Opting Out of Coverage Provides No Relief from Miss. Exclusive Remedy Restrictions

Case File

A contractor did what it was supposed to under workers' compensation law in Mississippi to make sure its subcontractor provided workers' compensation benefits, so when the subcontractor's owner opted out of coverage, he couldn't get around the state's exclusive remedy rules to sue for injuries he experienced on the job. Simply Research subscribers have access to the full text of the case.

Case

Harris v. Hemphill Construction Company, Inc., No. 2023-CA-00973-SCT (Miss. 12/12/24)

What Happened

The owner of a company that subcontracted with a builder was severely injured while working on a construction project. The owner sought workers' compensation benefits from the builder, and administrative judge decided that the owner was not entitled to receive workers' compensation benefits because the owner had voluntarily opted out of the company's workers' compensation insurance coverage.

Six months later, the owner brought a negligence claim against the builder. The trial granted the builder's motion to dismiss, finding that it had tort immunity due to the exclusive remedy provision in the Mississippi Workers' Compensation Act.

The owner appealed to the Mississippi Supreme Court, arguing that tort immunity was not applicable.

Rule of Law

The liability of a Mississippi employer to pay workers' compensation is exclusive and in place of all other liability of such employer to the employee ... or anyone otherwise entitled to recover damages at common law, except that if an employer fails to secure payment of workers' compensation, an injured employee may elect to maintain an action at law for damages on account of injury or death.

In Mississippi, in the case of an employer who is a subcontractor, the contractor shall be liable for and shall secure the payment of workers' compensation to employees of the subcontractor, unless the subcontractor has secured such payment.

What the Mississippi Supreme Court Said

In a matter of first impression, the court addressed whether a contractor was immune when an owner or officer of a subcontractor opted out of insurance coverage, even though the subcontractor was required to have such coverage.

Looking at precedent cases, the court explained that, in the past, it has interpreted the phrase "secured such payment" to mean that if the proper steps were taken to provide for the payment of workers' compensation benefits, then a contractor is immune from suit in tort.

In this case, the court held that the builder secured payment by contractually requiring the subcontractor to obtain workers' compensation coverage and, thereby, "did all it could to ensure that it was hiring a financially responsible subcontractor who had secured coverage for its employees."

According to the court, it was the owner's own action in withdrawing from coverage under the insurance policy that deprived him of benefits under the state's workers' compensation law.

The court concluded that the builder was entitled to tort immunity because it had secured payment within the meaning of state law and thus it affirmed the trial court's decision.

Takeaway

A contractor should not be punished and subjected to a common law tort claim when it takes all necessary actions to protect itself and employees of a subcontractor to secure payment of workers' compensation benefits.

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