker's sole remedy for job-related injuries caused by statutory co-employees is a claim against his own statutory employer for an award of workers' compensation benefits. Evans v. Hook, 239 Va. 127, 130- 31, 387 S.E.2d 777, 778-79, 6 Va. Law Rep. 1081 (1990). He may not bring a common-law action against his statutory co-employees. The statutory co- employees' lack of workers' compensation insurance is, in these

4 This is why §65.2-805 did not apply. It applies when the plaintiff is suing his own employer who did not carry comp, or the statutory employer who did not carry comp. It does not apply to fellow servants by its own terms.

18 circumstances, immaterial because they would in no event be liable to the injured worker for benefits under the Act.

Hey, what about 65.2-805?!

§ 65.2-805. Civil penalty for violation of §§ 65.2-800, 65.2-803.1, and 65.2- 804.

A. If such employer fails to comply with the provisions of § 65.2-800 or 65.2-804, he shall be assessed a civil penalty of not more than $250 per day for each day of noncompliance, subject to a maximum penalty of $50,000. Such employer also shall be liable during continuance of such failure to any employee either for compensation under this title or at law in a suit instituted by the employee against such employer to recover damages for personal injury or death by accident, and in any such suit such employer shall not be permitted to defend upon any of the following grounds:

1. That the employee was negligent;

2. That the injury was caused by the negligence of a fellow employee; or

3. That the employee had assumed the risk of the injury.

Legislature could have written “Such employer and fellow employee also shall be liable during continuance of such failure…” But didn’t. This waiver/civil penalty statute applies to statutory employers and employers, not fellow servants.

In short: If you’re dealing with a statutory co-employee, the stranger to the work test is very broad. Not all encompassing, certainly, but broad. As long as the negligent party was conducting the business of the statutory employer, he/she is a fellow servant and you’re stuck with comp.

THE END.