Washington Metropolitan Area Transit Authority v. Johnson

• Citation: 467 U.S. 925,81 L.Ed.2d 768,104 S.Ct. 2827
• Decision Date: 26 June 1984
• Docket Number: No. 83-747,83-747
• Parties: WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, Petitioner, v. Paul D. JOHNSON, et al
• Court: United States Supreme Court

467 U.S. 925

104 S.Ct. 2827

81 L.Ed.2d 768

WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, Petitioner,

v Paul D. JOHNSON, et al.

No. 83-747.

Supreme Court of the United States

Argued April 24, 1984.

Decided June 26, 1984.

Rehearing Denied Aug. 16, 1984.

Syllabus

Section 4(a) of the Longshoremen's and Harbor Workers' Compensation Act (LHWCA or Act) provides that "[e]very employer shall be liable for and shall secure the payment to his employees" of compensation payable under the Act, and further provides that "[i]n the case of an employer who is a subcontractor, the contractor shall be liable for and shall secure the payment of such compensation to employees of the subcontractor unless the subcontractor has secured such payment." Section 5(a) provides that the liability of an "employer" prescribed in § 4 shall be exclusive and in place of all other liability of "such employer" to the employee, except that if an "employer" fails to secure payment of compensation as required by the Act, an injured employee may elect to claim compensation under the Act or to maintain an action at law or in admiralty for damages. Petitioner, a general contractor governed by the Act and responsible for construction of a rapid transit system (Metro) for the District of Columbia and surrounding metropolitan area, purchased a comprehensive "wrap-up" workers' compensation insurance policy to cover all employees of subcontractors engaged in the construction of Metro. Respondents, employees of subcontractors who had not secured their own workers' compensation insurance, after having obtained compensation awards from petitioner's insurer for work-related injuries, each brought a tort action against petitioner in Federal District Court to supplement such awards. The court in each case awarded summary judgment to petitioner, holding that by purchasing workers' compensation insurance for the employees of its subcontractors, petitioner had earned § 5(a)'s immunity from tort suits brought for work-related injuries. In a consolidated appeal, the Court of Appeals reversed, taking the view that § 5(a)'s grant of immunity applies to a general contractor only if the contractor secures compensation after the subcontractor fails to do so. The court therefore concluded that since petitioner unilaterally purchased the "wrap-up" policy and thus pre-empted its subcontractors, it was not entitled to § 5(a)'s immunity.

Held:

1. Section 5(a)'s grant of immunity extends to general contractors. While § 5(a) speaks in terms of an "employer" and a general contractor does not act as an employer of a subcontractor's employees, there is ample evidence in the use of the term "employer" elsewhere in the LHWCA to infer that Congress intended the term to include general contractors as well as direct employers. This is particularly so with respect to § 5(a) inasmuch as granting tort immunity to contractors who comply with § 4(a) is consistent with the quid pro quo underlying workers' compensation statutes whereby in return for the guarantee of compensation, the employees surrender common-law remedies against their employers for work-related injuries, while the employer, as a reward for securing compensation, is granted immunity from employee tort suits. Pp. 933-936.

2. A general contractor qualifies for § 5(a) immunity as long as it does not fail to meet its obligations to secure compensation for subcontractor employees under § 4(a). Section 4(a) simply places on general contractors a contingent obligation to secure compensation whenever a subcontractor has failed to do so. This is the most natural reading of § 4(a). Moreover, this reading furthers the underlying policy of the LHWCA to ensure that workers are not deprived of compensation coverage, and saves courts from the onerous task of determining when subcontractors have defaulted on their own statutory obligations. Pp. 936-940.

3. Based on the above interpretations of §§ 4(a) and 5(a), petitioner was entitled to immunity from respondents' tort actions. Far from failing to secure payment of compensation as required by the LHWCA, petitioner acted above and beyond its statutory obligation by purchasing the "wrap-up" insurance on behalf of all its subcontractors. Pp. 940-941.

230 U.S.App.D.C. 297, 717 F.2d 574 (DC1983), reversed and remanded.

E. Barrett Prettyman, Jr., Washington, D.C., for petitioner.

William F. Mulroney, Washington, D.C., for respondents.

Justice MARSHALL delivered the opinion of the Court.

Section 4(a) of the Longshoremen's and Harbor Workers' Compensation Act (LHWCA or Act), 44 Stat. (part 2) 1426, 33 U.S.C. § 904(a), makes general contractors responsible for obtaining workers' compensation coverage for the employees of subcontractors under certain circumstances. The question presented by this case is when, if ever, these general contractors are entitled to the immunity from tort liability provided in § 5(a) of the Act, 33 U.S.C. § 905(a).

I

Petitioner Washington Metropolitan Area Transit Authority (WMATA) is a government agency created in 1966 by the District of Columbia, the State of Maryland, and the Commonwealth of Virginia with the consent of the United States Congress.¹ WMATA is charged with the construction and operation of a rapid transit system (Metro) for the District of Columbia and the surrounding metropolitan region. Under the interstate compact that governs its existence, WMATA is authorized to hire subcontractors to work on various aspects of the Metro construction project.² Since 1966 WMATA has engaged several hundred subcontractors, who in turn have employed more than a thousand sub-subcontractors.³

Of the multifarious problems WMATA faced in constructing the Metro system, one has been ensuring that workers engaged in the project in the District of Columbia are cov- ered by workers' compensation insurance. Under § 4(a) of the LHWCA,⁴ general contractors "shall be liable for and shall secure the payment of [workers'] compensation to employees of the subcontractor unless the subcontractor has secured such payment." 33 U.S.C. § 904(a). A company "secures" compensation either by purchasing an insurance policy or by obtaining permission from the Secretary of Labor to self-insurer and make compensation payments directly to injured workers. 33 U.S.C. § 932(a). The effect of § 4(a) is to require general contractors like WMATA ⁵ to obtain workers' compensation coverage for the employees of subcontractors that have not secured their own compensation. See, infra, at 938.

During the initial phase of Metro construction, which ran from 1969 to 1971, WMATA relied upon its subcontractors to purchase workers' compensation insurance for subcontractor employees. However, when the second phase of construction began, WMATA abandoned this policy in favor of a more centralized insurance program. As a financial matter, WMATA discovered that it could reduce the cost of workers' compensation insurance if it, rather than its numerous subcontractors, arranged for insurance. Practical considerations also influenced WMATA's decision to change its workers' compensation program. Requiring subcontractors to purchase their own insurance apparently hampered WMATA's affirmative action program, because many minority subcontractors were unable to afford or lacked sufficient business experience to qualify for their own workers' compensation insurance policies.⁶ Moreover, as the number of Metro subcontractors grew, it became increasingly burdensome for WMATA to monitor insurance coverage at every tier of the Metro hierarchy. Periodically, subcontractors' insurance would expire or their insurance companies would go out of business without WMATA's being informed. In such cases, a group of employees went uninsured, and WMATA technically breached its statutory duty to ensure that these employees were covered by compensation plans.

For all of these reasons, WMATA elected to assume responsibility for securing workers' compensation insurance for all Metro construction employees. Effective July 31, 1971, WMATA purchased a comprehensive "wrap-up" policy from the Lumberman's Mutual Casualty Co. Under the policy, WMATA paid a single premium and, in return, Lumberman's Mutual agreed to make compensation payments for any injuries suffered by workers employed at Metro construction sites and compensable under the relevant workers' compensation regimes.⁷ After arranging for this "wrap-up" coverage, WMATA informed potential subcontractors that WMATA would "for the benefit of contractors and others, procure and pay premiums" for workers' compensation insurance and that the cost of securing such compensation in- surance need no longer be included in bids submitted for Metro construction jobs. App. 104, 106. Subcontractors, however, were also advised that, if they deemed it necessary, they could "at their own expense and effort" obtain their own workers' compensation insurance. Id., at 104. Once subcontractors were awarded Metro contracts, Lumberman's Mutual issued certificates of insurance confirming that the subcontractor's employees were covered by WMATA's policy. On these certificates, both WMATA and the subcontractor were listed as parties to whom the insurance was issued. Id., at 225.

Respondents are employees of subcontractors engaged in the Metro project. Each respondent filed a compensation claim for work-related injuries. Most of these claims alleged respiratory injuries caused by high levels of silica dust and other industrial pollutants at Metro sites. None of respondents' employers had secured its own workers' compensation insurance, and respondents' claims were therefore handled under the Lumberman's Mutual policy purchased by WMATA. Lumberman's Mutual paid five of the respondents lump-sum compensation awards in complete settlement of their claims. The remaining two respondents received partial awards from Lumberman's Mutual.

The instant litigation arose when respondents attempted to supplement their...