The opinion of the court was delivered by
The plaintiff, Michael Robinett, was injured while performing work under a subcontract between his employer, Stanley Jones Corporation (Stanley Jones), and the defendant, The Haskell Company (Haskell). Under the terms of the contract between Stanley Jones and Haskell, Stanley Jones provided workers compensation coverage for its employees and paid such compensation to the plaintiff. Thereafter, the plaintiff sued Haskell in tort for injuries sustained. The plaintiff appeals from a summary judgment ruling
The undisputed facts establish that Armour Swift-Eckrich employed Haskell as its principal contractor for the construction of a new facility in Geary County. Haskell is a design/build firm that provides architectural, engineering, construction, and real estate services. Haskell subcontracted with the plaintiff's employer, Stanley Jones, for installation of heating, air conditioning, and mechanical work on the new project.
On November 13, 1996, the plaintiff was injured on the job site when he stepped into an uncovered floor drain, causing serious injury to his right foot, right leg, and back. The plaintiff claimed that this injury was the direct result of the wrongful and negligent act of an employee of Haskell, for which Haskell would be liable under the doctrine of respondeat superior.
Stanley Jones provided worker compensation coverage for all its employees through Lumberman's Underwriting Alliance. After recovering worker compensation benefits, the plaintiff filed a tort action against Haskell for damages. Haskell filed a motion for summary judgment, arguing that it qualified as the plaintiff's statutory employer under K.S.A. 1999 Supp. 44-503(a) and was therefore immune from suit under the Kansas Workers Compensation Act's exclusive remedy rule contained in K.S.A. 44-501(b). In his response and now on appeal, the plaintiff argues that K.S.A. 1999 Supp. 44-503(g) which exempts general contractors from providing workers compensation benefits for the employees of subcontractors where the subcontractor provides such benefits, renders Haskell liable.
In granting Haskell summary judgment, the trial court concluded that the plaintiff's tort action was barred by the exclusive remedy provisions of K.S.A. 44-501(b), thereby rejecting the plaintiffs contention that K.S.A. 1999 Supp. 44-503(g) authorized his
The plaintiff's argument rests upon a 1994 amendment to 44-503 of the Kansas Workers Compensation Act adding subsection (g), which relieves the principal contractor of its obligation to provide workers compensation coverage for employees of a subcontractor where such coverage is secured by the subcontractor. Before discussing the amendment and its effect, the following background and context is helpful in framing the question we must resolve.
Exclusive Remedy and Subcontracting Provisions
K.S.A. 44-501(b) contains the exclusive remedy provision upon which the trial court based its decision for Haskell. In pertinent part, the statute provides:
Thus, under K.S.A. 44-501(b), an employer is not liable in tort for any injury in which compensation is recoverable under the Kansas Workers Compensation Act. The remedy provided in the Kansas Workers Compensation Act is exclusive and a worker may not maintain a common-law action for damages founded upon negligence against a party from whom he or she could have recovered compensation from that employer under the Act. Woods v. Cessna Aircraft Co., 220 Kan. 479, 482, 553 P.2d 900 (1976).
Subcontracting under the Kansas Workers Compensation Act is addressed by the provisions of K.S.A. 1999 Supp. 44-503. K.S.A. 1999 Supp. 44-503(a) provides:
K.S.A. 1999 Supp. 44-503(a) has been a part of Kansas workers compensation law in essentially the same form since its enactment in 1927. See L. 1927, ch. 232, § 3. The statute extends the application of the Kansas Workers Compensation Act to certain individuals or entities who are not the immediate employers of the injured workers, but rather are "statutory employers." Bright v. Cargill, Inc., 251 Kan. 387, 393, 837 P.2d 348 (1992). The impact of K.S.A. 1999 Supp. 44-503 is to allow an employee of a contractor to recover workers compensation benefits from either his immediate employer or the principal contractor, so long as the work being done by the employee is either an integral part of the principal's trade or business or is work that would ordinarily have been done by an employee of the principal. See Cobble v. Williams, 177 Kan. 743, 750-51, 282 P.2d 425 (1955). The purpose for this statute is "`to prevent employers from evading liability under the act by the device of contracting with outsiders to do work which they have undertaken to do as a part of their trade or business.' (Citations omitted.)" Zehring v. Wickham, 232 Kan. 704, 707, 658 P.2d 1004 (1983). A statutory employer is immune from a common-law suit for damages due to the exclusive remedy provision even when the injured employee chooses to receive workers compensation benefits from his or her immediate employer rather than the statutory employer because the employee could have recovered compensation from the statutory employer. See Bright v. Cargill, Inc., 251 Kan. at 392-393; Zehring v. Wickham, 232 Kan. at 707.
Pre-1994 Subcontracting Provisions
Prior to 1994, the law in this area would have been clear. The trial court found, and neither party seriously disputes, that Haskell,
Thus, under the law as it existed before 1994, Haskell would have been liable to pay workers compensation benefits to the plaintiff as if the plaintiff were a direct employee. See K.S.A. 44-503(a). The plaintiff could have claimed benefits from either Haskell or his direct employer, Stanley Jones, assuming Stanley Jones provided such benefits. K.S.A. 44-503(a), (c). Conversely, both Haskell, as a statutory employer, and Stanley Jones, as the direct employer, would be immune from a negligence suit under the exclusive remedy provision as the plaintiff could have recovered compensation from either one under the Kansas Workers Compensation Act. See Woods v. Cessna Aircraft Co., 220 Kan. at 482.
In 1994, K.S.A. 44-503 was amended with the addition of subsection (g). L. 1994, ch. 288, § 1. K.S.A. 1999 Supp. 44-503(g) provides:
The effect of subsection (g) is that if a subcontractor has secured the payment of workers compensation benefits for its employees, the principal contractor is not liable for such benefits. Instead, the principal contractor is only secondarily liable for payment of benefits in the event that the subcontractor fails to provide benefits. K.S.A. 1999 Supp. 44-503(g).
In the case at hand, Stanley Jones, the plaintiff's direct employer, had secured workers compensation benefits for the plaintiff. Therefore, under K.S.A. 1999 Supp. 44-503(g), Haskell was not liable for benefits. The question, however, is whether because Haskell was not liable for benefits, Haskell could be liable for its own negligence in tort notwithstanding the fact that Haskell would still qualify as a statutory employer under K.S.A. 1999 Supp. 44-503(a).
Scope of Review
Resolution of this question necessarily requires interpretation of both K.S.A. 1999 Supp. 44-501 and K.S.A. 1999 Supp. 44-503, as well as the Kansas Workers Compensation Act as a whole. The interpretation of a statute is a question of law, and our review is unlimited. Hamilton v. State Farm Fire & Cas. Co., 263 Kan. 875, 879, 953 P.2d 1027 (1998).
Rules of Statutory Construction
The fundamental rule to which all other rules are subordinate is that the intent of the legislature governs if that intent can be ascertained, and when a statute is plain and unambiguous, the court must give effect to the intention of the legislature as expressed rather than determine what the law should or should not be. In re Marriage of Killman, 264 Kan. 33, 42-43, 955 P.2d 1228 (1998). Where the face of the statute leaves its construction uncertain, the court may look to the historical background of the enactment, the circumstances attending its passage, the purpose to be accomplished,
Application of Rules
The plain language of K.S.A. 1999 Supp. 44-503(g) does not specifically address the question of whether a principal contractor who is not primarily liable for workers compensation benefits may be sued for its own negligence in tort. The plain language of the statute does state that where a subcontractor has secured workers compensation benefits for its employees, an injured employee "shall have no right to ... proceed against the principal for compensation under this or any other section of the workers compensation act." However, the principal contractor still remains liable for ultimate payment in the event that the contractor's compensation is not secured or is otherwise unavailable or not in effect. K.S.A. 1999 Supp. 44-503(g). Thus, it is not unambiguously clear whether relieving the principal contractor of responsibility for providing coverage subjects the principal to tort action by employees of the subcontractor.
The historical background and circumstances attending the passage of K.S.A. 1999 Supp. 44-503(g) are of little help. Senate Bill 767, L. 1994, ch. 288, § 1, which amended K.S.A. 44-503 to add section (g), originally affected only owner-operators of motor carriers, and contained none of the language which eventually made its way into the statute. Motor carriers who leased trucks and drivers
In both the Senate and House committees, critics argued that the bill was special interest legislation which would give special treatment to one industry and adversely impact the workers compensation system. See Minutes of the Senate Committee on Commerce, February 25, 1994; Minutes of the House Committee on Labor and Industry, March 16, 1994. Nevertheless, both committees favorably recommended the bill for passage. However, the House amended the bill by gutting the original language completely. See House J., 1994, pp. 2034-35. In its place, the House inserted the language that makes up the statute today. House J., 1994, p. 2035. There is no record for the reason behind the amendment. However, the amendment changed S.B. 767 from special interest legislation which exempted one industry from liability for workers compensation into general legislation which enacted a typical "contractor-under" statute.
In its amicus brief, the Kansas Association of Defense Counsel contends that S.B. 767 was enacted to make Kansas employers who enter into subcontracts more competitive with similar companies in other states by eliminating duplicative workers compensation premiums, and that it is "inconceivable" to think that the legislature intended to make the same companies liable in tort by abrogating the defense available under the exclusive remedy rule.
The plaintiff argues that the exclusive remedy rule in Kansas requires that parties who are not liable for workers compensation benefits not have immunity because there is no quid pro quo on their part. In other words, the provisions of K.S.A. 1999 Supp. 44-503(g) relieve the statutory employer under certain conditions from providing coverage but gives no comparable benefit to the employee. The plaintiff points to this court's statement in Bright v. Cargill, Inc., wherein we found that LSI, an employer of another contractor in the case, was not shielded from liability. Noting that LSI had no workers compensation responsibility to Bright, we stated: "A defendant has no workers compensation responsibility to a plaintiff who is not its employee. A defendant should not be relieved from its normal respondeat superior liability, while at the same time giving no accompanying benefit to the workers compensation system." 251 Kan. at 414. The plaintiff argues that similarly, a defendant who is statutorily shielded from liability for workers compensation benefits should not be allowed to take advantage of the exclusive remedy provision to escape liability in tort for its actions.
It must be noted that the very basis for our decision in Bright regarding LSI was that LSI was not the employer of Bright. At the same time, in Bright we affirmed the principle under 44-503(a) that one determined to be a statutory employer is immune from a
The plaintiff's argument that a defendant who is only secondarily liable for workers compensation benefits should not be immune from tort suits is supported by decisions in a number of jurisdictions. See Colon Nunez v. Horn-Linie, 423 F.2d 952, 955-57 (1st Cir. 1970) (applying Puerto Rico law); Ryan v. New Bedford Cordage Co., 421 F.Supp. 794, 798 (D. Vt. 1976); Baldwin Co. v. Manner, 224 Ark. 348, 352-53, 273 S.W.2d 28 (1954); Great Western Sugar Co. v. Erbes, 148 Colo. 566, 367 P.2d 329 (1961); Fonseca v. Pacific Constr. Co., 54 Haw. 578, 583-84, 513 P.2d 156 (1973); Andrews v. Robinson Steel Constr. Co., 355 S.W.2d 890, 892-93 (Mo. 1962) (applying Illinois law); Piper v. Lockwood Water Users Ass'n, 175 Mont. 242, 244-47, 573 P.2d 646 (1978); Boettner v. Twin City Constr. Co., 214 N.W.2d 635, 638-39 (N.D. 1974). Until recently, this view, whether based on statutory language or policy, was the general rule. See 6 Larson's Workers Compensation Law § 111.04[b] (2000). The rationale behind this rule is that the secondary liability of the principal does not become effective until the contractor fails to provide benefits, and where the contractor does actually provide benefits, there is no quid pro quo on the part of the principal which would entitle the principal to immunity. See Fonseca, 54 Haw. at 583; Andrews, 355 S.W.2d at 893.
However, there has been a marked trend in more recent times toward granting immunity to the principal contractor when the subcontractor was insured and even when compensation has been actually paid under the subcontractor's policy. 6 Larson's Workers Compensation Law § 111.04[b] (2000). See Washington Metro. Transit Auth. v. Johnson, 467 U.S. 925, 938-41, 81 L. Ed.2d 768,
It should be noted that Congress later amended the Longshoreman's and Harbor Workers' Compensation Act to provide for immunity only where the general contractor is actually required to pay compensation benefits. 98 Stat. 1639, §§ 4(a) and 5(a). See Meiggs v. Associated Builders, Inc., 545 A.2d 631, 633 (D.C. 1988). Nevertheless, the result reached by the Johnson court is still consistent with the modern trend in workers compensation law. See 6 Larson's Workers Compensation Law § 111.04[b] (2000).
In his treatise on Workers Compensation Law, Professor Larson favors the modern rule, stating:
We believe the above rationale to be sound and consistent with the overall purpose and specific provisions of K.S.A. 1999 Supp. 44-503. This law recognizes the primary responsibility of the principal contractor in providing worker compensation coverage not only for its immediate employees but also for its statutory employees. See Bright v. Cargill, Inc., 251 Kan. at 393. This responsibility arises because the work being done is either an integral part of the principal's trade or business or is work that would ordinarily have been done by an employee of the principal. See Cobble v. Williams, 177 Kan. at 750. The purpose of the statute is "`to prevent employers from evading liability under the act by the device of contracting with outsiders to do work which they have undertaken to do as a part of their trade or business.'" Zehring v. Wickham, 232 Kan. at 707.
K.S.A. 1999 Supp. 44-503(g) continues to recognizes this responsibility by referring to the principal contractor as the one who "would otherwise be liable [for the payment of compensation] under this section." Moreover, the 1994 amendment provides that the principal contractor remains liable for such coverage "[i]n the event that the payment of compensation is not secured or is otherwise unavailable or in effect." K.S.A. 1999 Supp. 44-503(g). In providing for this contingent liability, the legislature chose not to abandon the concept of statutory employer, instead placing the
Subjecting the principal contractor as the statutory employer to tort liability for employees of the subcontractor would be an extreme departure from the law predating the 1994 amendment. Such a departure we believe should not be predicated upon the assumption that since the principal contractor is relieved of its coverage responsibility, it is therefore subject to third party tort actions by its statutory employees or employees of its subcontractor. Such a change, if intended, would surely have been expressly provided for by the legislature.
We also believe that the manner in which the legislature chose to relieve the principal contractor of primary responsibility for workers compensation coverage is significant. K.S.A. 1999 Supp. 44-503(g) does not mandate that the subcontractor provide workers compensation coverage. Instead, the legislature leaves the coverage question up to the subcontractor and the principal contractor, recognizing that primary responsibility lies with the principal contractor. Where coverage is secured by the subcontractor, the principal contractor remains only contingently liable. By so providing, the legislature encourages the principal in his or her negotiations with the subcontractor to require the subcontractor to secure workers compensation coverage of its direct employees. In this case, the contract between Haskell and Stanley Jones required that Stanley Jones, as the direct employer of the plaintiff, provide such coverage.
The cost of such coverage becomes a factor in the negotiations of the parties and is factored into the contract, with the result that between the parties the cost of coverage is shared, if not paid for, by the principal contractor. Thus, the principal is still providing quid pro quo for its immunity. If the principal does not obtain immunity, there is really no incentive for the employer to hire a contractor with workers compensation coverage, especially where the principal will likely have to pay a higher price for such a contractor as opposed to a contractor who is uninsured. In fact, the principal who does so will be worse off in that not only will it be
Given the primary responsibility of the principal to either provide workers compensation coverage or contract for it to be provided by the subcontractor, the remaining contingent liability of the principal, the lack of any express language governing third-party tort liability in K.S.A. 1999 Supp. 44-503, and the fact that immunity furthers the policy of the statute to ensure that workers are not deprived of workers compensation coverage, we conclude that in passing K.S.A. 1999 Supp. 44-503, the legislature did not intend to subject principal contractors to tort liability for injuries to the employees of subcontractors, even where the principal contractor is not liable for workers compensation benefits because such coverage is secured by the subcontractor.