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Larson's Case Law Developments 11/2/2009 1:14:01 AM EST Uninsured Employer Unable to Seek Contribution/Indemnity From Third Party in Wrongful Death Action Author/Editor An employer purchased a used posthole digger for use in its operations. While using the posthole digger and tractor to do fencing work, an employee became entangled in the auger blade and died as a result of his injuries. When the employee's widow sought workers' compensation benefits, it was determined that the employer was not enrolled in a workers' compensation plan at the time of the employee's death. As a result, the state uninsured employers' fund paid the widow's claim. The widow subsequently filed a wrongful death action against the employer and others in the U.S. District Court. The employer ultimately settled the case with the widow, paid settlement monies (through an insurance carrier), and then sought to recover from the posthole manufacturer via an alternative claim of contribution or indemnity. The U.S. District Court certified the following question (as amended) to the Supreme Court of Montana: "Is an uninsured employer prohibited from bringing either a contribution claim or an indemnity claim against a third party after settling with the injured employee?"
Here's What The Court Decided:
In State Farm Fire & Cas. Co. v. Bush Hog, LLC, 2009 MT 349, 2009 Mont. LEXIS 500 (Oct. 21, 2009), the Supreme Court of Montana answered, "Yes." Acknowledging first that in Montana, the right to contribution was established by statute, while the right to indemnity was an equitable principle, the Court indicated that the two concepts had essentially the same purpose: to shift one's losses to another. The doctrine of contribution is to allocate liability among all responsible parties whereas the doctrine of indemnity springs from the equitable theory that one has been compelled to pay for damages caused by another. The Supreme Court agreed with the manufacturer that it was not equitable to require a stranger to the employer-employee relationship to indemnity an employer for liability that was wholly avoidable if the employer had simply obeyed the Workers' Compensation Act and provided coverage for its employees. But for the employer's failure to provide workers' compensation coverage to the employee, the employer would have had no liability to the employee's widow. The essence of the contribution/indemnity claim was directly attributable to the employer's own violation of the workers' compensation laws of the State. The Court concluded that allowing an action for contribution or indemnity would relieve an uninsured employer of the responsibility and consequences of its own violation. See generally Larson's Workers' Compensation Law, §§ 102.02, 118.01, 120.01, 120.04. Create an account or login to post comments.
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