CONTRACTOR-SUBCONTRACTOR-WORKERS’ COMPENSATION IMMUNITY

May 2nd, 2022 by Rieders Travis in Workers' Compensation

Dobransky v. EQT Prod. Co., 2022 Pa. Super. LEXIS 158 (April 11, 2022) (Bender, P.J.E.)  Appellant, Eric Dobransky, appeals from the trial court’s May 22, 2019 order granting summary judgment in favor of Appellees, EQT Production Company (“EQT”) and Halliburton Energy Services, Inc. (“HESI”) (referred to herein collectively as “Appellees”). After careful review, we vacate the trial court’s order and remand. In addition, we deny Appellees’ application to strike and preclude argument. The matter before us concerns whether HESI — and by extension, EQT — qualify as statutory employers under the Workers’ Compensation Act (“WCA” or “the Act”) and, as such, enjoy immunity from tort liability for injuries suffered by Mr. Dobransky.  By way of background, under the WCA, employers must pay workers’ compensation benefits, regardless of negligence, to employees who sustain injuries in the course of their employment. See 77 P.S. § 431. In exchange for receiving these benefits without having to prove negligence, employees may not sue their employers in tort for injuries they incurred in the course of their employment. See 77 P.S. § 481(a). In other words, with respect to work-related injuries, the employers have immunity from tort liability. Pertinent to the issues before us, pursuant to Section 302(a) of the WCA, codified at 77 P.S. § 461, certain contractors who meet a specialized definition take on secondary liability for the payment of workers’ compensation benefits to the injured employees of their subcontractors. See 77 P.S. § 461; see also Six L’s Packing Co. v. W.C.A.B. (Williamson), 615 Pa. 615, 44 A.3d 1148, 1157 (Pa. 2012). Thus, in the event the subcontractor-employers cannot or will not pay workers’ compensation benefits to their subcontractor-employees, these contractors assume workers’ compensation liability. 77 P.S. § 461. As such, despite not being the actual employers of the subcontractor-employees, these contractors are considered “statutory employers” of the subcontractor-employees due to their treatment under the WCA. See Patton v. Worthington Associates, Inc., 625 Pa. 1, 89 A.3d 643, 645 (Pa. 2014). Like the treatment of actual employers under the WCA, in return for assuming secondary liability for the payment of workers’ compensation benefits, statutory employers enjoy immunity in tort for injuries the subcontractor-employees receive during the course of their employment. See 77 P.S. § 481(a); Doman v. Atlas America, Inc., 2016 PA Super 233, 150 A.3d 103 (Pa. Super. 2016). The contractors enjoy this immunity “by virtue of statutory-employer status alone, such that it is accorded even where the statutory employer has not been required to make any actual benefit payment.” See Patton, 89 A.3d at 645 (citing Fonner v. Shandon, Inc., 555 Pa. 370, 724 A.2d 903, 907 (Pa. 1999)) (footnote omitted).

 

With that background in mind, we now turn to the facts before us. This case arises out of injuries sustained by Mr. Dobransky from his exposure to barite at Scott’s Run, a natural-gas well site leased and operated by EQT, on June 19, 2012. In order to drill and produce natural gas at Scott’s Run, EQT subcontracted with numerous companies, including HESI. Pursuant to a master services agreement (“MSA”), EQT contracted with HESI to perform various services for it related to both drilling and hydraulic fracturing. Notably, at the Scott’s Run site, HESI provided EQT with mud services.

 

In providing EQT with mud services, HESI was responsible for gathering the necessary raw materials to create the drilling mud, maintaining and inspecting the tanks that held the barite, and keeping track of inventory. (“[HESI] did not purchase the ‘mud’ from a third[- ]party supplier, but instead collected the necessary raw materials to have the mud blended and stored at the EQT well site.”); (noting that HESI required that barite be delivered in order to make the drilling mud). In order to have the barite used in the drilling mud delivered to the Scott’s Run well site, HESI executed a transportation agreement with Northwest Concrete Products, Inc., d/b/a Northwest Logistics (“Northwest”), under which Northwest agreed to “transport the goods or materials tendered to it by [HESI] or any supplier of [HESI] to and from the origin and/or destination points (and stop off points in between) as designated by [HESI]….” Northwest also unloaded the goods and materials it transported. Northwest employed Mr. Dobransky as a truck driver. On the day in question, Mr. Dobransky was delivering barite to the Scott’s Run site. When unloading the barite into HESI’s storage tank, the cap blew off, releasing barite onto Mr. Dobransky’s face and onto his person. Mr. Dobransky claims that, among other deficiencies, the tank was missing a ball valve and pressure gauge. As a result of his exposure to the barite, Mr. Dobransky alleges that he sustained severe and serious injuries, including losing nearly half of his lung capacity.  Mr. Dobransky subsequently filed a negligence action against Appellees. On July 2, 2018, Appellees filed a motion for summary judgment, arguing that they were Mr. Dobransky’s statutory employers under Section 302(a) of the WCA, and, therefore, immune from tort liability. We granted their request and withdrew the panel decisions originally issued in this matter. We now examine whether Appellees are entitled to summary judgment based on their statutory employer defense under either Section 302(a)(1)(i) or Section 302(a)(2).

 

Section 302(a)(2) provides that “a person who contracts with another … to have work performed of a kind which is a regular or recurrent part of the business, occupation, profession or trade of such person shall be deemed a contractor,  and such other person a subcontractor.” 77 P.S. § 461(2). Appellees argue that HESI’s contractual relationship with Northwest satisfies these requirements. They say that (1) “HESI is in the ‘business’ or ‘trade’ of providing well[]site services, and a ‘regular or recurrent’ part of that business or trade is delivering and unloading barite for use at well sites”; (2) “HESI contracted with Northwest … for Northwest … to (repeatedly) deliver barite and unload it into onsite tanks to meet HESI’s contractual obligation to EQT”; and (3) “Mr. Dobransky is employed by Northwest … and, indeed, was performing the work HESI contracted for Northwest … to perform.” Mr. Dobransky asserted that HESI does not qualify as his statutory employer under Section 302(a)(2) simply because he delivered a single raw material to HESI. Mr. Dobransky emphasizes that his employer, Northwest, is in the transportation business, and that HESI is not a transporter of barite or any other type of freight. He argues that HESI’s function at the Scott’s Run well site was to supply drilling mud, and that “[a]lthough [HESI] — like thousands of other businesses — requires the delivery of materials that are consumed in one manner or another in the recipient’s business, that fact alone cannot render the truck driver who delivers those materials a statutory employee of the recipient.” (“The use of an object that has been transported or delivered does not render the ‘transportation’ or ‘delivery’ of such object a regular or recurrent part of the recipient’s business for purposes of [Section] 302(a)(2).”). Appellees do not definitively demonstrate that the transportation and unloading of barite was an aspect of HESI’s business or trade, and that HESI contractually delegated that aspect of its business or trade to Northwest. we cannot agree with Appellees that the MSA and the sales order form indisputably establish that HESI was in the business of supplying and transporting barite. Instead, viewing all facts and reasonable inferences in a light most favorable to Mr. Dobransky, the evidence shows that HESI was in the business of providing well site services, which included mud services. In order to make drilling mud for EQT, HESI needed barite, among other items, and therefore contracted with Northwest to transport and deliver barite to it. The evidence establishes, at most, that HESI needed barite for making the drilling mud and that it had Northwest transport and deliver barite to it at the well site.

 

In sum, we conclude that HESI (and therefore EQT) have not indisputably demonstrated that they qualify as Mr. Dobransky’s statutory employers under either Section 302(a)(1)(i) or Section 302(a)(2). We therefore vacate the trial court’s order granting summary judgment in Appellees’ favor and remand for further proceedings. Order vacated. Case remanded. Appellees’ application to strike and preclude argument denied. Jurisdiction relinquished. President Judge Panella and Judge Lazarus, Judge Kunselman and Judge McCaffery join this opinion. Judge Bowes files a dissenting opinion in which Judge Olson, Judge Dubow and Judge Murray join. Judgment Entered.

Attorney Cliff Rieders

Attorney Cliff RiedersCliff Rieders is a Nationally Board Certified Trial Lawyer practicing personal injury law. A large part of his practice involves multi-district litigation, including cases related to pharmaceuticals, vitamin supplements and medical devices. He is admitted in several state and federal courts, as well as the Supreme Court of the United States. Rieders is the past regional president of the Federal Bar Association and is a life member of the distinguished American Law Institute, which promulgates proposed rules adopted by many state courts. He is a past president of the Pennsylvania Association for Justice, formerly Pennsylvania Trial Lawyers Association. As a founder of the Pennsylvania Patient Safety Authority, he served on the Board for 15 years.

Not only has Rieders held many highly esteemed, leadership positions, he authored legislation related to the Patient Safety Authority and the Mcare Act, which governs medical and hospital liability actions in Pennsylvania. He authored texts upon which both practitioners and judges rely, including Pennsylvania Malpractice Laws and Forms, and Financial Responsibility Law Issues in Pennsylvania, the latter governing auto and truck collisions in Pennsylvania. In addition, he wrote several books on the practice of law in Pennsylvania regarding wrongful death and survivor actions, insurance bad faith, legal malpractice claims and worker rights, among others. Rieders also serves as a resource to practitioners as a regular speaker for Celesq, an arm of the world’s largest legal publisher, Thomson Reuters West Publishing.

As recognition of his wide range of contribution to his profession and of his dedication to protecting the rights of his clients, he received numerous awards, among them the George F. Douglas Amicus Curiae Award, the Milton D. Rosenberg Award, the B’nai B’rith Justice Award, and awards of recognition from the Pennsylvania Trial Lawyers. [ Attorney Bio ]

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