Justices: ‘Value’ threshold for workers’ comp liability not just direct monetary payment

The “value” attributable to the performance of work that triggers secondary liability under the Worker’s Compensation Act includes both direct monetary payment as well as any ancillary consideration received for the work, the Indiana Supreme Court ruled in a case of first impression.

The justices had to decide in Jason Young v. Hood's Gardens, Inc., 29S02-1405-PL-314, whether Hood’s Gardens Inc. was liable for the injuries of subcontractor Jason Young, who was hired to remove a tree from the company’s property, and in the course of the work was severely injured and rendered a paraplegic. Hood’s Garden hired Discount Tree Extraction to remove the tree at a cost of $600. As part of the job, Discount Tree Extraction would keep the wood, which it intended to sell as firewood.

Hood’s Gardens did not verify that Discount Tree had workers’ compensation insurance, which it did not. Under I.C. 22-3-2-14(b), Hood’s Gardens becomes secondarily liable when a contract for work exceeds $1,000 in value. Hood’s Gardens argued that the contract price was $600, so it is not liable; Young, the injured worker, claimed the value of the contractor’s work also included the price of the firewood, which would be more than $400, setting off Hood’s Gardens’ liability.

Section 14(b), which the justices found is ambiguous, shows the legislative intent to enhance the availability of workers’ compensation benefits for workers injured during their employment with employers not providing such coverage, Justice Brent Dickson wrote. It also incentivizes people who hire companies to seek those who can pay workers’ compensation benefits.

“Failure to obtain a certificate showing that an employer is able to provide worker's compensation by insurance or by the employer's own financial ability to pay benefits exposes the person engaging the employer to full liability for worker's compensation benefits for any of the employer's workers injured in the course of the work. This legislative objective is best served by interpreting Section 14(b) to trigger secondary liability for worker's compensation benefits at the lowest threshold, that is by permitting the $1,000 trigger to be satisfied by both direct monetary payment as well as any ancillary consideration received by the employer for the work,” Dickson wrote.  

Because Hood’s Gardens failed to designate evidence that the value of the wood received plus the $600 paid did not exceed $1,000, and the plaintiff designated testimony that the value of the wood triggered the $1,000 threshold, summary judgment should not have been granted to the business.

The justices reversed summary judgment for Hood’s Gardens and remanded for further proceedings.