A little over a year ago, the state Superior Court decided the case of Patton v. Worthington Associates, 43 A.3d 479 (2012), which essentially modified the Pennsylvania Supreme Court’s seminal 1930 case dealing with the statutory employer doctrine, McDonald v. Levinson Steel. Given that the Superior Court does not have the authority to modify Supreme Court precedent, last Friday, the high court issued an order granting the petition for allowance of appeal filed in the case. The per curiam order citing the issue, as stated by the petitioner, read:
"Whether the Superior Court majority’s precedential opinion has sub silentio nullified the statutory employer doctrine and effectively overruled this court’s decision in McDonald v. Levinson Steel, 153 A. 424 (Pa. 1930), by grafting a fact question onto the McDonald analysis that can never be answered in a way that allows the statutory employer doctrine to apply."
By way of background, the statutory employer doctrine can be used both by an entity attempting to shield itself from a liability action in common pleas court and by an employee looking for workers’ compensation benefits, who is injured while working for a subcontractor that has no workers’ compensation coverage. In the instance where the employer/subcontractor has workers’ compensation insurance, the injured worker can also attempt to prove that the general contractor is not a statutory employer in order to bring a third-party, liability action. In that instance, the general contractor will seek to establish that it has statutory employer status in an effort to invoke the immunity provisions of the Workers’ Compensation Act. In other words, a statutory employer is a master who is not a contractual or common-law one, but is made one by the Workers’ Compensation Act.
The court in McDonald created a five-element test under Section 302(b) of the act. The existence of a statutory employer was held to be dependent on proof of the following:
• There must be a contract between the entity and an owner of the premises.
• The premises is occupied or controlled at the time of the injury by the entity.
• The entity entered into a subcontract with the claimant’s employer.
• Part of the entity’s regular business must be entrusted to the subcontractor.
• The employee of the subcontractor is injured on the premises.
In 2012, the Supreme Court made it easier for injured workers to prove statutory employer status with the Six L’s Packing Co. case. The court held that where an entity is deemed a "contractor" under §302(a) of the act, the injured worker does not need to prove all of the elements of McDonald. In particular, the "on-premises" requirement from element five above, was deemed unnecessary for an entity to be a statutory employer.
In Patton, the claimant was injured while doing carpentry work on a church. Significant to the holding and rather unique as far as fact patterns go, the injured worker also owned the carpentry company that was subcontracted by the general contractor to perform the carpentry work. The general contractor asserted the statutory employer defense at trial. The judge gave the jury an instruction requiring it to first determine whether the injured worker was an independent contractor or employee of the general contractor prior to considering the McDonald test at all. The jury determined that the carpenter was an independent contractor, thus denying the general contractor statutory immunity under the Workers’ Compensation Act.
On appeal, the Superior Court affirmed the decision of the trial court, reasoning that the first element of the McDonald test requires that the general contractor qualify as an employer. Therein lies the problem with Patton. The progeny of McDonald has never required a threshold inquiry of whether an entity is deemed an employer for purposes of the act prior to applying the McDonald test.
While the facts in Patton are extraordinarily unique, as most injured workers are employees of subcontractors, and not their owners, the case does make liability claims against general contractors much easier. Likewise, workers who are hurt while in the employ of an uninsured subcontractor are faced with the prospect of not being able to obtain workers’ compensation benefits should Patton prove not to be distinguishable based on the ownership element.
It would appear as if the Supreme Court has a substantial problem with the Patton case. While perhaps unintentionally so, the Superior Court seems to have added, in the words of the petitioner, a fact question onto the McDonald analysis that can never be answered in a way that allows the statutory employer doctrine to apply. If that is what Patton did, it would almost certainly not comport with the intent of the legislature and 83 years of common law.
Christian Petrucci is a solo practitioner and past co-chairman of the Philadelphia Bar Association’s workers’ compensation section. He concentrates his practice in workers’ compensation litigation and Social Security disability.