April 2014 Subrogation Newsletter
The existence of anti-indemnity statutes can have a dramatic effect on not only a subcontractor’s liability, but also its insurers’ liability and/or subrogation potential. Whether you are a liability carrier looking to limit liability for a construction site accident or a workers’ compensation carrier interested in subrogating against another party to a construction contract, it’s important to obtain copies of all contracts and policies immediately after a loss. Indemnity clauses, additional insured requirements, hold harmless language, and waiver of subrogation agreements must be understood and addressed by liability claims professionals and subrogation professionals in order to make informed decisions on the appropriate claims strategy and recovery options available to them.
Abraham Lincoln once said, “The best way to get a bad law repealed is to enforce it strictly.” When and whether an injured employee can sue an owner or subcontractor for a work-related injury in Pennsylvania has been a matter of some confusion over the years. It is the latest in a landslide of confusing legal principles and legislation trying to plug the square peg of American civil justice into the round hole of workers’ compensation. In Pennsylvania, a contractor who subcontracts all or part of a contract is liable for workers’ compensation benefits to the employees of the subcontractor unless the subcontractor (direct employer) has secured payment of such benefits.
The FEHBA preemption clause is very similar to the ERISA preemption clause, so courts often look to the latter to interpret the former. It would follow that where ERISA is held to preempt state anti-subrogation law, the FEHBA would do the same. Unfortunately, that’s no longer the case in Missouri. In Nevils v. Group Health Plan, Inc., 2014 WL 440015 (Mo. 2014), Group Health Plan, Inc. (GHP) was attempting to enforce a subrogation lien against Nevils’ settlement of a personal injury claim. Pursuant to existing Missouri law which held that the FEHBA preempted that state’s anti-subrogation law, the trial court entered a summary judgment in favor of GHP, and Nevils appealed that summary judgment and filed a class action lawsuit against GHP, arguing that Missouri law does not allow the subrogation of personal injury claims.