Zurich American Insurance Company v. Uninsured Employers'fund
Docket: 1509, September Term, 2009
Court: Court of Special Appeals of Maryland; November 3, 2010; Maryland; State Appellate Court
The case Zurich American Insurance Company v. Uninsured Employers' Fund involves the interpretation of a workers' compensation and employers' liability policy issued by Zurich to A. B. Enterprises, Inc. A. B., a Delaware corporation, contracted to build a pole building for Richard Townsend in Maryland and subcontracted the work to WMT Contracting, also from Delaware. Dean J. Young, an employee of WMT, sustained injuries while working on the site and initially filed a workers' compensation claim in Delaware, where WMT was found to be uninsured. Subsequently, Young filed a claim in Maryland against WMT, which led the Uninsured Employers' Fund (UEF) to include A. B. and Zurich as parties. The Maryland Workers' Compensation Commission determined A. B. was a statutory employer, that Young's injury was compensable, and that the policy offered coverage for his claim. Zurich's appeal followed the Circuit Court's affirmation of the Commission's decision. The background details indicate that A. B. primarily operated in Delaware with minimal work in Maryland, and Young was injured shortly after starting work on the project. The Delaware Industrial Accident Board later confirmed Young's injury was compensable but noted WMT's lack of insurance, requiring them to secure compensation.
WMT did not post the required bond, leading to the dismissal of Mr. Young's claim after he failed to appear at a hearing on June 28, 2007. Mr. Young had filed a workers' compensation claim in Maryland on February 28, 2007. A hearing was held on May 29, 2008, after A. B. and Zurich were joined as parties. The Commission ruled on June 5, 2008, that Mr. Young was employed by WMT, which was uninsured, and determined A. B. to be his statutory employer, covered by the Policy. The Commission found Mr. Young's injury to be compensable based on the Policy's terms, specifically the Endorsement. Zurich filed a petition for judicial review on July 7, 2008, along with motions for summary judgment from both Zurich and UEF. The circuit court granted UEF's motion and denied Zurich's on June 23, 2009, heavily relying on the precedent set in Kacur v. Employers Mutual. Zurich's motion for reconsideration was denied, leading to the current appeal.
The Policy, issued in Delaware, was in effect during Mr. Young's injury from July 21, 2004, to July 21, 2005. It specified that the workers' compensation coverage applied to Delaware law. The Endorsement provided coverage under certain conditions for states not listed in the Policy, including stipulations regarding the employee's contract of employment, existing coverage in the injury state, and the temporary nature of work performed there. The Endorsement does not cover fines or penalties for non-compliance with workers' compensation laws. Employers are advised to comply with respective state laws if hiring employees outside the listed states.
Employers in Maryland must secure compensation for covered employees through insurance with the Injured Workers' Insurance Fund, an authorized insurer, or self-insurance, as mandated by LE. 9-402(a). The Workers' Compensation Act applies to employers with at least one covered employee (LE. 9-201), and an individual is presumed a covered employee under an express or implied contract of hire (LE. 9-202). Covered employees must be working "in this State" (LE. 9-203(a)), with exceptions for casual employees (LE. 9-205) and those working intermittently or temporarily for an employer from another state, provided certain conditions are met (LE. 9-203(b)(1)).
A principal contractor, who is not the direct employer, can be liable as a statutory employer under specific conditions: if they undertake work that is part of their business, contract with a subcontractor for that work, and if the covered employee is engaged in executing that work (LE. 9-508(a)). If an employer fails to secure compensation, the Uninsured Employers' Fund (UEF) is responsible for the award (LE. 9-1002).
In the case at hand, the parties agree that A. B. was the statutory employer of Mr. Young at the time of his injury. Zurich argues that the Endorsement's language governs the case, asserting that Mr. Young's hiring in Delaware meets subsection A.1.a. However, Zurich claims that all conditions of subsection A.1.b., specifically subparts i), ii), and (iii), must be satisfied; it argues that A. B. did not meet the Maryland insurance requirement (subsection ii) nor is an authorized self-insurer (subsection iii). Zurich contends that Mr. Young's work in Maryland was not temporary, thus failing to satisfy subsection A.1.c. It cites Granite State for the position that Mr. Young was 'regularly employed' in Maryland and qualifies as a 'covered employee.' Additionally, Zurich addresses the Kacur decision, arguing that it establishes an insurer's liability only to the extent they would be liable in another forum where the claimant could file.
Zurich asserts that the Kacur case is not applicable because Delaware did not recognize the statutory employer doctrine at the time of Mr. Young's injury, meaning a claim against A. B. in Delaware would have been denied. Zurich emphasizes that while Mr. Young could choose to file against WMT, he could not against A. B. Further, Zurich points out that the Kacur decision was based on the parties' intentions rather than public policy, and there was no relevant endorsement in that case. Conversely, UEF argues that coverage exists under the Endorsement, interpreting the disjunctive nature of its provisions to affirm that A.1.b. is satisfied, given Zurich's acknowledgment that A. B. lacked workers' compensation coverage in Maryland and was not an authorized self-insurer. UEF claims that A.1.c. is also satisfied due to the temporary nature of Mr. Young's employment in Maryland and argues that substantial evidence supports the Commission's ruling, which should be upheld. UEF contends that any ambiguity in the Endorsement should be construed against Zurich and maintains that Kacur provides a valid basis for coverage, irrespective of the statutory employer doctrine's recognition in Delaware at the relevant time. UEF highlights that if Mr. Young had pursued a claim in Delaware against A. B., Delaware's choice of law principles would have resulted in the application of Maryland's statutory employer law.
The document then addresses the standard of review for the Commission's decisions, noting that such decisions typically receive deferential judicial review. However, since this case involves interpreting an insurance policy and related legal questions decided via summary judgment, the interpretation follows general contract principles. Maryland courts aim to determine and fulfill the contracting parties' intentions, relying primarily on the contract language. Summary judgment is appropriate when there is no genuine dispute over material facts, and the party awarded judgment is entitled to it as a matter of law.
A reviewing court is required to perform an independent assessment of the record to identify any disputes over material facts that could affect the case outcome, as established in Wells Fargo Home Mortgage, Inc. v. Neal. A material fact is one that, if resolved differently by the fact-finder, would change the case's result. General or conclusory allegations are insufficient to establish such disputes, as reiterated in Beatty v. Trailmaster Prods. Inc. The reviewing court conducts a de novo review of summary judgment orders, using the same information and legal issues as the trial court, with all reasonable inferences drawn in favor of the non-moving party. Even if the facts are undisputed, if they allow for multiple reasonable inferences, a choice among those inferences should not be made as a matter of law, precluding summary judgment.
The court's review standard focuses on legal correctness rather than whether the trial court was clearly erroneous. In this case, A. B. is identified as a statutory employer liable for benefits, with specific coverage conditions outlined in the Endorsement. The Endorsement allows for temporary operations outside the named state unless the employer possesses other workers' compensation coverage, is mandated to have separate coverage, or is self-insured in that state. Mr. Young, hired in Delaware, meets the criteria for coverage under subsection A.1.a. A. B. lacked other workers' compensation insurance in Maryland and was not an authorized self-insurer there. The necessity for separate insurance in Maryland hinges on Mr. Young's classification as a 'casual employee' or his employment status as 'intermittent or temporary.' The term 'casual employee' is not statutorily defined, and its application depends on the specific circumstances of each case, as established in Wood v. Abell and Lupton v. McDonald.
Factors for determining if an employee is classified as a casual employee include the nature of the work, duration of employment, and the employment contract. The assessment prioritizes the hiring's scope and purpose over just the duration and regularity of the service. Evidence indicated Mr. Young was hired as a regular employee with the intention of indefinite employment, thus he did not qualify as a casual employee under LE 9-205. A nonresident hired in another state is not considered a "covered employee" in Maryland if working there intermittently or temporarily per LE 9-203(b)(1). The Commission found Mr. Young was not a covered employee, concluding that the Endorsement provided coverage. Although there is no Maryland case directly interpreting LE 9-203(b)(1), the definition of "temporary" is generally a factual question, which was not disputed here. Under LE 9-745(a), the Commission's decision is presumed correct. It was determined that Mr. Young was indeed temporarily in Maryland, thus Maryland did not require separate workers' compensation insurance as per A.1.b. of the Endorsement. Additionally, Mr. Young's work duration in Maryland was deemed temporary under A.1.c., as he was expected to be there only a few days. The case referenced, Granite State, was distinguished due to different factual circumstances. Consequently, the judgment was affirmed, with costs to be paid by the appellant.
