A ruling handed down by California’s Supreme Court represents a loss for workers compensation payers’ ability to pursue subrogation claims against certain third parties responsible for an employee’s injuries.

Ruling in Seabright Insurance Co. vs. US Airways Inc., the court said Monday that an insurer cannot sue a third-party company when the hiring company fails to follow safety regulations and an injury results.

The case involved an employee of Lloyd W. Aubry Co., which US Airways hired to maintain a luggage conveyor at San Francisco International Airport.

The conveyor lacked safety guards required under California occupational safety regulations, the court opinion states. When Aubry’s employee inspected the conveyor, he caught one arm in its moving parts and suffered an injury.

Insurer sues airline

Aubry‘s workers comp insurer, Seabright, provided the injured employee benefits and then sued US Airways, alleging that the airline caused the injury. Seabright sought to recover the amount it paid in workers comp benefits.

But the trial court found no evidence that US Airways contributed to the accident and granted it summary judgment.

A state appellate court, however, held that under California regulations, US Airways had a “nondelegable” duty to ensure that the conveyor had safety guards. It also ruled that whether US Airways contributed to the employee’s injury remained a triable issue.

The decision created a split in California appellate courts over whether companies that hire independent contractors can be liable for contractor injuries if the hiring company fails to comply with state safety regulations.

Court resolves split

The California Supreme Court eventually granted US Airway’s petition for review in order to resolve the split. On Monday, it overturned the appeals court decision in the US Airways case.

The high court said among other things that workers comp law shields independent contractors from tort liability and that “it would be unfair to permit the injured employee to obtain full tort damages from the hirer of the independent contractor—damages that would be unavailable to employees who did not happen to work for a hired contractor. This inequity would be even greater when, as is true here, the independent contractor had sole control over the means of performing the work.”