Olveda v. United States

• Citation: 508 F. Supp. 255
• Decision Date: 17 February 1981
• Docket Number: Civ. A. No. M-78-10-CA.
• Court: U.S. District Court — Eastern District of Texas
• Parties: Michael OLVEDA v. UNITED STATES of America.

508 F. Supp. 255

Michael OLVEDA v. UNITED STATES of America.

Civ. A. No. M-78-10-CA.

United States District Court, E. D. Texas, Marshall Division.

February 17, 1981.

Scott Baldwin, Jones, Jones & Baldwin, Inc., Marshall, Tex., for plaintiff.

William J. Cornelius, Jr., Asst. U. S. Atty., Tyler, Tex.; for defendant.

OPINION

STEGER, District Judge.

This is a Federal Tort Claim Action filed against the United States because of radiation exposure to the Plaintiff, Mr. Olveda, while he was employed at the Rocky Flats Plant near Boulder, Colorado. The U.S. Atomic Energy Commission owned and Dow Chemical Company, an independent contractor with the United States, managed and operated the Rocky Flats Plant during that time. Mr. Olveda was an employee of the Dow Chemical Company.

In connection with his employment Mr. Olveda was involved in an accident during which he was substantially contaminated with plutonium. The Complaint alleges that this radiation exposure caused Plaintiff to sustain "severe and permanent injuries to his entire body and nervous system."¹

The accidental exposure occurred on August 22, 1971 and an administrative claim was filed on October 20, 1977.² On January 11, 1978 the Department of Energy denied the administrative claim. Twenty-one days later this lawsuit was filed. In the Complaint Plaintiff alleges that the Government was negligent and careless "in failing to furnish proper inspection, failing to furnish proper safety equipment and failing to furnish safe working conditions."³ The United States filed an Answer and later filed a Motion for Summary Judgment which raised among other things the "statutory employer" defense.

That legal defense, a legislatively created immunity, has its roots in workmen's compensation theory. It recognized that a worker is better served by reasonable assurance of benefits through legislation for work-connected injuries without regard to fault rather than by preservation of his common law tort remedies with the associated burden of proving fault and the risk of encountering a judgment-proof defendant.⁴

By 1949 all states had enacted Workmen's Compensation Acts.⁵ These acts typically require the employer to purchase workmen's compensation insurance for his employees and establish tort law immunity for the employer who so complies.⁶ Employees lose the right to sue the employer in tort but gain reasonably assured benefits for work-connected injuries even if the employee negligently caused his own injury.

However, some employers were able to perform work without purchasing the required workmen's compensation insurance by hiring small uninsured independent contractors to do the actual work. Thus, the cost of production was decreased, but many injured workmen were not able to receive their legislatively mandated benefits because they worked for a subcontractor who had too few employees to be covered under state law or who deliberately refused to purchase insurance. Often common law didn't help because the employee could not meet the necessary burden of proof to prevail against the employer under the standard concepts of tort law. Even if the employee did win a tort suit the employer was often judgment-proof. Consequently, the public policy of assured compensation for work-related injuries was effectively foiled by an inability to bring the large general contractors into the workmen's compensation system. Forty-three states⁷ have remedied this situation through legislation which has closed this loophole by requiring the general contractor to insure that workmen's compensation insurance has been purchased by his independent contractors. Under such state statutes the general contractor is considered the "statutory employer" of the employees of the independent contractor.⁸ Since the general contractor is responsible for this insurance as if he were the actual employer, most states also give that general contractor the same immunity from common law tort suits enjoyed by the actual employer.⁹ "The general contractor, like the immediate employer, is subjected to nonfault liability for compensation, whether he is called a statutory employer, or insurer, or anything else, and he ought in return to get immunity from damage suits."¹⁰

The work-connected injury which forms the basis of this lawsuit is alleged to be "severe and permanent injuries to the Plaintiff's entire body and nervous system."¹¹ These injuries were allegedly caused when "Plaintiff was exposed to Plutonium 239 ... while an employee for Dow Chemical Company ... working at the Rocky Flats Division of their plant at Boulder, Colorado."¹² In other words, Mr. Olveda was an employee of Dow Chemical Company which was an independent contractor of the United States.¹³ This radiation exposure occurred at the Rocky Flats Plant located in Colorado. Mr. Olveda is barred from filing a tort suit against Dow Chemical Company because Colorado State law¹⁴ grants Dow an immunity from such suits since Dow had purchased workmen's compensation insurance.¹⁵ The premium for this workmen's compensation insurance was paid by the United States as an allowable cost under the contract with Dow.¹⁶ Indeed, Mr. Olveda himself recognizes this statutory immunity and has not filed a lawsuit against his employer, Dow Chemical Corporation. Instead, he filed a claim for workmen's compensation.¹⁷ Now he seeks to recover from the United States for the same injuries that were the basis of his workmen's compensation claim.

Under the Federal Tort Claims Act the liability of the United States is determined "in accordance with the law of the place where the act or omission occurred" and "in the same manner and to the same extent as a private individual under like circumstances." 28 U.S.C. §§ 1346(b) and 2674. Since Mr. Olveda's radiation exposure occurred in Colorado this Court must examine the law of Colorado to determine if the United States qualifies as a "statutory employer" and gains the resultant immunity.

Indeed, the United States has moved for summary judgment arguing that under Colorado law it is immune from this lawsuit because it is a "statutory employer." Colorado Revised Statute § 8-48-101 states:

(1) Any person, company, or corporation operating or engaged in or conducting any business by leasing or contracting out any part or all of the work thereof ... shall be construed to be an employer as defined in articles 40 to 54 of this title and shall be liable as provided in said articles.... The employer, before commencing said work shall insure and keep insured his liability as provided in said articles, and such lessee, sublessee, contractor or subcontractor, as well as any employee thereof, shall be deemed employees as defined in said articles....

(2) If said ... contractor, or subcontractor ... before commencing such work insures and keeps insured his liability ... neither said ... contractor, or subcontractor, its employees, or its insurer shall have any right of contribution or action of any kind ... against the person, company or corporation operating or engaged in or conducting any business by leasing or contracting out any part or all of the work thereof, or against its employees, servants or agents.¹⁸

Under this statute the United States paid for workmen's compensation insurance as an allowable cost under the contract with Dow and thus becomes a "person, company or corporation" C.R.S. § 8-48-101(2) which cannot be sued by the employee of a subcontractor (Mr. Olveda) because the United States is statutorily "construed to be an employer" C.R.S. § 8-48-101(1). Under Colorado Workmen's Compensation law, Mr. Olveda (an employee) has no right of action against an employer who purchases the required workmen's compensation insurance. C.R.S. §§ 8-42-102 and 8-43-104.

The purpose of Colorado's "statutory employer" law was explained by the Supreme Court of Colorado in O'Quinn v. Walt Disney Productions, Inc., 177 Colo. 190, 493 P.2d 344, 346 (1972):

The instant legislation confers an immunity on a general contractor or a real property owner in exchange for a duty which inheres to the benefit of a workman. Thus, while on the one hand a workman will be required to forego a negligence action against a general contractor or real property owner, he will on the other hand be assured that regardless of fault, the more solvent general contractor or real property owner stands behind and secures the Workmen's Compensation liability of the workman's immediate employer.

A further comment was made in the case of Edwards v. Price, 191 Colo. 46, 550 P.2d 856, 860 (1976):

The public policy upon which the Workmen's Compensation Act is founded derives from the need to provide monetary relief for workmen injured in the course of their employment, regardless of the negligence of the employer or the lack of negligence on the part of the employee.... The underlying concept is one of "no fault." It is further the policy of Colorado and the great majority of states to make the more financially solvent general contractor ultimately responsible for workmen's compensation benefits arising out of injuries to employees of all subcontractors. ... The policy interests are embodied in section 8-48-101, C.R.S. 1973 and are a legitimate state objective.

In return for this ultimate statutory liability, the general contractor is relieved of any liability for "contribution or action of any kind, including actions under section 8-52-108" Section 8-48-101(2), C.R.S. 1973....

It is the general contractor to whom the employees of all subcontractors may look for workmen's compensation if their immediate employer is uninsured or financially irresponsible.

Recently, the Colorado Supreme Court concisely stated a purpose of Colorado's "statutory employer" law in a case where it was not applied:

The purpose of the contracting out provision is to prevent employers from avoiding financial responsibility by contracting out their regular work to uninsured independent

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