Six L's Packing Co. v. Workers' Comp. Appeal Bd.

• Decision Date: 29 May 2012
• Citation: 44 A.3d 1148
• Parties: SIX L'S PACKING COMPANY and its Claims Administrator, Broadspire Services, Inc., Appellants v. WORKERS' COMPENSATION APPEAL BOARD (WILLIAMSON), Appellee.
• Court: Pennsylvania Supreme Court

44 A.3d 1148

SIX L'S PACKING COMPANY and its Claims Administrator, Broadspire Services, Inc., Appellants

v.WORKERS' COMPENSATION APPEAL BOARD (WILLIAMSON), Appellee.

Supreme Court of Pennsylvania.

Argued March 6, 2012.

Decided May 29, 2012.

Sharolyn L. Murphy, Philadelphia, for Six L's Packing Co. and its Claims Administrator, Broadspire Services, Inc.

Amber Marie Kenger, Richard C. Lengler, Workers Compensation Appeal Board, Harrisburg, for Workers Compensation Appeal Board.

Jennifer Chun Strawn, Jeffrey L. Zeitz, Sand and Saidel, P.C., Philadelphia, for Kevin Williamson.

Erich Mark Diehl, PA Workers' Compensation Appeal Board, Philadelphia, Thomas Joseph Kuzma, Harrisburg, for Appellee Amicus Curiae, Department of

Labor and Industry, Bureau of Workers' Compensation.

Paul Timothy Kelly, Mattise & Kelly, P.C., for Appellee Amicus Curiae, Pennsylvania Association for Justice.

BEFORE: CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.

OPINION

Justice SAYLOR.

The questions presented center on whether Appellant bears liability for workers' compensation benefits as a statutory employer of an injured truck driver employed by an independent contractor.

Pursuant to Section 302(a) of the Workers' Compensation Act,¹ certain “contractors” bear secondary liability for compensation to injured workers employed by their “subcontractors,” as follows:

A contractor who subcontracts all or any part of a contract and his insurer shall be liable for the payment of compensation to the employes of the subcontractor unless the subcontractor primarily liable for the payment of such compensation has secured its payment as provided for in this act.

77 P.S. § 461. See generally McDonald v. Levinson Steel Co., 302 Pa. 287, 292, 153 A. 424, 425 (1930) (“A statutory employer is a master who is not a contractual or common-law one, but is made one by the Act.”). As is relevant to the present case, Section 302(a) also specifies that one who contracts with another to have certain work performed—including work “of a kind which is a regular or recurrent part of the business ... of such person”—is deemed a “contractor,” for purposes of the aforementioned prescription conferring statutory employer status. 77 P.S. § 461. In the same vein, the other party to the agreement is deemed a “subcontractor.” See id. Other work implicating a contractor-subcontractor relationship under Section 302(a) includes removal, excavation, or drilling of soil, rocks, or minerals and the cutting or removal of timber from lands. See id.²

Appellant, Six L's Packing Company, Inc., (now Lipman Produce) grows, harvests, processes, and distributes tomatoes and other produce. The company owns and leases various farms and distribution and processing facilities in North America.

In April 2002, Appellant contracted with F. Garcia & Sons (“Garcia”) to perform various services, including transporting tomatoes between a warehouse in Shickshinny, Pennsylvania, and a processing facility in Crisfield, Maryland. Claimant, who was employed by Garcia as a truck driver, suffered injuries in a vehicle accident on a Pennsylvania roadway while transporting Appellant's tomatoes between the above locations. Claimant filed claim petitions against Garcia and against Appellant, and it was determined during the course of the ensuing litigation that Garcia did not maintain workers' compensation insurance. The present proceedings are centered on the claim against Appellant, pursued, inter alia, on the theory that Appellant was Claimant's statutory employer, per Section 302(a) of the WCA, and, accordingly, is secondarily liable for the payment of workers' compensation benefits.

In the proceedings before a workers' compensation judge (the “WCJ”), Appellantsubmitted evidence to establish that it did not own trucks or employ drivers, but, rather, utilized independent contractors, such as Garcia, to supply transportation services. Appellant thus took the position that it was not Claimant's employer. With regard to Claimant's assertion that Appellant was a statutory employer per Section 302 of the WCA, Appellant asserted that Section 302 liability on the part of an entity may be established only where a Claimant proves the following five elements set forth in McDonald:

(1) the entity is under contract with an owner or one in position of an owner; (2) the entity occupies or is in control of the premises [where the injury occurred]; (3) the entity entered into a subcontract; (4) the entity entrusted a part of its regular business to the subcontractor; and (5) the injured party is an employee of such subcontractor.

Gann v. WCAB (MBS Mgmt./Wellington East Dev.), 792 A.2d 701, 705 (Pa.Cmwlth.2002) (citing McDonald, 302 Pa. at 295, 153 A. at 426). Since Claimant was injured on a public highway, and not on premises occupied or controlled by Appellant, the company took the position that McDonald was not satisfied, and, therefore, it could not be deemed a statutory employer. Nevertheless, the WCJ summarily opined that the McDonald test was met and found Appellant liable for payment of workers' compensation benefits per Section 302(a).³

The Workers' Compensation Appeal Board (the “WCAB” or the “Board”) affirmed, although, given that Claimant's injury occurred off premises, the Board did not agree that the McDonald test was met. Rather, the Board reasoned that McDonald simply does not pertain to statutory employer status under Section 302(a). See Williamson v. Six L's Packing Co., No. A07–0437, slip op. (WCAB Mar. 17, 2009).

In this regard, the WCAB explained that McDonald concerned Section 203 of the WCA, see77 P.S. § 52, a provision which confirms that certain entities deemed to be statutory employers enjoy the same immunity from liability in tort as one who is an employer in fact. In this regard, Section 203 prescribes:

An employer who permits the entry upon premises occupied by him or under his control of a laborer or an assistant hired by an employe or contractor, for the performance upon such premises of a part of the employer's regular business entrusted to such employe or contractor, shall be liable to such laborer or assistant in the same manner and to the same extent as to his own employe.

77 P.S. § 52 (emphasis added).⁴

The Board further observed that Section 203 dovetails with Section 302(b) of the Act, which provides for liability of a statutory employer to pay workers' compensation benefits, as follows:

Any employer who permits the entry upon premises occupied by him or under his control of a laborer or an assistant hired by an employe or contractor, for the performance upon such premises of a part of such employer's regular business entrusted to that employe or contractor, shall be liable for the paymentof compensation to such laborer or assistant unless such hiring employe or contractor, if primarily liable for the payment of such compensation, has secured the payment thereof as provided for in this act.

77 P.S. § 462 (emphasis added).⁵See generally Vandervort v. WCAB (City of Philadelphia), 899 A.2d 414, 418 (Pa.Cmwlth.2006) (“An entity's status as a ‘statutory employer’ results in liability for workers' compensation insurance and, coextensively, provides immunity to the statutory employer from common law tort liability.”).⁶ Since both the Section 203 immunity and Section 302(b) liability provisions concern employers who permit entry upon premises occupied by them or under their control, the WCAB explained that they have been construed similarly as pertaining to on-premises injuries. See Williamson, No. A07–0437, slip op. at 8 (citing Leibensperger v. WCAB (Thomas H. Lewis Builders, Inc.), 813 A.2d 28 (Pa.Cmwlth.2002), for the proposition that “Section 302(b) has been applied to work injuries at fixed work sites, such as construction sites”). In light of this parallel, the McDonald test also had been extended from the Section 203 setting into the Section 302(b) context. Accord Vandervort, 899 A.2d at 419 (“The McDonald test has been utilized over the years to determine whether an entity is a statutory employer under both the tort immunity section (203) and the insurer section (302(b)).”).

The WCAB emphasized that Section 302(a), by contrast, contains no language analogous to that found in Sections 203 and 302(b) to suggest a similar on-premises-injury limitation. See Williamson, No. A07–0437, slip op. at 7. Moreover, the Board highlighted, Section 302(a)'s approach to statutory-employer status was added via amendments which post-dated McDonald. See id. at 11. Given the textual differences and this history, the WCAB did not believe that courts and administrative tribunals should engraft the McDonald elements, derived from a previous statute, onto the later-enacted Section 302(a).

The WCAB did recognize that there are decisions of the intermediate appellate courts which have not distinguished between Sections 302(a) and (b) in terms of McDonald's application. See id. at 10 (citing Gann, 792 A.2d at 701,Williams v. WCAB (Global Van Lines), 682 A.2d 23 (Pa.Cmwlth.1996), and Wright Demolition & Excavating Co. v. WCAB (Manuel), 61 Pa.Cmwlth. 479, 434 A.2d 232 (1981), for the proposition that “the courts have ... given mixed signals as to whether the McDonald test applies to Section 302(a)”). Nevertheless, the WCAB found support for its interpretation in Delich v. WCAB (Lyons), 661 A.2d 936 (Pa.Cmwlth.1995), which held that a claimant did not need to prove that the McDonald factors were present to establish that an entity was a statutory employer, where the statutory elements of Section 302(a) were met. The WCAB realized that Delich involved circumstances in which the injured worker was an employee of an uninsured subcontractor engaged by the contractor to remove timber from lands, and, accordingly, the intermediate court had relied on the proviso of Section 302(a) pertaining to such activities. See Williamson, No. A07–0437, slip op. at 12. Nevertheless, the Board explained...