“Borrowed” Plaintiff-Employee Barred from Suit (PA)

On June 22, 2018, the Superior Court of Pennsylvania affirmed the trial court’s decision in Matranga v. U-Haul.  Plaintiff Marc Matranga was working as a welder at one of U-Haul’s manufacturing facilities in 2013, and was employed by a staffing agency assigned to the manufacturing facility.  While working, a fellow employee in a forklift knocked over a stack of steel frames which then fell on Matranga, injuring him.  He filed suit in 2015.

U-Haul filed a motion for summary judgment on the basis that it was not liable under the defenses of statutory employer, borrowed servant, and contractual waiver and release.  The trial court granted U-Haul’s motion and Matranga appealed.

Pennsylvania’s Workers’ Compensation Act provides the exclusive remedy for employees to recover from their employers.  Employers are also statutorily defined as one who permits entry upon the premises occupied by them or under their control, a laborer or assistant hired by an employee or contractor for the performance of a part of the employer’s regular business.  The Supreme Court of Pennsylvania provided a five-part test for one to qualify as a statutory employer which are: 1) an employer who is under contract with an owner or one in the position of the owner; 2) the premises is occupied by or under control of such employer; 3) a subcontract made by such employer; 4) part of employer’s regular business is entrusted to the subcontractor; and 5) an employee of such subcontractor is injured.

The Superior Court then agreed with the trial court and found that U-Haul had a contract with Matranga’s employer and that U-Haul occupied the facility.  In addition, U-Haul entrusted its business to Matranga’s employer through a subcontract.  As such, U-Haul was Matranga’s statutory employer.

The court also found that Matranga was U-Haul’s “borrowed servant” and qualified for the Workers’ Compensation bar under common law as well.  To determine if one is the servant of another, court’s will look at whether an entity has the right to control the work and the manner in which it is done, irrespective if that right is actually exercised.  The court again agreed with U-Haul and found that Matranga was its borrowed servant because U-Haul chose the departments where Matranga worked, he reported to U-Haul supervisors, U-Haul assigned him tasks and trained him, and U-Haul reviewed his work.

And finally, the court found that even if Matranga did not qualify as U-Haul’s employee, he waived his right to assert any claims against U-Haul when signing his employment contract which contained a wavier provision.  For an exculpatory clause to be valid it must: 1) not contravene public policy; 2) must be between persons relating to their private affairs; and 3) each party must be a free bargaining agent so that it is not one of adhesion.  The court found that Matranga had the opportunity to read the contract and actually asked questions about it.  In addition, he provided no evidence to show that he was forced to sign the contract.

This case demonstrates the various defenses available to entities and employers in Pennsylvania.  Pennsylvania’s Workers’ Compensation Act provides both statutory and common law bars to plaintiffs’ claims, so long as a defendant qualifies as an “employer”.  Also, well-written waiver provisions in employment contracts can limit liability for a company.  What these cases also demonstrate is that these defenses are difficult to establish in that they have multiple elements to prove.  Thanks to Peter Cardwell for his contribution to this post.  Please email Brian Gibbons with any questions.

Slippery Issues of Fact Denies Party “Borrowed Servant” Defense (PA)

On May 30, 2018, the Superior Court of Pennsylvania overturned a trial court’s granting of summary judgment in Gardner v. MIA Products Company et al.  In the underlying facts of the case, plaintiff Eric Gardner was an employee of DelVal Staffing, a temporary employment agency, that assigned him to work at MIA Products as a packer in their food freezer.  While working in the freezer, Gardner slipped and fell and suffered injuries.  He received workers’ compensation benefits through DelVal and then filed suit against MIA Products alleging negligence.

MIA Products moved for summary judgment on the basis that Gardner was a “borrowed employee” and therefore ineligible to file a tort action against it under Pennsylvania’s Workers’ Compensation Act, which the trial court granted.  Gardner then appealed.

Under Pennsylvania’s workers’ compensation law, employees are limited from suing their employers for injuries on the job, as workers’ compensation is meant to be the avenue for their recovery.  These limitations can also extend to other entities that are not individuals’ direct employers and are termed the “statutory employer defense” and the “borrowed servant defense”.  If a worker falls under either of these definitions, then the workers’ compensation limitation extends to them and prevents them from then suing that company that hired them.

In Pennsylvania, the requirements to be a “statutory employer” are defined in the Workers’ Compensation Act.  In this case, whether an individual is a “borrowed servant” is analyzed under the common law.  To determine if a worker who is furnished by one entity to another becomes the employee of the company to whom they are loaned, courts look at whether the latter company has the right to control the work that is being done and the manner in which it is being performed, irrespective of whether control is actually exercised.  Courts also look at other factors like the right to discharge the employee, the skill and expertise required for the work, and the payment of wages.

In the instant case, the Superior Court overturned the trial court’s granting of summary judgment for MIA Products as it found there were still genuine issues of material fact as to who actually controlled Gardner as an employee.  Though the court conceded that MIA Products personnel were present and directed Gardner on certain aspects of the job, they also cited deposition testimony that showed that DelVal personnel also transported Gardner to the site, provided work clothing, lockers for personal items, directed him on packing methods, provided a walkthrough of the facility, among other actions.  As such, the court concluded that there were still issues as to whether Gardner was truly “borrowed” by MIA Products.

This case demonstrates the important statutory employer and borrowed servant defense in Pennsylvania.  These defenses can provide a company a complete defense in a case and bar a plaintiff’s claims against it if a court agrees, as tort claims against an employer are barred under Pennsylvania’s Workers’ Compensation Act.  This case also demonstrates the difficulty with establishing the defenses, as well, as they are both very fact intensive with multiple elements to meet.  In addition, if these defenses backfire then the record is set up to establish that a defendant exercised significant control over an area or plaintiff, thus possibly setting it up for more exposure.  Thus, though the statutory employer and borrowed servant defenses are powerful in Pennsylvania, they do come with risks.  Thanks to Peter Cardwell for his contribution to this post.  Please email Brian Gibbons with any questions.

NJ Supreme Court Rejects Employee’s Direct Action Against WC Carrier For Pain and Suffering

No one seems happy with the workers compensation system. Employers and their insurers complain that the system is biased in favor of employees, awarding compensation even in the face of fraud, malingering or worse. On the other hand, employees kvetch that workers compensation insurers are slow to process and pay claims, leading to delays in treatment, needless anxiety and unhappy medical providers.

With this background in mind, may an injured employee seek damages directly from his employer’s workers compensation insurer for pain and suffering allegedly due to the insurer’s delay in making required payments?

The New Jersey Supreme Court tackled this issued in Stancil v. ACE USA, ruling in favor of the workers compensation insurer. In Stancil, the employee alleged that the insurer routinely delayed medical payments and ignored a directive from the workers compensation court to rectify this situation by a date certain. In response, the employee filed suit against the insurer in the local Superior Court seeking damages for pain, suffering and physical injury allegedly caused by the insurer’s delay. The Superior Court and Appellate Division dismissed plaintiff’s complaint on the pleadings but, ever the persistent fellow, plaintiff was granted permission to appeal to the New Jersey Supreme Court. A good omen indeed.

Displaying unusual deference to the worker compensation system, the Supreme Court ruled that the employee’s complaint could not stand for three reasons. First, the legislature constructed the workers compensation system that eliminated the worker’s right to file suit in the Superior Court. The employee’s suit was inconsistent with that scheme. Second, the legislature had already enacted remedies to deter the occasional recalcitrant insurer. Neither the courts nor an injured employee should interfere with or expand those remedial measures. Finally, the Supreme Court found that the present system worked fairly well for several decades and the legislature had moved quickly and decisively when problems became apparent. In other word, no need to tinker with a system that, albeit not perfect, was working fairly well.

Stancil settles the question of whether an employee can seek damages for pain and suffering from a workers compensation insurer for alleged delays in making required payments. The Supreme Court firmly declined to recognize a remedy beyond that authorized by the Workers Compensation Act.

If you have any questions or comments, please email Paul at pclark@wcmlaw.com