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Insurer not obligated to pay for injury under comp exclusion

Posted On: Sep. 9, 2019 1:53 PM CST


An insurer is not obligated to indemnify a construction company for a subcontractor’s injuries because of a policy exclusion for workers comp-related claims, says a federal appeals court, in affirming a lower court ruling.

White Plains, New York-based Endurance American Specialty Insurance Co., a unit of Sompo Holdings Inc., issued a general commercial liability policy to Weston, Florida-based United Construction Engineering Inc. that had two exclusions, one that specifically excluded injuries that would be covered by a workers compensation claim and a second that excluded bodily injuries of workers injured in the course of their employment, according to Friday’s ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in Endurance American Specialty Insurance Co. v. United Construction Engineering Inc., Carlos Marroquin Lopez.

Another company executed a contract with United Construction to perform a roof repair on a Miami warehouse. United Construction hired a subcontractor, which in turn hired Mr. Lopez to perform the work. 

On the second day of the project, Mr. Lopez slipped and fell into a pool of hot tar on the job site. Neither United Construction nor the subcontractor carried workers compensation insurance at the time.

After Mr. Lopez sued United Construction in state court for his injuries, Endurance defended the company under a reservation of rights, but filed a declaratory judgment action in U.S. District Court in Miami seeking a declaration it had no duty to defend or indemnify it in the state suit.

The District Court ruled in Endurance’s favor, which was upheld by a unanimous three-judge appeals court panel. “Lopez’s primary argument is that he was, in fact, a temporary employee under the terms of the policy” and that varying interpretations of “employee’” in the policy create an ambiguity that should be resolved in favor of holding the employee exclusion does not apply, said the appeals court panel.

“We see no need to engage with Lopez’s entire argument because it fails to address and overcome the deficiencies the district court noted with the workers’ compensation exclusion that independently causes Lopez’s claim to fail,” said the ruling, in affirming the lower court’s summary judgment in the case.

United Construction’s attorney had no comment, while other attorneys in the case could not be reached.

Employers continue to struggle with fall prevention and protection more than two years after federal regulators updated workplace safety rules in an effort to reduce fall-related fatalities, experts say.