Self-Insurance Offers Subcontractors Immunity from Tort Claims
Kegler Brown E-mployment Alert May 20, 2016
Smart Summary for Subs + GCs
- Be aware that the Ohio Supreme Court has ruled that self-insurance offers GCs and subcontractors immunity from tort claims brought by injured employees of other subs.
- To protect themselves and their subcontractors, GCs should consider self-insurance on eligible projects, which include those that are to be completed in less than 6 years and where the anticipated spend is in excess of $100M.
The Supreme Court of Ohio recently issued an opinion that significantly benefits subcontractors involved in some large construction projects by providing workers’ compensation immunity against tort liability in actions brought by other companies’ employees.
In Stolz v. J & B Steel Erectors, Inc., 2016-Ohio-1567, plaintiff Daniel Stolz worked as a concrete finisher on the Cincinnati Horseshoe Casino construction project for Jostin Construction, which was a subcontractor on the job for Messer Construction Company (“Messer”). Stolz was injured on the job site and, after collecting workers’ comp benefits, brought negligence claims against Messer and fellow subcontractors J&B Steel Erectors, Terracon Consultants, Pendleton Construction Group, D.A.G. Construction, and TriVersity Construction Co.
Prior to Stolz’s accident, Messer had applied for and obtained authority from the Ohio BWC to act as the self-insuring employer on the project under R.C. 4123.35(O), which permits self-insurance of projects scheduled for completion within 6 years and where the total cost is anticipated to exceed $10 million. Messer was therefore responsible for providing workers’ compensation coverage both for its own employees and its subcontractors’ employees working on the casino project. In return for providing this coverage, the Supreme Court confirmed that the self-insuring employer is immune from claims arising out of work-related injuries by its own employees or any employees of its subcontractors that participate in the self-insurance plan. This means that Messer was immune from Stolz’s claims and the parties did not argue otherwise. However, the issue remained regarding whether an employee of one enrolled subcontractor working on the self-insured construction project can bring tort claims against another enrolled subcontractor.
The Supreme Court held that subcontractors enrolled in a self-insured construction project plan are immune from tort claims made by the employees of other enrolled subcontractors who are injured or killed while working on the project and whose injuries, illnesses, or deaths are compensable under Ohio’s workers’ compensation law. The Supreme Court, after a thorough analysis of the language of R.C. 4123.35(O), came to the conclusion that Stolz is barred from bringing claims against J&B Steel, Terracon, Pendleton, D.A.G., and TriVersity, and also that those subcontractors are immune against such claims relating to the construction project.